[Congressional Record: November 17, 1999 (Senate)] [Page S14696-S14739] From the Congressional Record Online via GPO Access [wais.access.gpo.gov] [DOCID:cr17no99-190] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. CRAIG (for himself, Mr. Thomas, Mr. Crapo, and Mr. Burns): S. 1938. A bill to provide for the return of fair and reasonable fees to the Federal Government for the use and occupancy of National Forest System land under the recreation residence program, and for other purposes; to the Committee on Agriculture, Nutrition, and Forestry. cabin user fee fairness act of 1999 Mr. CRAIG. Mr. President, I am introducing legislation today that will set a new course for the Forest Service in determining fees for forest lots on which families and individuals have been authorized to build cabins for seasonal recreation since the early part of this century. I am pleased to have Senators Mike Crapo, Craig Thomas, and Conrad Burns joining me in sponsoring this legislation, which is a companion bill to H.R. 3327, introduced in the House of Representatives by Congressman George Nethercutt. In 1915, under the Term Permit Act, Congress set up a program to give families the opportunity to recreate on our public lands through the so-called recreation residence program. Today, 15,000 of these forest cabins remain, providing generation after generation of families and their friends a respite from urban living and an opportunity to use our public lands. These cabins stand in sharp contrast to many aspects of modern outdoor recreation, yet are an important aspect of the mix recreation opportunities for the American public. While many of us enjoy fast, off-road machines and watercraft or hiking to the backcountry with high-tech gear, others enjoy a relaxing weekend at their cabin in the woods with their family and friends. The recreation residence programs allows families all across the country an opportunity to use our national forests. This quiet, somewhat uneventful [[Page S14697]] program continues to produce close bonds and remarkable memories for hundreds of thousands of Americans, but in order to secure the future of the cabin program, this Congress needs to reexamine the basis on which fees are now being determined. Roughly 20 years ago, the Forest Service saw the need to modernize the regulations under which the cabin program is administered. Acknowledging that the competition for access and use of forest resources has increased dramatically since 1915, both the cabin owners and the agency wanted a formal understanding about the rights and obligations of using and maintaining these structures. New rules that resulted nearly a decade later reaffirmed the cabins as a valid recreational use of forest land. At the same time, the new policy reflected numerous limitations on use that are felt to be appropriate in order to keep areas of the forest where cabins are located open for recreational use by other forest visitors. Commercial use of the cabins is prohibited, as is year-round occupancy by the owner. Owners are restricted in the size, shape, paint color and presence of other structures or installations on the cabin lot. The only portion of a lot that is controlled by the cabin owner is that portion of the lot that directly underlies the footprint of the cabin itself. At some locations, the agency has determined a need to remove cabins for a variety of reasons related to ``higher public purposes'' and cabin owners wanted to be certain in the writing of new regulations that a fair process would guide any future decisions about cabin removal. At other locations, some cabins have been destroyed by fire, avalanche or falling trees, and a more reliable process of determining whether such cabins might be rebuilt or relocated was needed. It was determined, therefore, that this recreational program would be tied more closely to the forest planning process. The question of an appropriate fee to be paid for the opportunity of constructing and maintaining a cabin in the woods was also addressed at that time. Although the agency's policies for administration of the cabin program have, overall, held up well over time, the portion dealing with periodic redetermination of fees proved in the last few years to be a failure. A base fee was determined 20 years ago by an appraisal of sales of comparable undeveloped lots in the real estate market adjacent to the national forest where a cabin was located. The new policy called for reappraisal of the value of the lot 20 years later--a trigger that led to initiation of the reappraisal process in 1995. In the meantime, according to the policy, annual adjustments to the base fee would be tracked by the Implicit Price Deflator (IPD), which proved to be a faulty mechanism for this purpose. Annual adjustments to the fee based on movements of the IPD failed entirely to keep track of the booming land values associated with recreation development. As the results of actual reappraisals on the ground began reaching my office in 1997, it became clear that far more than the inoperative IPD was out of alignment in determining fees for the cabin owners. At the Pettit Lake tract in Idaho's Sawtooth National Recreation Area, the new base fees skyrocketed into alarming five-digit amounts-- so high that a single annual fee was nearly enough money to buy raw land outside the forest and construct a cabin. Meanwhile, the agency's appraisal methodology was resulting in new base fees in South Dakota, in Florida, and in some locations in Colorado that were actually lower than the previous fee. Very generally speaking, the value of the use of the forest lot is approximately the same for any cabin owner, whether they are tucked into what has become in recent years the Sawtooth National Recreation Area of Idaho, or high in the Sierra Mountain range of California, or in the lowland forests of the southeastern States. Yet Idaho cabin owners are now expected to pay a new average fee of $9,221 each year, while cabin owners in Kentucky will be paying a new average fee of $140. At the request of the chairman of the House Committee on Agriculture in 1998, the cabin owners named a coalition of leaders of their various national and State cabin owner associations to examine the methodology being used by the Forest Service to determine fees. It became obvious to these laymen that analysis of appraisal methodology and the determination of fees was beyond their grasp, and a prestigious consulting appraiser was retained to guide the cabin owners through their task. The report and recommendations of the coalition's consulting appraiser is available from my office for those who might wish to examine the details. At the bottom line, it was learned that the Forest Service--contrary to its own policy--was appraising and affixing value to the lots being provided to cabin owners as if this land were fully developed, legally subdivided, fee simple residential land. In other words, the agency has been capturing the values associated with a variety of structures and services that the homeowners themselves (not the agency) provide. The Forest Service, in setting fees on this basis, has been capturing incremental values assigned by a developer at various stages of development for risk, expectations of profit and other factors. My goal is to see that the cabin program remains affordable for American families. Consistent with the recommendations of the coalition's consulting appraiser, the methodology for determining fees is directed toward the value of the use to the cabin owner--not what the market would bear, should the Forest Service decide to sell off its assets. This is highly technical legislation. Its purpose is to send a clear set of instructions to appraisers in the field and a clear set of instructions to forest managers to respect the results of appraisals undertaken to place value on the raw land being offered cabin owners. I intend to hold hearings on this legislation early in the next session. I urge each of my colleagues to be in contact with cabin owners in their State during the congressional recess. There are more than 15,000 families out there who fear that the long tradition of cabin-based forest recreation is nearing an end because the agencies fee mechanism has made the program unaffordable for all but the wealthy. These cabin owners and I would wholeheartedly welcome the support and cosponsorship of all Senators for this important legislation. I ask unanimous consent that a copy of the legislation be printed in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 1938 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 ``Fair Cabin User Fee Act of 1999''. SEC. 2. FINDINGS. Congress finds that-- (1) the recreation residence program is-- (A) a valid use of forest land and 1 of the multiple uses of the National Forest System; and (B) an important component of the recreation program of the Forest Service; (2) cabins located on forest land have provided a unique recreation experience to a large number of cabin owners, their families, and guests each year since Congress authorized the recreation residence program in 1915; (3) tract associations, cabin owners, their extended families, guests, and others that regularly use and enjoy forest cabin tracts have contributed significantly toward efficient management of the program and the stewardship of forest land; (4) cabin user fees have traditionally generated income to the Federal Government in amounts significantly greater than the Federal cost of administering the program; (5) the rights and privileges granted to owners of cabins authorized under the program have steadily diminished while regulatory restrictions and fees charged under the program have steadily increased; and (6) the current fee determination procedure has been shown to incorrectly reflect market value and value of use. SEC. 3. PURPOSES. The purposes of this Act are-- (1) to ensure, to the maximum extent practicable, that the National Forest System recreation residence program is managed to preserve the opportunity for individual and family-oriented recreation at a reasonable cost; and (2) to develop and implement a more efficient, cost- effective procedure for determining cabin user fees that better reflects the probable value of that use by the cabin owner, taking into consideration the limitations of the authorization and other relevant market factors. [[Page S14698]] SEC. 4. DEFINITIONS. In this Act: (1) Agency.--The term ``agency'' means the Forest Service. (2) Authorization.--The term ``authorization'' means a special use permit for the use and occupancy of National Forest System land by a cabin owner under the authority of the program. (3) Base cabin user fee.--The term ``base cabin user fee'' means the initial fee for an authorization that results from the appraisal of a lot in accordance with sections 6 and 7. (4) Cabin.--The term ``cabin'' means a privately built and owned structure authorized for use and occupancy on National Forest System land. (5) Cabin user fee.--The term ``cabin user fee'' means a special use fee paid annually by a cabin owner to the Secretary in accordance with this Act. (6) Cabin owner.--The term ``cabin owner'' means-- (A) a person authorized by the agency to use and to occupy a cabin on National Forest System land; and (B) an heir or assign of such a person. (7) Caretaker cabin.--The term ``caretaker cabin'' means a caretaker residence occupied in limited cases in which caretaker services are necessary to maintain the security of a tract. (8) Center.--The term ``Center'' means the Federal Center for Dispute Resolution of the American Arbitration Association. (9) Current cabin user fee.--The term ``current cabin user fee'' means the most recent cabin user fee that results from an annual adjustment to the base cabin user fee in accordance with section 8. (10) Lot.--The term ``lot'' means a parcel of land of the National Forest System on which a cabin owner is authorized to build, use, occupy, and maintain a cabin and related improvements. (11) Program.--The term ``program'' means the recreation residence program established under the Act of March 4, 1915 (38 Stat. 1101, chapter 144). (12) Secretary.--The term ``Secretary'' means the Secretary of Agriculture, acting through the Chief of the Forest Service. (13) Tract.--The term ``tract'' means an established location within a National Forest containing 1 or more cabins authorized in accordance with the program. (14) Tract association.--The term ``tract association'' means a cabin owner association in which all cabin owners within a tract are eligible for membership. SEC. 5. ADMINISTRATION OF RECREATION RESIDENCE PROGRAM. (a) In General.--The Secretary shall ensure, to the maximum extent practicable, that the basis and procedure for calculating cabin user fees results in a reasonable and fair fee for an authorization that reflects the probable value of the use and occupancy of a lot to the cabin owner in accordance with subsection (b). (b) Determination of Value.--The value of the use and occupancy of a lot referred to in subsection (a)-- (1) shall not be equivalent to a rental fee of the lot; and (2) shall reflect regional economic influences, as determined by an appraisal of the value of use of the National Forest in which the lot is located. SEC. 6. APPRAISALS. (a) Requirements for Conducting Appraisals.--In implementing and conducting an appraisal process for determining cabin user fees, the Secretary shall-- (1) establish an appraisal process to determine the value of the fee simple estate of a typical lot or lots within a tract, with adjustments to reflect limitations arising from the authorization and special use permit; (2) enter into a contract with an appropriate professional organization for the development of specific appraisal guidelines in accordance with subsection (b), subject to public comment and congressional review; (3) require that an appraisal be performed by a State- certified general real estate appraiser, selected by the Secretary and licensed to practice in the State in which the lot is located; (4) provide the appraiser with-- (A) appraisal guidelines developed in accordance with this Act; and (B) a copy of the special use permit associated with the typical lot to be appraised, with an instruction to the appraiser to consider any prohibitions or limitations contained in the authorization; (5) notwithstanding any other provision of law, require the appraiser to coordinate the assignment closely with affected parties by seeking advice, cooperation, and information from cabin owners and tract associations; (6) require that the appraiser perform the appraisal in compliance with-- (A) the most current edition of the Uniform Standards of Professional Appraisal Practice on the date of the appraisal; (B) the most current edition of the Uniform Appraisal Standards for Federal Land Acquisitions on the date of the appraisal; and (C) the specific appraisal guidelines developed in accordance with this Act; (7) require that the appraisal report be a self-contained report (as defined by the Uniform Standards of Professional Appraisal Practice); (8) require that the appraisal report comply with the reporting guidelines established by the Uniform Appraisal Standards for Federal Land Acquisitions; and (9) before accepting any appraisal, conduct a review of the appraisal to ensure that the guidelines made available to the appraiser have been followed and that the appraised values are properly supported. (b) Specific Appraisal Guidelines.--In the development of specific appraisal guidelines in accordance with paragraph (a)(2), the instructions to an appraiser shall require, at a minimum, the following: (1) Appraisal of a typical lot.-- (A) In general.--In conducting an appraisal under this paragraph, the appraiser shall appraise a typical lot or lots within a tract that are selected by the cabin owners and the agency in a manner consistent with the policy of the program. (B) Appraisal.--In appraising a typical lot or lots within a tract, the appraiser shall-- (i) consult with affected cabin owners; and (ii) appraise the typical lot or lots selected for purposes of comparison with other lots or groups of lots in the tract having similar value characteristics (rather than appraising each individual lot). (B) Estimate of market value of typical lot.-- (i) In general.--The appraiser shall estimate the market value of a typical lot as a parcel of undeveloped, raw land that has been made available for use and occupancy by the cabin owner on a seasonal or periodic basis. (ii) No equivalence to legally subdivided lot.--The appraiser shall not appraise the typical lot as being equivalent to a legally subdivided lot. (2) Requirement for analysis of comparable sales.--The appraisal shall be based on a prioritized analysis of 1 or more categories of sales of comparable land as follows: (A) Larger parcels.--Sales of larger, privately-owned, and preferably unimproved parcels of rural land, generally similar in size to the tract being examined, shall be given the most weight in the analysis. (B) Smaller parcels.--Sales of smaller, privately-owned, and preferably unimproved parcels of rural land that are not part of an established subdivision shall be given secondary weight in the analysis. (C) Mapped and recorded parcels.--Sales of privately-owned parcels in a mapped and recorded rural subdivision shall be given the least weight in the analysis. (3) Exception for certain sales of land.--In conducting an analysis under paragraph (2), the appraiser shall select sales of comparable land that are outside the area of influence of-- (A) land affected by urban growth boundaries; (B) land for which a government or institution holds a conservation or recreational easement; or (C) land designated for conservation or recreational purposes by Congress, a State, or a political subdivision of a State. (4) Adjustments for typical value influences.-- (A) In general.--The appraiser shall consider and adjust the price of sales of comparable land for all typical value influences described in subparagraph (B). (B) Value influences.--The typical value influences referred to in subparagraph (A) include-- (i) differences in the locations of the parcels; (ii) accessibility, including limitations on access attributable to-- (I) weather; (II) the condition of roads or trails; or (III) other factors; (iii) the presence of marketable timber; (iv) limitations on, or the absence of, services such as law enforcement, fire control, road maintenance, or snow plowing; (v) the condition and regulatory compliance of any site improvements; and (vi) any other typical value influences described in standard appraisal literature. (5) Adjustments for restrictions on use.--In evaluating the sale of a comparable fee simple parcel, an adjustment to the sale price of the parcel shall be made to reflect the influence of prohibitions or limitations on use or benefits imposed by the agency that affect the value of the subject cabin lot, including-- (A) any prohibition against year-round use and occupancy or any other restriction that limits or reduces the type or amount of cabin use and occupancy; (B) any limitation on the right of the cabin owner to sell, lease, or rent the cabin without restrictions imposed by the Secretary; (C) any limitation on, or prohibition against, improvements to the lot, such as remodeling or enlargement of the cabin, construction of additional structures, landscaping, signs, fencing, clothes drying lines, mail boxes, swimming pools, or other recreational facilities; and (D) any limitation on, or prohibition against, use of the lot for placement of amenities such as playground equipment, domestic livestock, recreational vehicles, or boats. (6) Adjustments to sales of comparable parcels.-- (A) In general.-- (i) Utilities provided by agency.--Only utilities (such as water, sewer, electricity, or telephone) or access roads or trails that are clearly established as of the date of the appraisal as having been provided and maintained by the agency at a lot shall be included in the appraisal. (ii) Features provided by cabin owner.--All cabin facilities, decks, docks, patios, and [[Page S14699]] other nonnatural features (including utilities or access)-- (I) shall be presumed to have been provided by, or funded by, the cabin owner; and (II) shall be excluded from the appraisal by adjusting any comparable sales with the nonnatural features referred to in subparagraph (B)(ii). (iii) Withdrawal of utility or access by agency.--If, during the term of an authorization, the agency makes a substantial and materially adverse change in the provision or maintenance of any utility or access, the cabin owner shall have the right to request and obtain a new determination of the base cabin user fee at the expense of the agency. (B) Adjustment for improvements.-- (i) In general.--The appraiser shall consider and adjust the price of each sale of a comparable parcel for all nonnatural features referred to in subparagraph (A)(ii) that-- (I) are present at, or add value to, the parcel; but (II) are not present at the lot being appraised or not included in the appraisal under subparagraph (A). (ii) Adjustments.--An adjustment to the price of a parcel sold under this subparagraph shall include allowances for matters such as-- (I) depreciated current replacement costs of installing nonnatural features referred to in clause (i) at the typical lot being appraised, including an allowance for entrepreneurial profit and overhead; (II) likely construction difficulties for nonnatural features referred to in clause (i) at the lot being appraised; and (III) the deduction in price that would be taken in the market as a risk allowance if-- (aa) a parcel does not have adequate access or adequate sewer or water systems; and (bb) there is a risk of failure or material cost overruns in attempting to provide the systems referred to in item (aa). (C) Reappraisal for and recalculation of base cabin user fee.--Periodically, but not less often than once every 10 years, the Secretary shall recalculate the base cabin user fee (including conducting any reappraisal required to recalculate the base cabin user fee). SEC. 7. CABIN USER FEES. (a) In General.--The Secretary shall establish the cabin user fee as the amount that is equal to 5 percent of the value of the lot, as determined in accordance with section 6, reflecting an adjustment to the market rate of return based solely on-- (1) the limited term of the authorization; (2) the absence of significant property rights normally attached to fee simple ownership; and (3) the public right of access to, and use of, any open portion of the lot on which the cabin or other enclosed improvements are not located. (b) Fee for Caretaker Residences.--The base cabin user fee for a lot on which a caretaker residence is located shall not be greater than the base cabin user fee charged for the authorized use of a similar typical lot in the tract. (c) Annual Cabin User Fee in the Event of Determination Not To Reissue Authorization.--If the Secretary determines that an authorization should not be reissued at the end of a term, the Secretary shall-- (1) establish as the new base cabin user fee for the remaining term of the authorization the amount charged as the cabin user fee in the year that was 10 years before the year in which the authorization expires; and (2) calculate the current cabin user fee for each of the remaining 9 years of the term of the authorization by multiplying-- (i) \1/10\ of the new base cabin user fee; by (ii) the number of years remaining in the term of the authorization after the year for which the cabin user fee is being calculated. (d) Annual Cabin User Fee in Event of Changed Conditions.-- If a review of a decision to convert a lot to an alternative public use indicates that the continuation of the authorization for use and occupancy of the cabin by the cabin owner is warranted, and the decision is subsequently reversed, the Secretary may require the cabin owner to pay any portion of annual cabin user fees, as calculated in accordance with subsection (d), that were forgone as a result of the expectation of termination of use and occupancy of the cabin by the cabin owner. (e) Termination of Fee Obligation in Loss Resulting From Acts of God or Catastrophic Events.--On a determination by the agency that, due to an act of God or a catastrophic event, a lot cannot be safely occupied and that the authorization for the lot should accordingly be terminated, the fee obligation of the cabin owner shall terminate effective on the date of the occurrence of the act or event. SEC. 8. ANNUAL ADJUSTMENT OF CABIN USER FEE. (a) In General.--The Secretary shall adjust the cabin user fee annually, using a rolling 5-year average of a published price index in accordance with subsection (b) or (c) that reports changes in rural or similar land values in the State, county, or market area in which the lot is located. (b) Initial Index.-- (1) In general.--For the period of 10 years beginning on the date of enactment of this Act, the Secretary shall use changes in agricultural land prices in the appropriate State or county, as reported in the Index of Agricultural Land Prices published by the Department of Agriculture, to determine the annual adjustment to the cabin user fee in accordance with subsections (a) and (d). (2) Statewide changes.--In determining the annual adjustment to the cabin user fee for an authorization located in a county in which agricultural land prices are influenced by the factors described in section 6(b)(3), the Secretary shall use average statewide changes in the State in which the lot is located. (c) New Index.-- (1) In general.--Not later than 10 years after the date of enactment of this Act, the Secretary may select and use an index other than the index described in subsection (b)(2) to adjust a cabin user fee if the Secretary determines that a different index better reflects change in the value of a lot over time. (2) Selection process.--Before selecting a new index, the Secretary shall-- (A) solicit and consider comments from the public; and (B) not later than 60 days before the date on which the Secretary makes a final index selection, submit any proposed selection of a new index to-- (i) the Committee on Resources of the House of Representatives; and (ii) the Committee on Energy and Natural Resources of the Senate. (d) Limitation.--In calculating an annual adjustment to the base cabin user fee, the Secretary shall-- (1) limit any annual fee adjustment to an amount that is not more than 5 percent per year when the change in agricultural land values exceeds 5 percent in any 1 year; and (2) apply the amount of any adjustment that exceeds 5 percent to the annual fee payment for the next year in which the change in the index factor is less than 5 percent. SEC. 9. PAYMENT OF CABIN USER FEES. (a) Due Date for Payment of Fees.--A cabin user fee shall be paid or prepaid annually by the cabin owner on a monthly, quarterly, annual, or other schedule, as determined by the Secretary. (b) Payment of Equal or Lesser Fee.--If, in accordance with section 7, the Secretary determines that the amount of a new base cabin user fee is equal to or less than the current base cabin user fee, the Secretary shall require payment of the new base cabin user fee by the cabin owner in accordance with subsection (a). (c) Payment of Greater Fee.--If, in accordance with section 7, the Secretary determines that the amount of a new base cabin user fee is greater than the current base cabin user fee, the Secretary shall-- (1) require full payment of the new base cabin user fee in the first year following completion of the fee determination procedure if the increase in the amount of the new base cabin user fee is not more than 100 percent of the most recently paid cabin user fee; or (2) phase in the increase over the current cabin user fee in approximately equal increments over 3 years if the increase in the amount of the new base cabin user fee is greater than 100 percent of the most recently paid base cabin user fee. (d) Requirement for Payment During Arbitration, Appeal, or Judicial Review.--If arbitration, an appeal, or judicial review concerning a cabin user fee is brought in accordance with section 11 or 12, the Secretary shall-- (1) suspend annual payment by the cabin owner of any increase in the cabin user fee, pending completion of the arbitration, appeal, or judicial review; and (2) make any adjustments, as necessary, that result from the findings of the arbitration, appeal, or judicial review by providing to the cabin owner-- (A)(i) a credit toward future cabin user fee payments; or (ii) a refund for any overpayment of the cabin user fee; and (B) a supplemental billing for any additional amount of the cabin user fee that is due. SEC. 10. RIGHT OF SECOND APPRAISAL. (a) Right of Second Appraisal.--On receipt of notice from the Secretary of the determination of a new base cabin user fee, the cabin owner-- (1) not later than 60 days after the date on which the notice is received, shall notify the Secretary of the intent of the cabin owner to obtain a second appraisal; and (2) may obtain, within 1 year following the date of receipt of the notice under this subsection, at the expense of the cabin owner, a second appraisal of the typical lot on which the initial appraisal was conducted. (b) Conduct of Second Appraisal.--In conducting a second appraisal, the appraiser selected by the cabin owner shall-- (1) consider all relevant factors in accordance with this Act (including guidelines developed under section 6(a)(2)); and (2) notify the Secretary of any material differences of fact or opinion between the initial appraisal conducted by the agency and the second appraisal. (c) Request for Reconsideration of Base Cabin User Fee.--A cabin owner shall submit to the Secretary any request for reconsideration of the base cabin user fee, based on the results of the second appraisal, not later than 60 days after the receipt of the report for a second appraisal. (d) Reconsideration of Base Cabin User Fee.--On receipt of a request from the cabin owner under subsection (c) for reconsideration of a base cabin user fee, not later than 60 days after the date of receipt of the request, the Secretary shall-- [[Page S14700]] (1) review the initial appraisal of the agency; (2) review the results and commentary from the second appraisal; (3) determine a new base cabin user fee in an amount that is-- (A) equal to the fee determined by the initial or the second appraisal; or (B) within the range of values, if any, between the initial and second appraisals; and (4) notify the cabin owner of the amount of the new base cabin fee. SEC. 11. RIGHT OF ARBITRATION. (a) In General.-- (1) Request for arbitration.--Not later than 30 days after the receipt of notice of a new base cabin fee under section 10(d)(4), the tract association may request arbitration if a cabin owner in the tract and the Secretary are unable to reach agreement on the amount of the base cabin user fee determined in accordance with section 10. (2) Identification of Third-Party Neutrals.--If arbitration is requested under paragraph (1), the Secretary shall promptly request the Center to develop a list of the names of not fewer than 20 appraisers and 10 attorneys who possess appropriate training and experience in valuations of land and interest in land to serve as qualified third-party neutrals. (b) Arbitration.--Not later than 30 days after the receipt of a request from the tract association for arbitration, the Secretary shall-- (1) notify the Center of the request; and (2) request the Center to provide to the Secretary and the tract association, within 15 days-- (A) instructions related to arbitration procedures; and (B) the list of qualified third-party neutrals described in subsection (a)(2). (c) Arbitration Panel.-- (1) In general.--Not later than 15 days after the receipt of the list described in subsection (a)(2), the Secretary and the tract association may each recommend the names of 2 appraisers and 1 attorney from the list for consideration in the selection of an arbitration panel by the Center. (2) Availability of list.--The Secretary and the tract association shall disclose to each other the names of third- party neutrals recommended under paragraph (1). (3) Option to eliminate recommended neutrals.--The Secretary and the tract association may each peremptorily eliminate from consideration for the arbitration panel 1 third-party neutral recommended under paragraph (1). (4) Selection by center.--From the third-party neutrals recommended to the Center under paragraph (1) that are not eliminated from consideration under paragraph (3), the Center shall select and retain an arbitration panel consisting of 2 appraisers and 1 attorney. (5) Notification of establishment.--Not later than 5 days after the selection of members of the arbitration panel, the Center shall notify the Secretary and the tract association of the establishment of the arbitration panel. (d) Arbitration Procedure.-- (1) Submission of information.--Not later than 30 days after notification by the Center of the establishment of the arbitration panel under subsection (c)(3), each party shall submit to the arbitration panel-- (A) the appraisal report of each party, including comments, if any, of material differences of fact or opinion related to the initial appraisal or the second appraisal; (B) a copy of the authorization associated with any typical lot that was subject to appraisal; (C) a copy of this Act; and (D) a copy of appraisal guidelines developed in accordance with section 6(a)(2). (2) Hearing or field inspection.--On agreement of both parties, the arbitration may be conducted without a hearing or a field inspection. (3) Schedule for decision.-- (A) In general.--Except as provided in subparagraph (B), not later than 60 days after the receipt of all materials described in paragraph (1), the arbitration panel shall prepare and forward to the Secretary a written advisory decision on the appropriate amount of the base cabin user fee. (B) Extension.--If the arbitration panel or the parties to the arbitration determine that a hearing or field inspection is necessary, the date for submission of the advisory decision under subparagraph (A) shall be extended for-- (i) not more than 30 days; or (ii) in the case of difficult or hazardous road or weather conditions, such an additional period of time as is necessary to complete the inspection. (4) Determination of recommended base cabin user fee.--The base cabin user fee recommended by the arbitration panel shall fall within the range of values, if any, between the initial and second appraisals submitted to the arbitration panel by the parties. (e) Adoption of Recommended Base Cabin User Fee.-- (1) In general.--Not later than 45 days after the receipt of the recommendation by the arbitration panel, the Secretary shall make a determination to adopt or reject the recommended base cabin user fee. (2) Notice to tract association.--Not later than 15 days after making the determination under paragraph (1), the Secretary shall provide notice of the determination to the tract association. (f) No Admission of Fact or Recommendation.--Neither the fact that arbitration in accordance with this section has occurred, nor the recommendation of the arbitration panel, shall be admissible in any court or administrative proceeding. (g) Costs of Arbitration.-- (1) Fees.-- (A) In general.--In addition to amounts collected under paragraph (2), the Center may charge a reasonable fee to each party to an arbitration under this Act for the provision of arbitration services. (B) Transfer.--Fees collected under this paragraph shall be transferred to the Secretary for use in the administration of the program without further Act of appropriation. (2) Cost sharing.--The agency and the tract association shall each pay 50 percent of the costs incurred by the Center in establishing and administering an arbitration in accordance with this section, unless the arbitration panel recommends that either the agency or the tract association bear the entire cost of establishing and administering the arbitration. (h) Funding.-- (1) Authorization of appropriations for initial costs.-- There is authorized to be appropriated to the agency for the initial costs of establishing and administering the program not to exceed $15,000. (2) Arbitration fees.--Any amounts exceeding the amount authorized by paragraph (1) that are required for the administration of the program shall be derived from arbitration fees charged under subsection (g)(1). SEC. 12. RIGHT OF APPEAL AND JUDICIAL REVIEW. (a) Rights of Appeal.--Notwithstanding any action of a cabin owner to exercise rights in accordance with section 10 or 11, the Secretary shall by regulation grant the cabin owner the right to an administrative appeal of the determination of a new base cabin user fee. (b) Judicial Review.--A cabin owner that is adversely affected by a final decision of the Secretary under this Act may commence a civil action in United States district court. SEC. 13. CONSISTENCY WITH OTHER LAW AND RIGHTS. (a) Consistency With Rights of the United States.--Nothing in this Act limits or restricts any right, title, or interest of the United States in or to any land or resource. (b) Special Rule for Alaska.--In determining a cabin user fee in the State of Alaska, the Secretary shall not establish or impose a cabin fee or a condition affecting a cabin fee that is inconsistent with the requirements under section 1303(d) of the Alaska National Interest Lands Conservation Act (16 U.S.C. 3193(d)). SEC. 14. REGULATIONS. Not later than 1 year after the date of enactment of this Act, the Secretary shall promulgate regulations to implement this Act. SEC. 15. TRANSITION PROVISIONS. (a) In General.--On enactment of this Act, the Secretary shall-- (1) suspend appraisal activities related to existing authorizations until new rules, policies, and procedures are promulgated in accordance with this Act; and (2) temporarily charge an annual cabin user fee for each lot that is-- (A) an amount equal to the cabin user fee for the lot that was in effect on September 30, 1995, adjusted by application of the Implicit Price Deflator-Gross National Product Index, if no appraisal of the lot on which the cabin is located was completed after that date and before the date of enactment of this Act; (B) an amount that is not more than 100 percent greater than the cabin user fee in effect on September 30, 1995, adjusted by application of the Implicit Price Deflator-Gross National Product Index prior to reappraisal, if an appraisal conducted after that date but before the date of enactment of this Act resulted in the increase; or (C) the cabin user fee in effect on the date of enactment of this Act, if an appraisal conducted after September 30, 1995, including adjustments resulting from application of the Implicit Price Deflator-Gross National Product Index before the date of enactment of this Act, resulted a base cabin user fee that is not greater than the fee in effect before the appraisal. (b) Conduct of Appraisals Under New Law.--On publication of new rules, policies, and procedures under this Act, the Secretary shall carry out any appraisals of lots and determinations of fees that were not completed between September 30, 1995, and the date of enactment of this Act. (c) Request for New Appraisal Under New Law.--Not later than 2 years after the promulgation of final regulations and policies and the development of appraisal guidelines in accordance with section 6(a)(2), a cabin owner whose base cabin user fee was adjusted subject to an appraisal completed after September 30, 1995, but before the date of enactment of this Act, may request that the Secretary conduct a new appraisal and determine a new fee in accordance with this Act. (d) Conduct of New Appraisal.--On receiving a request under subsection (c), the Secretary shall conduct, and bear all costs incurred in conducting, a new appraisal and fee determination in accordance with this Act. (e) Assumption of New Base Cabin User Fee.--In the absence of a request under subsection (c) for a new appraisal and fee determination from a cabin owner whose cabin [[Page S14701]] user fee was determined as a result of an appraisal conducted after September 30, 1995, but before the date of enactment of this Act, the Secretary may consider the base cabin user fee resulting from the appraisal conducted between September 30, 1995, and the date of enactment of this Act to be the base cabin user fee that complies with the transition provisions of this Act. (f) Transitional Cabin User Fee Obligation.-- (1) In general.--In determining the liability of the cabin owner for payment of fees for the period of time between the date of enactment of this Act and the determination of a base cabin user fee in accordance with this Act, the Secretary shall-- (A) require the cabin owner to remit any balance owed for any underpayment of an annual cabin user fee; or (B) if an overpayment of a cabin user fee has occurred, credit the cabin owner, or an heir or assign of the cabin owner, toward future cabin user fee obligations. (2) Billing.--The agency shall bill a cabin owner for amounts determined to be owed under paragraph (1)(A) in approximately equal increments over 3 years. ______ By Mr. LEAHY (for himself, Mr. Brownback, Mr. Feingold, Mr. Kennedy, Mr. Kerry, Mr. Jeffords, and Mr. Lautenberg): S. 1940. A bill to amend the Immigration and Nationality Act to reaffirm the United States' historic commitment to protecting refugees who are fleeing persecution or torture; to the Committee on the Judiciary. the refugee protection act Mr. LEAHY. Mr. President, today Senators Brownback, Feingold, Kennedy, Kerry, Jeffords, and I are introducing the Refugee Protection Act of 1999, a bill to limit and reform the expedited removal system currently operating in our ports of entry. In 1996, I introduced an amendment that would have only authorized the use of expedited removal at times of immigration emergencies. The bill I introduce today--with the cosponsorship of two Republican and three Democratic Senators--is modeled on that proposal. That amendment passed the Senate with bipartisan support, but was omitted from the bill that was reported out of a partisan, closed conference. As a result, expedited removal took effect on April 1, 1997. America's historic reputation as a beacon for refugees has suffered as a consequence. Expedited removal allows INS inspections officers summarily to remove aliens who arrive in the United States without travel documents, or even with facially valid travel documents that the officers merely suspect are fraudulent, unless the aliens utter the magic words ``political asylum'' upon their first meeting with American immigration authorities. This policy is fundamentally unwise and unfair, both in theory and in practice. First, this policy ignores the fact that many deserving asylum applicants are forced to travel without papers. For example, victims of repressive governments often find themselves forced to flee their homelands at a moment's notice, without time or means to acquire proper documentation. Or a government may systematically strip refugees of their documentation, as we saw Serb soldiers do in Kosovo earlier this year. Second, expedited removal places an undue burden on refugees, and places too much authority in the hands of low-level INS officers. Refugees typically arrive at our borders ragged and tired from their ordeals, and often with little or no knowledge of English. Our policy forces them to undergo a secondary inspection interview with a low- level INS officer who can deport them on the spot, subject only to a supervisor's approval. By law, anyone who indicates a fear of persecution or requests asylum during this interview is to be referred for an interview with an asylum officer. But no safeguards exist to guarantee that this happens, and the secondary inspection interviews take place behind closed doors with no witnesses. Indeed, this interview often becomes unduly confrontation and intimidating. As the Lawyers Committee for Human Rights has documented, refugees are detained for as long as 36 hours, are deprived of food and water, and are often shackled. If they are lucky, they will be provided with an interpreter who speaks their language. If they are unlucky, they will receive no interpreter at all, or an interpreter who works for the airline owned by the government that they claim is persecuting them. Such a system is a betrayal of our ideals, and is already producing a human cost. Indeed, only a few years into this new regime, there are extraordinary troubling stories of bona fide refugees who were turned away unjustly at our borders. I will talk about two such refugees today. ``Dem'' (a pseudonym) was a 21-year-old ethnic Albanian student in Kosovo. In October 1998, Serbian police seized him and tortured him for 10 days, accusing him of terrorism and threatening to kill his family. Immediately after this experience, Dem fled Kosovo, without travel documents. He traveled through Albania to Italy, where he purchased a Slovenian passport. In January of this year, he flew via Mexico City to California, hoping to find refuge in the United States. Dem's hopes were not realized. The INS referred him for a secondary inspection interview and provided for a Serbian translator to participate by telephone. Since Dem could speak only Albanian, the interpreter was useless. Instead of finding an interpreter who could speak Albanian, the INS officers simply closed Dem's case, handcuffed his hands behind his back and put him on a plane back to Mexico City. In other words, Dem--a victim of an ethnic conflict that was already front page news in America's newspapers--was removed from the United States without ever being asked in a language he could understand whether he was afraid to return to Kosovo. Luckily, Dem succeeded in a second attempt to enter the United States, has since been found to have a credible fear of persecution, and is now awaiting an asylum hearing. One can only wonder how many refugees in Dem's position never receive such a second chance. While Dem was arriving in Los Angeles this January, a Tamil from Sri Lanka named Arumugam Thevakumar arrived at JFK Airport in New York seeking asylum. Mr. Thevakumar had escaped from Sri Lanka and its bloody civil war, but only after being persecuted by the army because he is a Tamil. When he had his secondary inspection interview, he told the interpreter that he was a refugee and sought asylum. The translator laughed and said that he was unable to translate Mr. Thevakumar's request into English. In addition to battling a language barrier and an uncooperative translator, Mr. Thevakumar's ability to convince the INS of his sincerity was further handicapped by the fact that he was handcuffed and shackled for significant portions of the interview. Following his interview, Mr. Thevakumar was briefly detained and was allowed to telephone a cousin, who arranged for a lawyer. The lawyer contacted the INS to clarify that Mr. Thevakumar wanted to apply for asylum. But the INS sent Mr. Thevakumar back to Istanbul, where his flight to New York had originated, without affording him even the opportunity to show that he was deserving of asylum. Indeed, the INS faulted him for not making his intention to apply for asylum clear during his secondary inspection interview. Mr. Thevakumar's ordeal did not end there. When he landed in Turkey, he was jailed for four days by immigration officials, who beat and interrogated him before handing him over to regular police. When he was finally released by the police, he was referred to a United Nations office in Ankara, halfway across the country from Istanbul. After 15 days of travel wearing clothes that were completely unsuitable for the Turkish winter, he finally arrived at the U.N. office and requested refugee status and asked not to be sent back to Sri Lanka. He is currently living in a Red Cross facility in Turkey. These stories--just two of the many stories demonstrating the human cost of expedited removal--go a long way toward showing the inhumanity of the new immigration regime that Congress imposed in 1996. But refugees are not the only people affected by expedited removal. Human rights groups have also documented numerous cases where people traveling to the United States on business, with proper travel documents, have been removed based on the so-called ``sixth sense'' of a low-level INS officer who suspected that their facially valid documents were fraudulent. In other words, the damage done by expedited removal also threatens the increasingly international American economy--if businesspeople from [[Page S14702]] around the world are treated disrespectfully at our ports of entry, they are likely to take their business elsewhere. But perhaps the most distressing part of expedited removal is that there is no way for us to know how many deserving refugees have been excluded. Because secondary inspection interviews are conducted in secret, we typically only learn about mistakes when refugees manage to make it back to the U.S. a second time, like Dem, or when they are deported to a third country they passed through on their way to the U.S., like Mr. Thevakumar. This uncertainty should lead us to be especially wary of continuing this failed experiment. As I said, my bill would limit the use of expedited removal to times of immigration emergencies, defined as the arrival or imminent arrival of aliens that would substantially exceed the INS' ability to control our borders. The bill gives the Attorney General the discretion to declare an emergency migration situation, and the declaration is good for 90 days. During those 90 days, the INS would be authorized to use expedited removal. The Attorney General is given the power to extend the declaration for further periods of 90 days, in consultation with the House and Senate Judiciary Committees. s This framework allows the government to take extraordinary steps when a true immigration emergency threatens our ability to patrol our borders. At the same time, it recognizes that expedited removal is an extraordinary step, and is not an appropriate measure under ordinary circumstances. This bill also provides safeguards that will ensure that refugees are assured of some due process rights, even during immigration emergencies. First, aliens would be given the right to have an immigration judge review a removal order, and would have the right both to speak before the immigration judge on their own behalf and to be represented at the hearing at their own expense. To make these rights meaningful, immigration officers would be required to inform aliens of their rights before they are removed or withdraw their application to enter the country. This provision takes away from low-level INS officers the unilateral power to remove an alien from the United States. Second, expedited removal will not apply to aliens who have fled from a country that engages in serious human rights violations. The Attorney General, in consultation with the Assistant Secretary of State for Democracy, Human Rights, and Labor, will develop and maintain a list of such countries. This will help ensure that even during an immigration emergency, we will provide added protection for many of our most vulnerable refugees. Third, this bill reforms the procedures used to determine whether an applicant who seeks asylum has a credible fear of persecution. If an asylum officer determines that an applicant does not have a credible fear of persecution, the applicant will now have a right to a prompt review by an immigration judge. The applicant will have the right to appear at that review hearing and to be represented, at the applicant's expense. In addition to providing procedural guarantees, the bill also redefines ``credible fear of persecution'' as a claim for asylum that is not clearly fraudulent and is related to the criteria for granting asylum. In combination, these changes will make it easier for aliens requesting asylum in the United States to receive an appropriate asylum hearing before an immigrant judge. Fourth, the bill clarifies that the Attorney General is not obligated to detain asylum applicants while their claims are pending. Asylum seekers are not criminals and they do not deserve to be imprisoned or detained against their will. There may be cases where detention is appropriate, and this bill allows for such cases, but I believe that that power should only be used in very rare cases. After all, these applicants have by definition demonstrated a credible fear of persecution. Moreover, detaining asylum applicants imposes a significant burden on the taxpayers, who of course must foot the bill for the detention. This bill also gives the Attorney General the ability to release an asylum applicant from detention pending a final determination of credible fear of persecution. Finally, this Refugee Protection Act also addresses a few other problems that have arisen under the restrictive immigration laws Congress passed in 1996. First, it gives aliens the opportunity to demonstrate good cause for filing for asylum after the one-year time limit for claims has expired. By definition, worthy asylum applicants have arrived in the United States following traumatic experiences abroad. They often must spend their first months here learning the language and adjusting to a culture that in many cases is extraordinarily different from the one they know. Therefore, although I can understand the desire to have asylum seekers submit timely applications, we must apply the one-year rule with some discretion and common sense. Indeed, when the Senate passed the 1996 immigration law, it contained a broad ``good cause'' exception that did not survive to become part of the final legislation. The Senate should take up this issue again; we were right in 1996, and the need is still there today. In a similar vein, the bill allows asylum applicants whose claims have been rejected to submit a second application where they can show good cause. No one wants to allow aliens to submit repeated applications and drain the resources of our INS officers and immigration courts. But there are exceptional cases where a second application is justified, beyond the ``changed circumstances'' exception that exists under current law. For example, extraordinarily worthy asylum applicants, unfamiliar with the United States and its legal system, might submit an application without the benefit of counsel and without an understanding of the legal requirements of a successful asylum claim. Such people deserve a second chance to demonstrate that they deserve to receive asylum. In conclusion, I point out that even in 1996, a year in which immigration was as unpopular in this Capitol as I can remember, this body agreed that expedited removal was inappropriate for a country of our ideals and our historic commitment to human rights. And that agreement cut across party lines, as many of my Republican colleagues voted to implement expedited removal only in times of immigration emergencies. I urge them, as well as my fellow Democrats, to support this legislation and to work for its passage before the end of the 106th Congress. Mr. BROWNBACK. Mr. President, I join my distinguished colleagues from Vermont, Senator Leahy and Senator Jeffords, among others, to introduce this bill entitled The Refugee Protection Act of 1999, which restores fairness to our treatment of refugees who arrive at our shores seeking freedom from persecution and oppression. This bill should dramatically reduce incidences where refugees are wrongly returned to their countries to face imprisonment, torture, and even death. It was about 400 years when the refugee Pilgrims arrived in this new land seeking religious liberty. Defined by such events since the earliest days of the Republic, America has provided asylum to those fleeing tyranny and seeking liberty. George Washington urged his fellow citizens ``to render this country more and more a safe and propitious asylum for the unfortunates of other countries.'' In his 1801 First Annual Message, President Thomas Jefferson asked, ``Shall oppressed humanity find no asylum on this globe?'' In 1996, Congress changed the procedures by which arriving asylum seekers ask for protection in the United States, which our legislation corrects. Previously, arriving asylum seekers presented their claims directly to an immigration judge at an evidentiary hearing. The applicant could present witnesses and documentation to support their claim. Decisions by the immigration judge were subject to administrative and judicial review. The new 1996 law did away with these fundamental due process protections, and instead, granted lower level INS officers the power to make life and death decisions that previously were entrusted to professional immigration judges. This new, unfortunate system of ``expedited removal'' presently allows for the immediate deportation of individuals who arrive without valid travel documents, such as a passport and visa. It can even be used against an individual who has a facially valid visa that INS inspectors suspect was obtained under false pretenses. In short, [[Page S14703]] the process is so expedited and summary that it has resulted in the improper deportation of refugees fleeing persecution and torture. Simply put, our legislation restores the pre-1996 due process procedures, including a judicial review. Last year, Congress addressed the problems of religious persecution which continues to be a serious problem worldwide. Enactment of the International Religious Freedom Act was the first time in the history of democracy that any country had adopted comprehensive, national legislation on religious liberty. That legislation ensures that religious liberty will be an important factor in our nation's foreign policy considerations. In the May 17, 1999 final report to the Secretary of State and to President of the United States, the Advisory Committee on Religious Freedom Abroad said: Putting an end to such (religious) persecution cannot be accomplished without providing meaningful protection to the victims of religious persecution. We must upgrade domestic procedures that identify and protect refugees and asylum seekers fleeing religious persecution. We must strengthen our overseas refugee processing mechanisms to reach those in need of rescue. . . And, here at home we must eliminate processes such as ``expedited removal'' that can make victims of those fleeing religious persecution rather than providing access to protection. Consistent with this commitment to protect international religious liberty, we must also ensure that persons fleeing religious persecution are not wrongly turned away at our shores because of unfair procedures. This will be accomplished through this Act. The Refugee Protection Act returns fairness to the system by limiting expedited removal procedures only to emergency situations. An ``emergency'' must be declared as such by the Attorney General, and typically involves large numbers of immigrants arriving en masse, so as to overwhelm the INS review system. In the event that ``expedited removal'' is employed, the Act requires an immigration judge to review the summary deportation order. Also, it permits claims for asylum to be filed beyond the one-year deadline created by the 1996 legislation, if there is good cause for the delay or when consideration of the claims is clearly in the interest of justice. Our refugee asylum system reflects both the best and the worst policies, throughout our history as a nation. In 1939, more than 900 Jews aboard the SS St. Louis, who were within sight of Miami, were rejected and forced to return to Europe where they were murdered in concentration camps. Yet when World War II ended, the United States led the effort to establish universally recognized fundamental rights. As a result of this advocacy, the General Assembly of the United Nations adopted the Universal Declaration of Human Rights on December 10, 1948 which recognized a right of asylum. Over the next 30 years the United States provided refuge to numerous people fleeing communism, including to those involved in `underground' democracy movements in Hungary, Cuba, and Southeast Asia. Yet it was not until 1980 that Congress enacted a comprehensive asylum system using the criteria of the 1951 Convention Relating to the Status of Refugees. The Convention defines a refugee as someone with a ``well- founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion.'' Under the procedures of this Refugee Act of 1980, requests for asylum were decided by an immigration judge, thus providing a fundamental due process protection. Notably, this judicial review was stripped in the 1996 legislation, and is a flaw which our legislation seeks to correct. Fair procedures are critically important in making life or death decisions, as asylum cases can be. At a June 24, 1999 hearing of the Senate Subcommittee on International Operations and Human Rights, Ms. Lavinia Limon, Director of the Office of Refugee Resettlement at the Department of Health and Human Services, noted: Once released, torture victims often attempt to flee to countries such as the United States to become invisible and safe, and to survive. But they retain the impact of torture: they are not able to speak of their experiences for fear officials will not believe them or understand them or will regard them as criminals. They often cannot express themselves effectively in asylum interviews because they cannot speak articulately of their experiences and they feel vulnerable to all officials. They have learned to fear government and the police and they do not trust any government officials and authorities to help them. They have been weakened and disabled psychologically from the torture. Many times the victims must flee alone, enduring long periods of separation from their families who might otherwise provide emotional support. Today the need for proper asylum reviews is greater than ever. Worldwide, religious intolerance and ethnic strife turn religious leaders and ordinary citizens into desperate asylum seekers. According to Amnesty International, government-sanctioned torture is practiced in 125 countries. This legislation helps those fleeing intolerable injustices in the name of religious freedom and democracy. Placing the decision squarely in the hands of an immigration judge does not impose an unreasonable or impossible burden on the government. Congress should enact the Refugee Protection Act because it restores the fundamental due process protections needed to ensure that legitimate asylum seekers are not wrongly turned away. Mr. FEINGOLD. Mr. President, I rise today to join my distinguished colleagues, Senators Leahy, Brownback, and Jeffords, to introduce a bill that will reduce the likelihood that people fleeing genuine persecution in their homelands and seeking refuge in America will be unfairly returned to their countries. Mr. President, as you know, our nation has been built by people who arrived on our shores from all over the world. Immigrants have enriched our nation economically, culturally, and in so many other invaluable ways. I don't think anyone can dispute that, of all the countries in the world, our nation has the deepest, richest commitment to welcoming all people who want to make a new home and a new life. At the same time, Mr. President, our nation also has a deep tradition of welcoming those who are fleeing oppression in their native land. From the pilgrims who set foot in present day Massachusetts and Virginia, to the Kosovars who fled brutality in their homeland earlier this year, America has been a safe refuge for those fleeing persecution. Our nation's first president, George Washington, said: ``America is open to receive not only the opulent and respectable stranger, but the oppressed and persecuted of all nations and religions.'' George Washington said those words in 1783. One hundred and one years later, France would present our country with a gift, a statue called ``Liberty Enlightening the World.'' In 1884, that title was a profound statement of our nation's past, our present and hope for the future. ``Liberty Enlightening the World'' later became known as the Statue of Liberty. The Statue of Liberty has these words inscribed on her: . . . Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door! Unfortunately, Mr. President, our current asylum and immigration laws have nearly slammed the door shut on victims of persecution, even those who are sure to suffer if returned to their home countries. Current law originates with the passage in 1996 of the Illegal Immigration Reform and Immigrant Responsibility Act. That law was an attempt to combat illegal immigration. But in the process, Congress denied victims of persecution the protection that our nation historically has offered. The current system provides for the immediate deportation of individuals who arrive without travel documents precisely in order. Now, Mr. President, it's appropriate that we require these documents, but people who have fled torture and great brutality may not have proper documentation because of the circumstances under which they fled their homelands. As a result, genuine victims of persecution face the risk of being turned away at our borders and put on the next plane back to face imprisonment, torture or death. The 1996 law effectively empowers low level INS officers to summarily make the life and death decision as to whether to deport an asylum seeker. Prior to 1996, those decisions were made by an immigration judge. We must return a judicial role to the review of asylum claims. As my colleagues who were here in 1995 and 1996 may recall, the 1996 law [[Page S14704]] was enacted in reaction to a flurry of concern that our border controls were too lax. The debate on the 1996 law was fueled by legitimate concern over criminals who managed to enter the country and commit acts of terrorism or other crimes. In response, the INS began a sensible tightening of the asylum process. In 1994 and 1995, the INS ceased issuing work authorizations at the border. Instead, asylum seekers had to wait until an adjudication of their case before receiving work authorization. As a result, claims for asylum dropped dramatically-- those who were seeking work but did not have a legitimate fear of persecution were no longer claiming asylum. The INS reforms were effective. But the 1996 law went too far. In our rush to keep undesirable asylum applicants out, Congress created a system where those with bona fide asylum claims face the great risk of being immediately deported to face the wrath of oppressive home governments without a real chance to make their case. Because an INS officer has the authority to deport refugees immediately, with no record keeping requirement, it has been difficult to determine exactly how many genuine refugees with a valid fear of persecution in their home countries have been turned away at our airports and borders as a result of the 1996 law. Organizations like the Lawyers Committee for Human Rights, however, have been able to collect some data on the extent of the problem. One of the most troubling stories is the case of a 21-year-old Kosovar Albanian known as ``Dem.'' In October 1998, Serb police seized Dem at his home, beat him, and threatened to kill his family. This abuse occurred over a period of ten days. When the Serb police finally released Dem, he fled Kosovo. He eventually made his way to the United States in January of this year, landing in California via Mexico City. When he arrived, the INS arranged for a Serbian translator to assist by telephone with its questioning of Dem. But Dem, a Kosovar Albanian, could not speak Serbian. After the translator spoke with Dem, the translator said something to the INS officer. The INS officer promptly handcuffed and fingerprinted Dem and then put him on a plane back to Mexico City. Fortunately, Dem was not returned to Kosovo. Dem tried re-entering the United States and on this second attempt, he was allowed to apply for asylum. But the facts supporting Dem's asylum claim had not changed. We must fix a system that produces such arbitrary results where people's lives, and American ideals, are at stake. We don't know exactly how many victims of real persecution have been immediately deported, and we obviously don't know exactly what has happened to each victim since enactment of the 1996 law. What we do know is that an asylum seeker who is fleeing torture, abuse or death faces the risk of being kicked out of our country, without even obtaining a perfunctory hearing before an immigration judge. The Refugee Protection Act of 1999 will return fairness and due process to the treatment of asylum seekers. For non-emergency migration situations, the bill would restore the pre-1996 law, when immigration judges were involved in the decision to deport someone who claimed asylum. The current process will continue to apply in emergency migration situations and would designate the Attorney General as the official with authority to determine when an emergency migration situation exists. The bill also would provide that an emergency cannot exist for more than 90 days, unless the Attorney General, after consultation with the Senate and House Judiciary Committees, determines that the emergency situation continues to exist. Mr. President, this is a sensible bill that allows us to scrutinize those who come to our borders, but honors our best traditions and returns fairness and humanity to our treatment of those who are fleeing persecution. I urge my colleagues to join me and Senators Leahy, Brownback and Jeffords in fighting for basic human dignity, decency and justice. Let us lift the torch of ``Liberty Enlightening the World'' once again. Let us not reflexively turn away those whose very lives may depend on a fair hearing as they seek refuge in the United States. ______ By Mr. DODD (for himself and Mr. DeWine): S. 1941. A bill to amend the Federal Fire Prevention and Control Act of 1974 to authorize the Director of the Federal Emergency Management Agency to provide assistance to fire departments and fire prevention organizations for the purpose of protecting the public and firefighting personnel against fire and fire-related hazards; to the Committee on Commerce, Science, and Transportation. Firefighter Investment and Response Enhancement Act Mr. DODD. Mr. President, I rise today with my colleague and friend, Senator DeWine of Ohio, to introduce legislation that would represent our nation's first comprehensive commitment to fire safety. The Firefighter Investment and Response Enhancement Act (the FIRE bill), will, for the first time, provide volunteer and professional firefighters with the resources they need to protect the people and property of their towns and cities. In communities throughout America, firefighters are almost always the first to respond to a call for help. They respond to a fire alarm. They are on the scene of traffic accidents and construction accidents. Emergency medical technicians, who often belong to fire departments, each day answer tens of thousands of calls for medical assistance. And, when a natural or manmade calamity strikes--from hurricanes to school shootings to bombings--firefighters are there without fail, restoring order and saving lives. Given all that they do, it should surprise no one that, across the Nation, fire departments struggle to find resources to help keep our communities safe. As the demands placed on fire departments have grown in volume and magnitude, the ability of local residents to support them has been put to a severe test. As a result, towns and cities throughout the country are struggling mightily to provide the fire departments with the resources they require. The FIRE Act will help localities meet that critical objective. It will provide grants to help localities hire more firefighters, train new and existing personnel to handle the volume and intensity of today's tragedies, and purchase badly needed equipment. This legislation will also provide critical resources to communities to fund fire prevention and education programs so that they can anticipate disasters and respond appropriately. Such programs are critical means of preventing tragedies from occurring in the first place. Eight out of ten fire deaths occur in a place where people feel the safest--their homes. Tragically, our children and the elderly account for a disproportionate number of these deaths. Indeed, preschool children face a risk of death from fire that is more than twice the risk for all age groups combined. While we can and should ensure that the fire equipment and personnel are available to respond to these tragedies, our best defense remains education and prevention. Yet, it is a painful irony that when resources are scarce, education and prevention efforts are often the first to be put on the budgetary chopping block. The legislation Senator DeWine and I are introducing will help ensure that no locality is put in the painful position of choosing between prevention and responding to emergencies. This legislation will enable our fire departments to worry more about saving lives and less about finding dollars. It will enable communities to better prevent disasters, and better train firefighters. I look forward to working with Senator DeWine to successfully advance this legislation in the Senate. It is our shared hope that our colleagues will come to realize that this bill is one whose time has come. Our Nation's firefighters deserve the support that this bill will provide, and I hope that we will give it to them before the end of this Congress. Mr. DeWINE. Mr. President, each day, we entrust our lives and the safety of our families, friends, and neighbors to the capable hands of the brave men and women in our local police and fire departments. These individuals have decided that they are willing to risk their lives and safety out of a dedication to their citizens and their commitment to public service. In Congress, we have recognized the dangers inherent in police work by [[Page S14705]] dedicating federal resources to help local police departments. In fact, this year, Fiscal Year (FY) 1999, the federal government spent $11 billion on law enforcement initiatives, such as the COPS program, to help local law enforcement face the daily challenges of their communities. In contrast, though, the federal government spent only $32 million on fire prevention and training. We ask local firefighters to risk no less than their lives every time they respond to a fire alarm. We ask them to risk their lives responding to the approximately two million reports of fire that they receive on an annual basis. We expect them to be willing to give their lives in exchange for the lives of our families, neighbors, and friends once every 71 seconds while responding to the 400,000 residential fires--fires which represent only about 22% of all fires reported. We count on them to protect our lives and the lives of our loved ones. I believe the Federal Government needs to show a greater commitment to the fire services. So, today, along with my colleague and friend from Connecticut, Senator Dodd, I rise to introduce the Firefighter Investment and Response Enhancement Act--or, FIRE bill. This bill is very simple. It authorizes, over five years, $5 billion in grants to local fire departments. These grants can be used for just about any purpose--training, equipment, hiring more firefighters, or education and prevention programs. A new office, established by this bill under the Federal Emergency Management Agency (FEMA), would be responsible for distributing grants to local departments based on a competitive process, involving needs assessment. To ensure that the funding is not spent solely on brand new state-of-the-art fire trucks, it mandates that no more than 25% of the grant funding can be used to purchase new fire vehicles. Finally, it requires that at least 10% of the funds are used for fire prevention programs. Our bill is supported by the National Safe Kids Campaign, the International Association of Fire Fighters, International Association of Fire Chiefs, national Volunteer Fire Council, International Association of Arson Investigators, International Society of Fire Service Instructors, and the National Fire Protection Association. It is also a companion measure to legislation introduced in the House by Congressmen Pascrell and Weldon, where almost 200 members of the House of Representatives have cosponsored it. I am proud to introduce this bill with my friend from Connecticut and look forward to working to ensure that the federal government increases its commitment to the men and women who make up our local fire departments. We owe it to them. ______ By Mr. JEFFORDS: S. 1942. A bill to amend the Older Americans Act of 1965 to establish grant programs to provide State pharmacy assistance programs and medication management programs; to the Committee on Health, Education, Labor, and Pensions. PHARMACEUTICAL AID FOR OLDER AMERICANS ACT Mr. JEFFORDS. Mr. President, there has been considerable attention rightfully paid by our colleagues this year to the issue of providing prescription drug coverage for our older American citizens. Estimates of the number of older Americans without some form of added coverage for prescription drugs vary between a low of 16.7 percent to 50 percent. About 7.7 million Medicare beneficiaries with annual incomes below 200 percent of poverty have no prescription drug coverage, despite some evidence indicating they are in poorer health than those beneficiaries with coverage. Those without added coverage for prescription benefits spend approximately 50 percent of their total income on out-of-pocket health care costs, and there are anecdotal reports that some elders forgo taking their prescribed medicines in order to have food to eat. Finally, there are econometric studies that conclude that a $1 increase in pharmaceutical expenditure is associated with a $3.65 reduction in hospital care expenditure. The problems posed by the lack of prescription drug coverage for the neediest elders is compounded by the well-documented effects of inappropriate drug use among the elderly. In 1995, the General Accounting Office (GAO) found that inappropriate drug use among elders is acute and that elders were particularly susceptible to unintended, adverse drug events (ADEs), due in part to the natural aging process and also to the likelihood that they are taking multiple medications. One study of drug use by the elderly, done by the Vermont Program for Quality in Health Care, found that it was not uncommon for elders to be taking more than a dozen drugs at one time. In fact, the Vermont study actually documented one case in which ``a single individual received prescriptions for 71 different drugs in a single year, several of which probably should not have been taken in combination.'' The GAO report also cited studies showing that hospitalizations for elderly patients due to ADEs were six times greater than for the general population, with an estimated annual cost of $20 billion. However, a recent Journal of the American Medical Association article indicated that the level of ADEs could be reduced 66 percent, if a pharmacist participated in grand rounds. Clearly, more must be done to recognize the importance of medication management programs that ensure the quality of drug therapy, including patient evaluations, compliance assessments, and drug therapy reviews. We are all aware that prescription drug costs continue to grow at an alarming rate. Seniors are being forced to spend greater and greater portions of their fixed incomes on prescription drugs which they need to live. Research and development of prescription drugs have come a long way since Medicare was originally enacted in 1965. Today, drugs are just as important as hospital visits, and in many cases more important, and it just doesn't make sense for Medicare to reimburse hospitals for surgery but not to provide coverage for the drugs that might prevent surgery. We need to modernize the Medicare program so that it does not go bankrupt in the next 10 to 15 years, and at the same time we must ensure that any Medicare reform proposal we consider includes a prescription drug benefit that helps all seniors. Mr. President, I have already introduced two measures that will help our older citizens obtain the medicines they need and at prices they can afford. My first bill, S. 1462, the ``Personal Use Prescription Drug Importation Act of 1999,'' allows Americans of all ages to avail themselves of the lower prices for prescription medicines that are available in Canada. A second measure, S. 1725, the ``DrugGap Insurance for Seniors Act of 1999,'' would provide for a more comprehensive access to prescription drugs by Medicare beneficiaries through reform and modernization of the Medicare Supplemental, Medigap, program. Under this approach, all existing Medigap plans, and three new drug-only Medigap plans, would provide various levels of prescription drug benefits from which seniors could choose. And our neediest elders' needs would be supported through Federal contributions for the cost of their premiums. During the 1st Session of the 106th Congress, no fewer than eight bills have been introduced in the Senate to provide a prescription drug benefit for Medicare beneficiaries--with most proposals estimated to cost between $5 billion and $40 billion per year. While I'm hopeful that we will all work hard to include a prescription drug benefit for Medicare beneficiaries, I am also concerned that at the end of the Congress we may not be successful. That is why I am introducing a measure today, the ``Pharmaceutical Aid to Older Americans Act,'' which will serve as a backstop for our neediest elders. This program builds on State pharmacy assistance programs that are already in place, and it encourages States to begin them where they don't already exist. Fifteen States are cutting new and innovative paths for providing prescription drug coverage for their neediest citizens. Most of these programs are for elder citizens (more than half also cover people with disabilities), and cover a wide variety of drugs--though some are limited to certain drugs or conditions, some require cost sharing for prescription medicines, and some have annual enrollment fees or monthly premiums. As of 1997, these programs aided over 700,000 people. The [[Page S14706]] Pharmaceutical Aid to Older Americans Act is designed to assist States in their efforts to provide medicines and appropriate pharmacy counseling benefits for their neediest elders. This Act will strengthen the Older Americans Act by authorizing two discretionary grant programs, subject to appropriations, to fund State- based pharmaceutical assistance and medication management programs. Under this measure, States would develop models that work best for them and would have the latitude to design and implement innovative approaches for providing benefits to their neediest elders. States awarded grant money would agree to: match Federal funds with 30 percent new or existing State funds or in-kind contributions and not supplant current State expenditures with Federal funds. In-kind contributions counting toward the match requirement could include assistance from pharmaceutical companies and organization- and community-based pharmacies, thereby making this approach a truly public-private partnership. Each application for pharmaceutical assistance funds must include a medication management program that ensures the quality of drug therapies through patient evaluations, compliance assessments, and drug therapy reviews. Federal funds could be used to provide drug coverage benefits only to eligible beneficiaries, defined as Medicare beneficiaries with incomes up to 200 percent of poverty but without any other coverage for prescription drug benefits (States could expand eligibility with State resources). All senior citizens could utilize the medication management portion of the program. This is not government control of drug prices or price-fixing. The States can purchase pharmaceuticals from any willing seller, including pharmaceutical manufacturers, pharmaceutical distributors, wholesalers, pharmacy benefit management firms (PBMs), and chain or local pharmacies, without any Federal requirement for wholesale prices or Medicaid-based rebates. In some instances, it's likely that States may be able to negotiate better purchasing prices than any of those set by some artificial, imposed ceiling. Finally, for those States that choose not to provide pharmaceutical benefits, the Act authorizes grants to States to create or support stand-alone Medication Management Programs that will involve the States in collaborative efforts with community, chain-based, and institutional pharmacists to implement medication management programs. As I mentioned earlier, Mr. President, I am fully committed to providing a prescription benefit for all our elders as we move forward on comprehensive reform of the Medicare program. I am equally committed to seeing that the Older Americans Act is reauthorized this Congress, and I will work diligently to get these jobs accomplished. However, if the latter effort succeeds and the former doesn't, then the Pharmaceutical Assistance for Older Americans Act will be in place to provide much-needed medicines for our neediest elders. I'm very pleased Mr. President, that this measure has received endorsement of two of the key advocacy organizations associated with the Older Americans Act, the National Association of Area Agencies on Aging and the National Association of State Units on Aging. Note that these guardians of the aged support this measure, like me, if and only if we are unsuccessful in passing a prescription drug benefit for the Medicare program. Mr. President, I ask unanimous consent that the bill and the text of these letters and this measure be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: S. 1942 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 ``Pharmaceutical Aid to Older Americans Act''. SEC. 2. AMENDMENT TO OLDER AMERICANS ACT OF 1965. Part B of title IV of the Older Americans Act of 1965 (42 U.S.C. 3034 et seq.) is amended by adding at the end the following: ``SEC. 429K. GRANTS FOR STATE PHARMACY ASSISTANCE PROGRAMS. ``(a) Program Authorized.--The Assistant Secretary may award grants to States to provide and administer State pharmacy assistance programs. ``(b) Preference.--In awarding grants under subsection (a), the Assistant Secretary shall give preference to States that propose to develop and implement State pharmacy assistance programs, or to provide assistance to State pharmacy assistance programs in existence on the date of enactment of this section, that provide services for underserved populations or for populations residing in rural areas. ``(c) Use of Funds.--A State that receives a grant under subsection (a) shall use funds made available through the grant to-- ``(1) develop and implement a State pharmacy assistance program, or to provide assistance to a State pharmacy assistance program in existence on the date of enactment of this section; and ``(2) prepare and submit an evaluation to the Assistant Secretary on the implementation of, or provision of, or assistance to a program described in paragraph (1). ``(d) Application.--To be eligible to receive a grant under subsection (a), a State shall submit to the Assistant Secretary an application at such time, in such manner, and containing such information as the Assistant Secretary may require, including-- ``(1) a description of a State pharmacy assistance program that such State plans to develop and implement, including information on the anticipated number of individuals to be served, eligibility criteria of individuals to be served, such as the age and income level of such individuals, drugs to be covered by the program, and performance measures to be used to evaluate the program; or ``(2) a description of a State pharmacy assistance program in existence on the date of enactment of this section that such State plans to assist with funds received under subsection (a), including information on the number of individuals served, eligibility criteria of individuals served, such as the age and income level of such individuals, drugs covered by the program, and performance measures used to evaluate the program. ``(e) Minimum Amount.--In awarding grants under subsection (a), from the amount appropriated under subsection (l)(1) for each fiscal year, the Assistant Secretary shall award, to each eligible State, an amount that is not less than $250,000. ``(f) Duration of Grant.--In awarding grants under subsection (a), the Assistant Secretary shall award such grants for periods of 2 years. ``(g) Matching Requirement.--The Assistant Secretary shall not award a grant to a State under subsection (a) unless that State agrees that, with respect to the costs to be incurred by the State in carrying out the program for which the grant was awarded, the State will make available (directly or through donations from public or private entities) non- Federal contributions in an amount that is not less than 30 percent of Federal funds provided under the grant. ``(h) Supplement Not Supplant.--Funds made available under this section shall be used to supplement, and not supplant, any other Federal, State, or local funds expended by a State to provide the services for programs described in this section. ``(i) Evaluations and Report.-- ``(1) Program evaluations.--Not later than 6 months after the end of the period for which the grant is awarded under subsection (a), the State shall prepare an evaluation of the effectiveness of programs carried out with funds received under this section. Not later than 6 months after the end of such period, the State shall submit to the Assistant Secretary a report containing the results of the evaluation, in such form and containing such information as the Assistant Secretary may require. ``(2) Report to congress.--Not later than 36 months after the date of enactment of this section, the Assistant Secretary shall prepare and submit to the Speaker of the House of Representatives and the President pro tempore of the Senate a report that describes the effectiveness of the programs carried out with funds received under this section. ``(j) Sunset Provision.--This section shall not apply beginning on the date of enactment of legislation that provides comprehensive health care coverage for prescription drugs under the medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) for all medicare beneficiaries. ``(k) Definitions.--In this section: ``(1) Medication management.--The term `medication management program' means a program of services for older individuals, including pharmacy counseling, medicine screening, or patient and health care provider education programs, that-- ``(A) provides information and counseling on the prescription drug purchases that are currently the most economical, and safe and effective; ``(B) provides services to minimize unnecessary or inappropriate use of prescription drugs; and ``(C) provides services to minimize adverse events due to unintended prescription drug-to-drug interactions. ``(2) State pharmacy assistance programs.--The term `State pharmacy assistance program' means a program that provides coverage for prescription drugs and medication management programs for individuals who-- ``(A) are not less than 65 years of age; [[Page S14707]] ``(B) are not eligible for medical assistance under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.); ``(C) are from families with incomes at or below 200 percent of the poverty line; and ``(D) have no coverage for prescription drugs other than coverage provided by a State pharmacy assistance program. ``(l) Authorization of Appropriations.-- ``(1) In general.--There are authorized to be appropriated to carry out this section, $25,000,000 for fiscal year 2001, and such sums as may be necessary for each of fiscal years 2002 through 2005. ``(2) Reservation.--From the amount appropriated under paragraph (1), for each fiscal year, the Assistant Secretary shall reserve not less than 33.3 percent of such amount to enable States to assist State pharmacy assistance programs in existence on the date of enactment of this section. ``SEC. 429L. GRANTS FOR MEDICATION MANAGEMENT PROGRAMS. ``(a) Program Authorized.--The Assistant Secretary may award grants to State agencies to assist such agencies or area agencies on aging in providing and administering medication management programs. ``(b) Use of Funds.--A State agency or area agency on aging that receives funds through a grant awarded under subsection (a) shall use such funds to-- ``(1) develop and implement a medication management program, or to provide assistance to a medication management program in existence on the date of enactment of this section; and ``(2) prepare an evaluation on the implementation of or provision of assistance to a program described in paragraph (1), and, in the case of an area agency on aging, submit the evaluation to the appropriate State agency. ``(c) Application.--To be eligible to receive a grant under subsection (a), a State agency shall submit to the Assistant Secretary an application at such time, in such manner, and containing such information as the Assistant Secretary may require. ``(d) Minimum Amount.--In awarding grants under subsection (a), from the amount appropriated under subsection (j) for each fiscal year, the Assistant Secretary shall award, to each eligible State agency, an amount that is not less than $50,000. ``(e) Duration of Grant.--In awarding grants under subsection (a), the Assistant Secretary shall award such grants for a period of 2 years. ``(f) Matching Requirement.--The Assistant Secretary shall not award a grant to a State agency under subsection (a) unless that State agency agrees that, with respect to the costs to be incurred in carrying out programs for which the grant was awarded, the State agency will make available (directly or through donations from public or private entities) non-Federal contributions in an amount that is not less than 30 percent of Federal funds provided under the grant. ``(g) Supplement Not Supplant.--Funds made available under this section shall be used to supplement, and not supplant, any other Federal, State, or local funds expended by a State agency or area agency on aging to provide the services for programs described in this section. ``(h) Reports.-- ``(1) Report to assistant secretary.--Not later than 24 months after receipt of a grant under subsection (a), a State agency shall prepare and submit to the Assistant Secretary a report on the medication management programs carried out by the State agency or area agencies on aging in the State in such form and containing such information as the Assistant Secretary may require, including an analysis of the effectiveness of the programs. Such report shall in part be based on evaluations submitted under subsection (b)(2). ``(2) Report to congress.--Not later than 36 months after grants have been awarded under subsection (a), the Assistant Secretary shall prepare and submit to the Speaker of the House of Representatives and the President pro tempore of the Senate a report that describes the effectiveness of the programs carried out with funds received under this section. ``(i) Medication Management Programs.--In this section, the term `medication management program' means a program of services for older individuals, including pharmacy counseling, medicine screening, or patient and health care provider education programs, that-- ``(1) provides information and counseling on the prescription drug purchases that are currently the most economical, and safe and effective; ``(2) provides services to minimize unnecessary or inappropriate use of prescription drugs; and ``(3) provides services to minimize adverse events due to unintended prescription drug-to-drug interactions. ``(j) Authorization of Appropriations.--There are authorized to be appropriated to carry out this section, $15,000,000 for fiscal year 2001, and such sums as may be necessary for each of fiscal years 2002 through 2005.''. ____ National Association of Area Agencies on Aging, Washington, DC, November 9, 1999. Hon. James Jeffords, Chair, Committee on Health, Education, Labor & Pensions, U.S. Senate, Washington, DC. Dear Senator Jeffords: The National Association of Area Agencies on Aging (N4A) is pleased that you are introducing the Pharmaceutical Aid to Older Americans Act. We believe implementation of this Act could be an ideal interim measure until a Medicare prescription drug benefit is enacted. As you know, a fast-growing aging population coupled with escalating pharmaceutical costs makes the lack of prescription drug coverage one of the most pressing problems facing our nation's older Americans. The proposed State Pharmacy Assistance Program would allow states with existing benefit programs to expand services and provide a strong incentive for other states to implement a prescription drug program. Your legislative measure also goes far in addressing drug misuse, which is another escalating and dangerous problem. The proposed Medication Management Program would provide states with a financial base to implement a statewide information, education and counseling program that would significantly benefit the health and welfare of older adults. While N4A supports your proposal in concept, we have some specific questions about the implementation of these programs and concerns about the roles and responsibilities of Area Agencies on Aging (AAAs) and Title IV Native American grantees. We welcome the opportunity to meet with you in the near future to address these concerns. Again, we applaud your efforts and look forward to working with you next session as you further define the proposal and shepherd it through the legislative process. Sincerely, Janice Jackson, Executive Director. ____ National Association of State Units on Aging, Washington, DC, November 10, 1999. Sean Donohue, U.S. Senate, Committee on Health, Education, Labor, and Pensions, Washington, DC. Dear Sean: Dan Quirk and I reviewed the draft you sent last week outlining Senator Jeffords' proposed Pharmaceutical Aid to Older Americans Act. Overall, the proposal to provide grants to states to support the development or expansion of pharmaceutical assistance programs and medication management programs is a good one, and using the existing infrastructure of the Older Americans Act makes good sense. The aging network is well suited to develop and administer these types of programs. Your proposal was well developed and thoughtful. Both programs would provide valuable assistance to older people who do not have any other prescription drug coverage available. The requirement for a 30-percent state match seems high, but allowing contributions to be ``in-kind'' will help states in that regard. The income eligibility level of 200- percent of the federal poverty level may conflict with the eligibility levels set by states in existing programs, though I haven't done an analysis of this yet. As with other programs under the Older Americans Act, if state-funded programs already exist that provide the same services, and eligibility or cost sharing requirements are at odds with the federal program, it requires states essentially to manage two different funding streams for the same program or set of services. As always, giving states the flexibility to blend federal funds with state funds to develop one program would decrease administrative expenses for the states and allow the money saved to be used for direct services. NASUA continues to support overall reform of the Medicare program that would provide a comprehensive prescription drug benefit to beneficiaries. In the meantime, state-funded programs that are being developed and which would be supported under this proposal continue to fill in the gaps for people with no coverage for prescription drugs. This proposal would strengthen the existing infrastructure, and perhaps could serve to support a prescription program under Medicare whenever it may be implemented in the future. We hope this proposal will generate some further interest in reauthorizing the Older Americans Act as soon as possible, hopefully before the end of the 106th Congress. We were very disappointed that reauthorization was stalled over long- standing disagreements over the Title V program. If there is anything NASUA can do to support Senator Jeffords proposal and reauthorization, please let me know. Thanks for the opportunity to review the Pharmaceutical Aid to Older Americans Act. Sincerely, Kathleen C. Konka, Policy Associate. ______ By Mrs. MURRAY: S. 1943. A bill to provide for an inexpensive book distribution program; to the Committee on Health, Education, Labor, and Pensions. first book distribution program act Mrs. MURRAY. Mrs. MURRAY. Mr. President, today I introduce legislation on another topic I will be discussing with Chairman Jeffords as we move forward with reauthorization of the Elementary and Secondary Education Act in the Senate Health, Education, Labor, and Pensions Committee. I am introducing legislation today to fund an innovative book distribution [[Page S14708]] program targeted at giving low-income students their own ``first book.'' The ``First Book'' program is a non-profit private organization that has been tremendously successful gathering and distibuting new children's books to needy children throughout the nation. Key to the success of ``First Book'' are local boards called ``First Book Local Advisory Boards.'' Under my legislation, which would provide $5 million a year federal investment to such boards, will help them leverage millions more in funds from other sources. ``First Book'' has been successful because it is locally-driven, and reflects private industry initiative. ``First Book'' provides new books, which the program purchases from publishers at discount rates, to disadvantaged children and families primarily through tutoring, mentoring, and family literacy programs. This bill builds on successful efforts underway in communities across the country. It takes what has been a successful but very targeted program, and will increase its reach and effect into many more American communities. ``First Book'' makes a very real difference for disadvantaged children and their families, and with this investment, it will make a difference for thousands more. ______ By Mrs. MURRAY: S. 1944. A bill to provide national challenge grants for innovation in the education of homeless children and youth; to the Committee on Health, Education, Labor, and Pensions. stuart mc kinney homeless education improvement act Mrs. MURRAY. Mr. President, today I introduce legislation on another topic I will be discussing with Chairman Jeffords as we move forward with reauthorization of the Elementary and Secondary Education Act in the Senate Health, Education, Labor, and Pensions Committee. The bill deals with an improvement I hope we can make in the Stuart McKinney Homeless Education program. While the McKinney program is relatively small, my hope is that we can greatly improve its effectiveness by recognizing and funding innovative approaches for serving homeless students. Chairman Jeffords and others have recognized that keeping a homeless child in their school district of origin is vital to their success. Children, especially homeless children, need continuity in their lives. Yet as a nation, we have not yet focused on funding the innovative practices that will show how this can be done and done effectively. In addition, there are chronic problems facing homeless children, such as the problems of trying to reach out to unaccompanied homeless youth, those young people who do not have parents or guardians with them in their homeless situation. Homeless preschoolers present another whole range of issues that many schools struggle to overcome. My legislation will provide $2 million each year in national competitive challenge grants for innovation in the education of homeless children and youth. We follow this same approach in education technology and other areas, and challenge grants are remarkably successful in sparking innovation and dissemination of new methods of instruction. Homeless students face many challenges, and schools face challenges in serving them. Creating a small challenge grant for homeless education is one necessary step we can take to help schools help these students succeed and achieve. ______ By Mr. LOTT: S. 1948. A bill to amend the provisions of title 17, United States Code, and the Communications Act of 1934, relating to copyright licensing and carriage of broadcast signals by satellite; to the Committee on the Judiciary. intellectual property and communications omnibus reform act of 1999 Mr. LOTT: Mr. President, I ask unanimous consent that the following section-by-section analysis be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: S. 1948--Section-by-Section Analysis Section 1. Short Title. This Act may be cited as the ``Intellectual Property and Communications Omnibus Reform Act of 1999.'' TITLE I--SATELLITE HOME VIEWER IMPROVEMENT ACT OF 1999 When Congress passed the Satellite Home Viewer Act in 1988, few Americans were familiar with satellite television. They typically resided in rural areas of the country where the only means of receiving television programming was through use of a large, backyard C-band satellite dish. Congress recognized the importance of providing these people with access to broadcast programming, and created a compulsory copyright license in the Satellite Home Viewer Act that enabled satellite carriers to easily license the copyrights to the broadcast programming that they retransmitted to their subscribers. The 1988 Act fostered a boom in the satellite television industry. Coupled with the development of high-powered satellite service, or DSS, which delivers programming to a satellite dish as small as 18 inches in diameter, the satellite industry now serves homes nationwide with a wide range of high quality programming. Satellite is no longer primarily a rural service, for it offers an attractive alternative to other providers of multichannel video programming; in particular, cable television. Because satellite can provide direct competition with the cable industry, it is in the public interest to ensure that satellite operates under a copyright framework that permits it to be an effective competitor. The compulsory copyright license created by the 1988 Act was limited to a five year period to enable Congress to consider its effectiveness and renew it where necessary. The license was renewed in 1994 for an additional five years, and amendments made that were intended to increase the enforcement of the network territorial restrictions of the compulsory license. Two-year transitional provisions were created to enable local network broadcasters to challenge satellite subscribers' receipt of satellite network service where the local network broadcaster had reason to believe that these subscribers received an adequate off-the-air signal from the broadcaster. The transitional provisions were minimally effective and caused much consumer confusion and anger regarding receipt of television network stations. The satellite license is slated to expire at the end of this year, requiring Congress to again consider the copyright licensing regime for satellite retransmissions of over-the- air television broadcast stations. In passing this legislation, the Conference Committee was guided by several principles. First, the Conference Committee believes that promotion of competition in the marketplace for delivery of multichannel video programming is an effective policy to reduce costs to consumers. To that end, it is important that the satellite industry be afforded a statutory scheme for licensing television broadcast programming similar to that of the cable industry. At the same time, the practical differences between the two industries must be recognized and accounted for. Second, the Conference Committee reasserts the importance of protecting and fostering the system of television networks as they relate to the concept of localism. It is well recognized that television broadcast stations provide valuable programming tailored to local needs, such as news, weather, special announcements and information related to local activities. To that end, the Committee has structured the copyright licensing regime for satellite to encourage and promote retransmissions by satellite of local television broadcast stations to subscribers who reside in the local markets of those stations. Third, perhaps most importantly, the Conference Committee is aware that in creating compulsory licenses, it is acting in derogation of the exclusive property rights granted by the Copyright Act to copyright holders, and that it therefore needs to act as narrowly as possible to minimize the effects of the government's intrusion on the broader market in which the affected property rights and industries operate. In this context, the broadcast television market has developed in such a way that copyright licensing practices in this area take into account the national network structure, which grants exclusive territorial rights to programming in a local market to local stations either directly or through affiliation agreements. The licenses granted in this legislation attempt to hew as closely to those arrangements as possible. For example, these arrangements are mirrored in the section 122 ``local-to-local'' license, which grants satellite carriers the right to retransmit local stations within the station's local market, and does not require a separate copyright payment because the works have already been licensed and paid for with respect to viewers in those local markets. By contrast, allowing the importation of distant or out-of-market network stations in derogation of the local stations' exclusive right--bought and paid for in market-negotiated arrangements--to show the works in question undermines those market arrangements. Therefore, the specific goal of the 119 license, which is to allow for a life-line network television service to those homes beyond the reach of their local television stations, must be met by only allowing distant network service to those homes which cannot receive the local network television stations. Hence, the ``unserved household'' limitation that has been in the license since its inception. The Committee is mindful and respectful of the [[Page S14709]] interrelationship between the communications policy of ``localism'' outlined above and property rights considerations in copyright law, and seeks a proper balance between the two. Finally, although the legislation promotes satellite retransmissions of local stations, the Conference Committee recognizes the continued need to monitor the effects of distant signal importation by satellite. To that end, the compulsory license for retransmission of distant signals is extended for a period of five years, to afford Congress the opportunity to evaluate the effectiveness and continuing need for that license at the end of the five-year period. Section 1001. Short Title This title may be cited as the ``Satellite Home Viewer Improvement Act.'' Section 1002. Limitations on Exclusive Rights; Secondary Transmissions by Satellite Carriers Within Local Markets The House and the Senate provisions were in most respects highly similar. The conference substitute generally follows the House approach, with the differences described here. Section 1002 of this Act creates a new statutory license, with no sunset provision, as a new section 122 of the Copyright Act of 1976. The new license authorizes the retransmission of television broadcast stations by satellite carriers to subscribers located within the local markets of those stations. Creation of a new statutory license for retransmission of local signals is necessary because the current section 119 license is limited to the retransmission of distance signals by satellite. The section 122 license allows satellite carriers for the first time to provide their subscribers with the television signals they want most: their local stations. A carrier may retransmit the signal of a network station (or superstation) to all subscribers who reside within the local market of that station, without regard to whether the subscriber resides in an ``unserved household.'' The term ``local market'' is defined in Section 119(j)(2), and generally refers to a station's Designated Market Area as defined by Nielsen. Because the section 122 license is permanent, subscribers may obtain their local television stations without fear that their local broadcast service may be turned off at a future date. In addition, satellite carriers may deliver local stations to commercial establishments as well as homes, as the cable industry does under its license. These amendments create parity and enhanced competition between the satellite and cable industries in the provision of local television broadcast stations. For a satellite carrier to be eligible for this license, this Act, following the House approach, provides both in new section 122(a) and in new section 122(d) that a carrier may use the new local-to-local license only if it is in full compliance with all applicable rules and regulations of the Federal Communications Commission, including any requirements that the Commission may adopt by regulation concerning carriage of stations or programming exclusivity. These provisions are modeled on similar provisions in section 111, the terrestrial compulsory license. Failure to fully comply with Commission rules with respect to retransmission of one or more stations in the local market precludes the carrier from making use of the section 122 license. Put another way, the statutory license overrides the normal copyright scheme only to the extent that carriers strictly comply with the limits Congress has put on that license. Because terrestrial systems, such as cable, as a general rule do not pay any copyright royalty for local retransmissions of broadcast stations, the section 122 license does not require payment of any copyright royalty by satellite carriers for transmissions made in compliance with the requirements of section 122. By contrast, the section 119 statutory license for distant signals does require payment of royalties. In addition, the section 122 statutory license contains no ``unserved household'' limitation, while the section 119 license does contain that limitation. Satellite carriers are liable for copyright infringement, and subject to the full remedies of the Copyright Act, if they violate one or more of the following requirements of the section 122 license. First, satellite carriers may not in any way willfully alter the programming contained on a local broadcast station. Second, satellite carriers may not use the section 122 license to retransmit a television broadcast station to a subscriber located outside the local market of the station. Retransmission of a station to a subscriber located outside the station's local market is covered by section 119, and is permitted only when all conditions of that license are satisfied. Accordingly, satellite carriers are required to provide local broadcasters with accurate lists of the street addresses of their local-to-local subscribers so that broadcasters may verify that satellite carriers are making proper use of the license. The subscriber information supplied to broadcasters is for verification purposes only, and may not be used by broadcasters for any other reason. Any knowing provision of false information by a satellite carrier would, under section 122(d), bar use of the Section 122 license by the carrier engaging in such practices. The section 122 license contains remedial provisions parallel to those of Section 119, including a ``pattern or practice'' provision that requires termination of the Section 122 statutory license as to a particular satellite carrier if it engages in certain abuses of the license. Under this provision, just as in the statutory licenses codified in sections 111 and 119, a violation may be proven by showing willful activity, or simple delivery of the secondary transmission over a certain period of time. In addition to termination of service on a nationwide or local or regional basis, statutory damages are available up to $250,000 for each 6-month period during which the pattern or practice of violations was carried out. Satellite carriers have the burden of proving that they are not improperly making use of the section 122 license to serve subscribers outside the local markets of the television broadcast stations they are providing. The penalties created under this section parallel those under Section 119, and are to deter satellite carriers from providing signals to subscribers in violation of the licenses. The section 122 license is limited in geographic scope to service to locations in the United States, including any commonwealth, territory or possession of the United States. In addition, section 122(j) makes clear that local retransmission of television broadcast stations to subscribers is governed solely by the section 122 license, and that no provision of the section 111 cable compulsory license should be interpreted to allow satellite carriers to make local retransmissions of television broadcast stations under that license. Likewise, no provision of the section 119 license (or any other law) should be interpreted as authorizing local-to-local retransmissions. As with all statutory licenses, these explicit limitations are consistent with the general rule that, because statutory licenses are in derogation of the exclusive rights granted under the Copyright Act, they should be interpreted narrowly. Section 1002(a) of this Act contains new standing provisions. Adopting the approach of the House bill, section 122(f)(1) of the Copyright Act is parallel to section 119(e), and ensures that local stations, in addition to any other parties that qualify under other standing provisions of the Act, will have the ability to sue for violations of section 122. New section 122(f)(2) of the Copyright Act enables a local television station that is not being carried by a satellite carrier in violation of the license to file a copyright infringement lawsuit in federal court to enforce its rights. Section 1003. Extension of Effect of Amendments to Section 119 of Title 17, United States Code As in both the House bill and the Senate amendment, this Act extends the section 119 satellite statutory license for a period of five years by changing the expiration date of the legislation from December 31, 1999, to December 31, 2004. The procedural and remedial provisions of section 119, which have already been interpreted by the courts, are being extended without change. Should the section 119 license be allowed to expire in 2004, it shall do so at midnight on December 31, 2004, so that the license will cover the entire second accounting period of 2004. The advent of digital terrestrial broadcasting will necessitate additional review and reform of the distant signal statutory license. And responsibility to oversee the development of the nascent local station satellite service may also require for review of the distant signal statutory license in the future. For each of these reasons, this Act establishes a period for review in 5 years. Although the section 119 regime is largely being extended in its current form, certain sections of the Act may have a near-term effect on pending copyright infringement lawsuits brought by broadcasters against satellite carriers. These changes are prospective only; Congress does not intend to change the legality of any conduct that occurred prior to the date of enactment. Congress does intend, however, to benefit consumers where possible and consistent with existing copyright law and principles. This Act attempts to strike a balance among a variety of public policy goals. While increasing the number of potential subscribers to distant network signals, this Act clarifies that satellite carriers may carry up to, but no more than, two stations affiliated with the same network. The original purpose of the Satellite Home Viewer Act was to ensure that all Americans could receive network programming and other television services provided they could not receive those services over-the-air or in any other way. This bill reflects the desire of the Conference to meet this requirement and consumers' expectations to receive the traditional level of satellite service that has built up over the years, while avoiding an erosion of the programming market affected by the statutory licenses. Section 1004. Computation of Royalty Fees for Satellite Carriers Like both the House bill and the Senate amendment, this Act reduces the royalty fees currently paid by satellite carriers for the retransmission of network and superstations by 45 percent and 30 percent, respectively. These are reductions of the 27-cent royalty fees made effective by the Librarian of Congress on January 1, 1998. The reductions take effect on July 1, 1999, which is the beginning of the second accounting period for 1999, and apply to all accounting periods for the five-year extension of the section 119 license. The Committee has drafted this provision such that, if the section 119 license is renewed after 2004, the 45 percent and 30 percent reductions of the 27-cent fee will remain in effect, unless altered by legislative amendment. [[Page S14710]] In addition, section 119(c) of title 17, United States Code, is amended to clarify that in royalty distribution proceedings conducted under section 802 of the Copyright Act, the Public Broadcasting Service may act as agent for all public television copyright claimants and all Public Broadcasting Service member stations. Section 1005. Distant Signal Eligibility for Consumers The Senate bill contained provisions retaining the existing Grade B intensity standard in the definition of ``unserved household.'' The House agreed to the Senate provisions with amendments, which extend the ``unserved household'' definition of section 119 of title 17 intact in certain respects and amend it in other respects. Consistent with the approach of the Senate amendment, the central feature of the existing definition of ``unserved household''--inability to receive, through use of a conventional outdoor rooftop receiving antenna, a signal of Grade B intensity from a primary network station--remains intact. The legislation directs the FCC, however, to examine the definition of ``Grade B intensity,'' reflecting the dBu levels long set by the Federal Communications Commission in 47 C.F.R. Sec. 73.683(a), and issue a rulemaking within 6 months after enactment to evaluate the standard and, if appropriate, make recommendations to Congress about how to modify the analog standard, and make a further recommendation about what an appropriate standard would be for digital signals. In this fashion, the Congress will have the best input and recommendations from the Commission, allowing the Commission wide latitude in its inquiry and recommendations, but reserve for itself the final decision-making authority over the scope of the copyright licenses in question, in light of all relevant factors. The amended definition of ``unserved household'' makes other consumer-friendly changes. It will eliminate the requirement that a cable subscriber wait 90 days to be eligible for satellite delivery of distant network signals. After enactment, cable subscribers will be eligible to receive distant network signals by satellite, upon choosing to do so, if they satisfy the other requirements of section 119. In addition, this Act adds three new categories to the definition of ``unserved household'' in section 119(d)(10): (a) certain subscribers to network programming who are not predicted to receive a signal of Grade A intensity from any station of the relevant network, (b) operators of recreational vehicles and commercial trucks who have complied with certain documentation requirements, and (c) certain C- band subscribers to network programming. This Act also confirms in new section 119(d)(10)(B) what has long been understood by the parties and accepted by the courts, namely that a subscriber may receive distant network service if all network stations affiliated with the relevant network that are predicted to serve that subscriber give their written consent. Section 1005(a)(2) of the bill creates a new section 119(a)(2)(B)(i) of the Copyright Act to prohibit a satellite carrier from delivering more than two distant TV stations affiliated with a single network in a single day to a particular customer. This clarifies that a satellite carrier provides a signal of a television station throughout the broadcast day, rather than switching between stations throughout a day to pick the best programming among different signals. Section 1005(a)(2) of this Act creates a new section 119(a)(2)(B)(ii)(I) of the Copyright Act to confirm that courts should rely on the FCC's ILLR model to presumptively determine whether a household is capable of receiving a signal of Grade B intensity. The conferees understand that the parties to copyright infringement litigation under the Satellite Home Viewer Act have agreed on detailed procedures for implementing the current version of ILLR, and nothing in this Act requires any change in those procedures. In the future, when the FCC amends the ILLR model to make it more accurate pursuant to section 339(c)(3) of the Communications Act of 1934, the amended model should be used in place of the current version of ILLR. The new language also confirms in new section 119(a)(2)(B)(ii)(II) that the ultimate determination of eligibility to receive network signals shall be a signal intensity test pursuant to 47 C.F.R. Sec. 73.686(d), as reflected in new section 339(c)(5) of the Communications Act of 1934. Again, the conferees understand that existing Satellite Home Viewer Act court orders already incorporate this FCC-approved measurement method, and nothing in this Act requires any change in such orders. Such a signal intensity test may be conducted by any party to resolve a customer's eligibility in litigation under section 119. Section 1005(a)(2) of this Act creates a new section 119(a)(2)(B)(iii) of the Copyright Act to permit continued delivery by means of C-band transmissions of network stations to C-band dish owners who received signals of the pertinent network on October 31, 1999, or were recently required to have such service terminated pursuant to court orders or settlements under section 119. This provision does not authorize satellite delivery of network stations to such persons by any technology other than C-band. Section 1005(b) also adds a new provision (E) to section 119(a)(5). The purpose of this provision is to allow certain longstanding superstations to continue to be delivered to satellite customers without regard to the ``unserved household'' limitation, even if the station now technically qualifies as a ``network station'' under the 15-hour-per-week definition of the Act. This exception will cease to apply if such a station in the future becomes affiliated with one of the four networks (ABC, CBS, Fox, and NBC) that qualified as networks as of January 1, 1995. Section 1005(c) of this Act adds a new section 119(e) of the Copyright Act. This provision contains a moratorium on terminations of network stations to certain otherwise ineligible recent subscribers to network programming whose service has been (or soon would have been) terminated and allows them to continue to be eligible for distant signal services. The subscribers affected are those predicted by the current version of the ILLR model to receive a signal of less than Grade A intensity from any network station of the relevant network defined in section 73.683(a) of Commission regulations (47 C.F.R. 73.683(a)) as in effect January 1, 1999. As the statutory language reflects, recent court orders and settlements between the satellite and broadcasting industries have required (or will in the near future require) significant numbers of terminations of network stations to ineligible subscribers in this category. Although the conferees strongly condemn lawbreaking by satellite carriers, and intend for satellite carriers to be subject to all other available legal remedies for any infringements in which the carriers have engaged, the conferees have concluded that the public interest will be served by the grandfathering of this limited category of subscribers whose service would otherwise be terminated. The decision by the conferees to direct this limited grandfathering should not be understood as condoning unlawful conduct by satellite carriers, but rather reflects the concern of the conference for those subscribers who would otherwise be punished for the actions of the satellite carriers. Note that in the previous 18 months, court decisions have required the termination of some distant network signals to some subscribers. However, the Conferees are aware that in some cases satellite carriers terminated distant network service that was not subject to the original lawsuit. The Conferees intend that affected subscribers remain eligible for such service. The words ``shall remain eligible'' in section 119(e) refer to eligibility to receive stations affiliated with the same network from the same satellite carrier through use of the same transmission technology at the same location; in other words, grandfathered status is not transferable to a different carrier or a different type of dish or at a new address. The provisions of new section 119(e) are incorporated by reference in the definition of ``unserved household'' as new section 119(d)(10)(C). Section 1005(d) of this Act creates a new section 119(a)(11), which contains provisions governing delivery of network stations to recreational vehicles and commercial trucks. This provision is, in turn, incorporated in the definition of ``unserved household'' in new section 119(d)(10)(D). The purpose of these amendments is to allow the operators of recreational vehicles and commercial trucks to use satellite dishes permanently attached to those vehicles to receive, on television sets located inside those vehicles, distant network signals pursuant to section 119. To prevent abuse of this provision, the exception for recreational vehicles and commercial trucks is limited to persons who have strictly complied with the documentation requirements set forth in section 119(a)(11). Among other things, the exception will only become available as to a particular recreational vehicle or commercial truck after the satellite carrier has provided all affected networks with all documentation set forth in section 119(a). The exception will apply only for reception in that particular recreational vehicle or truck, and does not authorize any delivery of network stations to any fixed dwelling. Section 1006. Public Broadcasting Service Satellite Feed The conference agreement follows the Senate bill with an amendment that applies the network copyright royalty rate to the Public Broadcasting Service the satellite feed. The conference agreement grants satellite carriers a section 119 compulsory license to retransmit a national satellite feed distributed and designated by PBS. The license would apply to educational and informational programming to which PBS currently holds broadcast rights. The license, which would extend to all households in the United States, would sunset on January 1, 2002, the date when local-to-local must-carry obligations become effective. Under the conference agreement, PBS will designate the national satellite feed for purposes of this section. Section 1007. Application of Federal Communications Commission Regulations The section 119 license is amended to clarify that satellite carriers must comply with all rules, regulations, and authorizations of the Federal Communications Commission in order to obtain the benefits of the section 119 license. As provided in the House bill, this would include any programming exclusivity provisions or carriage requirements that the Commission may adopt. Violations of such rules, regulations or authorizations would render a carrier ineligible for the copyright statutory license with respect to that retransmission. [[Page S14711]] Section 1008. Rules for Satellite Carriers Retransmitting Television Broadcast Signals The Senate agrees to the House bill provisions regarding carriage of television broadcast signals, with certain amendments, as discussed below. Section 108 creates new sections 338 and 339 of the Communications Act of 1934. Section 338 addresses carriage of local television signals, while section 339 addresses distant television signals. New section 338 requires satellite carriers, by January 1, 2002, to carry upon request all local broadcast stations' signals in local markets in which the satellite carriers carry at least one signal pursuant to section 122 of title 17, United States Code. The conference report added the cross-reference to section 122 to the House provision to indicate the relationship between the benefits of the statutory license and the carriage requirements imposed by this Act. Thus, the conference report provides that, as of January 1, 2002, royalty-free copyright licenses for satellite carriers to retransmit broadcast signals to viewers in the broadcasters' service areas will be available only on a market-by-market basis. The procedural provisions applicable to section 338 (concerning costs, avoidance of duplication, channel positioning, compensation for carriage, and complaints by broadcast stations) are generally parallel to those applicable to cable systems. Within one year after enactment, the Federal Communications Commission is to issue implementing regulations which are to impose obligations comparable to those imposed on cable systems under paragraphs (3) and (4) of section 614(b) and paragraphs (1) and (2) of section 615(g), such as the requirement to carry a station's entire signal without additions or deletions. The obligation to carry local stations on contiguous channels is illustrative of the general requirement to ensure that satellite carriers position local stations in a way that is convenient and practically accessible for consumers. By directing the FCC to promulgate these must-carry rules, the conferees do not take any position regarding the application of must-carry rules to carriage of digital television signals by either cable or satellite systems. To make use of the local license, satellite carriers must provide the local broadcast station signal as part of their satellite service, in a manner consistent with paragraphs (b), (c), (d), and (e), FCC regulations, and retransmission consent requirements. Until January 1, 2002, satellite carriers are granted a royalty-free copyright license to retransmit broadcast signals on a station-by-station basis, consistent with retransmission consent requirements. The transition period is intended to provide the satellite industry with a transitional period to begin providing local- into-local satellite service to communities throughout the country. The conferees believe that the must-carry provisions of this Act neither implicate nor violate the First Amendment. Rather than requiring carriage of stations in the manner of cable's mandated duty, this Act allows a satellite carrier to choose whether to incur the must-carry obligation in a particular market in exchange for the benefits of the local statutory license. It does not deprive any programmers of potential access to carriage by satellite carriers. Satellite carriers remain free to carry any programming for which they are able to acquire the property rights. The provisions of this Act allow carriers an easier and more inexpensive way to obtain the right to use the property of copyright holders when they retransmit signals from all of a market's broadcast stations to subscribers in that market. The choice whether to retransmit those signals is made by carriers, not by the Congress. The proposed licenses are a matter of legislative grace, in the nature of subsidies to satellite carriers, and reviewable under the rational basis standard.\1\ --------------------------------------------------------------------------- See footnotes at end of Analysis. --------------------------------------------------------------------------- In addition, the conferees are confident that the proposed license provisions would pass constitutional muster even if subjected to the O'Brien standard applied to the cable must- carry requirement.\2\ The proposed provisions are intended to preserve free television for those not served by satellite or cable systems and to promote widespread dissemination of information from a multiplicity of sources. The Supreme Court has found both to be substantial interests, unrelated to the suppression of free expression.\3\ Providing the proposed license on a market-by-market basis furthers both goals by preventing satellite carriers from choosing to carry only certain stations and effectively preventing many other local broadcasters from reaching potential viewers in their service areas. The Conference Committee is concerned that, absent must-carry obligations, satellite carriers would carry the major network affiliates and few other signals. Non-carried stations would face the same loss of viewership Congress previously found with respect to cable noncarriage.\4\ The proposed licenses place satellite carrier in a comparable position to cable systems, competing for the same customers. Applying a must-carry rule in markets which satellite carriers choose to serve benefits consumers and enhances competition with cable by allowing consumers the same range of choice in local programming they receive through cable service. The conferees expect that, by January 1, 2002, satellite carriers' market share will have increased and that the Congress' interest in maintaining free over-the- air television will be undermined if local broadcasters are prevented from reaching viewers by either cable or satellite distribution systems. The Congress' preference for must-carry obligations has already been proven effective, as attested by the appearance of several emerging networks, which often serve underserved market segments. There are no narrower alternatives that would achieve the Congress' goals. Although the conferees expect that subscribers who receive no broadcast signals at all from their satellite service may install antennas or subscribe to cable service in addition to satellite service, the Conference Committee is less sanguine that subscribers who receive network signals and hundreds of other programming choices from their satellite carrier will undertake such trouble and expense to obtain over-the-air signals from independent broadcast stations. National feeds would also be counterproductive because they siphon potential viewers from local over-the-air affiliates. In sum, the Conference Committee finds that trading the benefits of the copyright license for the must carry requirement is a fair and reasonable way of helping viewers have access to all local programming while benefitting satellite carriers and their customers. Section 338(c) contains a limited exception to the general must-carry requirements, stating that a satellite carrier need not carry two local affiliates of the same network that substantially duplicate each others' programming, unless the duplicating stations are licensed to communities in different states. The latter provisions address unique and limited cases, including WMUR (Manchester, New Hampshire) / WCVB (Boston, Massachusetts) and WPTZ (Plattsburg, New York)/ WNNE (White River Junction, Vermont), in which mandatory carriage of both duplicating local stations upon request assures that satellite subscribers will not be precluded from receiving the network affiliate that is licensed to the state in which they reside. Because of unique technical challenges on satellite technology and constraints on the use of satellite spectrum, satellite carriers may initially be limited in their ability to deliver must carry signals into multiple markets. New compression technologies, such as video streaming, may help overcome these barriers however, and, if deployed, could enable satellite carriers to deliver must-carry signals into many more markets than they could otherwise. Accordingly, the conferees urge the FCC, pursuant to its obligations under section 338, or in any other related proceedings, to not prohibit satellite carriers from using reasonable compression, reformatting, or similar technologies to meet their carriage obligations, consistent with existing authority. * * * * * New section 339 of the Communications Act contains provisions concerning carriage of distant television stations by satellite carriers. Section 339(a)(1) limits satellite carriers to providing a subscriber with no more than two stations affiliated with a given television network from outside the local market. In addition, a satellite carrier that provides two distant signals to eligible households may also provide the local television signals pursuant to section 122 of title 17 if the subscriber offers local-to-local service in the subscriber's market. This provision furthers the congressional policy of localism and diversity of broadcast programming, which provides locally-relevant news, weather, and information, but also allows consumers in unserved households to enjoy network programming obtained via distant signals. Under new section 339(a)(2), which is based on the Senate amendment, the knowing and willful provision of distant television signals in violation of these restrictions is subject to a forfeiture penalty under section 503 of the Communications Act of $50,000 per violation or for each day of a continuing violation. New section 339(b)(1)(A) requires the Commission to commence within 45 days of enactment, and complete within one year after the date of enactment, a rulemaking to develop regulations to apply network nonduplication, syndicated exclusivity and sports blackout rules to the transmission of nationally distributed superstations by satellite carriers. New section 339(b)(1)(B) requires the Commission to promulgate regulations on the same schedule with regard to the application of sports blackout rules to network stations. These regulations under subparagraph (B) are to be imposed ``to the extent technically feasible and not economically prohibitive'' with respect to the affected parties. The burden of showing that conforming to rules similar to cable would be ``economically prohibitive'' is a heavy one. It would entail a very serious economic threat to the health of the carrier. Without that showing, the rules should be as similar as possible to that applicable to cable services. Section 339(c) of the Communications Act of 1934 addresses the three distinct areas discussed by the Commission in its Report & Order in Docket No. 98-201: (i) the definition of ``Grade B intensity,'' which is the substantive standard for determining eligibility to receive distant network stations by satellite, (ii) prediction of whether a signal of Grade B intensity from a particular station is present at a particular household, and (iii) measurement of whether a signal of Grade B intensity from a particular station is present [[Page S14712]] at a particular household. Section 339(c) addresses each of these topics. New section 339(c) addresses evaluation and possible recommendations for modification by the Commission of the definition of Grade B intensity, which is incorporated into the definition of ``unserved household'' in section 119 of the Copyright Act. Under section 339(c), the Commission is to complete a rulemaking within 1 year after enactment to evaluate, and if appropriate to recommend modifications to the Grade B intensity standard for analog signals set forth in 47 C.F.R. Sec. 73.683(a), for purposes of determining eligibility for distant signal satellite service. In addition, the Commission is to recommend a signal standard for digital signals to prepare Congress to update the statutory license for digital television broadcasting. The Committee intends that this report would reflect the FCC's best recommendations in light of all relevant considerations, and be based on whatever factors and information the Commission deems relevant to determining whether the signal intensity standard should be modified and in what way. As discussed above, the two-part process allows the Commission to recommend modifications leaving to Congress the decision- making power on modifications of the copyright licenses at issue. Section 339(c)(3) addresses requests to local television stations by consumers for waivers of the eligibility requirements under section 119 of title 17, United States Code. If a satellite carrier is barred from delivering distant network signals to a particular customer because the ILLR model predicts the customer to be served by one or more television stations affiliated with the relevant network, the consumer may submit to those stations, through his or her satellite carrier, a written request for a waiver. The statutory phrase ``station asserting that the retransmission is prohibited'' refers to a station that is predicted by the ILLR model to serve the household. Each such station must accept or reject the waiver request within 30 days after receiving the request from the satellite carrier. If a relevant network station grants the requested waiver, or fails to act on the waiver within 30 days, the viewer shall be deemed unserved with respect to the local network station in question. Section 339(c)(4) addresses the ILLR predictive model developed by the Commission in Docket No. 98-201. The provision requires the Commission to attempt to increase its accuracy further by taking into account not only terrain, as the ILLR model does now, but also land cover variations such as buildings and vegetation. If the Commission discovers other practical ways to improve the accuracy of the ILLR model still further, it shall implement those methods as well. The linchpin of whether particular proposed refinements to the ILLR model result in greater accuracy is whether the revised model's predictions are closer to the results of actual field testing in terms of predicting whether households are served by a local affiliate of the relevant network. The ILLR model of predicting subscribers' eligibility will be of particular use in rural areas. To make the ILLR more accurate and more useful to this group of Americans, the Conference Committee believes the Commission should be particularly careful to ensure that the ILLR is accurate in areas that use star routes, postal routes, or other addressing systems that may not indicate clearly the location of the actual dwelling of a potential subscriber. The Commission should to ensure the model accurately predicts the signal strength at the viewers' actual location. New section 339(c)(5) addresses the third area discussed in the Commission's Report & Order in Docket No. 98-201, namely signal intensity testing. This provision permits satellite carriers and broadcasters to carry out signal intensity measurements, using the procedures set forth by the Commission in 47 C.F.R. Sec. 73.686(d), to determine whether particular households are unserved. Unless the parties otherwise agree, any such tests shall be conducted on a ``loser pays'' basis, with the network station bearing the costs of tests showing the household to be unserved, and the satellite carrier bearing the costs of tests showing the household to be served. If the satellite carrier and station is unable to agree on a qualified individual to perform the test, the Commission is to designate an independent and neutral entity by rule. The Commission is to promulgate rules that avoid any undue burdens being imposed on any party. Section 1009. Retransmission Consent Section 1009 amends the provisions of section 325 of the Communications Act governing retransmission consent. As revised, section 325(b)(1) bars multichannel video programming distributors from retransmitting the signals of television broadcast stations, or any part thereof, without the express authority of the originating station. Section 325(b)(2) contains several exceptions to this general prohibition, including noncommercial stations, certain superstations, and, until the end of 2004, retransmission of not more than two distant signals by satellite carriers to unserved households outside of the local market of the retransmitted stations, and (E) for six months to the retransmission of local stations pursuant to the statutory license in section 122 of the title 17. Section 1009 also amends section 325(b) of the Communications Act to require the Commission to issue regulations concerning the exercise by television broadcast stations of the right to grant retransmission consent. The regulations would, until January 1, 2006, prohibit a television broadcast station from entering into an exclusive retransmission consent agreement with a multichannel video programming distributor or refusing to negotiate in good faith regarding retransmission consent agreements. A television station may generally offer different retransmission consent terms or conditions, including price terms, to different distributors. The FCC may determine that such different terms represent a failure to negotiate in good faith only if they are not based on competitive marketplace considerations. Section 1009 of the bill adds a new subsection (e) to section 325 of the Communications Act. New subsection 325(e) creates a set of expedited enforcement procedures for the alleged retransmission of a television broadcast station in its own local market without the station's consent. The purpose of these expedited procedure is to ensure that delays in obtaining relief from violations do not make the right to retransmission consent an empty one. The new provision requires 45-day processing of local-to-local retransmission consent complaints at the Commission, followed by expedited enforcement of any Commission orders in the United States District Court for the Eastern District of Virginia. In addition, a television broadcast station that has been retransmitted in its local market without its consent will be entitled to statutory damages of $25,000 per violation in an action in federal district court. Such damages will be awarded only if the television broadcast station agrees to contribute any statutory damage award above $1,000 to the United States Treasury for public purposes. The expedited enforcement provision contains a sunset which prevents the filing of any complaint with the Commission or any action in federal district court to enforce any Commission order under this section after December 31, 2001. The conferees believe that these procedural provisions, which provide ample due process protections while ensuring speedy enforcement, will ensure that retransmission consent will be respected by all parties and promote a smoothly functioning marketplace. Section 1010. Severability Section 1010 of the Act provides that if any provision of section 325(b) of the Communications Act as amended by this Act is declared unconstitutional, the remaining provisions of that section will stand. Section 1011. Technical Amendments Section 1011 of this Act makes technical and conforming amendments to sections 101, 111, 119, 501, and 510 of the Copyright Act. Apart from these technical amendments, this legislation makes no changes to section 111 of the Copyright Act. In particular, nothing in this legislation makes any changes concerning entitlement or eligibility for the statutory licenses under sections 111 and 119, nor specifically to the definitions of ``cable system'' under section 111(f), and ``satellite carrier'' under section 119(d)(6). Certain technical amendments to these definitions that were included in the Conference Report to the Intellectual Property and Communications Omnibus Reform Act (IPCORA) of 1999 are not included in this legislation. Congress intends that neither the courts nor the Copyright Office give any legal significance either to the inclusion of the amendments in the IPCORA conference report or their omission in this legislation. These statutory definitions are to be interpreted in the same way after enactment of this legislation as they were interpreted prior to enactment of this legislation. Section 1011(b) makes a technical and clarifying change to the definition of a ``work made for hire'' in section 101 of the Copyright Act. Sound recordings have been registered in the Copyright Office as works made for hire since being protected in their own right. This clarifying amendment shall not be deemed to imply that any sound recording or any other work would not otherwise qualify as a work made for hire in the absence of the amendment made by this subsection. Section 1012. Effective dates. Under section 1012 of this Act, sections 1001, 1003, 1005, and 1007 through 1011 shall be effective on the date of enactment. The amendments made by sections 1002, 1004, and 1006 shall be effective as of July 1, 1999. TITLE II--RURAL LOCAL TELEVISION SIGNALS Section 2001. Short Title This title may be referred to as the ``Rural Local Broadcast Signal Act.'' Section 2002. Local Television Service in Unserved and Underserved Markets To encourage the FCC to approve needed licenses (or other authorizations to use spectrum) to provide local TV service in rural areas, the Commission is required to make determinations regarding needed licenses within one year of enactment. However, the FCC shall ensure that no license or authorization provided under this section will cause ``harmful interference'' to the primary users of the spectrum or to public safety use. Subparagraph (2), states that the Commission shall not license under subsection (a) any facility that causes harmful interference to existing primary users of spectrum or to public safety use. The Commission typically categorizes a licensed service as primary or secondary. Under Commission rules, a secondary service cannot be authorized to operate in the same band as a [[Page S14713]] primary user of that band unless the proposed secondary user conclusively demonstrates that the proposed secondary use will not cause harmful interference to the primary service. The Commission is to define ``harmful interference'' pursuant to the definition at 47 C.F.R. section 2.1 and in accordance with Commission rules and policies. For purposes of section 2005(b)(3) the FCC may consider a compression, reformatting or other technology to be unreasonable if the technology is incompatible with other applicable FCC regulation or policy under the Communications Act of 1934, as amended. The Commission also may not restrict any entity granted a license or other authorization under this section, except as otherwise specified, from using any reasonable compression, reformatting, or other technology. TITLE III--TRADEMARK CYBERPIRACY PREVENTION Section 3001. Short Title; References This section provides that the Act may be cited as the ``Anticybersquatting Consumer Protection Act'' and that any references within the bill to the Trademark Act of 1946 shall be a reference to the Act entitled ``An Act to provide for the registration and protection of trademarks used in commerce, to carry out the provisions of certain international conventions, and for other purposes,'' approved July 5, 1946 (15 U.S.C. 1051 et seq.), also commonly referred to as the Lanham Act. Sec. 3002. Cyberpiracy Prevention Subsection (a). In General. This subsection amends the Trademark Act to provide an explicit trademark remedy for cybersquatting under a new section 43(d). Under paragraph (1)(A) of the new section 43(d), actionable conduct would include the registration, trafficking in, or use of a domain name that is identical or confusingly similar to, or dilutive of, the mark of another, including a personal name that is protected as a mark under section 43 of the Lanham Act, provided that the mark was distinctive (i.e., enjoyed trademark status) at the time the domain name was registered, or in the case of trademark dilution, was famous at the time the domain name was registered. The bill is carefully and narrowly tailored, however, to extend only to cases where the plaintiff can demonstrate that the defendant registered, trafficked in, or used the offending domain name with bad- faith intent to profit from the goodwill of a mark belonging to someone else. Thus, the bill does not extend to innocent domain name registrations by those who are unaware of another's use of the name, or even to someone who is aware of the trademark status of the name but registers a domain name containing the mark for any reason other than with bad faith intent to profit from the goodwill associated with that mark. The phrase ``including a personal name which is protected as a mark under this section'' addresses situations in which a person's name is protected under section 43 of the Lanham Act and is used as a domain name. The Lanham Act prohibits the use of false designations of origin and false or misleading representations. Protection under 43 of the Lanham Act has been applied by the courts to personal names which function as marks, such as service marks, when such marks are infringed. Infringement may occur when the endorsement of products or services in interstate commerce is falsely implied through the use of a personal name, or otherwise, without regard to the goods or services of the parties. This protection also applies to domain names on the Internet, where falsely implied endorsements and other types of infringement can cause greater harm to the owner and confusion to a consumer in a shorter amount of time than is the case with traditional media. The protection offered by section 43 to a personal name which functions as a mark, as applied to domain names, is subject to the same fair use and first amendment protections as have been applied traditionally under trademark law, and is not intended to expand or limit any rights to publicity recognized by States under State law. Paragraph (1)(B)(i) of the new section 43(d) sets forth a number of nonexclusive, nonexhaustive factors to assist a court in determining whether the required bad-faith element exists in any given case. These factors are designed to balance the property interests of trademark owners with the legitimate interests of Internet users and others who seek to make lawful uses of others' marks, including for purposes such as comparative advertising, comment, criticism, parody, news reporting, fair use, etc. The bill suggests a total of nine factors a court may wish to consider. The first four suggest circumstances that may tend to indicate an absence of bad-faith intent to profit from the goodwill of a mark, and the next four suggest circumstances that may tend to indicate that such bad-faith intent exits. The last factor may suggest either bad-faith or an absence thereof depending on the circumstances. First, under paragraph (1)(B)(i)(I), a court may consider whether the domain name registrant has trademark or any other intellectual property rights in the name. This factor recognizes, as does trademark law in general, that there may be concurring uses of the same name that are noninfringing, such as the use of the ``Delta'' mark for both air travel and sink faucets. Similarly, the registration of the domain name ``deltaforce.com'' by a movie studio would not tend to indicate a bad faith intent on the part of the registrant to trade on Delta Airlines or Delta Faucets' trademarks. Second, under paragraph (1)(B)(i)(II), a court may consider the extent to which the domain name is the same as the registrant's own legal name or a nickname by which that person is commonly identified. This factor recognizes, again as does the concept of fair use in trademark law, that a person should be able to be identified by their own name, whether in their business or on a web site. Similarly, a person may bear a legitimate nickname that is identical or similar to a well-known trademark, such as in the well- publicized case of the parents who registered the domain name ``pokey.org'' for their young son who goes by that name, and these individuals should not be deterred by this bill from using their name online. This factor is not intended to suggest that domain name registrants may evade the application of this act by merely adopting Exxon, Ford, or other well-known marks as their nicknames. It merely provides a court with the appropriate discretion to determine whether or not the fact that a person bears a nickname similar to a mark at issue is an indication of an absence of bad-faith on the part of the registrant. Third, under paragraph (1)(B)(i)(III), a court may consider the domain name registrant's prior use, if any, of the domain name in connection with the bona fide offering of goods or services. Again, this factor recognizes that the legitimate use of the domain name in online commerce may be a good indicator of the intent of the person registering that name. Where the person has used the domain name in commerce without creating a likelihood of confusion as to the source or origin of the goods or services and has not otherwise attempted to use the name in order to profit from the goodwill of the trademark owner's name, a court may look to this as an indication of the absence of bad faith on the part of the registrant. Fourth, under paragraph (1)(B)(i)(IV), a court may consider the person's bona fide noncommercial or fair use of the mark in a web site that is accessible under the domain name at issue. This factor is intended to balance the interests of trademark owners with the interests of those who would make lawful noncommercial or fair uses of others' marks online, such as in comparative advertising, comment, criticism, parody, news reporting, etc. Under the bill, the mere fact that the domain name is used for purposes of comparative advertising, comment, criticism, parody, news reporting, etc., would not alone establish a lack of bad-faith intent. The fact that a person uses a mark in a site in such a lawful manner may be an appropriate indication that the person's registration or use of the domain name lacked the required element of bad-faith. This factor is not intended to create a loophole that otherwise might swallow the bill, however, by allowing a domain name registrant to evade application of the Act by merely putting up a noninfringing site under an infringing domain name. For example, in the well know case of Panavision Int'l v. Toeppen, 141 F.3d 1316 (9th Cir. 1998), a well known cybersquatter had registered a host of domain names mirroring famous trademarks, including names for Panavision, Delta Airlines, Neiman Marcus, Eddie Bauer, Lufthansa, and more than 100 other marks, and had attempted to sell them to the mark owners for amounts in the range of $10,000 to $15,000 each. His use of the ``panavision.com'' and ``panaflex.com'' domain names was seemingly more innocuous, however, as they served as addresses for sites that merely displayed pictures of Pana Illinois and the word ``Hello'' respectively. This bill would not allow a person to evade the holding of that case--which found that Mr. Toeppen had made a commercial use of the Panavision marks and that such uses were, in fact, diluting under the Federal Trademark Dilution Act--merely by posting noninfringing uses of the trademark on a site accessible under the offending domain name, as Mr. Toeppen did. Similarly, the bill does not affect existing trademark law to the extent it has addressed the interplay between First Amendment protections and the rights of trademark owners. Rather, the bill gives courts the flexibility to weigh appropriate factors in determining whether the name was registered or used in bad faith, and it recognizes that one such factor may be the use the domain name registrant makes of the mark. Fifth, under paragraph (1)(B)(i)(V), a court may consider whether, in registering or using the domain name, the registrant intended to divert consumers away from the trademark owner's website to a website that could harm the goodwill of the mark, either for purposes of commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site. This factor recognizes that one of the main reasons cybersquatters use other people's trademarks is to divert Internet users to their own sites by creating confusion as to the source, sponsorship, affiliation, or endorsement of the site. This is done for a number of reasons, including to pass off inferior goods under the name of a well-known mark holder, to defraud consumers into providing personally identifiable information, such as credit card numbers, to attract ``eyeballs'' to sites that price online advertising according to the number of ``hits'' the site receives, or even just to harm the value of the mark. Under this provision, [[Page S14714]] a court may give appropriate weight to evidence that a domain name registrant intended to confuse or deceive the public in this manner when making a determination of bad-faith intent. Sixth, under paragraph (1)(B)(i)(VI), a court may consider a domain name registrant's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain, where the registrant has not used, and did not have any intent to use, the domain name in the bona fide offering of any goods or services. A court may also consider a person's prior conduct indicating a pattern of such conduct. This factor is consistent with the court cases, like the Panavision case mentioned above, where courts have found a defendant's offer to sell the domain name to the legitimate mark owner as being indicative of the defendant's intent to trade on the value of a trademark owner's marks by engaging in the business of registering those marks and selling them to the rightful trademark owners. It does not suggest that a court should consider the mere offer to sell a domain name to a mark owner or the failure to use a name in the bona fide offering of goods or services as sufficient to indicate bad faith. Indeed, there are cases in which a person registers a name in anticipation of a business venture that simply never pans out. And someone who has a legitimate registration of a domain name that mirrors someone else's domain name, such as a trademark owner that is a lawful concurrent user of that name with another trademark owner, may, in fact, wish to sell that name to the other trademark owner. This bill does not imply that these facts are an indication of bad-faith. It merely provides a court with the necessary discretion to recognize the evidence of bad-faith when it is present. In practice, the offer to sell domain names for exorbitant amounts to the rightful mark owner has been one of the most common threads in abusive domain name registrations. Finally, by using the financial gain standard, this paragraph allows a court to examine the motives of the seller. Seventh, under paragraph (1)(B)(i)(VII), a court may consider the registrant's intentional provision of material and misleading false contact information in an application for the domain name registration, the person's intentional failure to maintain accurate contact information, and the person's prior conduct indicating a pattern of such conduct. Falsification of contact information with the intent to evade identification and service of process by trademark owners is also a common thread in cases of cybersquatting. This factor recognizes that fact, while still recognizing that there may be circumstances in which the provision of false information may be due to other factors, such as mistake or, as some have suggested in the case of political dissidents, for purposes of anonymity. This bill balances those factors by limiting consideration to the person's contact information, and even then requiring that the provision of false information be material and misleading. As with the other factors, this factor is nonexclusive and a court is called upon to make a determination based on the facts presented whether or not the provision of false information does, in fact, indicate bad- faith. Eight, under paragraph (1)(B)(i)(VIII), a court may consider the domain name registrant's acquisition of multiple domain names which the person knows are identical or confusingly similar to, or dilutive of, others' marks. This factor recognizes the increasingly common cybersquatting practice known as ``warehousing'', in which a cybersquatter registers multiple domain names--sometimes hundreds, even thousands--that mirror the trademarks of others. By sitting on these marks and not making the first move to offer to sell them to the mark owner, these cybersquatters have been largely successful in evading the case law developed under the Federal Trademark Dilution Act. This bill does not suggest that the mere registration of multiple domain names is an indication of bad faith, but it allows a court to weigh the fact that a person has registered multiple domain names that infringe or dilute the trademarks of others as part of its consideration of whether the requisite bad-faith intent exists. Lastly, under paragraph (1)(B)(i)(IX), a court may consider the extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous within the meaning of subsection (c)(1) of section 43 of the Trademark Act of 1946. The more distinctive or famous a mark has become, the more likely the owner of that mark is deserving of the relief available under this act. At the same time, the fact that a mark is not well-known may also suggest a lack of bad-faith. Paragraph (1)(B)(ii) underscores the bad-faith requirement by making clear that bad-faith shall not be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful. Paragraph (1)(C) makes clear that in any civil action brought under the new section 43(d), a court may order the forfeiture, cancellation, or transfer of a domain name to the owner of the mark. Paragraph (1)(D) clarifies that a prohibited ``use'' of a domain name under the bill applies only to a use by the domain name registrant or that registrant's authorized licensee. Paragraph (1)(E) defines what means to ``traffic in'' a domain name. Under this Act, ``traffics in'' refers to transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration. Paragraph (2)(A) provides for in rem jurisdiction, which allows a mark owner to seek the forfeiture, cancellation, or transfer of an infringing domain name by filing an in rem action against the name itself, where the mark owner has satisfied the court that it has exercised due diligence in trying to locate the owner of the domain name but is unable to do so, or where the mark owner is otherwise unable to obtain in personam jurisdiction over such person. As indicated above, a significant problem faced by trademark owners in the fight against cybersquatting is the fact that many cybersquatters register domain names under aliases or otherwise provide false information in their registration applications in order to avoid identification and service of process by the mark owner. This bill will alleviate this difficulty, while protecting the notions of fair play and substantial justice, by enabling a mark owner to seek an injunction against the infringing property in those cases where, after due diligence, a mark owner is unable to proceed against the domain name registrant because the registrant has provided false contact information and is otherwise not to be found, or where a court is unable to assert personal jurisdiction over such person, provided the mark owner can show that the domain name itself violates substantive federal trademark law (i.e., that the domain name violates the rights of the registrant of a mark registered in the Patent and Trademark Office, or section 43(a) or (c) of the Trademark Act). Under the bill, a mark owner will be deemed to have exercised due diligence in trying to find a defendant if the mark owner sends notice of the alleged violation and intent to proceed to the domain name registrant at the postal and e- mail address provided by the registrant to the registrar and publishes notice of the action as the court may direct promptly after filing the action. Such acts are deemed to constitute service of process by paragraph (2)(B). The concept of in rem jurisdiction has been with us since well before the Supreme Court's landmark decision in Pennoyer v. Neff, 95 U.S. 714 (1877). Although more recent decisions have called into question the viability of quasi in rem ``attachment'' jurisdiction, see Shaffer v. Heitner, 433 U.S. 186 (1977), the Court has expressly acknowledged the propriety of true in rem proceedings (or even type I quasi in rem proceedings \5\) where ``claims to the property itself are the source of the underlying controversy between the plaintiff and the defendant.'' Id. at 207-08. The Act clarifies the availability of in rem jurisdiction in appropriate cases involving claims by trademark holders against cyberpirates. In so doing, the Act reinforces the view that in rem jurisdiction has continuing constitutional vitality, see R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943, 957-58 (4th Cir. 1999) (``In rem actions only require that a party seeking an interest in a res bring the res into the custody of the court and provide reasonable, public notice of its intention to enable others to appear in the action to claim an interest in the res.''); Chapman v. Vande Bunte, 604 F. Supp. 714, 716-17 (E.D. N.C. 1985) (``In a true in rem proceeding, in order to subject property to a judgment in rem, due process requires only that the property itself have certain minimum contacts with the territory of the forum.''). By authorizing in rem jurisdiction, the Act also attempts to respond to the problems faced by trademark holders in attempting to effect personal service of process on cyberpirates. In an effort to avoid being held accountable for their infringement or dilution of famous trademarks, cyberpirates often have registered domain names under fictitious names and addresses or have used offshore addresses or companies to register domain names. Even when they actually do receive notice of a trademark holder's claim, cyberpirates often either refuse to acknowledge demands from a trademark holder altogether, or simply respond to an initial demand and then ignore all further efforts by the trademark holder to secure the cyberpirate's compliance. The in rem provisions of the Act accordingly contemplate that a trademark holder may initiate in rem proceedings in cases where domain name registrants are not subject to personal jurisdiction or cannot reasonably be found by the trademark holder. Paragraph (2)(C) provides that in an in rem proceeding, a domain name shall be deemed to have its situs in the judicial district in which (1) the domain name registrar, registry, or other domain name authority that registered or assigned the domain name is located, or (2) documents sufficient to establish control and authority regarding the disposition of the registration and use of the domain name are deposited with the court. Paragraph (2)(D) limits the relief available in such an in rem action to an injunction ordering the forfeiture, cancellation, or transfer of the domain name. Upon receipt of a written notification of the complaint, the domain name registrar, registry, or other authority is required to deposit with the court documents sufficient to establish the court's control and authority regarding the disposition of the registration and use of the domain name to the court, and may not transfer, suspend, or otherwise modify the domain name during the pendency of the action, except upon order of the court. Such domain [[Page S14715]] name registrar, registry, or other authority is immune from injunctive or monetary relief in such an action, except in the case of bad faith or reckless disregard, which would include a willful failure to comply with any such court order. Paragraph (3) makes clear that the new civil action created by this Act and the in rem action established therein, and any remedies available under such actions, shall be in addition to any other civil action or remedy otherwise applicable. This paragraph thus makes clear that the creation of a new section 43(d) in the Trademark Act does not in any way limit the application of current provisions of trademark, unfair competition and false advertising, or dilution law, or other remedies under counterfeiting or other statutes, to cybersquatting cases. Paragraph (4) makes clear that the in rem jurisdiction established by the bill is in addition to any other jurisdiction that otherwise exists, whether in rem or in personam. Subsection (b). Cyberpiracy Protection for Individuals Subsection (b) prohibits the registration of a domain name that is the name of another living person, or a name that is substantially and confusingly similar thereto, without such person's permission, if the registrant's specific intent is to profit from the domain name by selling it for financial gain to such person or a third party. While the provision is broad enough to apply to the registration of full names (e.g., johndoe.com), appellations (e.g., doe.com), and variations thereon (e.g. john-doe.com or jondoe.com), the provision is still very narrow in that it requires a showing that the registrant of the domain name registered that name with a specific intent to profit from the name by selling it to that person or to a third party for financial gain. This section authorizes the court to grant injunctive relief, including ordering the forfeiture or cancellation of the domain name or the transfer of the domain name to the plaintiff. Although the subsection does not authorize a court to grant monetary damages, the court may award costs and attorneys' fees to the prevailing party in appropriate cases. This subsection does not prohibit the registration of a domain name in good faith by an owner or licensee of a copyrighted work, such as an audiovisual work, a sound recording, a book, or other work of authorship, where the personal name is used in, affiliated with, or related to that work, where the person's intent in registering the domain is not to sell the domain name other than in conjunction with the lawful exploitation of the work, and where such registration is not prohibited by a contract between the domain name registered and the named person. This limited exemption recognizes the First Amendment issues that may arise in such cases and defers to existing bodies of law that have developed under State and Federal law to address such uses of personal names in conjunction with works of expression. Such an exemption is not intended to provide a loophole for those whose specific intent is to profit from another's name by selling the domain name to that person or a third party other than in conjunction with the bona fide exploitation of a legitimate work of authorship. For example, the registration of a domain name containing a personal name by the author of a screenplay that bears the same name, with the intent to sell the domain name in conjunction with the sale or license of the screenplay to a production studio would not be barred by this subsection, although other provisions of State or Federal law may apply. On the other hand, the exemption for good faith registrations of domain names tied to legitimate works of authorship would not exempt a person who registers a personal name as a domain name with the intent to sell the domain name by itself, or in conjunction with a work of authorship (e.g., a copyrighted web page) where the real object of the sale is the domain name, rather than the copyrighted work. In sum, this subsection is a narrow provision intended to curtail one form of ``cybersquatting''--the act of registering someone else's name as a domain name for the purpose of demanding remuneration from the person in exchange for the domain name. Neither this section nor any other section in this bill is intended to create a right of publicity of any kind with respect to domain names. Nor is it intended to create any new property rights, intellectual or otherwise, in a domain name that is the name of a person. This subsection applies prospectively only, affecting only those domain names registered on or after the date of enactment of this Act. Sec. 3003. Damages and Remedies This section applies traditional trademark remedies, including injunctive relief, recovery of defendant's profits, actual damages, and costs, to cybersquatting cases under the new section 43(d) of the Trademark Act. The bill also amends section 35 of the Trademark Act to provide for statutory damages in cybersquatting cases, in an amount of not less than $1,000 and not more than $100,000 per domain name, as the court considers just. Sec. 3004. Limitation on Liability This section amends section 32(2) of the Trademark Act to extend the Trademark Act's existing limitations on liability to the cybersquatting context. This section also creates a new subparagraph (D) in section 32(2) to encourage domain name registrars and registries to work with trademark owners to prevent cybersquatting through a limited exemption from liability for domain name registrars and registries that suspend, cancel, or transfer domain names pursuant to a court order or in the implementation of a reasonable policy prohibiting cybersquatting. Under this exemption, a registrar, registry, or other domain name registration authority that suspends, cancels, or transfers a domain name pursuant to a court order or a reasonable policy prohibiting cybersquatting will not be held liable for monetary damages, and will be not be subject to injunctive relief provided that the registrar, registry, or other registration authority has deposited control of the domain name with a court in which an action has been filed regarding the disposition of the domain name, it has not transferred, suspended, or otherwise modified the domain name during the pendency of the action, other than in response to a court order, and it has not willfully failed to comply with any such court order. Thus, the exemption will allow a domain name registrar, registry, or other registration authority to avoid being joined in a civil action regarding the disposition of a domain name that has been taken down pursuant to a dispute resolution policy, provided the court has obtained control over the name from the registrar, registry, or other registration authority, but such registrar, registry, or other registration authority would not be immune from suit for injunctive relief where no such action has been filed or where the registrar, registry, or other registration authority has transferred, suspended, or otherwise modified the domain name during the pendency of the action or wilfully failed to comply with a court order. This section also protects the rights of domain name registrants against overreaching trademark owners. Under a new subparagraph (D)(iv) in section 32(2), a trademark owner who knowingly and materially misrepresents to the domain name registrar or registry that a domain name is infringing shall be liable to the domain name registrant for damages resulting from the suspension, cancellation, or transfer of the domain name. In addition, the court may grant injunctive relief to the domain name registrant by ordering the reactivation of the domain name or the transfer of the domain name back to the domain name registrant. In creating a new subparagraph (D)(iii) of section 32(2), this section codifies current case law limiting the secondary liability of domain name registrars and registries for the act of registration of a domain name, absent bad-faith on the part of the registrar and registry. Finally, subparagraph (D)(v) provides additional protections for domain name holders by allowing a domain name registrant whose name has been suspended, disabled, or transferred to file a civil action to establish that the registration or use of the domain name by such registrant is not a violation of the Lanham Act. In such cases, a court may grant injunctive relief to the domain name registrant, including the reactivation of the domain name or transfer of the domain name to the domain name registrant. Sec. 3005. Definitions This section amends the Trademark Act's definitions section (section 45) to add definitions for key terms used in this Act. First, the term ``Internet'' is defined consistent with the meaning given that term in the Communications Act (47 U.S.C. 230(f)(1)). Second, this section creates a narrow definition of ``domain name'' to target the specific bad faith conduct sought to be addressed while excluding such things as screen names, file names, and other identifiers not assigned by a domain name registrar or registry. Sec. 3006. Study on Abusive Domain Name Registrations Involving Personal Names This section directs the Secretary of Commerce, in consultation with the Patent and Trademark Office and the Federal Election Commission, to conduct a study and report to Congress with recommendations on guidelines and procedures for resolving disputes involving the registration or use of domain names that include personal names of others or names that are confusingly similar thereto. This section further directs the Secretary of Commerce to collaborate with the Internet Corporation for Assigned Names and Numbers (ICANN) to develop guidelines and procedures for resolving disputes involving the registration or use of domain names that include personal names of others or names that are confusingly similar thereto. Sec. 3007. Historic Preservation This section provides a limited immunity from suit under trademark law for historic buildings that are on or eligible for inclusion on the National Register of Historic Places, or that are designated as an individual landmark or as a contributing building in a historic district. Sec. 3008. Savings Clause This section provides an explicit savings clause making clear that the bill does not affect traditional trademark defenses, such as fair use, or a person's first amendment rights. Sec. 3009. Effective Date This section provides that damages provided for under this bill shall not apply to the registration, trafficking, or use of a domain name that took place prior to the enactment of this Act. TITLE VI--INVENTOR PROTECTION Sec. 4001. Short Title This title may be cited as the ``American Inventors Protection Act of 1999.'' [[Page S14716]] Sec. 4002. Table of Contents Section 4002 enumerates the table of contents of this title. Subtitle A--Inventors' Rights Subtitle A creates a new section 297 in chapter 29 of title 35 of the United States Code, designed to curb the deceptive practices of certain invention promotion companies. Many of these companies advertise on television and in magazines that inventors may call a toll-free number for assistance in marketing their inventions. They are sent an invention evaluation form, which they are asked to complete to allow the promoter to provide expert analysis of the market potential of their inventions. The inventors return the form with descriptions of the inventions, which become the basis for contacts by salespeople at the promotion companies. The next step is usually a ``professional''-appearing product research report which contains nothing more than boilerplate information stating that the invention has outstanding market potential and fills an important need in the field. The promotion companies attempt to convince the inventor to buy their marketing services, normally on a sliding scale in which the promoter will ask for a front-end payment of up to $10,000 and a percentage of resulting profits, or a reduced front-end payment of $6,000 or $8,000 with commensurately larger royalties on profits. Once paid under such a scenario, a promoter will typically and only forward information to a list of companies that never respond. This subtitle addresses these problems by (1) requiring an invention promoter to disclose certain materially relevant information to a customer in writing prior to entering into a contract for invention promotion services; (2) establishing a federal cause of action for inventors who are injured by material false of fraudulent statements or representations, or any omission of material fact, by an invention promoter, or by the invention promoter's failure to make the required written disclosures; and (3) requiring the Director of the United States Patent and Trademark Office to make publicly available complaints received involving invention promoters, along with the response to such complaints, if any, from the invention promoters. Sec. 4101. Short title This subtitle may be cited as the ``Inventors'' Rights Act of 1999.'' Sec. 4102. Integrity in invention promotion services This section adds a new section 297 to in chapter 29 of title 35, United States Code, intended to promote integrity in invention promotion services. Legitimate invention assistance and development organizations can be of great assistance to novice inventors by providing information on how to protect an invention, how to develop it, how to obtain financing to manufacture it, or how to license or sell the invention. While many invention developers are legitimate, the unscrupulous ones take advantage of untutored inventors, asking for large sums of money up front for which they provide no real service in return. This new section provides a much needed safeguard to assist independent inventors in avoiding becoming victims of the predatory practices of unscrupulous invention promoters. New section 297(a) of title 35 requires an invention promoter to disclose certain materially relevant information to a customer in writing prior to entering into a contract for invention promotion services. Such information includes: (1) The number of inventions evaluated by the invention promoter and stating the number of those evaluated positively and the number negatively; (2) The number of customers who have contracted for services with the invention promoter in the prior five years; (3) The number of customers known by the invention promoter to have received a net financial profit as a direct result of the invention promoter's services; (4) The number of customers known by the invention promoter to have received license agreements for their inventions as a direct result of the invention promoter's services; and (5) the names and addresses of all previous invention promotion companies with which the invention promoter or its officers have collectively or individually been affiliated in the previous 10 years to enable the customer to evaluate the reputations of these companies. New section 297(b) of title 35 establishes a civil cause of action against any invention promoter who injures a customer through any material false or fraudulent statement, representation, or omission of material fact by the invention promoter, or any person acting on behalf of the invention promoter, or through failure of the invention promoter to make all the disclosures required under subsection (a). In such a civil action, the customer may recover, in addition to reasonable costs and attorneys' fees, the amount of actual damages incurred by the customer or, at the customer's election, statutory damages up to $5,000, as the court considers just. Subsection (b)(2) authorizes the court to increase damages to an amount not to exceed three times the amount awarded as statutory or actual damages in a case where the customer demonstrates, and the court finds, that the invention promoter intentionally misrepresented or omitted a material fact to such customer, or failed to make the required disclosures under subsection (a), for the purpose of deceiving the customer. In determining the amount of increased damages, courts may take into account whether regulatory sanctions or other corrective action has been taken as a result of previous complaints against the invention promoter. New section 297(c) defines the terms used in the section. These definitions are carefully crafted to cover true invention promoters without casting the net too broadly. Paragraph (3) excepts from the definition of ``invention promoter'' departments and agencies of the Federal, state, and local governments; any nonprofit, charitable, scientific, or educational organizations qualified under applicable State laws or described under Sec. 170(b)(1)(A) of the Internal Revenue Code of 1986; persons or entities involved in evaluating the commercial potential of, or offering to license or sell, a utility patent or a previously filed nonprovisional utility patent application; any party participating in a transaction involving the sale of the stock or assets of a business; or any party who directly engages in the business of retail sales or distribution of products. Paragraph (4) defines the term ``invention promotion services'' to mean the procurement or attempted procurement for a customer of a firm, corporation, or other entity to develop and market products or services that include the customer's invention. New section 297(d) requires the Director of the USPTO to make publicly available all complaints submitted to the USPTO regarding invention promoters, together with any responses by invention promoters to those complaints. The Director is required to notify the invention promoter of a complaint and provide a reasonable opportunity to reply prior to making such complaint public. Section 297(d)(2) authorizes the Director to request from Federal and State agencies copies of any complaints relating to invention promotion services they have received and to include those complaints in the records maintained by the USPTO regarding invention promotion services. It is anticipated that the Director will use appropriate discretion in making such complaints available to the public for a reasonably sufficient, yet limited, length of time, such as a period of three years from the date of receipt, and that the Director will consult with the Federal Trade Commission to determine whether the disclosure requirements of the FTC and section 297(a) can be coordinated. Sec. 4103. Effective date This section provides that the effective date of section 297 will be 60 days after the date of enactment of this Act. Subtitle B--Patent and Trademark Fee Fairness Subtitle B provides patent and trademark fee reform, by lowering patent fees, by directing the Director of the USPTO to study alternative fee structures to encourage full participation in our patent system by all inventors, large and small, and by strengthening the prohibition against the use of trademark fees for non-trademark uses. Sec. 4201. Short title This subtitle may be cited as the ``Patent and Trademark Fee Fairness Act of 1999.'' Sec. 4202. Adjustment of patent fees. This section reduces patent filing an reissue fees by $50, and reduces patent maintenance fees by $110. This would mark only the second time in history that patent fees have been reduced. Because trademark fees have not been increased since 1993 and because of the application of accounting based cost principles and systems, patent fee income has been partially offsetting the cost of trademark operations. This section will restore fairness to patent and trademark fees by reducing patent fees to better reflect the cost of services. Sec. 4203. Adjustment of trademark fees. This section will allow the Director of the USPTO to adjust trademark fees in fiscal year 2000 without regard to fluctuations in the Consumer Price Index in order to better align those fees with the costs of services. Sec. 4204. Study on alternative fee structures This section directs the Director of the USPTO to conduct a study and report to the Judiciary Committees of the House and Senate within one year on alternative fee structures that could be adopted by the USPTO to encourage maximum participation in the patent system by the American inventor community. Sec. 4205. Patent and Trademark Office funding Pursuant to section 42(c) of the Patent Act, fees available to the Commissioner under section 31 of the Trademark Act of 1946 \6\ may be used only for the processing of trademark registrations and for other trademark-related activities, and to cover a proportionate share of the administrative costs of the USPTO. In an effort to more tightly ``fence'' trademark funds for trademark purposes, section 4205 amends this language such that all (trademark) fees available to the Commissioner shall be used for trademark registration and other trademark-related purposes. In other words, the Commissioner may exercise no discretion when spending funds; they must be earmarked for trademark purposes. Subtitle C--First Inventor Defense Subtitle C strikes an equitable balance between the interests of U.S. inventors who have invented and commercialized business methods and processes, many of which until recently were thought not to be patentable, and U.S. or foreign inventors who later patent the methods and processes. The subtitle creates a defense for inventors who have reduced an invention to practice in the U.S. at [[Page S14717]] least one year before the patent filing date of another, typically later, inventor and commercially used the invention in the U.S. before the filing date. A party entitled to the defense must not have derived the invention from the patent owner. The bill protects the patent owner by providing that the establishment of the defense by such an inventor or entrepreneur does not invalidate the patent. The subtitle clarifies the interface between two key branches of intellectual property law--patents and trade secrets. Patent law serves the public interest by encouraging innovation and investment in new technology, and may be thought of as providing a right to exclude other parties from an invention in return for the inventor making a public disclosure of the invention. Trade secret law, however, also serves the public interest by protecting investments in new technology. Trade secrets have taken on a new importance with an increase in the ability to patent all business methods and processes. It would be administratively and economically impossible to expect any inventor to apply for a patent on all methods and processes now deemed patentable. In order to protect inventors and to encourage proper disclosure, this subtitle focuses on methods for doing and conducting business, including methods used in connection with internal commercial operations as well as those used in connection with the sale or transfer of useful end results--whether in the form of physical products, or in the form of services, or in the form of some other useful results; for example, results produced through the manipulation of data or other inputs to produce a useful result. The earlier-inventor defense is important to many small and large businesses, including financial services, software companies, and manufacturing firms--any business that relies on innovative business processes and methods. The 1998 opinion by the U.S. Court of Appeals for the Federal Circuit in State Street Bank and Trust Co. v. Signature Financial Group,\7\ which held that methods of doing business are patentable, has added to the urgency of the issue. As the Court noted, the reference to the business method exception had been improperly applied to a wide variety of processes, blurring the essential question of whether the invention produced a ``useful, concrete, and tangible result.'' In the wake of State Street, thousands of methods and processes used internally are now being patented. In the past, many businesses that developed and used such methods and processes thought secrecy was the only protection available. Under established law, any of these inventions which have been in commercial use--public or secret--for more than one year cannot now be the subject of a valid U.S. patent. Sec. 4301. Short title This subtitle may be cited as the ``First Inventor Defense Act of 1999.'' Sec. 4302. Defense to patent infringement based on earlier inventor In establishing the defense, subsection (a) of section 4302 creates a new section 273 of the Patent Act, which in subsection (a) sets forth the following definitions: (1) ``Commercially used and commercial use'' mean use of any method in the United States so long as the use is in connection with an internal commercial use or an actual sale or transfer of a useful end result; (2) ``Commercial use as applied to a nonprofit research laboratory and nonprofit entities such as a university, research center, or hospital intended to benefit the public'' means that such entities may assert the defense only based on continued use by and in the entities themselves, but that the defense is inapplicable to subsequent commercialization or use outside the entities; (3) ``Method'' means any method for doing or conducting an entity's business; and (4) ``Effective filing date'' means the earlier of the actual filing date of the application for the patent or the filing date of any earlier US, foreign, or international application to which the subject matter at issue is entitled under the Patent Act. To be ``commercially used'' or in ``commercial use'' for purposes of subsection (a), the use must be in connection with either an internal commercial use or an actual arm's- length sale or other arm's-length commercial transfer of a useful end result. The method that is the subject matter of the defense may be an internal method for doing business, such as an internal human resources management process, or a method for conducting business such as a preliminary or intermediate manufacturing procedure, which contributes to the effectiveness of the business by producing a useful end result for the internal operation of the business or for external sale. Commercial use does not require the subject matter at issue to be accessible to or otherwise known to the public. Subject matter that must undergo a premarketing regulatory review period during which safety or efficacy is established before commercial marketing or use is considered to be commercially used and in commercial use during the regulatory review period. The issue of whether an invention is a method is to be determined based on its underlying nature and not on the technicality of the form of the claims in the patent. For example, a method for doing or conducting business that has been claimed in a patent as a programmed machine, as in the State Street case, is a method for purposes of section 273 if the invention could have as easily been claimed as a method. Form should not rule substance. Subsection (b)(1) of section 273 establishes a general defense against infringement under section 271 of the Patent Act. Specifically, a person will not be held liable with respect to any subject matter that would otherwise infringe one or more claims to a method in another party's patent if the person: (1) Acting in good faith, actually reduced the subject matter to practice at least one year before the effective filing date of the patent; and (2) Commercially used the subject matter before the effective filing date of the patent. The first inventor defense is not limited to methods in any particular industry such as the financial services industry, but applies to any industry which relies on trade secrecy for protecting methods for doing or conducting the operations of their business. Subsection (b)(2) states that the sale or other lawful disposition of a useful end result produced by a patented method, by a person entitled to assert a section 273 defense, exhausts the patent owner's rights with respect to that end result to the same extent such rights would have been exhausted had the sale or other disposition been made by the patent owner. For example, if a purchaser would have had the right to resell a product or other end result if bought from the patent owner, the purchaser will have the same right if the product is purchased from a person entitled to a section 273 defense. Subsection (b)(3) creates limitations and qualifications on the use of the defense. First, a person may not assert the defense unless the invention for which the defense is asserted is for a commercial use of a method as defined in section 273(a)(1) and (3). Second, a person may not assert the defense if the subject matter was derived from the patent owner or persons in privity with the patent owner. Third, subsection (b)(3) makes clear that the application of the defense does not create a general license under all claims of the patent in question--it extends only to the specific subject matter claimed in the patent with respect to which the person can assert the defense. At the same time, however, the defense does extend to variations in the quantity or volume of use of the claimed subject matter, and to improvements that do not infringe additional, specifically- claimed subject matter. Subsection (b)(4) requires that the person asserting the defense has the burden of proof in establishing it by clear and convincing evidence. Subsection (b)(5) establishes that the person who abandons the commercial use of subject matter may not rely on activities performed before the date of such abandonment in establishing the defense with respect to actions taken after the date of abandonment. Such a person can rely only on the date when commercial use of the subject matter was resumed. Subsection (b)(6) notes that the defense may only be asserted by the person who performed the acts necessary to establish the defense, and, except for transfer to the patent owner, the right to assert the defense cannot be licensed, assigned, or transferred to a third party except as an ancillary and subordinate part of a good-faith assignment or transfer for other reasons of the entire enterprise or line of business to which the defense relates. When the defense has been transferred along with the enterprise or line of business to which it relates as permitted by subsection (b)(6), subsection (b)(7) limits the sites for which the defense may be asserted. Specifically, when the enterprise or line of business to which the defense relates has been transferred, the defense may be asserted only for uses at those sites where the subject matter was used before the later of the patent filing date or the date of transfer of the enterprise or line of business. Subsection (b)(8) states that a person who fails to demonstrate a reasonable basis for asserting the defense may be held liable for attorneys' fees under section 285 of the Patent Act. Subsection (b)(9) specifies that the successful assertion of the defense does not mean that the affected patent is invalid. Paragraph (9) eliminates a point of uncertainty under current law, and strikes a balance between the rights of an inventor who obtains a patent after another inventor has taken the steps to qualify for a prior use defense. The bill provides that the commercial use of a method in operating a business before the patentee's filing date, by an individual or entity that can establish a section 273 defense, does not invalidate the patent. For example, under current law, although the matter has seldom been litigated, a party who commercially used an invention in secrecy before the patent filing date and who also invented the subject matter before the patent owner's invention may argue that the patent is invalid under section 102 (g) of the Patent Act. Arguably, commercial use of an invention in secrecy is not suppression or concealment of the invention within the meaning of section 102(g), and therefore the party's earlier invention could invalidate the patent.\8\ Sec. 4303. Effective date and applicability The effective date for subtitle C is the date of enactment, except that the title does not apply to any infringement action pending on the date of enactment or to any subject matter for which an adjudication of infringement, including a consent judgment, has been made before the date of enactment. [[Page S14718]] Subtitle D--Patent Term Guarantee Subtitle D amends the provisions in the Patent Act that compensate patent applicants for certain reductions in patent term that are not the fault of the applicant. The provisions that were initially included in the term adjustment provisions of patent bills in the 105th Congress only provided adjustments for up to 10 years for secrecy orders, interferences, and successful appeals. Not only are these adjustments too short in some cases, but no adjustments were provided for administrative delays caused by the USPTO that were beyond the control of the applicant. Accordingly, subtitle D removes the 10-year caps from the existing provisions, adds a new provision to compensate applicants fully for USPTO-caused administrative delays, and, for good measure, includes a new provision guaranteeing diligent applicants at least a 17-year term by extending the term of any patent not granted within three years of filing. Thus, no patent applicant diligently seeking to obtain a patent will receive a term of less than the 17 years as provided under the pre-GATT \9\ standard; in fact, most will receive considerably more. Only those who purposely manipulate the system to delay the issuance of their patents will be penalized under subtitle D, a result that the Conferees believe entirely appropriate. Sec. 4401. Short title This subtitle may be cited as the ``Patent Term Guarantee Act of 1999.'' Sec.4402. Patent term guarantee authority Section 4402 amends section 154(b) of the Patent Act covering term. First, new subsection (b)(1)(A)(i)-(iv) guarantees day-for-day restoration of term lost as a result of delay created by the USPTO when the agency fails to: (1) Make a notification of the rejection of any claim for a patent or any objection or argument under Sec. 132, or give or mail a written notice of allowance under Sec. 151, within 14 months after the date on which a non-provisional application was actually filed in the USPTO; (2) Respond to a reply under Sec. 132, or to an appeal taken under Sec. 134, within four months after the date on which the reply was filed or the appeal was taken; (3) Act on an application within four months after the date of a decision by the Board of Patent Appeals and Interferences under Sec. 134 or Sec. 135 or a decision by a Federal court under Sec. Sec. 141, 145, or 146 in a case in which allowable claims remain in the application; or (4) Issue a patent within four months after the date on which the issue fee was paid under Sec. 151 and all outstanding requirements were satisfied. Further, subject to certain limitations, infra, section 154(b)(1)(B) guarantees a total application pendency of no more than three years. Specifically, day-for-day restoration of term is granted if the USPTO has not issued a patent within three years after ``the actual date of the application in the United States.'' This language was intentionally selected to exclude the filing date of an application under the Patent Cooperation Treaty (PCT).\10\ Otherwise, an applicant could obtain up to a 30-month extension of a U.S. patent merely by filing under PCT, rather than directly in the USPTO, gaining an unfair advantage in contrast to strictly domestic applicants. Any periods of time (1) consumed in the continued examination of the application under Sec. 132(b) of the Patent Act as added by section 4403 of this Act; (2) lost due to an interference under section135(a), a secrecy order under section 181, or appellate review by the Board of Patent Appeals and Interferences or by a Federal court (irrespective of the outcome); and (3) incurred at the request of an applicant in excess of the three months to respond to a notice from the Office permitted by section 154(b)(2)(C)(ii) unless excused by a showing by the applicant under section 154(b)(3)(C) that in spite of all due care the applicant could not respond within three months shall not be considered a delay by the USPTO and shall not be counted for purposes of determining whether the patent issued within three years from the actual filing date. Day-for-day restoration is also granted under new section 154(b)(1)(C) for delays resulting from interferences,\11\ secrecy orders,\12\ and appeals by the Board of Patent Appeals and Interferences or a Federal court in which a patent was issued as a result of a decision reversing an adverse determination of patentability. Section 4402 imposes limitations on restoration of term. In general, pursuant to new Sec. 154(b)(2)(A)-(C) of the bill, total adjustments granted for restorations under (b)(1) are reduced as follows: (1) To the extent that there are multiple grounds for extending the term of a patent that may exist simultaneously (e.g., delay due to a secrecy order under section 181 and administrative delay under section 154(b)(1)(A)), the term should not be extended for each ground of delay but only for the actual number of days that the issuance of a patent was delayed; (2) The term of any patent which has been disclaimed beyond a date certain may not receive an adjustment beyond the expiration date specified in the disclaimer; and (3) Adjustments shall be reduced by a period equal to the time in which the applicant failed to engage in reasonable efforts to conclude prosecution of the application, based on regulations developed by the Director, and an applicant shall be deemed to have failed to engage in such reasonable efforts for any periods of time in excess of three months that are taken to respond to a notice from the Office making any rejection or other request; New section 154(b)(3) sets forth the procedures for the adjustment of patent terms. Paragraph (3)(A) empowers the Director to establish regulations by which term extensions are determined and contested. Paragraph (3)(B) requires the Director to send a notice of any determination with the notice of allowance and to give the applicant one opportunity to request reconsideration of the determination. Paragraph (3)(C) requires the Director to reinstate any time the applicant takes to respond to a notice from the Office in excess of three months that was deducted from any patent term extension that would otherwise have been granted if the applicant can show that he or she was, in spite of all due care, unable to respond within three months. In no case shall more than an additional three months be reinstated for each response. Paragraph (3)(D) requires the Director to grant the patent after completion of determining any patent term extension irrespective of whether the applicant appeals. New section 154(b)(4) regulates appeals of term adjustment determinations made by the Director. Paragraph (4)(A) requires a dissatisfied applicant to seek remedy in the District Court for the District of Columbia under the Administrative Procedures Act \13\ within 180 days after the grant of the patent. The Director shall alter the term of the patent to reflect any final judgment. Paragraph (4)(B) precludes a third party from challenging the determination of a patent term prior to patent grant. Section 4402(b) makes certain conforming amendments to section 282 of the Patent Act and the appellate jurisdiction of the U.S. Court of Appeals for the Federal Circuit.\14\ Sec. 4403. Continued examination of patent applications Section 4403 amends section 132 of the Patent Act to permit an applicant to request that an examiner continue the examination of an application following a notice of ``final'' rejection by the examiner. New section 132(b) authorizes the Director to prescribe regulations for the continued examination of an application notwithstanding a final rejection, at the request of the applicant. The Director may also establish appropriate fees for continued examination proceedings, and shall provide a 50% fee reduction for small entities which qualify for such treatment under section 41(h)(1) of the Patent Act. Section 4404. Technical clarification Section 4404 of the bill coordinates technical term adjustment provisions set forth in section 154(b) with those in section 156(a) of the Patent Act. Section 4405. Effective date The effective date for the amendments in section 4402 and 4404 is six months after the date of enactment and, with the exception of design applications (the terms of which are not measured from filing), applies to any application filed on or after such date. The amendments made by section 4403 take effect six months after date of enactment to allow the USPTO to prepare implementing regulations an apply to all national and international (PCT) applications filed on or after June 8, 1995. Subtitle E--Domestic Publication of Patent Applications Published Abroad Subtitle E provides for the publication of pending patent applications which have a corresponding foreign counterpart. Any pending U.S. application filed only in the United States (e.g., one that does not have a foreign counterpart) will not be published if the applicant so requests. Thus, an applicant wishing to maintain her application in confidence may do so merely by filing only in the United States and requesting that the USPTO not publish the application. For those applicants who do file abroad or who voluntarily publish their applications, provisional rights will be available for assertion against any third party who uses the claimed invention between publication and grant provided that substantially similar claims are contained in both the published application and granted patent. This change will ensure that American inventors will be able to see the technology that our foreign competition is seeking to patent much earlier than is possible today. Sec. 4501. Short title This subtitle may be cited as the ``Domestic Publication of Foreign Filed Patent Applications Act of 1999.'' Sec. 4502. Publication As provided in subsection (a) of section 4502, amended section 122(a) of the Patent Act continues the general rule that patent applications will be maintained in confidence. Paragraph (1)(A) of new subsection (b) of section 122 creates a new exception to this general rule by requiring publication of certain applications promptly after the expiration of an 18-month period following the earliest claimed U.S. or foreign filing date. The Director is authorized by subparagraph (B) to determine what information concerning published applications shall be made available to the public, and, under subparagraph (C) any decision made in this regard is final and not subject to review. Subsection (b)(2) enumerates exceptions to the general rule requiring publication. Subparagraph (A) precludes publication of any [[Page S14719]] application that is: (1) no longer pending at the 18th month from filing; (2) the subject of a secrecy order until the secrecy order is rescinded; (3) a provisional application;\15\ or (4) a design patent application.\16\ Pursuant to subparagraph (B)(i), any applicant who is not filing overseas and does not wish her application to be published can simply make a request and state that her invention has not and will not be the subject of an application filed in a foreign country that requires publication after 18 months. Subparagraph (B)(ii) clarifies that an applicant may rescind this request at any time. Moreover, if an applicant has requested that her application not be published in a foreign country with a publication requirement, subparagraph (B)(iii) imposes a duty on the applicant to notify the Director of this fact. An unexcused failure to notify the Director will result in the abandonment of the application. If an applicant either rescinds a request that her application not be published or notifies the Director that an application has been filed in an early publication country or through the PCT, the U.S. application will be published at 18 months pursuant to subsection (b)(1). Finally, under subparagraph (B)(v), where an applicant has filed an application in a foreign country, either directly or through the PCT, so that the application will be published 18 months from its earliest effective filing date, the applicant may limit the scope of the publication by the USPTO to the total of the cumulative scope of the applications filed in all foreign countries. Where the foreign application is identical to the application filed in the United States or where an application filed under the PCT is identical to the application filed in the United States, the applicant may not limit the extent to which the application filed in the United States is published. However, where an applicant has limited the description of an application filed in a foreign country, either directly or through the PCT in comparison with the application filed in the USPTO, the applicant may restrict the publication by the USPTO to no more than the cumulative details of what will be published in all of the foreign applications and through the PCT. The applicant may restrict the extent of publication of her U.S. application by submitting a redacted copy of the application to the USPTO eliminating only those details that will not be published in any of the foreign applications. Any description contained in at least one of the foreign national or PCT filings may not be excluded from publication in the corresponding U.S. patent application. To ensure that any redacted copy of the U.S. application is published in place of the original U.S. application, the redacted copy must be received within 16 months from the earliest effective filing date. Finally, if the published U.S. application as redacted by the applicant does not enable a person skilled in the art to make and use the claimed invention, provisional rights under section 154(d) shall not be available. Subsection (c) requires the Director to establish procedures to ensure that no protest or other form of pre- issuance opposition to the grant of a patent on an application may be initiated after publication without the express written consent of the applicant. Subsection (d) protects our national security by providing that no application may be published under subsection (b)(1) where the publication or disclosure of such invention would be detrimental to the national security. In addition, the Director of the USPTO is required to establish appropriate procedures to ensure that such applications are promptly identified and the secrecy of such inventions is maintained in accordance with chapter 17 of the Patent Act, which governs secrecy of inventions in the interest of national security. Subsection (b) of section 4502 of subtitle E requires the Government Accounting Office (GAO) to conduct a study of applicants who file only in the United States during a three- year period beginning on the effective date of subtitle E. The study will focus on the percentage of U.S. applicants who file only in the United States versus those who file outside the United States; how many domestic-only filers request not to be published; how many who request not to be published later rescind that request; and whether there is any correlation between the type of applicant (e.g., small vs. large entity) and publication. The Comptroller General must submit the findings of the study, once completed, to the Committees on the Judiciary of the House and Senate. Sec. 4503. Time for claiming benefit of earlier filing date Section 119 of the Patent Act prescribes procedures to implement the right to claim priority under Article 4 of the Paris Convention for the Protection of Industrial Property.\17\ Under that Article, an applicant seeking protection in the United States may claim the filing date of an application for the same invention filed in another Convention country--provided the subsequent application is filed in the United States within 12 months of the earlier filing in the foreign country. Section 4503 of subtitle V amends section 119(b) of the Patent Act to authorize the Director to establish a cut-off date by which the applicant must claim priority. This is to ensure that the claim will be made early enough--generally not later than the 16th month from the earliest effective filing date--so as to permit an orderly publication schedule for pending applications. As the USPTO moves to electronic filing, it is envisioned that this date could be moved closer to the 18th month. The amendment to Sec. 119(b) also gives the Director the discretion to consider the failure of the applicant to file a timely claim for priority to be a waiver of any such priority claim. The Director is also authorized to establish procedures (including the payment of a surcharge) to accept an unintentionally delayed priority claim. Section 4503(b) of subtitle E amends section 120 of the Patent Act in a similar way. This provision empowers the Director to: (1) establish a time by which the priority of an earlier filed United States application must be claimed; (2) consider the failure to meet that time limit to be a waiver of the right to claim such priority; and (3) accept an unintentionally late claim of priority subject to the payment of a surcharge. Sec. 4504. Provisional rights Section 4504 amends section 154 of the Patent Act by adding a new subsection (d) to accord provisional rights to obtain a reasonable royalty for applicants whose applications are published under amended section 122(b) of the Patent Act, supra, or applications designating the United States filed under the PCT. Generally, this provision establishes the right of an applicant to obtain a reasonable royalty from any person who, during the period beginning on the date that his or her application is published and ending on the date a patent is issued-- (1) makes, uses, offers for sale, or sells the invention in the United States, or imports such an invention into the United States; or (2) if the invention claimed is a process, makes, uses, offers for sale, sells, or imports a product made by that process in the United States; and (3) had actual notice of the published application and, in the case of an application filed under the PCT designating the United States that is published in a language other than English, a translation of the application into English. The requirement of actual notice is critical. The mere fact that the published application is included in a commercial database where it might be found is insufficient. The published applicant must give actual notice of the published application to the accused infringer and explain what acts are regarded as giving rise to provisional rights. Another important limitation on the availability of provisional royalties is that the claims in the published application that are alleged to give rise to provisional rights must also appear in the patent in substantially identical form. To allow anything less than substantial identity would impose an unacceptable burden on the public. If provisional rights were available in the situation where the only valid claim infringed first appeared in substantially that form in the granted patent, the public would have no guidance as to the specific behavior to avoid between publication and grant. Every person or company that might be operating within the scope of the disclosure of the published application would have to conduct her own private examination to determine whether a published application contained patentable subject matter that she should avoid. The burden should be on the applicant to initially draft a schedule of claims that gives adequate notice to the public of what she is seeking to patent. Amended section 154(d)(3) imposes a six-year statute of limitations from grant in which an action for reasonable royalties must be brought. Amended section 154(d)(4) sets forth some additional rules qualifying when an international application under the PCT will give rise to provisional rights. The date that will give rise to provisional rights for international applications will be the date on which the USPTO receives a copy of the application published under the PCT in the English language; if the application is published under the PCT in a language other than English, then the date on which provisional rights will arise will be the date on which the USPTO receives a translation of the international application in the English language. The Director is empowered to require an applicant to provide a copy of the international application and a translation of it. Sec. 4505. Prior art effect of published applications Section 4505 amends section 102(e) of the Patent Act to treat an application published by the USPTO in the same fashion as a patent published by the USPTO. Accordingly, a published application is given prior art effect as of its earliest effective U.S. filing date against any subsequently filed U.S. applications. As with patents, any foreign filing date to which the published application is entitled will not be the effective filing date of the U.S. published application for prior art purposes. An exception to this general rule is made for international applications designating the United States that are published under Article 21(2)(a) of the PCT in the English language. Such applications are given a prior art effect as of their international filing date. The prior art effect accorded to patents under section 4505 remains unchanged from present section 102(e) of the Patent Act. Sec. 4506. Cost recovery for publications Section 4506 authorizes the Director to recover the costs of early publication required by the amendment made by section 4502 of this Act by charging a separate publication fee after a notice of allowance is given pursuant to section 151 of the Patent Act. [[Page S14720]] Sec. 4507. Conforming amendments Section 4507 consists of various technical and conforming amendments to the Patent Act. These include amending section 181 of the Patent Act to clarify that publication of pending applications does not apply to applications under secrecy orders, and amending section 284 of the Patent Act to ensure that increased damages authorized under section 284 shall not apply to the reasonable royalties possible under amended section 154(d). In addition, section 374 of the Patent Act is amended to provide that the effect of the publication of an international application designating the United States shall be the same as the publication of an application published under amended section 122(b), except as its effect as prior art is modified by amended section 102(e) and its giving rise to provisional rights is qualified by new section 154(d). Sec. 4508. Effective date Subtitle E shall take effect on the date that is one year after the date of enactment and shall apply to all applications filed under section 111 of the Patent Act on or after that date; and to all applications complying with section 371 of the Patent Act that resulted from international applications filed on or after that date. The provisional rights provided in amended section 154(d) and the prior art effect provided in amended section 102(e) shall apply to all applications pending on the date that is one year after the date of enactment that are voluntarily published by their applicants. Finally, section 404 (provisional rights) shall apply to international applications designating the United States that are filed on or after the date that is one year after the date of enactment. Subtitle F--Optional Inter Partes Reexamination procedure Subtitle F is intended to reduce expensive patent litigation in U.S. district courts by giving third-party requesters, in addition to the existing ex parte reexamination in Chapter 30 of title 35, the option of inter partes reexamination proceedings in the USPTO. Congress enacted legislation to authorize ex parte reexamination of patents in the USPTO in 1980, but such reexamination has been used infrequently since a third party who requests reexamination cannot participate at all after initiating the proceedings. Numerous witnesses have suggested that the volume of lawsuits in district courts will be reduced if third parties can be encouraged to use reexamination by giving them an opportunity to argue their case for patent invalidity in the USPTO. Subtitle F provides that opportunity as an option to the existing ex parte reexamination proceedings. Subtitle F leaves existing ex parte reexamination procedures in Chapter 30 of title 35 intact, but establishes an inter partes reexamination procedure which third-party requesters can use at their option. Subtitle VI allows third parties who request inter partes reexamination to submit one written comment each time the patent owner files a response to the USPTO. In addition, such third-party requesters can appeal to the USPTO Board of Patent Appeals and Interferences from an examiner's determination that the reexamined patent is valid, but may not appeal to the Court of Appeals for the Federal Circuit. To prevent harassment, anyone who requests inter partes reexamination must identify the real party in interest and third-party requesters who participate in an inter partes reexamination proceeding are estopped from raising in a subsequent court action or inter partes reexamination any issue of patent validity that they raised or could have raised during such inter partes reexamination. Subtitle F contains the important threshold safeguard (also applied in ex parte reexamination) that an inter partes reexamination cannot be commenced unless the USPTO makes a determination that a ``substantial new question'' of patentability is raised. Also, as under Chapter 30, this determination cannot be appealed, and grounds for inter partes reexamination are limited to earlier patents and printed publications--grounds that USPTO examiners are well- suited to consider. Sec. 4601. Short title This subtitle may be cited as the ``Optional Inter Partes Reexamination Procedure Act.'' Sec. 4602. Clarification of Chapter 30 This section distinguishes Chapter 31 from existing Chapter 30 by changing the title of Chapter 30 to ``Ex Parte Reexamination of Patents.'' Sec. 4603. Definitions This section amends section 100 of the Patent Act by defining ``third-party requester'' as a person who is not the patent owner requesting ex parte reexamination under section 302 or inter partes reexamination under section 311. Sec. 4604. Optional Inter Partes Reexamination Procedure Section 4604 amends Part III of title 35 by inserting a new Chapter 31 setting forth optional inter partes reexamination procedures. New section 311, as amended by this section, differs from section 302 of existing law in Chapter 30 of the Patent Act by requiring any person filing a written request for inter partes reexamination to identify the real party in interest. Similar to section 303 of existing law, new section 312 of the Patent Act confers upon the Director the authority and responsibility to determine, within three months after the filing of a request for inter partes reexamination, whether a substantial new question affecting patentability of any claim of the patent is raised by the request. Also, the decision in this regard is final and not subject to judicial review. Proposed sections 313-14 under this subtitle are similarly modeled after sections 304-305 of Chapter 30. Under proposed section 313, if the Director determines that a substantial new question of patentability affecting a claim is raised, the determination shall include an order for inter partes reexamination for resolution of the question. The order may be accompanied by the initial USPTO action on the merits of the inter partes reexamination conducted in accordance with section 314. Generally, under proposed section 314, inter partes reexamination shall be conducted according to the procedures set forth in sections 132-133 of the Patent Act. The patent owner will be permitted to propose any amendment to the patent and a new claim or claims, with the same exception contained in section 305: no proposed amended or new claim enlarging the scope of the claims will be allowed. Proposed section 314 elaborates on procedure with regard to third-party requesters who, for the first time, are given the option to participate in inter partes reexamination proceedings. With the exception of the inter partes reexamination request, any document filed by either the patent owner or the third-party requester shall be served on the other party. In addition, the third party-requester in an inter partes reexamination shall receive a copy of any communication sent by the USPTO to the patent owner. After each response by the patent owner to an action on the merits by the USPTO, the third-party requester shall have one opportunity to file written comments addressing issues raised by the USPTO or raised in the patent owner's response. Unless ordered by the Director for good cause, the agency must act in an inter partes reexamination matter with special dispatch. Proposed section 315 prescribes the procedures for appeal of an adverse USPTO decision by the patent owner and the third-party requester in an inter partes reexamination. Both the patent owner and the third-party requester are entitled to appeal to the Board of Patent Appeals and Interferences (section 134 of the Patent Act), but only the patentee can appeal to the U.S. Court of Appeals for the Federal Circuit (Sec. Sec. 141-144); either may also be a party to any appeal by the other to the Board of Patent Appeals and Interferences. The patentee is not entitled to the alternative of an appeal of an inter partes reexamination to the U.S. District Court for the District of Columbia. Such appeals are rarely taken from ex parte reexamination proceedings under existing law and its removal should speed up the process. To deter unnecessary litigation, proposed section 315 imposes constraints on the third-party requester. In general, a third-party requester who is granted an inter partes reexamination by the USPTO may not assert at a later time in any civil action in U.S. district court \18\ the invalidity of any claim finally determined to be patentable on any ground that the third-party requester raised or could have raised during the inter partes reexamination. However, the third-party requester may assert invalidity based on newly discovered prior art unavailable at the time of the reexamination. Prior art was unavailable at the time of the inter partes reexamination if it was not known to the individuals who were involved in the reexamination proceeding on behalf of the third-party requester and the USPTO. Section 316 provides for the Director to issue and publish certificates canceling unpatentable claims, confirming patentable claims, and incorporating any amended or new claim determined to be patentable in an inter partes procedure. Subtitle F creates a new section 317 which sets forth certain conditions by which inter partes reexamination is prohibited to guard against harassment of a patent holder. In general, once an order for inter partes reexamination has been issued, neither a third-party requester nor the patent owner may file a subsequent request for inter partes reexamination until an inter partes reexamination certificate is issued and published, unless authorized by the Director. Further, if a third-party requester asserts patent invalidity in a civil action and a final decision is entered that the party failed to prove the assertion of invalidity, or if a final decision in an inter partes reexamination instituted by the requester is favorable to patentability, after any appeals, that third-party requester cannot thereafter request inter partes reexamination on the basis of issues which were or which could have been raised. However, the third-party requester may assert invalidity based on newly discovered prior art unavailable at the time of the civil action or inter partes reexamination. Prior art was unavailable at the time if it was not known to the individuals who were involved in the civil action or inter partes reexamination proceeding on behalf of the third-party requester and the USPTO. Proposed section 318 gives a patent owner the right, once an inter partes reexamination has been ordered, to obtain a stay of any pending litigation involving an issue of patentability of any claims of the patent that are the subject of the inter partes reexamination, unless the court determines that the stay would not serve the interests of justice. [[Page S14721]] Sec. 4605. Conforming amendments Section 4605 makes the following conforming amendments to the Patent Act: A patent owner must pay a fee of $1,210 for each petition in connection with an unintentionally abandoned application, delayed payment, or delayed response by the patent owner during any reexamination. A patent applicant, any of whose claims has been twice rejected; a patent owner in a reexamination proceeding; and a third-party requester in an inter partes reexamination proceeding may all appeal final adverse decisions from a primary examiner to the Board of Patent Appeals and Interferences. Proposed section 141 states that a patent owner in a reexamination proceeding may appeal an adverse decision by the Board of Patent Appeals and Interferences only to the U.S. Court of Appeals for the Federal Circuit as earlier noted. A third-party requester in an inter partes reexamination proceeding may not appeal beyond the Board of Patent Appeals and Interferences. The Director is required pursuant to section 143 (proceedings on appeal to the Federal Circuit) to submit to the court the grounds for the USPTO decision in any reexamination addressing all the issues involved in the appeal. Sec. 4606. Report to Congress Not later than five years after the effective date of subtitle F, the Director must submit to Congress a report evaluating whether the inter partes reexamination proceedings set forth in the title are inequitable to any of the parties in interest and, if so, the report shall contain recommendations for change to eliminate the inequity. Sec. 4607. Estoppel Effect of Reexamination Section 4607 estops any party who requests inter partes reexamination from challenging at a later time, in any civil action, any fact determined during the process of the inter partes reexamination, except with respect to a fact determination later proved to be erroneous based on information unavailable at the time of the inter partes reexamination. The estoppel arises after a final decision in the inter partes reexamination or a final decision in any appeal of such reexamination. If section 4607 is held to be unenforceable, the enforceability of the rest of subtitle F or the Act is not affected. Sec. 4608. Effective date Subtitle F shall take effect on the date of the enactment and shall apply to any patent that issues from an original application filed in the United States on or after that date, except that the amendments made by section 4605(a) shall take effect one year from the date of enactment. Subtitle G--United States Patent and Trademark Office Subtitle G establishes the United States Patent and Trademark Office (USPTO) as an agency of the United States within the Department of Commerce. The Secretary of Commerce gives policy direction to the agency, but the agency is autonomous and responsible for the management and administration of its operations and has independent control of budget allocations and expenditures, personnel decisions and processes, and procurement. The Committee intends that the Office will conduct its patent and trademark operations without micro-management by Department of Commerce officials, with the exception of policy guidance of the Secretary. The agency is headed by an Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, a Deputy, and a Commissioner of Patents and a Commissioner of Trademarks. The agency is exempt from government-wide personnel ceilings. A patent public advisory committee and a trademark public advisory committee are established to advise the Director on agency policies, goals, performance, budget and user fees. Sec. 4701. Short title This subtitle may be cited as the ``Patent and Trademark Office Efficiency Act.'' Subchapter A--United States Patent and Trademark Office Sec. 4711. Establishment of Patent and Trademark Office Section 4711 establishes the USPTO as an agency of the United States within the Department of Commerce and under the policy direction of the Secretary of Commerce. The USPTO, as an autonomous agency, is explicitly responsible for decisions regarding the management and administration of its operations and has independent control of budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions. Patent operations and trademark operations are to be treated as separate operating units within the Office, each under the direction of its respective Commissioner, as supervised by the Director. The USPTO shall maintain its principal office in the metropolitan Washington, D.C., area, for the service of process and papers and for the purpose of discharging its functions. For purposes of venue in civil actions, the agency is deemed to be a resident of the district in which its principal office is located, except where otherwise provided by law. The USPTO is also permitted to establish satellite offices in such other places in the United States as it considers necessary and appropriate to conduct business. This is intended to allow the USPTO, if appropriate, to serve American applicants better. Sec. 4712. Powers and duties Subject to the policy direction of the Secretary of the Commerce, in general the USPTO will be responsible for the granting and issuing of patents, the registration of trademarks, and the dissemination of patent and trademark information to the public. The USPTO will also possess specific powers, which include: (1) a requirement to adopt and use an Office seal for judicial notice purposes and for authenticating patents, trademark certificates and papers issued by the Office; (2) the authority to establish regulations, not inconsistent with law, that (A) govern the conduct of USPTO proceedings within the Office, (B) are in accordance with Sec. 553 of title 5, (C) facilitate and expedite the processing of patent applications, particularly those which can be processed electronically, (D) govern the recognition, conduct, and qualifications of agents, attorneys, or other persons representing applicants or others before the USPTO, (E) recognize the public interest in ensuring that the patent system retain a reduced fee structure for small entities, and (F) provide for the development of a performance-based process for managing that includes quantitative and qualitative measures, standards for evaluating cost- effectiveness, and consistency with principles of impartiality and competitiveness; (3) the authority to acquire, construct, purchase, lease, hold, manage, operate, improve, alter and renovate any real, personal, or mixed property as it considers necessary to discharge its functions; (4) the authority to make purchases of property, contracts for construction, maintenance, or management and operation of facilities, as well as to contract for and purchase printing services without regard to those federal laws which govern such proceedings; (5) the authority to use services, equipment, personnel, facilities and equipment of other federal entities, with their consent and on a reimbursable basis; (6) the authority to use, with the consent of the United States and the agency, government, or international organization concerned, the services, records, facilities or personnel of any State or local government agency or foreign patent or trademark office or international organization to perform functions on its behalf; (7) the authority to retain and use all of its revenues and receipts; (8) a requirement to advise the President, through the Secretary of Commerce, on national and certain international intellectual property policy issues; (9) a requirement to advise Federal departments and agencies of intellectual property policy in the United States and intellectual property protection abroad; (10) a requirement to provide guidance regarding proposals offered by agencies to assist foreign governments and international intergovernmental organizations on matters of intellectual property protection; (11) the authority to conduct programs, studies or exchanges regarding domestic or international intellectual property law and the effectiveness of intellectual property protection domestically and abroad; (12) a requirement to advise the Secretary of Commerce on any programs and studies relating to intellectual property policy that the USPTO may conduct or is authorized to conduct, cooperatively with foreign intellectual property offices and international intergovernmental organizations; and (13) the authority to (A) coordinate with the Department of State in conducting programs and studies cooperatively with foreign intellectual property offices and international intergovernmental organizations, and (B) transfer, with the concurrence of the Secretary of State, up to $100,000 in any year to the Department of State to pay an international intergovernmental organization for studies and programs advancing international cooperation concerning patents, trademarks, and other matters. The specific powers set forth in new subsection (b) are clarified in new subsection (c). The special payments of paragraph (14)(B) are additional to other payments or contributions and are not subject to any limitation imposed by law. Nothing in subsection (b) derogates from the duties of the Secretary of State or the United States Trade Representative as set forth in section 141 of the Trade Act of 1974 \19\, nor derogates from the duties and functions of the Register of Copyrights. The Director is required to consult with the Administrator of General Services when exercising authority under paragraphs (3) and (4)(A). Nothing in section 4712 may be construed to nullify, void, cancel, or interrupt any pending request-for-proposal let or contract issued by the General Services Administration for the specific purpose of relocating or leasing space to the USPTO. Finally, in exercising the powers and duties under this section, the Director shall consult with the Register of Copyright on all Copyright and related matters. Sec. 4713. Organization and management Section 4713 details the organization and management of the agency. The powers and duties of the USPTO shall be vested in the Under Secretary and Director, who shall be appointed by the President, by and with the consent of the Senate. The Under Secretary and Director performs two main functions. As Under Secretary of Commerce for Intellectual Property, she serves as the policy advisor to the Secretary of Commerce and the [[Page S14722]] President on intellectual property issues. As Director, she is responsible for supervising the management and direction of the USPTO. She shall consult with the Public Advisory Committees, infra, on a regular basis regarding operations of the agency and before submitting budgetary proposals and fee or regulation changes. The Director shall take an oath of office. The President may remove the Director from office, but must provide notification to both houses of Congress. The Secretary of Commerce, upon nomination of the Director, shall appoint a Deputy Director to act in the capacity of the Director if the Director is absent or incapacitated. The Secretary of Commerce shall also appoint two Commissioners, one for Patents, the other for Trademarks, without regard to chapters 33, 51, or 53 of title 5 of the U.S. Code. The Commissioners will have five-year terms and may be reappointed to new terms by the Secretary. Each Commissioner shall possess a demonstrated experience in patent and trademark law, respectively; and they shall be responsible for the management and direction of the patent and trademark operations, respectively. In addition to receiving a basic rate of compensation under the Senior Executive Service \20\ and a locality payment,\21\ the Commissioners may receive bonuses of up to 50 percent of their annual basic rate of compensation, not to exceed the salary of the Vice President, based on a performance evaluation by the Secretary, acting through the Director. The Secretary may remove Commissioners for misconduct or unsatisfactory performance. It is intended that the Commissioners will be non-political expert appointees, independently responsible for operations, subject to supervision by the Director. The Director may appoint all other officers, agents, and employees as she sees fit, and define their responsibilities with equal discretion. The USPTO is specifically not subject to any administratively or statutorily imposed limits (full- time equivalents, or ``FTEs'') on positions or personnel. The USPTO is charged with developing and submitting to Congress a proposal for an incentive program to retain senior (of the primary examiner grade or higher) patent and trademark examiners eligible for retirement for the sole purpose of training patent and trademark examiners. The Director of the USPTO, in consultation with the Director of the Office of Personnel Management, is required to maintain a program for identifying national security positions at the USPTO and for providing for appropriate security clearances for USPTO employees in order to maintain the secrecy of inventions as described in section 181 of the Patent Act and to prevent disclosure of sensitive and strategic information in the interest of national security. The USPTO will be subject to all provisions of title 5 of the U.S. Code governing federal employees. All relevant labor agreements which are in effect the day before enactment of subtitle G shall be adopted by the agency. All USPTO employees as of the day before the effective date of subtitle G shall remain officers and employees of the agency without a break in service. Other personnel of the Department of Commerce shall be transferred to the USPTO only if necessary to carry out purposes of subtitle G of the bill and if a major function of their work is reimbursed by the USPTO, they spend at least half of their work time in support of the USPTO, or a transfer to the USPTO would be in the interest of the agency, as determined by the Secretary of Commerce in consultation with the Director. On or after the effective date of the Act, the President shall appoint an individual to serve as Director until a Director qualifies under subsection (a). The persons serving as the Assistant Commissioner for Patents and the Assistant Commissioner for Trademarks on the day before the effective date of the Act may serve as the Commissioner for Patents and the Commissioner for Trademarks, respectively, until a respective Commissioner is appointed under subsection (b)(2). Sec. 4714. Public Advisory Committees Section 4714 provides a new section 5 of the Patent Act which establishes a Patent Public Advisory Committee and a Trademark Public Advisory Committee. Each Committee has nine voting members with three-year terms appointed by and serving at the pleasure of the Secretary of Commerce. Initial appointments will be made within three months of the effective date of the Act; and three of the initial appointees will receive one-year terms, three will receive two-year terms, and three will receive full terms. Vacancies will be filled within three months. The Secretary will also designate chairpersons for three-year terms. The members of the Committees will be U.S. citizens and will be chosen to represent the interests of USPTO users. The Patent Public Advisory Committee shall have members who represent small and large entity applicants in the United States in proportion to the number of applications filed by the small and large entity applicants. In no case shall the small entity applicants be represented by less than 25 percent of the members of the Patent Public Advisory Committee, at least one of whom shall be an independent inventor. The members of both Committees shall include individuals with substantial background and achievement in finance, management, labor relations, science, technology, and office automation. The patent and trademark examiners' unions are entitled to have one representative on their respective Advisory Committee in a non-voting capacity. The Committees meet at the call of the chair to consider an agenda established by the chair. Each Committee reviews the policies, goals, performance, budget, and user fees that bear on its area of concern and advises the Director on these matters. Within 60 days of the end of a fiscal year, the Committees prepare annual reports, transmit the reports to the Secretary of Commerce, the President, and the Committees on the Judiciary of the Congress, and publish the reports in the Official Gazette of the USPTO. Members of the Committees are compensated at a defined daily rate for meeting and travel days. Members are provided access to USPTO records and information other than personnel or other privileged information including that concerning patent applications. Members are special Government employees within the meaning of section 202 of title 18. The Federal Advisory Committee Act shall not apply to the Committees. Finally, section 4714 provides that Committee meetings shall be open to the public unless by a majority vote the Committee meets in executive session to consider personnel or other confidential information. Sec. 4715. Conforming amendments Technical conforming amendments to the Patent Act are set forth in section 4715. Sec. 4716. Trademark Trial and Appeal Board Section 4716 amends section 17 of the Trademark Act of 1946 by specifying that the Director shall give notice to all affected parties and shall direct a Trademark Trial and Appeal Board to determine the respective rights of those parties before it in a relevant proceeding. The section also invests the Director with the power of appointing administrative trademark judges to the Board. The Director, the Commissioner for Trademarks, the Commissioner for Patents, and the administrative trademark judges shall serve on the Board. Sec. 4717. Board of Patent Appeals and Interferences Under existing section 7 of the Patent Act, the Commissioner, Deputy Commissioner, Assistant Commissioners, and the examiners-in-chief constitute the Board of Patent Appeals and Interferences. Pursuant to section 4717 of subtitle G, the Board shall be comprised of the Director, the Commissioner for Patents, the Commissioner for Trademarks, and the administrative patent judges. In addition, the existing statute allows each appellant a hearing before three members of the Board who are designated by the Director. Section 4717 empowers the Director with this authority. Sec. 4718. Annual report of Director No later than 180 days after the end of each fiscal year, the Director must provide a report to Congress detailing funds received and expended by the USPTO, the purposes for which the funds were spent, the quality and quantity of USPTO work, the nature of training provided to examiners, the evaluations of the Commissioners by the Secretary of Commerce, the Commissioners' compensation, and other information relating to the agency. Sec. 4719. Suspension or exclusion from practice Under existing section 32 of the Patent Act, the Commissioner (the Director pursuant to this Act) has the authority, after notice and a hearing, to suspend or exclude from further practice before the USPTO any person who is incompetent, disreputable, indulges in gross misconduct or fraud, or is noncompliant with USPTO regulations. Section 4719 permits the Director to designate an attorney who is an officer or employee of the USPTO to conduct a hearing under section 32. Sec. 4720. Pay of Director and Deputy Director Section 4720 replaces the Assistant Secretary of Commerce and Commissioner of Patents and Trademarks with the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office to receive pay at Level III of the Executive Schedule.\22\ Section 4720 also establishes the pay of the Deputy Director at Level IV of the Executive Schedule.\23\ Subchapter B--Effective Date; Technical Amendments Sec. 4731. Effective date The effective date of subtitle G is four months after the date of enactment. Sec. 4732. Technical and conforming amendments Section 4732 sets forth numerous technical and conforming amendments related to subtitle G. Subchapter C--Miscellaneous Provisions Sec. 4741. References Section 4741 clarifies that any reference to the transfer of a function from a department or office to the head of such department or office means the head of such department or office to which the function is transferred. In addition, references in other federal materials to the current Commissioner of Patents and Trademarks refer, upon enactment, to the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. Similarly, references to the Assistant Commissioner for Patents are deemed to refer to the Commissioner for Patents and references to the Assistant Commissioner for Trademarks are deemed to refer to the Commissioner for Trademarks. [[Page S14723]] Sec. 4742. Exercise of authorities Under section 4742, except as otherwise provided by law, a federal official to whom a function is transferred pursuant to subtitle G may exercise all authorities under any other provision of law that were available regarding the performance of that function to the official empowered to perform that function immediately before the date of the transfer of the function. Sec. 4743. Savings provisions Relevant legal documents that relate to a function which is transferred by subtitle G, and which are in effect on the date of such transfer, shall continue in effect according to their terms unless later modified or repealed in an appropriate manner. Applications or proceedings concerning any benefit, service, or license pending on the effective date of subtitle G before an office transferred shall not be affected, and shall continue thereafter, but may later be modified or repealed in the appropriate manner. Subtitle G will not affect suits commenced before the effective date of passage. Suits or actions by or against the Department of Commerce, its employees, or the Secretary shall not abate by reason of enactment of subtitle G. Suits against a relevant government officer in her official capacity shall continue post enactment, and if a function has transferred to another officer by virtue of enactment, that other officer shall substitute as the defendant. Finally, administrative and judicial review procedures that apply to a function transferred shall apply to the head of the relevant federal agency and other officers to which the function is transferred. Sec. 4744. Transfer of assets Section 4744 states that all available personnel, property, records, and funds related to a function transferred pursuant to subtitle G shall be made available to the relevant official or head of the agency to which the function transfers at such time or times as the Director of the Office of Management and Budget (OMB) directs. Sec. 4745. Delegation and assignment Section 4745 allows an official to whom a function is transferred under subtitle G to delegate that function to another officer or employee. The official to whom the function was originally transferred nonetheless remains responsible for the administration of the function. Sec. 4746. Authority of Director of the Office of Management and Budget with respect to functions transferred Pursuant to section 4746, if necessary the Director of OMB shall make any determination of the functions transferred pursuant to subtitle G. Sec. 4747. Certain vesting of functions considered transfers Section 4747 states that the vesting of a function in a department or office pursuant to reestablishment of an office shall be considered to be the transfer of that function. Sec. 4748. Availability of existing funds Under section 4748, existing appropriations and funds available for the performance of functions and other activities terminated pursuant to subtitle G shall remain available (for the duration of their period of availability) for necessary expenses in connection with the termination and resolution of such functions and activities, subject to the submission of a plan to House and Senate appropriators in accordance with Public Law 105-277 (Departments of Commerce, Justice, and State, the Judiciary and Related Agencies Appropriations Act, Fiscal Year 1999). Sec. 4749. Definitions ``Function'' includes any duty, obligation, power, authority, responsibility, right, privilege, activity, or program. ``Office'' includes any office, administration, agency, bureau, institute, council, unit, organizational entity, or component thereof. Subtitle H--Miscellaneous Patent Provisions Subtitle H consists of seven largely-unrelated provisions that make needed clarifying and technical changes to the Patent Act . Subtitle H also authorizes a study. The provisions in Subtitle H take effect on the date of enactment except where stated otherwise in certain sections. Sec. 4801. Provisional applications Section 4801 amends section 111(b)(5) of the Patent Act by permitting a provisional application to be converted into a non-provisional application. The applicant must make a request within 12 months after the filing date of the provisional application for it to be converted into a non- provisional application. Section 4801 also amends section 119(e) of the Patent Act by clarifying the treatment of a provisional application when its last day of pendency falls on a weekend or a Federal holiday, and by eliminating the requirement that a provisional application must be co-pending with a non- provisional application if the provisional application is to be relied on in any USPTO proceeding. Sec. 4802. International applications Section 4802 amends section 119(a) of the Patent Act to permit persons who filed an application for patent first in a WTO \24\ member country to claim the right of priority in a subsequent patent application filed in the United States, even if such country does not yet afford similar privileges on the basis of applications filed in the United States. This amendment was made in conformity with the requirements of Articles 1 and 2 of the TRIPS Agreement.\25\ These Articles require that WTO member countries apply the substantive provisions of the Paris Convention for the Protection of Industrial Property to other WTO member countries. As some WTO member countries are not yet members of the Paris Convention, and as developing countries are generally permitted periods of up to 5 years before complying with all provisions of the TRIPS Agreement, they are not required to extend the right of priority to other WTO member countries until such time. Section 4802 also adds subsection (f) to section 119 of the Patent Act to provide for the right of priority in the United States on the basis of an application for a plant breeder's right first filed in a WTO member country or in a UPOV\26\ Contracting Party. Many foreign countries provide only a sui generis system of protection for plant varieties. Because section 119 presently addresses only patents and inventors' certificates, applicants from those countries are technically unable to base a priority claim on a foreign application for a plant breeder's right when seeking plant patent or utility patent protection for a plant variety in this country. Subsection (g) is added to section 119 to define the terms ``WTO member country'' and ``UPOV Contracting Party.'' Sec. 4803. Certain limitations on remedies for patent infringement not applicable Section 4803 amends section 287(c)(4) of the Patent Act, which pertains to certain limitations on remedies for patent infringement, to make it applicable only to applications filed on or after September 30, 1996. Sec. 4804. Electronic filing and publications Section 4804 amends section 22 of the Patent Act to clarify that the USPTO may receive, disseminate, and maintain information in electronic form. Subsection (d)(2), however, prohibits the Director from ceasing to maintain paper or microform collections of U.S. patents, foreign patent documents, and U.S. trademark registrations, except pursuant to notice and opportunity for public comment and except the Director shall first submit a report to Congress detailing any such plan, including a description of the mechanisms in place to ensure the integrity of such collections and the data contained therein, as well as to ensure prompt public access to the most current available information, and certifying that the implementation of such plan will not negatively impact the public. In addition, in the operation of its information dissemination programs and as the sole source of patent data, the USPTO should implement procedures that assure that bulk patent data are provided in such a manner that subscribers have the data in a manner that grants a sufficient amount of time for such subscribers to make the data available through their own systems at the same time the USPTO makes the data publicly available through its own Internet system. Sec. 4805. Study and report on biologic deposits in support of biotechnology patents Section 4805 charges the Comptroller General, in consultation with the Director of the USPTO, with conducting a study and submitting a report to Congress no later than six months after the date of enactment on the potential risks to the U.S. biotechnological industry regarding biological deposits in support of biotechnology patents. The study shall include: an examination of the risk of export and of transfers to third parties of biological deposits, and the risks posed by the 18-month publication requirement of subtitle E; an analysis of comparative legal and regulatory regimes; and any related recommendations. The USPTO is then charged with considering these recommendations when drafting regulations affecting biological deposits. Sec. 4806. Prior invention Section 4806 amends section 102(g) of the Patent Act to make clear that an inventor who is involved in a USPTO interference proceeding and establishes a date of invention under section 104 is subject to the requirements of section 102(g), including the requirement that the invention was not abandoned, suppressed, or concealed. Sec. 4807. Prior art exclusion for certain commonly assigned patents Section 4807 amends section 103 of the Patent Act, which sets forth patentability conditions related to the nonobviousness of subject matter. Section 103(c) of the current statute states that subject matter developed by another person which qualifies as prior art only under section 102(f) or (g) shall not preclude granting a patent on an invention with only obvious differences where the subject matter and claimed invention were, at the time the invention was made, owned by the same person or subject to an obligation of assignment to the same person. The bill amends section 103(c) by adding a reference to section 102(e), which currently bars the granting of a patent if the invention was described in another patent granted on an application filed before the applicant's date of invention. The effect of the amendment is to allow an applicant to receive a patent when an invention with only obvious differences from the applicant's invention was described in a patent granted on an application filed before the applicant's invention, provided the inventions are commonly owned or subject to an obligation of assignment to the same person. [[Page S14724]] Sec. 4808. Exchange of copies of patents with foreign countries Sec. 4808 amends section 12 of the Patent Act to prohibit the Director of the USPTO from entering into an agreement to exchange patent data with a foreign country that is not one of our NAFTA \27\ or WTO trading partners, unless the Secretary of Commerce explicitly authorizes such an exchange. TITLE V--MISCELLANEOUS PROVISIONS Section 5001. Commission on Online Child Protection. Section 5001(a) provides that references contained in the amendments made by this title are to section 1405 of the Child Online Protection Act (47 U.S.C. 231 note). Section 5001(b) amends the membership of the Commission on Online Child Protection to remove a requirement that a specific number of representatives come from designated sectors of private industry, as outlined in the Act. Section 5001(b) also provides that the members appointed to the Commission as of October 31, 1999, shall remain as members. Section 5001(b) also prevents the members of the Commission from being paid for their work on the Commission. This provision, however, does not preclude members from being reimbursed for legitimate costs associated with participating in the Commission (such as travel expenses). Section 5001(c) extends the due date for the report of the Commission by one year. Section 5001(d) establishes that the Commission's statutory authority will expire either (1) 30 days after the submission of the report required by the Act, or (2) November 30, 2000, whichever is earlier. Section 5001(e) requires the Commission to commence its first meeting no later than March 31, 2000. Section 5001(e) also requires that the Commission elect, by a majority vote, a chairperson of the Commission not later than 30 days after holding its first meeting. Section 5001(f) establishes minimum rules for the operations of the Commission, and also allows the Commission to adopt other rules as it deems necessary. Section 5002. Privacy Protection for Donors to Public Broadcasting Entities. This provision, which was added in Conference, protects the privacy of donors to public broadcasting entities. Section 5003. Completion of Biennial Regulatory Review. Section 5003 provides that, within 180 days after the date of enactment, the FCC will complete the biennial review required by section 202(h) of the Telecommunications Act of 1996. The Conferees expect that if the Commission concludes that it should retain any of the rules under the review unchanged, the Commission shall issue a report that includes a full justification of the basis for so finding. Section 5004. Broadcasting Entities. This provision, added in Conference, allows for a remittance of copyright damages for public broadcasting entities where they are not aware and have no reason to believe that their activities constituted violations of copyright law. This is currently the standard for nonprofit libraries, archives and educational institutions. Section 5005. Technical Amendments Relating to Vessel Hull Design Protection. This section makes several amendments to chapter 13 of the Copyright Act regarding design protection for vessel hulls. The sunset provision for chapter 13, enacted as part of the Digital Millennium Copyright Act, is removed so that chapter 13 is now a permanent provision of the Copyright Act. The timing and number of joint studies to be done by the Copyright Office and the Patent and Trademark Offices of the effectiveness of chapter 13 are also amended by reducing the number of studies from two to one, and requiring that the one study not be submitted until November 1, 2003. Current law requires delivery of two studies within the first two years of chapter 13, which is unnecessary and an insufficient amount of time for the Copyright Office and the Patent and Trademark Office to accurately measure and assess the effectiveness of design protection within the marine industry. The definition of a ``vessel'' in chapter 13 is amended to provide that in addition to being able to navigate on or through water, a vessel must be self-propelled and able to steer, and must be designed to carry at least one passenger. This clarifies Congress's intent not to allow design protection for such craft as barges, toy and remote controlled boas, inner tubes and surf boards. Section 5006. Informal Rulemaking of Copyright Determination. The Copyright Office has requested that Congress make a technical correction to section 1201(a)(1)(C) of title 17 by deleting the phrase ``on the record.'' The Copyright Office believes that this correction is necessary to avoid any misunderstanding regarding the intent of Congress that the rulemaking proceeding which is the be conducted by the Copyright Office under this provision shall be an informal, rather than a formal, rulemaking proceeding. Accordingly, the phrase ``on the record'' is deleted as a technical correction to clarify the intent of Congress that the Copyright Office shall conduct the rulemaking under section 1201(a)(1)(C) as an informal rulemaking proceeding pursuant to section 553 of Title 5. The intent is to permit interested persons an opportunity to participate through the submission of written statements, oral presentations at one or more of the public hearings, and the submission of written responses to the submissions or presentations of others. Section 5007. Service of Process for Surety Corporations This section allows surety corporations, like other corporations, to utilize approved state officials to receive service of process in any legal proceeding as an alternative to having a separate agent for service of process in each of the 94 federal judicial districts. Section 5008. Low-Power Television. Section 5008, which can be cited as the Community Broadcasters Protection Act of 1999, will ensure that many communities across the nation will continue to have access to free, over-the-air low-power television (LPTV) stations, even as full-service television stations proceed with their conversion to digital format. In particular, Section 5008 requires the Federal Communications Commission (FCC) to provide certain qualifying LPTV stations with ``primary'' regulatory status, which in turn will enable these LPTV stations to attract the financing that is necessary to provide consumers with critical information and programming. At the same time, recognizing the importance of, and the engineering complexity in, the FCC's plan to convert full- service television stations to digital format, Section 5009 protects the ability of these stations to provide both digital and analog service throughout their existing service areas. The FCC began awarding licenses for low-power television service in 1982. Low-power television service is a relatively inexpensive and flexible means of delivering programming tailored to the interests of viewers in small localized areas. It also ensures that spectrum allocated for broadcast television service is more efficiently used and promotes opportunities for entering the television broadcast business. The FCC estimates that there are more than 2,000 licensed and operational LPTV stations, about 1,500 of which are operated in the continental United States by 700 different licensees in nearly 750 towns and cities.\28\ LPTV stations serve rural and urban communities alike, although about two- thirds of all LPTV stations serve rural communities. LPTV stations in urban markets typically provide niche programming (e.g., bilingual or non-English programming) to under-served communities in large cities. In many rural markets, LPTV stations are consumers' only source of local, over-the-air programming. Owners of LPTV stations are diverse, including high school and college student populations, churches and religious groups, local governments, large and small businesses, and even individual citizens. From an engineering standpoint, the term ``low-power television service'' means precisely what it implies, i.e., broadcast television service that operates at a lower level of power than full-service stations. Specifically, LPTV stations radiate 3 kilowatts of power for stations operating on the VHF band (i.e., channels 2 through 13), and 150 kilowatts of power for stations operating on the UHF band (i.e., channels 14 through 69). By comparison, full-service stations on VHF channels radiate up to 316 kilowatts of power, and stations on UHF channels radiate up to 5,000 kilowatts of power. The reduced power levels that govern LPTV stations mean these stations serve a much smaller geographic region than do full-service stations. LPTV signals typically extend to a range of approximately 12 to 15 miles, whereas the originating signal of full-service stations often reach households 60 or 80 miles away. Compared to its rules for full-service television station licensees, the FCC's rules for obtaining and operating an LPTV license are minimal. But in return for ease of licensing, LPTV stations must operate not only at reduced power levels but also as ``secondary'' licensees. This means LPTV stations are strictly prohibited from interfering with, and must accept signal interference from, ``primary'' licensees, such as full-service television stations. Moreover, LPTV stations must yield at any point in time to full-service stations that increase their power levels, as well as to new full-service stations. The video programming marketplace is intensely competitive. The three largest broadcast networks that once dominated the market now face competition from several emerging broadcast and cable networks, cable systems, satellite television operators, wireless cable, and even the Internet. Low-power television plays a valuable, albeit modest, role in this market because it is capable of providing locally-originated programming to rural and urban communities that have either no access to local programming, or an over-abundance of national programming. Low-power television's future, however, is uncertain. To begin with, LPTV's secondary regulatory status means a licensee can be summarily displaced by a full-service station that seeks to expand its own service area, or by a new full- service station seeking to enter the same market. This cloud of regulatory uncertainty necessarily affects the ability of LPTV stations to raise capital over the long-term, irrespective of an LPTV station's popularity among consumers. The FCC's plan to convert full-service stations to digital substantially complicates LPTV stations' already uncertain future. In its digital television (DTV) proceeding, the FCC adopted a table of allotments for DTV service that provided a second channel for [[Page S14725]] each existing full-service station to use for DTV service in making the transition from the existing analog technology to the new DTV technology. These second channels were provided to broadcasters on a temporary basis. At the end of the DTV transition, which is currently scheduled for December 31, 2006, they must relinquish one of their two channels. In assigning DTV channels, the FCC maintained the secondary status of LPTV stations (as well as translators). In order to provide all full-service television stations with a second channel, the FCC was compelled to establish DTV allotments that will displace a number of LPTV stations, particularly in the larger urban market areas where the available spectrum is most congested. The FCC's plan also provides for the recovery of a portion of the existing broadcast television spectrum so that it can be reallocated to new uses. Specifically, the FCC provided for immediate recovery of broadcast channels 60 through 69, and for recovery of broadcast channels 52 through 59 at the end of the DTV transition. As further required by Congress under the Balanced Budget Act of 1997,\29\ the FCC has completed the reallocation of broadcast channels 60 through 69. Existing analog stations, including LPTV stations and a few DTV stations, are permitted to operate on these channels during the DTV transition. But at the end of the transition, all analog broadcast TV stations will have to cease operation, and the DTV stations on broadcast channels 52 through 69 will be relocated to new channels in the DTV core spectrum. As a result, the FCC estimates that the DTV transition will require about 35 to 45 percent of all LPTV stations to either change their operation or cease operation. Indeed, some full-service stations have already ``bumped'' several LPTV stations a number of times, at substantial cost to the LPTV station, with no guarantee that the LPTV station will be permitted to remain on its new channel in the long term. The conferees, therefore, seek to provide some regulatory certainty for low-power television service. The conferees recognize that, because of emerging DTV service, not all LPTV stations can be guaranteed a certain future. Moreover, it is not clear that all LPTV stations should be given such a guarantee in light of the fact that many existing LPTV stations provide little or no original programming service. Instead, the conferees seek to buttress the commercial viability of those LPTV stations which can demonstrate that they provide valuable programming to their communities. The House Committee on Commerce's record in considering this legislation reflects that there are a significant number of LPTV stations which broadcast programming--including locally originated programming--for a substantial portion of each day. From the consumers' perspective, these stations provide video programming that is functionally equivalent to the programming they view on full-service stations, as well as national and local cable networks. Consequently, these stations should be afforded roughly similar regulatory status. Section 5008, the Community Broadcasters Protection Act of 1999, will achieve that objective, and at the same time, protect the transition to digital. Section 5008(a) provides that the short title of this section is the ``Community Broadcasters Protection Act of 1999.'' Section 5008(b) describes the Congress' findings on the importance of low-power television service. The Congress finds that LPTV stations have operated in a manner beneficial to the public, and in many instances, provide worthwhile and diverse services to communities that lack access to over-the- air programming. The Congress also finds, however, that LPTV stations' secondary regulatory status effectively blocks access to capital. Section 5008(c) amends section 336 of the Communications Act of 1934 \30\ to require the FCC to create a new ``Class A'' license for certain qualifying LPTV stations. New paragraph (1)(A) in particular directs the FCC to prescribe rules within 120 days of enactment for the establishment of a new Class A television license that will be available to qualifying LPTV stations. The FCC's rules must ensure that a Class A licensee receives the same license terms and renewal standards as any full-service licensee, and that each Class A licensee is accorded primary regulatory status. Subparagraph (B) further requires the FCC, within 30 days of enactment, to send to each existing LPTV licensee a notice that describes the requirements for Class A designation. Within 60 days of enactment (or within 30 days of the FCC's notice), LPTV stations intending to seek Class A designation must submit a certification of eligibility to the FCC. Absent a material deficiency in an LPTV station's certification materials, the FCC is required under subparagraph (B) to grant a certification of eligibility. Subparagraph (C) permits an LPTV station, within 30 days of the issuance of the rules required under subparagraph (A), to submit an application for Class A designation. The FCC must award a Class A license to a qualifying LPTV station within 30 days of receiving such application. Subparagraph (D) mandates that the FCC must act to preserve the signal contours of an LPTV station pending the final resolution of its application for a Class A license. In the event technical problems arise that require an engineering solution to a full-service station's allotted parameters or channel assignment in the DTV table of allotments, subparagraph (D) requires the FCC to make the necessary modifications to ensure that such full-service station can replicate or maximize its service area, as provided for in the FCC's rules. With regard to maximization, a full-service digital television station must file an application for maximization or a notice of intent to seek such maximization by December 31, 1999, file a bona fide application for maximization by May 1, 2000, and also comply with all applicable FCC rules regarding the construction of digital television facilities. The term ``maximization'' is defined in paragraph 31 of the FCC's Sixth Report and Order as the process by which stations increase their service areas by operating with additional power or higher antennae than specified in the FCC's digital television table of allotments. Subparagraph(E) requires that a station must reduce the protected contour of its digital television service area in accordance with any modifications requested in future change applications. This provision is intended to ensure that stations indeed utilize the full amount of maximized spectrum for which they originally apply by the aforementioned deadlines. Paragraph (2) lists the criteria an LPTV station must meet to qualify for a Class A license. Specifically, the LPTV station must: during the 90 days preceding the date of enactment, broadcast a minimum of 18 hours per day--including at least 3 hours per week of locally-originated programming-- and also be in compliance with the FCC's rules on low-power television service; and from and after the date of its application for a Class A license, be in compliance with the FCC's rules for full-service television stations. In the alternative, the FCC may qualify an LPTV station as a Class A licensee if it determines that such qualification would serve the public interest, convenience, and necessity or for other reasons determined by the FCC. Paragraph (3) provides that no LPTV station authorized as of the date of enactment may be disqualified for a Class A license based on common ownership with any other medium of mass communication. Paragraph (4) makes clear that the FCC is not required to issue Class A LPTV stations (or translators) an additional license for advanced television services. The FCC, however, must accept applications for such services, provided the station will not cause interference to any other broadcast facility applied for, protected, permitted or authorized on the date of the filing of the application for advanced television services. Either the new license for advanced services or the original license must be forfeited at the end of the DTV transition. The licensee may elect to convert to advanced television services on its analog channel, but is not required to convert to digital format until the end of the DTV transition. Paragraph (5) clarifies that nothing in new subsection 336(f) preempts, or otherwise affects, section 337 of the Communications Act of 1934.\31\ Paragraph (6) precludes the FCC from granting Class A licenses to LPTV stations operating between 698 megahertz (MHz) and 806 MHz (i.e., television broadcast channels 52 through 69). However, the FCC shall provide to LPTV stations assigned to, and temporarily operating on, those channels the opportunity to qualify for a Class A license. If a qualifying LPTV station is ultimately assigned a channel within the band of frequencies that will eventually comprise the ``core spectrum'' (i.e., television broadcast channels 2 through 51), then the FCC is required to issue a Class A license simultaneously. However, the FCC may not grant a Class A license to an LPTV station operating on a channel within the core spectrum that the FCC will identify within 180 days of enactment. Finally, paragraph (7) provides that the FCC may not grant a Class A license (or a modification thereto) unless the requesting LPTV station demonstrates that it will not interfere with one of three types of radio-based services. First, under subparagraph (A), the LPTV station must show that it will not interfere with: (i) the predicted Grade B contour of any station transmitting in analog format; or (ii) the digital television service areas provided in the DTV table of allotments; or the digital television areas explicitly protected (as opposed to those areas that may be permitted) in the Commission's digital television regulations; or the digital television service areas of stations subsequently granted by the FCC prior to the filing of a Class A application; or lastly, stations seeking to maximize power under the FCC's rules (provided such stations are in compliance with the notification requirements under paragraph (1)). Second, under subparagraph (B), the LPTV station must show that it will not interfere with any licensed, authorized or pending LPTV station or translator. And third, under subparagraph (C), the LPTV station must show that it will not interfere with other services (e.g., land mobile services) that also operate on television broadcast channels 14 through 20. Finally, paragraph (8) establishes priority for those LPTVs that are displaced by an application filed under this section, in that these LPTVs have priority over other LPTVs in the assignment of available channels. FOOTNOTES \1\ See Rust v. Sullivan, 500 U.S. 173 (1991) (grants); Indopco, Inc. v. Commissioner, 503 U.S. 79, 84 (1992) (tax benefits). The First Amendment requires only [[Page S14726]] that Congress not aim at ``the suppression of dangerous ideas.'' NEA v. Finley, 118 S. Ct. 2168, 2178-79 (1998). \2\ See United States v. O'Brien, 391 U.S. 367 (1968). \3\ See Turner Broadcasting Sys., Inc. v. FCC, 512 U.S. 622, 663 (1994). \4\ See, e.g., H.R. Rep. No. 102-628, p. 51 (1992); S. Rep. No. 102-92, p. 62 (1991); see also Feb. 24 Hearing (Al DeVaney). \5\ The Supreme Court has described the ``two types'' of quasi in rem proceedings: a type I proceeding, in which ``the plaintiff is seeking to secure a pre-existing claim in the subject property and to extinguish or establish the nonexistence of similar interests of particular persons,'' and a type II action, in which ``the plaintiff seeks to apply what he concedes to be the property of the defendant to the satisfaction of a claim against him.'' Hanson v. Denckla, 357 U.S. 235, 246 n.12 (1958). \6\ 15 U.S.C. Sec. 1051, et seq. \7\ 149 F.3d 1368 (Fed. Cir. 1998) [hereinafter State Street]. \8\ See Dunlop Holdings v. Ram Golf Corp., 524 F.2d 33 (7th Cir. 1975), cert. denied, 424 US 985 (1976). \9\ General Agreement on Tariffs and Trade, Pub. L. No. 103- 465. The framework for international trade since its inception in 1948, GATT is now administered under the auspices of the World Trade Organization (WTO) (see note 19, infra). \10\ See Herbert F. Schwartz, Patent Law & Practice (2d ed., Federal Judicial Center, 1995), note 72 at 22. The PCT is a multilateral treaty among more than 50 nations that is designed to simplify the patenting process when an applicant seeks a patent on the same invention in more than one nation. See also 35 U.S.C.A. chs. 35-37 and PCT Applicant's Guide (1992, rev. 1994). \11\ 35 U.S.C. Sec. 135(a). \12\ 35 U.S.C. Sec. 181. \13\ 5 U.S.C. Sec. Sec. 551-559, 701-706, 1305, 3105, 3344, 5372, 7521. \14\ 28 U.S.C. Sec. 1295. \15\ 35 U.S.C. Sec. 111(b). Pursuant to 35 U.S.C. Sec. 111(b)(5), all provisional applications are abandoned 12 months after the date of their filing; accordingly, they are not subject to the 18-month publication requirement. \16\ 35 U.S.C. Sec. 171. Since design applications do not disclose technology, inventors do not have a particular interest in having them published. The bill as written therefore simplifies the proposed system of publication to confine the requirement to those applications for which there is a need for publication. \17\ Mar. 20, 1883, as revised at Brussels, Dec. 14, 1900, 25 Stat. 1645, T.S. No. 579, and subsequently through 1967. The Convention has 156 member nations, including the United States. \18\ See 28 U.S.C. Sec. 1338. \19\ 19 U.S.C. Sec. 2171. \20\ 28 U.S.C. Sec. 5382. \21\ 5 U.S.C. Sec. 5304(h)(2)(C). \22\ 5 U.S.C. Sec. 5314. \23\ 5 U.S.C. Sec. 5315. \24\ World Trade Organization. The agreement establishing the WTO is a multilateral instrument which creates a permanent organization to oversee the implementation of the Uruguay Round Agreements, including the GATT 1994, to provide a forum for multilateral trade negotiations and to administer dispute settlements (see note 3, supra). Staff of the House Comm. on Ways and Means, 104th Cong., 1st Sess., Overview and Compilation of U.S. Trade Statutes 1040 (Comm. Print 1995) [hereinafter, Overview and Compilation of U.S. Trade Statutes]. \25\ Trade-Related Aspects of Intellectual Property Rights Agreement; i.e., that component of GATT which addresses intellectual property rights among the signatory members. \26\ International Convention for the Protection of New Varieties of Plants. UPOV is administered by the World Intellectual Property Organization (WIPO), which is charged with the administration of, and activities concerning revisions to, the international intellectual property treaties. UPOV has 40 members, and guarantees plant breeders national treatment and right of priority in other countries that are members of the treaty, along with certain other benefits. See M.A. Leaffer, International Treaties on Intellectual Property at 47 (BNA, 2d ed. 1997). \27\ North American Free Trade Agreement, Pub. L. No. 103- 182. The cornerstone of NAFTA is the phased-out elimination of all tariffs on trade between the U.S., Canada, and Mexico. Overview and Compilation of U.S. Trade Statutes 1999. \28\ LPTV stations are distinct from so called ``translators.'' Whereas LPTV stations typically offer original programming, translators merely amplify or ``boost'' a full-service television station's signal into rural and mountainous regions adjacent to the station's market. \29\ See 47 U.S.C. Sec. 337. \30\ 47 U.S.C. Sec. 336. \31\ 47 U.S.C. Sec. 337. ______ By Mr. LEAHY: S. 1949. A bill to promote economically sound modernization of electric power generation capacity in the United States, to establish requirements to improve the combustion heat rate efficiency of fossil fuel-fired electric utility generating units, to reduce emissions of mercury, carbon dioxide, nitrogen oxides, and sulfur dioxide, to require that all fossil fuel-fired electric utility generating units operating in the United States meet new review requirements, to promote the use of clean coal technologies, and to promote alternative energy and clean energy sources such as solar, wind, biomass, and fuel cells; to the Committee on Finance. clean power plant and modernization act of 1999 Mr. LEAHY. Mr. President, Vermonters have a proud tradition of protecting our environment. We have some of the strongest environmental laws in the country. Yet despite this proud tradition of environmental stewardship, we have seen how pollution from outside our state has affected our mountains, lakes and streams. Acid rain caused from sulfur dioxide emissions outside Vermont has drifted through the atmosphere and scarred our mountains and poisoned our streams. Mercury has quietly made its deadly poisonous presence into the food chain of our fish to the point where health advisories have been posted for the consumption of several species. And, despite our own tough air laws and small population, the EPA has considered air quality warnings in Vermont that are comparable to emissions consistent for much larger cities. Silently each night, pollution from outside Vermont seeps into our state, and our exemplary and forward-looking environmental laws are powerless to stop or even limit the encroachment. The Clean Air Act of 1970 was a milestone law which established national air quality standards for the first time and attempted to provide protection for populations who are affected by emissions outside their own local and state control. That bill did much to halt declining air quality around the country and improve it in some areas. It also acknowledged that fossil fuel utility plants contribute a significant amount of air pollution not only in the area immediately around the plant but can affect air quality hundreds of miles away. While the bill has improved air quality, changes in the utility market since passage of the Clean Air Act make it necessary to consider important updates to the legislation. States throughout the country are deregulating utilities and soon Congress may consider federal legislation on this issue. I support these economic changes but Congress and the Administration should keep pace with this changing market. Breaking down the barriers of a regulated utility market can have important economic consequences for utility customers. More competition will drive down prices. But these lower costs will come with a price--the cheapest power is unfortunately produced by some of the dirtiest power plants. Most of these power plants were grandfathered under the Clean Air Act. So today I am introducing the ``Clean Power Plant and Modernization Act'' to address the local, regional, and global air pollution problems that are posed by fossil-fired power plants under a deregulated market. In the last few weeks, the EPA and the Administration have taken some important steps to address the power plant loophole in the Clean Air Act that allows hundreds of old, mostly coal-fired power plants to continue to pollute at levels much higher than new plants. Closing this loophole is critical to protecting the health of our environment and the health of our children. Last week the Justice Department and the Environmental Protection Agency filed suit against 32 coal-fired power plants who had made major changes to their plants without also installing new equipment to control smog, acid rain and soot. This is illegal, even under the Clean Air Act, and it spotlights the glaring need to level the playing field for all power plants. This is particularly as our country moves toward a deregulated electricity industry. Unfortunately, some of our colleagues decided that this move unfairly targeted some of their utilities that have benefitted from this loophole for almost thirty years. I would point out that many of us from New England and New York believe it is unfair that our states have been the dumping ground for the pollution coming out of these plants for the past thirty years. My colleagues have heard me speak on the floor about how this pollution is contaminating our fish with mercury, damaging our lakes and forests with acid rain, and causing respiratory problems and obscuring the view of Vermont's mountains with summertime ozone pollution from nitrogen oxide emissions. Now, added to these concerns is the growing body of knowledge showing that carbon dioxide emissions are having an impact on the global climate. More than a decade of record heat, reports from around the globe of dying coral reefs, and melting glaciers should be warning signals to all of us. In Vermont, one of our warning signals is the impact to sugar maples. Sugar maple now range naturally as far south as Tennessee and west of the Mississippi River from Minnesota to Missouri. Given the current predictions for climate changes, by the end of the next century the range of sugar maples in North America will be limited the state of Maine and portions of eastern Canada. Vermont's climate may not [[Page S14727]] change so much that palm trees will line the streets of Burlington and Montpelier, but the impact on the character and economy of Vermont and many other states will be profound. It is hard to imagine a Vermont hillside in the fall without the brilliant reds of the sugar maples, and it is hard to imagine a stack of pancakes without Vermont maple syrup. And it is unlikely that sugar maples will be the only species or crop that will be affected by climate change, or that the effects will be limited to Vermont. Many like to dismiss concerns about pollution from power plants as a ``Northeastern issue.'' It is not; it affects all of us, perhaps in ways that we have not even begun to imagine. I can show you maps that mark the deposition ``hot spots'' for these pollutants in the Everglades, the Upper Midwest, New England, Long Island Sound, Chesapeake Bay and the West Coast. This clearly is not a regional issue. Collectively, fossil fuel-fired power plants constitute the largest source of air pollution in the United States, annually emitting more than 2 billion tons of carbon dioxide, more than 12 million tons of acid rain producing sulfur dioxide, nearly 6 million tons of smog producing nitrogen oxides, and more than 50 tons of highly toxic mercury. These are staggering sums. Consider the fact that it would take nearly 25,000 Washington Monuments, weighing 81,120 tons apiece, to add up to 2 billion tons. And that is just one year. Why are we continuing to allow pollutants on that enormous scale to be dumped on some of our most fragile ecosystems, much less into our lungs through the air we breathe? It is because Congress assumed when it passed the 1970 Clean Air Act that these old pollution-prone plants would be retired over time and replaced by newer, cleaner plants. It has not worked out that way, and it is time for the Congress to rethink our strategy. More than 75 percent of the fossil-fuel fired plants in the United States began operation before the 1970 Clean Air Act was passed. As a result, they are ``grandfathered'' out from under the full force of its regulations. Many of the environmental problems posed by this industry are linked to the antiquated and inefficient technologies at these plants. The average fossil-fuel fired power plant uses combustion technology devised in the 1950's or before. Would any of us buy a car today that was still using 1950s technology? Of course not. So why are we still going out of our way to preserve 1950s technology for power plants? As long as we allow these plants to operate inefficiently they will produce enormous amounts of air pollution. My bill takes a new approach to reducing this pollution by retiring the inefficient ``grandfathered'' power plants and bring new, clean, and efficient technologies for the 21st Century on line. Obviously, major changes in this industry will not occur over night. The ``continue-business-as-usual'' inertia is enormous. The old, inefficient, pollution-prone power plants will operate until they fall down because they are paid for, burn the cheapest fuel, and are subject to much less stringent environmental requirements. ``Grandfathered'' plants have the statutory equivalent of an eternal lifetime under the Clean Air Act loophole. Mr. President, this article in Forbes Magazine describes how valuable the old ``grandfathered'' power plants are. The article cites the example of the ``grandfathered'' Homer City generating station outside of Pittsburgh. Until last year, the utility valued this plant at $540 million. According to the Forbes article, last year the utility sold the plant for $1.8 billion. That works out to $955 per kilowatt of generating capacity, or about the cost of building a new plant. Why are these old pollution-prone plants suddenly so valuable? Maybe their ``grandfathered'' status has something to do with it. What does my bill propose to do? First, it closes the ``grandfather'' loophole. Second, it lays out an aggressive but achievable set of air pollution and efficiency requirements for fossil-fired power plants. Third, the emissions standards will allow clean coal technologies to have a fair chance to compete in the future mix of electrical power generation. Fourth, it provides industry decision-makers with a comprehensive and predictable set of regulatory requirements and tax code changes so they can see up-front what the playing field is going to look like in the future. This will allow them to make informed, comprehensive, and economically efficient business decisions. Public health and the environment will benefit, consumers will benefit, and the utility companies will benefit from this approach. As U.S. power plants become more efficient and more power is produced by renewable technologies, less fossil fuel will be consumed. This will have an impact on the workers and communities that produce fossil fuels. These effects are likely to be greatest for coal, even with significant deployment of clean coal technology. The bill provides funding for programs to help workers and communities during the period of transition. I am eager to work with organized labor to ensure that these provisions address the needs of workers, particularly those who may not fully benefit from retraining programs. The bill provides substantial additional funding for research, development, and commercial demonstrations of renewable and clean energy technologies such as solar, wind, biomass, and fuel cells. As utilities retire their ``grandfathered'' plants and plan for future generating capacity, renewable and clean technologies need to be part of the equation. My bill also authorizes expenditures for implementing known ways of biologically sequestering carbon dioxide from the atmosphere such as planting trees, preserving wetlands, and soil restoration. How will the environment benefit from the emission and efficiency standards in my bill? Mercury emissions will be cut from more than 50 tons per year to no more than 5 tons per year. Annual emissions of sulfur dioxide that causes acid rain will be cut by more than 6 million tons beyond the requirements in Phase II of the Clean Air Act of 1990. Nitrogen oxide emissions that result in summertime ozone pollution will be cut by more than 3 million tons per year beyond Phase II requirements. And the bill would prevent at least 650 million tons of carbon dioxide emissions per year. Of course, this discussion should not just be about the impact to our environment. This debate should equally be focused on public health. There is mounting evidence of the health effects of these pollutants. The Washington Post Magazine ran an alarming article that documented the escalating number of children with asthma, jumping to 17.3 million in 1998 from 6.8 million in 1980. Asthma may not be caused directly by air pollution, but it certainly aggravates it and can lead to premature deaths. The American public still overwhelmingly supports the commitment to the environment that we made in the early 1970s. As stewards of the environment for our children and our grandchildren, we need to act without delay to ensure that in the new millennium the United States produces electricity more efficiently and with much less environmental and public health impact. There is no reason why we should go into the next century still using technology from the era of Ozzie and Harriet. Mr. President, I ask unanimous consent that a section-by-section overview of the bill, and an article entitled ``Poor Me'' from the May 31, 1999, edition of Forbes Magazine, be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: S. 1949 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 ``Clean Power Plant and Modernization Act of 1999''. (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 purposes. Sec. 3. Definitions. Sec. 4. Combustion heat rate efficiency standards for fossil fuel-fired generating units. Sec. 5. Air emission standards for fossil fuel-fired generating units. Sec. 6. Extension of renewable energy production credit. Sec. 7. Megawatt hour generation fees. Sec. 8. Clean Air Trust Fund. Sec. 9. Accelerated depreciation for investor-owned generating units. [[Page S14728]] Sec. 10. Grants for publicly owned generating units. Sec. 11. Recognition of permanent emission reductions in future climate change implementation programs. Sec. 12. Renewable and clean power generation technologies. Sec. 13. Clean coal, advanced gas turbine, and combined heat and power demonstration program. Sec. 14. Evaluation of implementation of this Act and other statutes. Sec. 15. Assistance for workers adversely affected by reduced consumption of coal. Sec. 16. Community economic development incentives for communities adversely affected by reduced consumption of coal. Sec. 17. Carbon sequestration. SEC. 2. FINDINGS AND PURPOSES. (a) Findings.--Congress finds that-- (1) the United States is relying increasingly on old, needlessly inefficient, and highly polluting powerplants to provide electricity; (2) the pollution from those powerplants causes a wide range of health and environmental damage, including-- (A) fine particulate matter that is associated with the deaths of approximately 50,000 Americans annually; (B) urban ozone, commonly known as ``smog'', that impairs normal respiratory functions and is of special concern to individuals afflicted with asthma, emphysema, and other respiratory ailments; (C) rural ozone that obscures visibility and damages forests and wildlife; (D) acid deposition that damages estuaries, lakes, rivers, and streams (and the plants and animals that depend on them for survival) and leaches heavy metals from the soil; (E) mercury and heavy metal contamination that renders fish unsafe to eat, with especially serious consequences for pregnant women and their fetuses; (F) eutrophication of estuaries, lakes, rivers, and streams; and (G) global climate change that may fundamentally and irreversibly alter human, animal, and plant life; (3) tax laws and environmental laws-- (A) provide a very strong incentive for electric utilities to keep old, dirty, and inefficient generating units in operation; and (B) provide a strong disincentive to investing in new, clean, and efficient generating technologies; (4) fossil fuel-fired power plants, consisting of plants fueled by coal, fuel oil, and natural gas, produce nearly two-thirds of the electricity generated in the United States; (5) since, according to the Department of Energy, the average combustion heat rate efficiency of fossil fuel-fired power plants in the United States is 33 percent, 67 percent of the heat generated by burning the fuel is wasted; (6) technology exists to increase the combustion heat rate efficiency of coal combustion from 35 percent to 50 percent above current levels, and technological advances are possible that would boost the net combustion heat rate efficiency even more; (7) coal-fired power plants are the leading source of mercury emissions in the United States, releasing an estimated 52 tons of this potent neurotoxin each year; (8) in 1996, fossil fuel-fired power plants in the United States produced over 2,000,000,000 tons of carbon dioxide, the primary greenhouse gas; (9) on average-- (A) fossil fuel-fired power plants emit 1,999 pounds of carbon dioxide for every megawatt hour of electricity produced; (B) coal-fired power plants emit 2,110 pounds of carbon dioxide for every megawatt hour of electricity produced; and (C) coal-fired power plants emit 205 pounds of carbon dioxide for every million British thermal units of fuel consumed; (10) the average fossil fuel-fired generating unit in the United States commenced operation in 1964, 6 years before the Clean Air Act (42 U.S.C. 7401 et seq.) was amended to establish requirements for stationary sources; (11)(A) according to the Department of Energy, only 23 percent of the 1,000 largest emitting units are subject to stringent new source performance standards under section 111 of the Clean Air Act (42 U.S.C. 7411); and (B) the remaining 77 percent, commonly referred to as ``grandfathered'' power plants, are subject to much less stringent requirements; (12) on the basis of scientific and medical evidence, exposure to mercury and mercury compounds is of concern to human health and the environment; (13) pregnant women and their developing fetuses, women of childbearing age, and children are most at risk for mercury- related health impacts such as neurotoxicity; (14) although exposure to mercury and mercury compounds occurs most frequently through consumption of mercury- contaminated fish, such exposure can also occur through-- (A) ingestion of breast milk; (B) ingestion of drinking water, and foods other than fish, that are contaminated with methyl mercury; and (C) dermal uptake through contact with soil and water; (15) the report entitled ``Mercury Study Report to Congress'' and submitted by the Environmental Protection Agency under section 112(n)(1)(B) of the Clean Air Act (42 U.S.C. 7412(n)(1)(B)), in conjunction with other scientific knowledge, supports a plausible link between mercury emissions from combustion of coal and other fossil fuels and mercury concentrations in air, soil, water, and sediments; (16)(A) the Environmental Protection Agency report described in paragraph (15) supports a plausible link between mercury emissions from combustion of coal and other fossil fuels and methyl mercury concentrations in freshwater fish; (B) in 1997, 39 States issued health advisories that warned the public about consuming mercury-tainted fish, as compared to 27 States that issued such advisories in 1993; and (C) the number of mercury advisories nationwide increased from 899 in 1993 to 1,675 in 1996, an increase of 86 percent; (17) pollution from powerplants can be reduced through adoption of modern technologies and practices, including-- (A) methods of combusting coal that are intrinsically more efficient and less polluting, such as pressurized fluidized bed combustion and an integrated gasification combined cycle system; (B) methods of combusting cleaner fuels, such as gases from fossil and biological resources and combined cycle turbines; (C) treating flue gases through application of pollution controls; (D) methods of extracting energy from natural, renewable resources of energy, such as solar and wind sources; (E) methods of producing electricity and thermal energy from fuels without conventional combustion, such as fuel cells; and (F) combined heat and power methods of extracting and using heat that would otherwise be wasted, for the purpose of heating or cooling office buildings, providing steam to processing facilities, or otherwise increasing total efficiency; and (18) adopting the technologies and practices described in paragraph (17) would increase competitiveness and productivity, secure employment, save lives, and preserve the future. (b) Purposes.--The purposes of this Act are-- (1) to protect and preserve the environment while safeguarding health by ensuring that each fossil fuel-fired generating unit minimizes air pollution to levels that are technologically feasible through modernization and application of pollution controls; (2) to greatly reduce the quantities of mercury, carbon dioxide, sulfur dioxide, and nitrogen oxides entering the environment from combustion of fossil fuels; (3) to permanently reduce emissions of those pollutants by increasing the combustion heat rate efficiency of fossil fuel-fired generating units to levels achievable through-- (A) use of commercially available combustion technology, including clean coal technologies such as pressurized fluidized bed combustion and an integrated gasification combined cycle system; (B) installation of pollution controls; (C) expanded use of renewable and clean energy sources such as biomass, geothermal, solar, wind, and fuel cells; and (D) promotion of application of combined heat and power technologies; (4)(A) to create financial and regulatory incentives to retire thermally inefficient generating units and replace them with new units that employ high-thermal-efficiency combustion technology; and (B) to increase use of renewable and clean energy sources such as biomass, geothermal, solar, wind, and fuel cells; (5) to establish the Clean Air Trust Fund to fund the training, economic development, carbon sequestration, and research, development, and demonstration programs established under this Act; (6) to eliminate the ``grandfather'' loophole in the Clean Air Act relating to sources in operation before the promulgation of standards under section 111 of that Act (42 U.S.C. 7411); (7) to express the sense of Congress that permanent reductions in emissions of greenhouse gases that are accomplished through the retirement of old units and replacement by new units that meet the combustion heat rate efficiency and emission standards specified in this Act should be credited to the utility sector and the owner or operator in any climate change implementation program; (8) to promote permanent and safe disposal of mercury recovered through coal cleaning, flue gas control systems, and other methods of mercury pollution control; (9) to increase public knowledge of the sources of mercury exposure and the threat to public health from mercury, particularly the threat to the health of pregnant women and their fetuses, women of childbearing age, and children; (10) to decrease significantly the threat to human health and the environment posed by mercury; (11) to provide worker retraining for workers adversely affected by reduced consumption of coal; and (12) to provide economic development incentives for communities adversely affected by reduced consumption of coal. SEC. 3. DEFINITIONS. In this Act: [[Page S14729]] (1) Administrator.--The term ``Administrator'' means the Administrator of the Environmental Protection Agency. (2) Generating unit.--The term ``generating unit'' means an electric utility generating unit. SEC. 4. COMBUSTION HEAT RATE EFFICIENCY STANDARDS FOR FOSSIL FUEL-FIRED GENERATING UNITS. (a) Standards.-- (1) In general.--Not later than the day that is 10 years after the date of enactment of this Act, each fossil fuel- fired generating unit that commences operation on or before that day shall achieve and maintain, at all operating levels, a combustion heat rate efficiency of not less than 45 percent (based on the higher heating value of the fuel). (2) Future generating units.--Each fossil fuel-fired generating unit that commences operation more than 10 years after the date of enactment of this Act shall achieve and maintain, at all operating levels, a combustion heat rate efficiency of not less than 50 percent (based on the higher heating value of the fuel), unless granted a waiver under subsection (d). (b) Test Methods.--Not later than 2 years after the date of enactment of this Act, the Administrator, in consultation with the Secretary of Energy, shall promulgate methods for determining initial and continuing compliance with this section. (c) Permit Requirement.--Not later than 10 years after the date of enactment of this Act, each generating unit shall have a permit issued under title V of the Clean Air Act (42 U.S.C. 7661 et seq.) that requires compliance with this section. (d) Waiver of Combustion Heat Rate Efficiency Standard.-- (1) Application.--The owner or operator of a generating unit that commences operation more than 10 years after the date of enactment of this Act may apply to the Administrator for a waiver of the combustion heat rate efficiency standard specified in subsection (a)(2) that is applicable to that type of generating unit. (2) Issuance.--The Administrator may grant the waiver only if-- (A)(i) the owner or operator of the generating unit demonstrates that the technology to meet the combustion heat rate efficiency standard is not commercially available; or (ii) the owner or operator of the generating unit demonstrates that, despite best technical efforts and willingness to make the necessary level of financial commitment, the combustion heat rate efficiency standard is not achievable at the generating unit; and (B) the owner or operator of the generating unit enters into an agreement with the Administrator to offset by a factor of 1.5 to 1, using a method approved by the Administrator, the emission reductions that the generating unit does not achieve because of the failure to achieve the combustion heat rate efficiency standard specified in subsection (a)(2). (3) Effect of waiver.--If the Administrator grants a waiver under paragraph (1), the generating unit shall be required to achieve and maintain, at all operating levels, the combustion heat rate efficiency standard specified in subsection (a)(1). SEC. 5. AIR EMISSION STANDARDS FOR FOSSIL FUEL-FIRED GENERATING UNITS. (a) All Fossil Fuel-Fired Generating Units.--Not later than 10 years after the date of enactment of this Act, each fossil fuel-fired generating unit, regardless of its date of construction or commencement of operation, shall be subject to, and operating in physical and operational compliance with, the new source review requirements under section 111 of the Clean Air Act (42 U.S.C. 7411). (b) Emission Rates for Sources Required To Maintain 45 Percent Efficiency.--Not later than 10 years after the date of enactment of this Act, each fossil fuel-fired generating unit subject to section 4(a)(1) shall be in compliance with the following emission limitations: (1) Mercury.--Each coal-fired or fuel oil-fired generating unit shall be required to remove 90 percent of the mercury contained in the fuel, calculated in accordance with subsection (e). (2) Carbon dioxide.-- (A) Natural gas-fired generating units.--Each natural gas- fired generating unit shall be required to achieve an emission rate of not more than 0.9 pounds of carbon dioxide per kilowatt hour of net electric power output. (B) Fuel oil-fired generating units.--Each fuel oil-fired generating unit shall be required to achieve an emission rate of not more than 1.3 pounds of carbon dioxide per kilowatt hour of net electric power output. (C) Coal-fired generating units.--Each coal-fired generating unit shall be required to achieve an emission rate of not more than 1.55 pounds of carbon dioxide per kilowatt hour of net electric power output. (3) Sulfur dioxide.--Each fossil fuel-fired generating unit shall be required-- (A) to remove 95 percent of the sulfur dioxide that would otherwise be present in the flue gas; and (B) to achieve an emission rate of not more than 0.3 pounds of sulfur dioxide per million British thermal units of fuel consumed. (4) Nitrogen oxides.--Each fossil fuel-fired generating unit shall be required-- (A) to remove 90 percent of nitrogen oxides that would otherwise be present in the flue gas; and (B) to achieve an emission rate of not more than 0.15 pounds of nitrogen oxides per million British thermal units of fuel consumed. (c) Emission Rates for Sources Required To Maintain 50 Percent Efficiency.--Each fossil fuel-fired generating unit subject to section 4(a)(2) shall be in compliance with the following emission limitations: (1) Mercury.--Each coal-fired or fuel oil-fired generating unit shall be required to remove 90 percent of the mercury contained in the fuel, calculated in accordance with subsection (e). (2) Carbon dioxide.-- (A) Natural gas-fired generating units.--Each natural gas- fired generating unit shall be required to achieve an emission rate of not more than 0.8 pounds of carbon dioxide per kilowatt hour of net electric power output. (B) Fuel oil-fired generating units.--Each fuel oil-fired generating unit shall be required to achieve an emission rate of not more than 1.2 pounds of carbon dioxide per kilowatt hour of net electric power output. (C) Coal-fired generating units.--Each coal-fired generating unit shall be required to achieve an emission rate of not more than 1.4 pounds of carbon dioxide per kilowatt hour of net electric power output. (3) Sulfur dioxide.--Each fossil fuel-fired generating unit shall be required-- (A) to remove 95 percent of the sulfur dioxide that would otherwise be present in the flue gas; and (B) to achieve an emission rate of not more than 0.3 pounds of sulfur dioxide per million British thermal units of fuel consumed. (4) Nitrogen oxides.--Each fossil fuel-fired generating unit shall be required-- (A) to remove 90 percent of nitrogen oxides that would otherwise be present in the flue gas; and (B) to achieve an emission rate of not more than 0.15 pounds of nitrogen oxides per million British thermal units of fuel consumed. (d) Permit Requirement.--Not later than 10 years after the date of enactment of this Act, each generating unit shall have a permit issued under title V of the Clean Air Act (42 U.S.C. 7661 et seq.) that requires compliance with this section. (e) Compliance Determination and Monitoring.-- (1) Regulations.--Not later than 2 years after the date of enactment of this Act, the Administrator, in consultation with the Secretary of Energy, shall promulgate methods for determining initial and continuing compliance with this section. (2) Calculation of mercury emission reductions.--Not later than 2 years after the date of enactment of this Act, the Administrator shall promulgate fuel sampling techniques and emission monitoring techniques for use by generating units in calculating mercury emission reductions for the purposes of this section. (3) Reporting.-- (A) In general.--Not less than often than quarterly, the owner or operator of a generating unit shall submit a pollutant-specific emission report for each pollutant covered by this section. (B) Signature.--Each report required under subparagraph (A) shall be signed by a responsible official of the generating unit, who shall certify the accuracy of the report. (C) Public reporting.--The Administrator shall annually make available to the public, through 1 or more published reports and 1 or more forms of electronic media, facility- specific emission data for each generating unit and pollutant covered by this section. (D) Consumer disclosure.--Not later than 2 years after the date of enactment of this Act, the Administrator shall promulgate regulations requiring each owner or operator of a generating unit to disclose to residential consumers of electricity generated by the unit, on a regular basis (but not less often than annually) and in a manner convenient to the consumers, data concerning the level of emissions by the generating unit of each pollutant covered by this section and each air pollutant covered by section 111 of the Clean Air Act (42 U.S.C. 7411). (f) Disposal of Mercury Captured or Recovered Through Emission Controls.-- (1) Captured or recovered mercury.--Not later than 2 years after the date of enactment of this Act, the Administrator shall promulgate regulations to ensure that mercury that is captured or recovered through the use of an emission control, coal cleaning, or another method is disposed of in a manner that ensures that-- (A) the hazards from mercury are not transferred from 1 environmental medium to another; and (B) there is no release of mercury into the environment. (2) Mercury-containing sludges and wastes.--The regulations promulgated by the Administrator under paragraph (1) shall ensure that mercury-containing sludges and wastes are handled and disposed of in accordance with all applicable Federal and State laws (including regulations). (g) Public Reporting of Facility-Specific Emission Data.-- (1) In general.--The Administrator shall annually make available to the public, through 1 or more published reports and the Internet, facility-specific emission data for each generating unit and for each pollutant covered by this section. (2) Source of data.--The emission data shall be taken from the emission reports submitted under subsection (e)(3). SEC. 6. EXTENSION OF RENEWABLE ENERGY PRODUCTION CREDIT. Section 45(c) of the Internal Revenue Code of 1986 (relating to definitions) is amended-- [[Page S14730]] (1) in paragraph (1)-- (A) in subparagraph (A), by striking ``and''; (B) in subparagraph (B), by striking the period and inserting ``, and''; and (C) by adding at the end the following: ``(C) solar power.''; (2) in paragraph (3)-- (A) by inserting ``, and December 31, 1998, in the case of a facility using solar power to produce electricity'' after ``electricity''; and (B) by striking ``1999'' and inserting ``2010''; and (3) by adding at the end the following: ``(4) Solar power.--The term `solar power' means solar power harnessed through-- ``(A) photovoltaic systems, ``(B) solar boilers that provide process heat, and ``(C) any other means.''. SEC. 7. MEGAWATT HOUR GENERATION FEES. (a) In General.--Chapter 38 of the Internal Revenue Code of 1986 (relating to miscellaneous excise taxes) is amended by inserting after subchapter D the following: ``Subchapter E--Megawatt Hour Generation Fees ``Sec. 4691. Imposition of fees. ``SEC. 4691. IMPOSITION OF FEES. ``(a) Tax Imposed.--There is hereby imposed on each covered fossil fuel-fired generating unit a tax equal to 30 cents per megawatt hour of electricity produced by the covered fossil fuel-fired generating unit. ``(b) Adjustment of Rates.--Not less often than once every 2 years beginning after 2002, the Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall evaluate the rate of the tax imposed by subsection (a) and increase the rate if necessary for any succeeding calendar year to ensure that the Clean Air Trust Fund established by section 9511 has sufficient amounts to fully fund the activities described in section 9511(c). ``(c) Payment of Tax.--The tax imposed by this section shall be paid quarterly by the owner or operator of each covered fossil fuel-fired generating unit. ``(d) Covered Fossil Fuel-Fired Generating Unit.--The term `covered fossil fuel-fired generating unit' means an electric utility generating unit that-- ``(1) is powered by fossil fuels; ``(2) has a generating capacity of 5 or more megawatts; and ``(3) because of the date on which the generating unit commenced commercial operation, is not subject to all regulations promulgated under section 111 of the Clean Air Act (42 U.S.C. 7411).''. (b) Conforming Amendment.--The table of subchapters for such chapter 38 is amended by inserting after the item relating to subchapter D the following: ``Subchapter E. Megawatt hour generation fees.''. (c) Effective Date.--The amendments made by this section shall apply to electricity produced in calendar years beginning after December 31, 2000. SEC. 8. CLEAN AIR TRUST FUND. (a) In General.--Subchapter A of chapter 98 of the Internal Revenue Code of 1986 (relating to trust fund code) is amended by adding at the end the following: ``SEC. 9511. CLEAN AIR TRUST FUND. ``(a) Creation of Trust Fund.--There is established in the Treasury of the United States a trust fund to be known as the `Clean Air Trust Fund' (hereafter referred to in this section as the `Trust Fund'), consisting of such amounts as may be appropriated or credited to the Trust Fund as provided in this section or section 9602(b). ``(b) Transfers to Trust Fund.--There are hereby appropriated to the Trust Fund amounts equivalent to the taxes received in the Treasury under section 4691. ``(c) Expenditures From Trust Fund.--Amounts in the Trust Fund shall be available, without further Act of appropriation, upon request by the head of the appropriate Federal agency in such amounts as the agency head determines are necessary-- ``(1) to provide funding under section 12 of the Clean Power Plant and Modernization Act of 1999, as in effect on the date of enactment of this section; ``(2) to provide funding for the demonstration program under section 13 of such Act, as so in effect; ``(3) to provide assistance under section 15 of such Act, as so in effect; ``(4) to provide assistance under section 16 of such Act, as so in effect; and ``(5) to provide funding under section 17 of such Act, as so in effect.''. (b) Conforming Amendment.--The table of sections for such subchapter A is amended by adding at the end the following: ``Sec. 9511. Clean Air Trust Fund.''. SEC. 9. ACCELERATED DEPRECIATION FOR INVESTOR-OWNED GENERATING UNITS. (a) In General.--Section 168(e)(3) of the Internal Revenue Code of 1986 (relating to classification of certain property) is amended-- (1) in subparagraph (E) (relating to 15-year property), by striking ``and'' at the end of clause (ii), by striking the period at the end of clause (iii) and inserting ``, and'', and by adding at the end the following: ``(iv) any 45-percent efficient fossil fuel-fired generating unit.''; and (2) by adding at the end the following: ``(F) 12-year property.--The term `12-year property' includes any 50-percent efficient fossil fuel-fired generating unit.''. (b) Definitions.--Section 168(i) of the Internal Revenue Code of 1986 (relating to definitions and special rules) is amended by adding at the end the following: ``(15) Fossil fuel-fired generating units.-- ``(A) 50-percent efficient fossil fuel-fired generating unit.--The term `50-percent efficient fossil fuel-fired generating unit' means any property used in an investor-owned fossil fuel-fired generating unit pursuant to a plan approved by the Secretary, in consultation with the Administrator of the Environmental Protection Agency, to place into service such a unit that is in compliance with sections 4(a)(2) and 5(c) of the Clean Power Plant and Modernization Act of 1999, as in effect on the date of enactment of this paragraph. ``(B) 45-percent efficient fossil fuel-fired generating unit.--The term `45-percent efficient fossil fuel-fired generating unit' means any property used in an investor-owned fossil fuel-fired generating unit pursuant to a plan so approved to place into service such a unit that is in compliance with sections 4(a)(1) and 5(b) of such Act, as so in effect.''. (c) Conforming Amendment.--The table contained in section 168(c) of the Internal Revenue Code of 1986 (relating to applicable recovery period) is amended by inserting after the item relating to 10-year property the following: ``12-year property...................................12 years''. .... (d) Effective Date.--The amendments made by this section shall apply to property used after the date of enactment of this Act. SEC. 10. GRANTS FOR PUBLICLY OWNED GENERATING UNITS. Any capital expenditure made after the date of enactment of this Act to purchase, install, and bring into commercial operation any new publicly owned generating unit that-- (1) is in compliance with sections 4(a)(1) and 5(b) shall, for a 15-year period, be eligible for partial reimbursement through annual grants made by the Secretary of the Treasury, in consultation with the Administrator, in an amount equal to the monetary value of the depreciation deduction that would be realized by reason of section 168(c)(3)(E) of the Internal Revenue Code of 1986 by a similarly-situated investor-owned generating unit over that period; and (2) is in compliance with sections 4(a)(2) and 5(c) shall, over a 12-year period, be eligible for partial reimbursement through annual grants made by the Secretary of the Treasury, in consultation with the Administrator, in an amount equal to the monetary value of the depreciation deduction that would be realized by reason of section 168(c)(3)(D) of such Code by a similarly-situated investor-owned generating unit over that period. SEC. 11. RECOGNITION OF PERMANENT EMISSION REDUCTIONS IN FUTURE CLIMATE CHANGE IMPLEMENTATION PROGRAMS. It is the sense of Congress that-- (1) permanent reductions in emissions of carbon dioxide and nitrogen oxides that are accomplished through the retirement of old generating units and replacement by new generating units that meet the combustion heat rate efficiency and emission standards specified in this Act, or through replacement of old generating units with nonpolluting renewable power generation technologies, should be credited to the utility sector, and to the owner or operator that retires or replaces the old generating unit, in any climate change implementation program enacted by Congress; (2) the base year for calculating reductions under a program described in paragraph (1) should be the calendar year preceding the calendar year in which this Act is enacted; and (3) a reasonable portion of any monetary value that may accrue from the crediting described in paragraph (1) should be passed on to utility customers. SEC. 12. RENEWABLE AND CLEAN POWER GENERATION TECHNOLOGIES. (a) In General.--Under the Renewable Energy and Energy Efficiency Technology Act of 1989 (42 U.S.C. 12001 et seq.), the Secretary of Energy shall fund research and development programs and commercial demonstration projects and partnerships to demonstrate the commercial viability and environmental benefits of electric power generation from-- (1) biomass (excluding unseparated municipal solid waste), geothermal, solar, and wind technologies; and (2) fuel cells. (b) Types of Projects.--Demonstration projects may include solar power tower plants, solar dishes and engines, co-firing of biomass with coal, biomass modular systems, next- generation wind turbines and wind turbine verification projects, geothermal energy conversion, and fuel cells. (c) Authorization of Appropriations.--In addition to amounts made available under any other law, there is authorized to be appropriated to carry out this section $75,000,000 for each of fiscal years 2001 through 2010. SEC. 13. CLEAN COAL, ADVANCED GAS TURBINE, AND COMBINED HEAT AND POWER DEMONSTRATION PROGRAM. (a) In General.--Under subtitle B of title XXI of the Energy Policy Act of 1992 (42 U.S.C. 13471 et seq.), the Secretary of Energy shall establish a program to fund projects and partnerships designed to demonstrate [[Page S14731]] the efficiency and environmental benefits of electric power generation from-- (1) clean coal technologies, such as pressurized fluidized bed combustion and an integrated gasification combined cycle system; (2) advanced gas turbine technologies, such as flexible midsized gas turbines and baseload utility scale applications; and (3) combined heat and power technologies. (b) Selection Criteria.-- (1) In general.--Not later than 1 year after the date of enactment of this Act, the Secretary of Energy shall promulgate criteria and procedures for selection of demonstration projects and partnerships to be funded under subsection (a). (2) Required criteria.--At a minimum, the selection criteria shall include-- (A) the potential of a proposed demonstration project or partnership to reduce or avoid emissions of pollutants covered by section 5 and air pollutants covered by section 111 of the Clean Air Act (42 U.S.C. 7411); and (B) the potential commercial viability of the proposed demonstration project or partnership. (c) Authorization of Appropriations.-- (1) In general.--In addition to amounts made available under any other law, there is authorized to be appropriated to carry out this section $75,000,000 for each of fiscal years 2001 through 2010. (2) Distribution.--The Secretary shall make reasonable efforts to ensure that, under the program established under this section, the same amount of funding is provided for demonstration projects and partnerships under each of paragraphs (1), (2), and (3) of subsection (a). SEC. 14. EVALUATION OF IMPLEMENTATION OF THIS ACT AND OTHER STATUTES. (a) In General.--Not later than 2 years after the date of enactment of this Act, the Secretary of Energy, in consultation with the Chairman of the Federal Energy Regulatory Commission and the Administrator, shall submit to Congress a report on the implementation of this Act. (b) Identification of Conflicting Law.--The report shall identify any provision of the Energy Policy Act of 1992 (Public Law 102-486), the Energy Supply and Environmental Coordination Act of 1974 (15 U.S.C. 791 et seq.), the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.), or the Powerplant and Industrial Fuel Use Act of 1978 (42 U.S.C. 8301 et seq.), or the amendments made by those Acts, that conflicts with the intent or efficient implementation of this Act. (c) Recommendations.--The report shall include recommendations from the Secretary of Energy, the Chairman of the Federal Energy Regulatory Commission, and the Administrator for legislative or administrative measures to harmonize and streamline the statutes specified in subsection (b) and the regulations implementing those statutes. SEC. 15. ASSISTANCE FOR WORKERS ADVERSELY AFFECTED BY REDUCED CONSUMPTION OF COAL. In addition to amounts made available under any other law, there is authorized to be appropriated $75,000,000 for each of fiscal years 2001 through 2015 to provide assistance, under the economic dislocation and worker adjustment assistance program of the Department of Labor authorized by title III of the Job Training Partnership Act (29 U.S.C. 1651 et seq.), to coal industry workers who are terminated from employment as a result of reduced consumption of coal by the electric power generation industry. SEC. 16. COMMUNITY ECONOMIC DEVELOPMENT INCENTIVES FOR COMMUNITIES ADVERSELY AFFECTED BY REDUCED CONSUMPTION OF COAL. In addition to amounts made available under any other law, there is authorized to be appropriated $75,000,000 for each of fiscal years 2001 through 2015 to provide assistance, under the economic adjustment program of the Department of Commerce authorized by the Public Works and Economic Development Act of 1965 (42 U.S.C. 3121 et seq.), to assist communities adversely affected by reduced consumption of coal by the electric power generation industry. Section-by-Section Overview of ``The Clean Power Plant and Modernization Act of 1999'' What will the ``Clean Power Plant and Modernization Act of 1999'' do? The ``Clean Power Plant and Modernization Act of 1999'' lays out an ambitious, achievable, and balanced set of financial incentives and regulatory requirements designed to increase power plant efficiency, reduce emissions, and encourage use of renewable power generation methods. The bill encourages innovation, entrepreneurship, and risk-taking. The bill encourages ``retirement and replacement'' of old, pollution-prone, and inefficient generating capacity with new, clean, and efficient capacity. The bill does not utilize a ``cap and trade'' approach. Many believe that the ``retirement and replacement'' approach does a superior job at the local and regional levels of protecting public health and the environment from mercury pollution, ozone pollution, and acid deposition. On a global level, the ``retirement and replacement'' also does a far superior job of permanently reducing the volume of carbon dioxide emitted. What will the bill do for the environment? The bill would prevent at least 650 million tons of carbon dioxide emissions per year. Over time, even more greenhouse gas emissions will be avoided annually as increases in power plant efficiencies exceed 50%, more combined heat and power systems are installed, and use of renewable energy sources increases. Prevention of greenhouse gas emissions of up to 1 billion tons per year may be possible. Mercury emissions will be cut from more than 50 tons per year to no more than 5 tons per year. Annual emissions of acid rain producing sulfur dioxide emissions will be cut by more than 6 million tons beyond Phase II Clean Air Act of 1990 requirements. Nitrogen oxide emissions that result in summertime ozone pollution will be cut by 3.2 million tons per year beyond Phase II requirements. Over a 50 year period, the proposal laid out in the bill will prevent more than 30 billion tons in carbon dioxide emissions, and maybe as high as 50 billion tons. Carbon dioxide is further addressed in the bill by authorizing expenditures for implementing known ways of biologically sequestering carbon dioxide from the atmosphere such as planting trees, preserving wetlands, and soil restoration. Over a 50 year period, more than 2,200 tons of mercury emissions would be avoided. While this might not sound like a lot in relation to the other pollutants, consider that a teaspoon of mercury is enough to contaminate several millions of gallons of water. And over a 50 year period more than 300 million tons of sulfur dioxide and 160 million tons of nitrogen oxides will be prevented beyond the Phase II emission limits specified in the Clean Air Act of 1990. Section 1. Title; table of contents Section 2. Findings and purposes Section 3. Definitions Section 4. Heat rate efficiency standards for fossil fuel- fired generating units On average, fossil fuel-fired power plants in the United States operate at a thermal efficiency rate of 33%, converting just one-third of the energy in the fuel to electricity, and wasting 67% of the heat generated by burning the fuel. Increasing efficiency in converting the energy in the fuel into electricity is really the only way to reduce carbon dioxide ``greenhouse'' emissions from these facilities. According to the Energy Information Administration, fossil-fired power plants in the United States emit more the 2 billion tons of carbon dioxide per year (or the weight equivalent of nearly 25,000 Washington Monuments every year). This is approximately 40% of annual domestic carbon dioxide emissions. Section 4 lays out a phased two-stage process for increasing efficiency. In the first stage, by 10 years after enactment, all units in operation must achieve a heat rate efficiency (at the higher heating value) of not less than 45%. In the second stage, with expected advances in combustion technology, units commencing operation more than 10 years after enactment must achieve a heat rate efficiency (at the higher heating value) of not less than 50%. If, for some unforeseen reason, technological advances do not achieve the 50% efficiency level, Section 4 contains a waiver provision that allows owners of new units to offset any shortfall in carbon dioxide emissions through implementation of carbon sequestration projects. Section 5. Air emission standards for fossil fuel-fired generating units Subsection (a) eliminates the ``grandfather'' loophole in the Clean Air Act and requires all units, regardless of when they were constructed or began operation, to comply with existing new source review requirements under Section 111 of the Clean Air Act. The average ``in service'' date for fossil-fired generating units in the United States is 1964-- six years before passage of the Clean Air Act. More than 75% of operating fossil-fired generating units came into service before implementation of the 1970 Clean Air Act and are subject to much less stringent requirements than newer units. Subsection (b) sets mercury, carbon dioxide, sulfur dioxide, and nitrogen oxide emission standards for units that are subject to the 45% thermal efficiency standards set forth in Section 4. For mercury, 90% removal of mercury contained in the fuel is required. For carbon dioxide, the emission limits are set by fuel type (i.e., natural gas = 0.9 pounds per kilowatt hour of output; fuel oil = 1.3 pounds per kilowatt hour of output; coal = 1.55 pounds per kilowatt hour of output). Ninety-five percent of sulfur dioxide emissions (and not more than 0.3 pounds per million Btus of fuel consumed), and 90 percent of nitrogen oxides (and not more than 0.15 pounds per million Btus of fuel consumed) are to be removed. Subsection (c) contains the same emission standards for mercury, sulfur dioxide, and nitrogen oxides as those in Subsection (b). Increased thermal efficiency will result in lower emissions of carbon dioxide, and the fuel specific emission limits at the 50% efficiency level are lowered accordingly (i.e., natural gas = 0.8 pounds per kilowatt hour of output; fuel oil = 1.2 pounds per kilowatt hour of output; coal = 1.4 pounds per kilowatt hour of output). Furthering the public's right-to-know information on emission volumes, Subsection (e) requires EPA to annually publish pollutant-specific emissions data for each generating unit covered by the ``Clean Power Plant and Modernization Act of 1999.'' In addition, at least once per year residential consumers will receive information from their electricity supplier on the emission volumes. Section 6. Extension of renewable energy production credit Section 45(c) of the Internal Revenue Code of 1986 is amended to include solar power, [[Page S14732]] and to extend renewable energy production credit to 2010 (it is currently set to expire in 1999). Section 7. Mega watt hour generation fee, and Section 8. Clean air trust fund The Clean Air Trust Fund is similar to the Highway Trust Fund and the Superfund. Revenue for the Clean Air Trust Fund will be provided through implementation of a fee on electricity produced by fossil-fired generating units that are ``grandfathered'' from the Clean Air Act's Section 111 new source requirements. Utilities will be assessed at the rate of 30 cents per megawatt hour of electricity that they produce from ``grandfathered'' units. For residential consumers receiving power from ``grandfathered'' plants, the cost of the fee would average 25 cents per month. Income from the fee will be placed in the Clean Air Trust Fund to pay for: a.) assistance to workers and communities adversely affected by reduced consumption of coal; b.) research and development and demonstration programs for renewable and clean power generation technologies (e.g., wind, solar, biomass, and fuel cells); c) demonstrations of the efficiency, environmental benefits, and commercial viability of electrical power generation from clean coal, advanced gas, and combined heat and power technologies; and d.) carbon sequestration projects. Section 9. Accelerated depreciation for investor-owned generating units. Under the Internal Revenue Code of 1986, utilities can depreciate their generating equipment over a 20-year period. New, cleaner and efficient generating technologies will experience shorter physical lifetimes compared to their dirtier, less efficient, but more durable predecessors. Over a 20-year timeframe, most components of new generating units will need to be replaced; some components will be replaced several times. To update the Internal Revenue Code of 1986 to reflect this change in the expected physical lifetimes of generating equipment, Section 9 amends Section 168 of the Code to allow depreciation over a 15-year period for units meeting the 45% efficiency level and the emission standards in Section 5(b) above. Section 168 is further amended to allow for deprecation over a 12-year period for units meeting the 50% efficiency level and the emission standards in Section 5(c). Section 10. Grants for publicly-owned generating units. No federal taxes are paid on publicly-owned generating units. Section 10 provides for annual grants in an amount equal to the monetary value of the depreciation deduction that would be realized by a similarly-situated investor owned generating unit under Section 9. Units meeting the 45% efficiency level and the emission standards in Section 5(b) above would receive annual grants over a 15-year period, and units meeting the 50% efficiency level and the emission standards in Section 5(c) would receive annual grants over a 12-year period. Section 11. Recognition of permanent emission reductions in future climate change implementation programs. This section expresses the sense of Congress that permanent reductions in emissions of carbon dioxide and nitrogen oxides that are accomplished through the retirement of old generating units and replacement by new generating units that meet the efficiency and emissions standards in the bill, or through replacement with non polluting renewable power generation technologies, should be credited to the utility sector and to the owner/operator in any climate change implementation program enacted by Congress. The base year for calculating reductions will be the year preceding enactment of the ``Clean Power Plant and Modernization Act of 1999.'' The bill stipulates that a portion of any monetary value that may accrue from credits under this section should be passed on to utility customers. Section 12. Renewable and clean power generation technologies. This section provides a total of $750 million over 10 years to fund research and development programs and commercial demonstration projects and partnerships to demonstrate the commercial viability and environmental benefits of electric power generation from biomass, geothermal, solar, wind, and fuel cell technologies. Types of projects may include solar power tower plants, solar dishes and engines, co- firing biomass with coal, biomass modular systems, next-generation wind turbines and wind verification projects, geothermal energy conversion, and fuel cells. Section 13. Clean coal, advanced gas turbine, and combined heat and power generation demonstration program. This section provides a total of $750 million over 10 years to fund projects and partnerships that demonstrate the efficiency and environmental benefits and commercial viability of electric power generation from clean coal technologies (including, but not limited to, pressurized fluidized bed combustion and integrated gasification combined cycle systems), advanced gas turbine technologies (including, but not limited to, flexible mid-sized gas turbines and baseload utility scale applications), and combined heat and power technologies. Section 14. Evaluation of implementation of this act and other statutes Not later than 2 years after enactment, DOE, in consultation with EPA and FERC, shall report to Congress on the implementation of the ``Clean Power Plant and Modernization Act of 1999.'' The report shall identify any provision of the Energy Policy Act of 1992, the Energy Supply and Environmental Coordination Act of 1974, the Public Utilities Regulatory Policies Act of 1978, or the Powerplant and Industrial Fuel Use Act of 1978 that conflicts with the efficient implementation of the ``Clean Power Plant and Modernization Act of 1999.'' The report shall include recommendations for legislative or administrative measures to harmonize and streamline these other statutes. Section 15. Assistance for workers adversely affected by reduced consumption of coal With increased power plant efficiency, less fuel will need to be burned to produce a given quantity of electricity. This section provides a total of $1.125 billion over 15 years ($75 million per year) to provide assistance to workers who are adversely affected as a result of reduced consumption of coal by the electric power generation industry. The funds will be administered under the economic dislocation and workers' adjustment assistance program of the Department of Labor authorized by Title III of the Job Training Partnership Act. Section 16. Community economic development incentives for communities adversely affected by reduced consumption of coal With increased power plant efficiency, less fuel will need to be burned to produce a given quantity of electricity. This section provides a total of $1.125 billion over 15 years ($75 million per year) to provide assistance to communities adversely affected as a result of reduced consumption of coal by the electric power generation industry. The funds will be administered under the economic adjustment program of the Department of Commerce authorized by the Public Works and Economic Development Act of 1965. Section 17. Carbon sequestration This section authorizes expenditure of $345 million over 10 years for development of a long-term carbon sequestration strategy ($45 million) for the United States, and authorizes EPA and USDA to fund carbon sequestration projects including soil restoration, tree planting, wetland's protection, and other ways of biologically sequestering carbon dioxide ($300 million). Projects funded under this section may not be used to offset emissions otherwise mandated by the ``Clean Power Plant and Modernization Act of 1999.'' ____ Poor Me (By Christopher Palmeri) Utilities are telling the rate regulators that their old power plants are practically worthless. But they're selling them for fancy prices. The Homer City Generation Station is a 34-year-old, coal- fired power plant near Pittsburgh. What's it worth? Until last year it was carried on the books of two utilities for $540 million. Then the companies sold it for $1.8 billion, or $955 per kilowatt--about what it would cost to build a brand- spanking-new electric plant. Are old plants a millstone for utilities as they enter the deregulated future? That's what the utilities are telling rate regulators. We built all these plants over the years because you told us to, they are saying--and now that newcomers are about to undercut us, we need compensation for the ``stranded costs.'' The logic of compensation for stranded costs is unassailable. The only debate is over the amount. Is the average power plant indeed a white elephant? According to data collected by Cambridge Energy Research Associates, the average nonnuclear power plant put up for sale in the last year sold for nearly twice its book value. Granted, the plants being sold tend to be the more desirable ones, by dint of their location or their fuel efficiency. Still, the pricing makes one wonder whether the power industry should be entitled to much of anything for stranded costs. Some states--California, Maine, Connecticut and New York, for example--have ordered utilities to sell all or part of their generation capacity. That should set an arm's length fair price. Thanks largely to the fat prices received for its power plants, Sempra Energy, the parent of San Diego Gas & Electric, says that its stranded-cost charges related to generation--about 12% of a typical customer's bill--will be paid off by July. That is two and a half years ahead of schedule, a savings of $400 million for southern Californians. Not every state legislature or utility commission has the political will to force divestiture, however. If a utility does not want to sell, the utility and the regulators have to estimate the fair market value for a plant and then see if that is a lot less than book value. This is tricky business. Last year Allegheny Energy, parent of West Penn Power Co., estimated the value of its power plant at $148 a kilowatt, half of their book value. An expert hired by a number of industrial energy users suggested the value should be $409. A hearing revealed that Allegheny had bought back a half-interest in one of its plants two years earlier at a price of $612 a kilowatt. Allegheny settled with the Pennsylvania Public Utility Commission for a [[Page S14733]] valuation of $225 a kilowatt, half again the original estimate. At that price, Allegheny's 700,000 customers in western Pennsylvania are stuck paying $670 million in stranded costs. What happens if the utility doesn't get the compensation it wants? Litigation. In New Hampshire the state legislature passed a law designed to open up the power market in 1996. New Hampshire's power companies and utility commission have been tied up in court ever since over the issue of stranded costs. For this reason, legislators and regulators sometimes feel like they need to cut some deal, any deal, just to get a competitive market moving forward. The state of Virginia, for example, dodged any stranded cost calculation. In a move supported by local utilities, the legislature delayed true competition and simply froze electric rates until 2007. Utilities had donated more than $1 million to Virginia politicians in the last two election cycles. Last year Ohio legislators proposed a bill to open up the power market. They figured stranded costs at $6 billion, spread among Ohio's eight big utilities. Not liking that number, the utilities came up with an $18 billion figure. The latest compromise is $11 billion. This number represents, in effect, the excess of the plants' book value over their market value. Wait a minute, says Samuel Randazzo, an attorney for some industrial power users. That $11 billion number is more than the book value of all the plants. Can the utilities lose more than their investment? Negotiations are to continue. ``We are applying a political solution to an economic problem,'' shrugs Ohio utility commissioner Craig Glazer. ``All intellectual arguments have been thrown out the window. Now it comes down to who screams the loudest. Expect further screaming as utilities enter the deregulated market. ______ By Mr. ENZI (for himself and Mr. Thomas): S. 1950. A bill to amend the Mineral Leasing Act of 1920 to ensure the orderly development of coal, coalbed methane, natural gas, and oil in the Powder River Basin, Wyoming and Montana, and for other purposes; to the Committee on Energy and Natural Resources. the powder river basin resource development act Mr. ENZI. Mr. President, I rise today to introduce the ``Powder River Basin Resource Development Act of 1999.'' This legislation is designed to provide a procedure for the orderly and timely resolution of disputes between coal producers and oil and gas operators in the Powder River Basin in north-central Wyoming and southern Montana. This legislation is cosponsored by my colleague from Wyoming, Senator Thomas. Mr. President, the Powder River Basin in Wyoming and southern Montana is one of the richest energy resource regions in the world. This area contains the largest coal reserves in the United States, providing nearly thirty percent of America's total coal production. This region also contains rich reserves of oil and gas, including coalbed methane. Wyoming is the fifth largest producer of natural gas in the county and the sixth largest producer of crude oil. The Powder River Basin plays an important role in the Wyoming's oil and gas production, and this role promises to grow as the exploration and production of coalbed methane increases over the next several years. This region, and the State of Wyoming as a whole, provides many of the resources that heat our homes, fuel our cans, generate electricity for our computers, microwaves, and televisions. In short, there is very little that any of us do in a day that is not affected by the resources of coal, oil, and natural gas. The production of these natural resources is a vital part of the economy of my home state of Wyoming. The production of coal and oil and gas employs more than 21,000 people in Wyoming. The property taxes, severance taxes, and state and federal royalties fund our schools, our roads, and many of the other services that are essential for the functioning of our state. Since Wyoming has no state income tax, our State relies heavily on the minerals industry for our tax base. Given the great importance both the coal and oil and gas industries have to Wyoming's economy, the State of Wyoming and the Federal Government have tried to encourage concurrent development in areas where it is feasible and safe to do so. Unfortunately, this is not always possible. This legislation is designed to provide a procedure for the fair and expeditious resolution of conflicts between oil and gas producers and coal producers who have interests on federal land in the Powder River Basin in Wyoming and southern Montana. Mr. President, this legislation sets forth a reasonable procedure to resolve conflicts between coal producers and oil and gas producers when their mineral rights come into conflict because of overlapping federal leasing. First, this proposal requires that once a potential conflict is identified, the parties must attempt to negotiate an agreement between themselves to resolve this conflict. Second, if the parties are unable to come to an agreement between themselves, either of the parties may file a petition for relief in U.S. district court in the district in which the conflict is located. Third, after such a petition is filed, the court would determine whether an actual conflict exists. Fourth, if the court determines that a conflict does in fact exist, the court would determine whether the public interest, as determined by the greater economic benefit of each mineral, is best served by suspension of the federal coal lease or suspension or termination of all or part of the oil and gas lease. Fifth, a panel of three experts would be assembled to determine the value of the mineral of lesser economic value. Each party to the action; the oil and gas interest, the coal interest, and the federal government, would each appoint one of the three experts. Finally, after the panel issues its final valuation report, the court would enter an order setting the compensation that is due the developer who had to temporarily or permanently forgo his development rights. This compensation would be paid by the owner of the mineral of greater economic value. A credit against federal royalties would also be available against the compensation price in a limited number of situations where the value of such compensation was not foreseen in the original federal lease bid. Mr. President, the ``Powder River Basin Resource Development Act of 1999'' has several benefits over the present system. First, it requires parties whose mineral interests may come into conflict to attempt to negotiate an agreement among themselves before either one of them may avail themselves of the expedited resolution mechanism. No such requirement exists today. Second, it directs the Secretary of the Interior to encourage expedited development of federal minerals and that are leased pursuant to the federal Mineral Leasing Act, that exist in conflict areas, and which may otherwise be lossed or bypassed. As such, this legislation encourages full and expeditious development of federal resources in this narrow conflict area where it is economically feasible and safe to do so. Third and finally, this bill provides an expeditious procedure to resolve conflicts that cannot be solved by the two parties alone, and it does so in a manner that ensures that any mineral owner will be fairly compensated for any suspension or loss of his mineral rights. In turn, this proposal will prevent the serious economic hardship to hundreds of families and the State treasury that could occur if mineral development is stalled for an indefinite amount of time due to protracted litigation under the current system. Mr. President, this legislation builds on legislation I introduced last year with Senators Thomas and Bingaman, which passed Congress and was signed into law last November. That bill, S. 2500, ensured that existing lease and contract rights to coalbed methane would not be terminated by a decision from the 10th Circuit Court of Appeals which concluded that coalbed methane gas was reserved to the federal government under earlier coal reservation Acts. As it turned out, the Supreme Court earlier this year realized we got in right in our bill and held that the coalbed methane was in fact a gas and not a solid, and therefore was not reserved to the government under earlier coal reservation Acts. As such, the protections we provided in S. 2500 were guaranteed to future as well as past oil and gas leaseholders. Mr. President, S. 2500 was an important step in providing certainty and resolution to the question of mineral ownership in Wyoming, and throughout the country. This bill, builds on last year's work by providing a means to [[Page S14734]] resolve ongoing development conflicts between owners of coal and oil and gas in the Powder River Basin. It represents the result of nearly a year of negotiations between the coal and coalbed producers, as well as the deep oil and gas interests, on a method to fairly reconcile mineral development disputes when they occur because of multiple leasing by the federal government. This bill has also incorporated recommendations made by the Bureau of Land Management. I look forward to working with all the affected parties during the second session of the 106th Congress to pass legislation that will put into place a reasonable, balanced method to ensure that we receive the best return on our valuable natural resources in the Powder River Basin. ______ By Mr. SCHUMER (for himself and Ms. Collins): S. 1951. A bill to provide the Secretary of Energy with authority to draw down the Strategic Petroleum Reserve when oil and gas prices in the United States rise sharply because of anticompetitive activity, and to require the President, through the Secretary of Energy, to consult with Congress regarding the sale of oil from the Strategic Petroleum Reserve; to the Committee on Energy and Natural Resources. oil price safeguard act Ms. COLLINS. Mr. President, I rise this afternoon to join my distinguished colleague, Senator Schumer, in introducing legislation that provides an effective option to the President and the Secretary of Energy to address the unfair, harmful manipulation in the global oil market. The Oil Price Safeguard Act would help to moderate sharp spikes in oil and gas prices caused by price fixing and production quotas through the judicious use of our enormous petroleum reserves. The global oil market is dominated by an international cartel with the ability to dramatically affect the price of oil. The eleven member countries of the Organization of Petroleum Exporting Countries known as OPEC supply over 40 percent of the world's oil and possess 78 percent of the world's total proven crude oil reserves. Their control of the world's oil supply allows these countries to collude to drive up the price of oil. OPEC has power to dominate the market and when it wields this power, consumers lose. Mr. President, if OPEC operated in the United States, the Department of Justice would undoubtedly prosecute the cartel for violation of U.S. anti-trust laws, but the cartel is beyond the reach of our antitrust enforcement. To appreciate how much economic power OPEC wields, it is helpful to review the historical relationship between world oil prices and the U.S. Gross Domestic Product. When OPEC cuts production to increase profits, the American consumer suffers, as does our economy. Rising oil prices increase transportation and manufacturing costs, dampening economic growth. The chart behind me entitled, ``Oil is a Vital Resource for the U.S. Economy,'' was prepared by the Energy Information Administration of the Department of Energy. On this chart, world oil prices are represented by the blue line, and U.S. Gross Domestic Product is represented by the red line. It is easy to see the inverse relationship between the two. When world oil prices are high, U.S. Gross Domestic Product drops. For example, in the late 1970s and early 1980s, as the price of oil climbed, the U.S. economy slumped into a deep recession. Conversely, the strength currently enjoyed by the U.S. economy was until recently accompanied by low oil prices. If these historical trends hold, the current rise in crude oil prices is a serious threat to our economic prosperity. This second chart entitled ``EIA Crude Oil Price Outlook,'' shows that crude oil prices have risen since January 1999 and are expected to continue rising this winter. To a large extent, this chart demonstrates the ability of OPEC to drive the price of oil up. It is chilling, that the Federal agency responsible for projecting energy prices for the government is predicting that the price of oil will be above $25 a barrel into January of next year. This prediction underscores the need for the legislation Senator Schumer and I introduce today. The bottom line is that consumers, as well as businesses, are hurt by expensive petroleum products. A rise in crude oil prices increases the price of home heating oil and gasoline. Northern states like Maine are particularly hard hit by increased oil prices because of the need to heat homes through long cold winters. Since about 6 out of 10 Maine homes burn oil and the average household uses 800 gallons annually increases in oil prices have a dramatic impact on the state's population and particularly on low-income families and seniors. A rural state like Maine is also hard hit by increased gasoline prices at the pump since rural residents often travel further distances than those living in urban or suburban areas. For example, my constituents in Aroostook County are currently paying close to $1.50 a gallon for regular octane gasoline. At the same time, higher petroleum prices increase the cost of transporting oil and gasoline to rural areas, like Northern Maine. At a recent OPEC meeting, the member nations reasserted their resolve to maintain high crude oil prices through production quotas. This is particularly troubling considering that the Energy Information Administration has projected that if New England experiences a particularly cold winter, the price of home heating oil could reach as high as $1.20 per gallon. This is 50 percent higher than what New Englanders paid for oil last year. Even if this winter has normal weather, the Energy Information Administration predicts significantly increased oil prices due in large measure to the OPEC production reductions. This chart, ``Crude and Distillate Price Outlook Higher than Last Winter'' shows projections for steeply increased prices in crude oil and, consequently, home heating oil. As you can see, prices have risen already and are expected to reach levels higher than those experienced during the winter of 1996-97. Even if our diplomatic efforts fail to break OPEC's choke-hold on the world oil supply, we need not sit idly as oil and gas prices rise well- beyond where they would be in a normally-functioning market. The United States has a tool available to ease the sting of this unfair market manipulation. The United States owns the largest strategic reserve of crude oil in the world. The Strategic Petroleum Reserve (SPR) consists of roughly 571 million barrels of crude oil held in salt caverns in Texas and Louisiana. The Energy Policy and Conservation Act allows the Secretary of Energy to sell oil from the reserve if the President makes certain findings set forth in the law. In order to tap into the Reserve, the President must determine that an emergency situation exists causing significant and lasting reductions in the supply of oil and severe price increases likely to cause a major adverse impact on the national economy. In the history of the Reserve, the President has only made this declaration once, during the Gulf War. The legislation I am proud to sponsor with Senator Schumer today, who has been a leader on this issue, will give the President more flexibility in using the Strategic Petroleum Reserve to protect American consumers. Specifically, this measure will amend the Energy Policy and Conservation Act to authorize a draw down of the reserve when the President finds that a significant reduction in the supply of oil has been caused by anti-competitive conduct. While many, myself included, believe that the President currently should consider ordering a draw down to counteract OPEC's latest market-distorting production quotas, this legislation will make it clear that he has the power to do so. It will also ensure that the proceeds from a draw-down of the Reserve are used to replenish its oil. The bill does by mandating that the proceeds are deposited in a special account designed for that purpose. We want to give the President the authority to use the SPR to restore market discipline, but not to permanently deplete the reserve in the process. To further encourage the use of the SPR to offset harmful and uncompetitive activities of foreign pricing cartels, the Oil Price Safeguard Act will require the Secretary of Energy to consult with Congress regarding the sale of oil from the Reserve. If the price of a barrel of crude exceeds 25 dollars for a period greater than 14 days, the [[Page S14735]] President, through the Secretary of Energy, will be required to submit to Congress a report within thirty days. This report will have four parts. First, it will detail the causes and potential consequences of the price increase. Second, it will provide an estimate of the likely duration of the price increase, based on analyses and forecasts of the Energy Information Administration. Third, it will provide an analysis of the effects of the price increase on the cost of home heating oil. And fourth, the report will provide a specific rationale for why the President does or does not support a draw down and distribution of oil from the SPR to counteract anti-competitive behavior in the oil market. The bill we are introducing today will grant important new authority to the President to protect consumers from the market-distorting behavior of foreign cartels. It will require the President to explain to Congress and the American people why actions available to the President have not been exercised to protect consumers. I urge my colleagues to join Senator Schumer and me in working for expeditious passage of this important measure. I yield to my colleague, the distinguished Senator from New York, so he may provide further explanation of our legislation. I commend him for his leadership on this issue. Mr. SCHUMER. I thank Senator Collins from Maine for her leadership on this issue. She has well represented her constituents on an issue of great concern. Like Maine, northern New York--much of New York--is very concerned with the prices of oil; not only gasoline but some heating oil, which--just as it is in Maine--is going through the roof in New York as we come into this winter season, which, thus far anyway, has been colder than people have predicted. I thank the Senator for garnering time to talk about our legislation, and I look forward to working with her on this issue. Two months ago, I wrote President Clinton and Energy Secretary Richardson requesting that they look into the possibility of releasing a modest amount of oil from our Nation's well-stocked Strategic Petroleum Reserve. I made this request not because the price of crude oil was rising, but rather because global oil prices had recently more than doubled, primarily due to the new-found unity between OPEC members and allies to uphold rigid supply quotas--not free market but rigid supply quotas. OPEC's decision in September to maintain the supply quotas meant the daily global oil supply would remain millions of barrels below last year's levels--and millions of barrels per day below global demand. The effects this decision would have on oil prices were clear. Yesterday, my colleagues--listen to this--oil closed at nearly $26 a barrel, and many industry experts now believe it will go to $30 or even $35 a barrel this winter. Most industry and financial experts believe oil prices above $25 per barrel for an extended period will adversely affect economic growth, even if you come from Arizona; not only will it raise your gasoline prices--you don't have to worry about home heating oil, but $35 per barrel is clearly recessionary. The effects will be felt most among the poor and elderly, both at the gas pump and in a sharp increase in the cost of home heating oil. It will effect our manufacturing, transportation, as well as other businesses that rely on oil. I don't believe in interfering with free markets. But these OPEC decisions are not examples of fair economic play. In fact, OPEC recently announced that it would not even revisit the supply until March of 2000. With American and global oil demand increasing, and a cold winter forecast for North America, OPEC's continued supply quota could have a severely detrimental effect on the U.S. economy over the coming months, and may very well throw sand in the gears of the global economy. Unfortunately, OPEC, with more than 40 percent market share in the global oil market, can have inordinate power over the global economy. So the question is, Should we rely on the judgment of OPEC ministers to make the right decision when it comes to the American and the world economy? The answer is clearly no. The next question is, What can we do about it? My colleague from Maine, Senator Collins, and I have worked together to formulate what we believe is a reasonable response policy by the U.S. Government to instances when foreign oil producers collude to manipulate oil prices to a level that will likely cause a significant adverse impact on our economy, not to mention gasoline, which could go to a $1.60, $1.70, or even higher a gallon, and home heating oil that could go, in my part of the country, from $1 to $1.25 a gallon. Here is how our legislation works. It works within the parameters of the 1975 Energy Policy and Conservation Act, which set up the U.S. Strategic Petroleum Reserve and the Energy Policy Act of 1992, which described oil supply reductions leading to severe price increases as a potential national emergency. We simply add a provision that allows the Energy Secretary to order a drawdown of the SPR when oil and gas prices in the U.S. rise sharply because of anticompetitive conduct of foreign oil producers. Oil supply can fall short for many natural, market-based reasons. But when the shortfall is due to opportunistic manipulations by foreign producers, especially to the degree that it will harm our economic well-being, we have the right to act in our own defense. That is why our bill also requires the administration to report to Congress within 30 days after the price of oil sustains a price higher than $25 for more than 2 weeks. This reporting requirement--which will get Congress more involved in SPR policies--simply calls for a comprehensive review of the causes and likely consequences of the price increase. It also requires the President to explain why the administration does or does not --we don't force his hand--support the drawdown and distribution of oil from the SPR. Before concluding, I want to make a few things clear about this legislation. First, it doesn't attempt in any way to bring oil prices down to what some would call unreasonable levels. Most of us believe oil prices were unrealistically low last winter, and that OPEC's initial supply cuts were an understandable strategy to achieve a better balance between global supply and demand. But to maintain the cuts despite the price recovery and the projected growth in demand amounts to nothing less than price gouging. OPEC is currently enjoying unity as a cartel not seen since the early 1980s. The bill also protects our national security by requiring that proceeds from the sale of oil from the SPR be used only to resupply the SPR, with profits from sales remaining in the SPR account. Therefore, in the long run, we are not going to deplete the oil reserve. We are just going to use it to try to bring oil prices to a reasonable level. And with the SPR currently stocked at 570 million barrels, we have more than enough oil to release several hundred thousand barrels a day in the event of a supply crisis without undercutting our stockpile. This should be more than sufficient to pressure oil producers to increase their supply to more realistically meet demand. The bottom line is this legislation would show foreign producers the U.S. can and may well intervene when unfair markets threaten our domestic economy. We will say loud and clear our national economic health is a national security issue. That knowledge may be sufficient to prevent OPEC from extensive oil market manipulations in the first place. A signal to OPEC that we are willing to use some of our strategic reserves to stabilize oil prices is consistent with the prudent long- term approach toward maintaining a stable economy. Mr. President, this legislation is a measured, bipartisan response to a vital economic issue. I look forward to debating and passing this legislation next year. With that, I yield back my time to the good Senator from Maine and thank her for her leadership. Ms. COLLINS. Mr. President, it has been a pleasure to work with the Senator from New York on this issue. ______ By Mr. BINGAMAN (for himself, Mr. Thompson, and Mr. Kennedy): S. 1954. A bill to establish a compensation program for employees of the [[Page S14736]] Department of Energy, its contractors, subcontractors, and beryllium vendors, who sustained beryllium-related illness due to the performance of their duty; to establish a compensation program for certain workers at the Paducah, Kentucky, gaseous diffusion plant; to establish a pilot program for examining the possible relationship between workplace exposure to radiation and hazardous materials and illnesses or health conditions; and for other purposes; to the Committee on Health, Education, Labor, and Pensions. energy employees' compensation act Mr. BINGAMAN. Mr. President, I am pleased to introduce today, along with my colleagues, Senators Thompson and Kennedy, a bill to establish compensation programs for workers at Department of Energy sites, contractors, and vendors who are ill because they were exposed to severe chemical and radioactive hazards while on the job. This bill, the Energy Employees' Compensation Act, will recognize three of the more egregious workplace hazards that were allowed to exist over the years at DOE facilities. The first of these situations was the exposure of workers at DOE sites and vendors to beryllium, a metal that has been used for the past 50 years in the production of nuclear weapons. Even very small amounts of exposure to beryllium can result in the onset of Chronic Beryllium Disease (CBD), an allergic lung reaction resulting in lung scarring and loss of lung function. The only treatment is the use of steroids to control the inflammation. There is no cure. Once a person has been exposed to beryllium, he or she has a lifelong risk of developing CBD. While only 1 to 6 percent of exposed people will generally develop CBD, some work tasks are associated with disease rates as high as 16 percent. Beryllium was used at 20 DOE sites, including sites in my state of New Mexico. An estimated 20,000 workers may have been exposed, including 1,000-1,500 in New Mexico. To date, DOE screening programs have identified 146 cases of CBD among current and former workers, although the number can be expected to grow. The people who are affected by this disease were typically blue-collar workers at these facilities. They are not covered by the federal workers' compensation system, and the various state workers' compensation programs are not well geared to deal with chronic occupational illnesses like CBD. I believe that, since these workers became exposed to beryllium while working in the defense of their country, the country owes them something in return, should they come down with Chronic Beryllium Disease. That is why I will fight to help the workers and their families in New Mexico and elsewhere through this part of the bill. The second situation which this bill seeks to remedy occurred at the DOE Paducah Gaseous Diffusion Plant in Kentucky. Here, workers were unknowingly exposed to plutonium and other highly radioactive materials that were present in recycled uranium sent to the plant by the former Atomic Energy Commission. The AEC and the managers of the plant knew about this hazard in the 1950s, but enhanced protection for workers at Paducah was not implemented until 1992. This is an unbelievable and outrageous error. These workers deserve full compensation for the health effects of exposures that they were subject to without their knowledge. The third situation that this bill addresses occurred to 55 workers at the DOE's East Tennessee Technology Park, who also suffered exposures to radiation and hazardous materials that have resulted in occupational illness. Through this provision, DOE can make a grant of $100,000 to each worker, if medical experts find that it is appropriate. The Department of Energy, under Secretary Richardson's leadership, is facing up to some of its past failures to properly oversee worker health and safety at its facilities. It is a tragedy that we have to introduce and pass bills like this one, particularly in cases where it seems so clear that the problems could have been prevented. But this bill is the right thing to do for workers who served their country and expected that they would be kept safe from occupational injury. As the Congress considers this bill, I hope that we also remain vigilant to the ongoing challenges to worker safety and health at DOE facilities, particularly in the parts of the Department that are being reorganized as a result of legislation we passed earlier this year. I ask unanimous consent that a section-by-section analysis be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: Section-by-Section Analysis TITLE I--ENERGY EMPLOYEES' BERYLLIUM COMPENSATION ACT SECTION 101. SHORT TITLE This section designates this title as the ``Energy Employees' Beryllium Compensation Act.'' SECTION 102. FINDINGS Employees of the Department of Energy, and employees of the Department's contractors and vendors, have been, and currently may be, exposed to harmful substances, including dust particles or vapor of beryllium, while performing duties uniquely related to the Department of Energy's nuclear weapons production program. Exposure to dust particles or vapor of beryllium in this situation may cause beryllium sensitivity and chronic beryllium disease, and those who suffer beryllium-related health conditions should have uniform and adequate compensation. SECTION 103. DEFINITIONS This section provides the definitions of a number of terms necessary to implement this legislation. It also incorporates the definitions of multiple terms from the Federal Employees' Compensation Act, section 8101 of title, United States Code. A beryllium vendor is defined as those vendors known to have produced or provided beryllium for the Department of Energy. The definition allows the Secretary of Energy to add other vendors by regulation. A covered employee is defined as an employee of entities that contracted with the Department of Energy to perform certain services at a Department of Energy facility and an employee of a subcontractor. The definition also includes an employee of a beryllium vendor during a time when beryllium was being processed and sold to the Department of Energy. An employee of the federal government is also a covered employee if the employee may have been exposed to beryllium at a Department of Energy facility or that of a beryllium vendor. Covered illness is defined as Beryllium Sensitivity and Chronic Beryllium Disease. The statute sets forth criteria by which the existence of these conditions may be established. Consequential injuries arising from these conditions are also covered illnesses. SECTION 104. REGULATORY AUTHORITY TO REVISE DEFINITIONS This section provides specific authority for the Secretary of Energy to designate by regulation additional entities as beryllium vendors for the purposes of this title. This section also authorizes the Secretary of Energy to provide by regulation additional criteria through which a claimant may establish the existence of a covered illness. With regard to proposed subsection (a), it is possible that new vendors of beryllium or beryllium-related products will develop contractual relationships with the Department of Energy in the future; as these contractual relationships develop, it will become necessary to designate these vendors as ``beryllium vendors'' for the purposes of this title. With respect to subsection (b), advances in medical science and testing, and in the medical field's understanding of the harmful effects of exposure to beryllium, are expected to occur. The definition of ``covered illness'' in section 103(4) of this title represents the understanding of the Department of Energy of the current state of medical knowledge on the demonstrated methods of establishing beryllium sensitivity or chronic beryllium disease. This subsection would allow the Secretary of Energy to specify additional criteria by which a claimant may establish existence of a covered illness. section 105. administration This section provides that the Secretary of Energy may administer the program or may enter into an agreement with another agency of the United States, such as the Department of Labor, to administer the program. The Department of Energy would reimburse the other agency for its administrative services. section 106. exposure to beryllium in the performance of duty In order to receive compensation under the Energy Employees' Beryllium Compensation Act (EEBCA) for any condition related to exposure to beryllium, a covered employee must be determined to have been exposed to beryllium in the performance of duty. Subsection (a) of this section provides a rebuttable presumption that employees of DOE contractors (section 103(3)(A)) and federal employees (section 103(3)(C)) who were employed at a DOE facility, or whose employment caused them to be present at a DOE or a beryllium vendor's facility, when beryllium was present, were exposed to beryllium in the performance of duty. To rebut the presumptions, substantial evidence would have to be introduced into the record establishing that the covered employee was not exposed to beryllium or beryllium dust during the employee's presence at the facility. With respect to employees of beryllium vendors (section 103(3)(B)), subsection (b) of [[Page S14737]] this section provides that these employees have the burden of establishing by substantial evidence exposure to beryllium that was intended for sale to, or to be used by, the DOE. Thus, to the extent that employees of beryllium vendors adduce evidence of exposure to beryllium or beryllium dust solely in circumstances where the eventual product was not intended for sale to, or use by, the DOE, this evidence would not support a finding that the employees were exposed to beryllium in the performance of duty. section 107. compensation for disability or death, medical services, and vocational rehabilitation This section incorporates into this statute the relevant provisions of the FECA regarding payment of compensation and other benefits for covered illnesses. Provisions incorporated by reference include FECA sections regarding medical services and benefits (5 U.S.C. Sec. 8103); vocational rehabilitation (Sec. Sec. 8104 and 8111(b)); total (Sec. 8105) and partial (Sec. 8106) disability; schedule awards for permanent impairment (Sec. Sec. 8107-8109); augmented compensation for dependents (Sec. 8110); additional compensation for services of attendants (Sec. 8111(a)); maximum and minimum monthly payments (Sec. 8112); increase or decrease of basic compensation (Sec. 8113); wage-earning capacity (Sec. 8115); three-day waiting period (Sec. 8117); compensation in case of death (Sec. 8133); funeral expenses (Sec. 8134); lump-sum payment (Sec. 8135); and cost-of-living adjustment (Sec. 8146a (a) and (b)). Subsection (b) of this section provides that all of the compensation under this title will come out of the Energy Employees' Beryllium Compensation Fund established pursuant to section 120 of this title and is limited to amounts available in that fund. Subsection (c) of this section prohibits any payment of compensation for any period prior to the effective date of the title, except for the retroactive lump-sum compensation payment specified in section 111 of this title. section 108. computation of pay This section incorporates 5 U.S.C. Sec. 8114 regarding computation of pay into this title. Subsection (b) of this section contains slight wording changes from 5 U.S.C. Sec. 8114(d)(3) necessitated by the fact that not all covered employees under this title are federal employees within the meaning of the FECA. section 109. limitations on receiving compensation This section parallels, with some modifications, the restrictions on receipt of compensation simultaneously with receipt of other benefits for the same covered illness set forth in 5 U.S.C. Sec. 8116. Subsections (a) and (b) of section 109 contain the same prohibitions against dual benefits sete forth in 5 U.S.C. Sec. 8116(a) and (b), and apply to federal employees and beneficiaries whose benefit derives from federal employees. Thus, individuals who are eligible to receive benefits under this title may not simultaneously receive those benefits and an annuity from the Office of Personnel Management, whether such annuity is based on length of service or disability. The election required by subsection (b) is not subject to the provisions of section 110 regarding coordination of benefits. Subsection (c) applies only to federal employees awarded benefits under this title and under FECA for the same covered illness or death, and requires an election between the two systems. Once an informed election has been made, the election is irrevocable. Subsections (d) and (e) require an individual eligible to receive benefits under this title, and also eligible to receive benefits under a state worker's compensation system based on the same covered illness or death, to elect either benefits under this title (subject to the reduction in benefits set forth in section 110) or under the applicable state workers' compensation system, unless the state workers' compensation coverage was secured by an insurance policy or contract, and the Secretary of Energy specifically waives the requirement to make an election. An informed election under these two subsections, once made, is irrevocable. Subsection (f) requires a widow or widower who would theoretically be eligible for benefits derived from more than one husband or wife to make an election of one benefit. The provision prevents a potential duplication of compensation benefits in unusual, but predictable, circumstances. An informed election under this subsection, once made, is irrevocable. section 110. coordination of benefits This section provides for reduction of benefits under this title if the claimant is awarded benefits under any state or federal workers' compensation system for the same covered illness or death. This section is intended to prevent a double recovery by individuals who have already received compensation for illnesses covered by this title. Subsection (a) of this section provides for a dollar-for-dollar reduction of benefits under this title by the amount of benefits received under this state or federal workers' compensation system, less than reasonable costs of obtaining such benefits. The determination of the reasonable costs obtaining such benefits is a matter reserved to the Secretary of Energy. Subsection (b) of this section provides that, if the Secretary of Energy has granted a waiver of the election requirement under section 109(d)(2) of this title, the amount of compensation benefits is reduced by eighty percent of the net amount of any state workers' compensation benefits actually received or entitled to be received in the future, after deducting the claimant's reasonable costs (as determined by the Secretary of Energy) of obtaining such benefits. Permitting an employee whose state workers' compensation remedy is secured by insurance to retain an additional twenty percent of state benefits provides an incentive for the employee to seek such benefits in situations where the Secretary of Energy has determined that it is appropriate to waive the election requirement. In these circumstances; value may be obtained for insurance policies purchased prior to the enactment of this title. section 111. retroactive compensation This section allows an eligible covered employee to elect to receive retroactive compensation of $100,000, in lieu of any other compensation under this title, if the employee was diagnosed, prior to October 1, 1999, as having a beryllium- related pulmonary condition consistent with Chronic Beryllium Disease and if the employee demonstrates the existence of such diagnosis and condition by medical documentation created during the employee's lifetime, at the time of death, or autopsy. When an employee who would have been eligible to elect to receive retroatice compensation dies prior to making the election, of any cause, the employee's survivors may make the election. The right to make an election shall be afforded to survivors in the order of precedence set forth in section 8109 of title 5, United States Code, which is based, in essence, on proximity of family relationship to the covered employee. The employee or survivor must make the election within 30 days after the date the Secretary of Energy determined to award compensation for total or partial disability or within 30 days after the date that the Secretary informs the employee or the employee's survivor of the right to make the election, whichever is later, unless the Secretary extends the time. Informed elections are irrevocable and binding on all survivors. When an employee or a survivor has made an election, no other payment of compensation may be made on account of any other beryllium-releated illness. A determination that the covered employee had ``beryllium- related pulmonary condition'' does not constitute a determination that he or she had a covered illness. Retroactive compensation is not subject to a cost of living adjustment. SECTION 112. EXCLUSIVITY OF REMEDY AGAINST THE UNITED STATES, CONTRACTORS, AND SUBCONTRACTORS This section provides that the benefits authorized under this title are an exclusive remedy for individuals against the United States, DOE, and DOE contractors and subcontractors, except for proceedings under a state or federal workers compensation statute, subject to sections 109 and 110 of this title. SECTION 113. ELECTION OF REMEDY AGAINST BERYLLIUM VENDORS This section provides that if an individual elects to accept payment under this title, acceptance also will be an exclusive remedy against beryllium vendors who have supplied DOE with beryllium products, except for proceedings under a state or federal workers compensation statute, subject to sections 109 and 110. SECTION 114. CLAIM This section adopts the requirements of a claim in section 8121, title 5, United States Code, which requires a claim to be in writing and delivered or properly mailed to the Secretary of Energy. The claim must be on an approved form, contain all required information, sworn, and accompanied by a physician's certificate stating the nature of the injury and the nature and probable extent of the disability, although the Secretary may waive these latter four requirements for reasonable cause. section 115. time limitation on filing a claim This section limits the time for fling a claim under this title. section 116. review of award This section provides that the decisions of the Secretary of Energy in allowing or denying any payment under this title are final, and are not subject to judicial review or review by another official of the United States. For purposes of this section, decisions issued by the Beryllium Compensation Appeals Panel (to be established under regulations authorized by section 122 of this title) are decisions of the designee of the Secretary of Energy, in the same way that the decisions of the Employees' Compensation Appeals Board established under 5 U.S.C. Sec. 8149 are decisions of the designee of the Secretary of Labor. section 117. assignment of claim This section is identical to 5 U.S.C. Sec. 8130. section 118. adjudication Subsection (a) provides that, if the Secretary of Energy establishes new criteria for establishing coverage of a covered illness by specifically promulgating a regulation pursuant to the authority granted by section 104(b) of this title, a claimant has the right to request reconsideration of a decision awarding or denying coverage. This provision is intended to permit a claimant whose claim was properly denied under the criteria in effect at the time of the initial denial to seek and obtain reconsideration based on the new criteria, notwithstanding the fact that, [[Page S14738]] under the administrative appeal rights contained in this title, the claimant would not be entitled to reconsideration. Subsection (b) incorporates into this title FECA provisions regarding physical examinations (Sec. 123); findings and awards (Sec. 8124); misbehavior at proceedings (Sec. 8125); subpoenas, oaths, and examination of witnesses (Sec. 8126); representation and attorney's fees (Sec. 8127); reconsideration (Sec. 8128); and recovery of overpayments (Sec. 8129). section 119. subrogation of the united states This section incorporates the provisions of 5 U.S.C. Sec. Sec. 8131 and 8132 into this title. Based on these provisions, the United States has the same statutory right of reimbursement of the compensation payable under this title against the proceeds of any recovery from a responsible third party tortfeasor as that set forth in the FECA. Subsection (c) notes that, for purposes of this title, the last sentence of 5 U.S.C. Sec. 8131(a) that an ``employee required to appear as a party or witness in the prosecution of such an action [against a third party] is in an active duty status while so engaged'' applies only to federal employees covered under this title, as defined in section 103(3)(C). SECTION 120. ENERGY EMPLOYEES BERYLLIUM COMPENSATION FUND This section creates in the U.S. Treasury the Energy Employees' Beryllium Compensation Fund, which consists of amounts appropriated to it or transferred to it from other DOE accounts and amounts that otherwise accrue to it under this title. Amounts in the Fund may be used for the payment of compensation and other benefits and expenses authorized by this title and for payment of administrative expenses. SECTION 121. FORFEITURE OF BENEFITS BY CONVICTED FELONS Any individual convicted of violating section 1920 of title 18, United States Code, which prohibits false statements to obtain federal employees' compensation, or any other federal or state criminal statute relating to fraud in the application or receipt of any benefits under the title, or any other workers' compensation Act, shall forfeit (as of the date of conviction) any benefits for any injury occurring on or before the date of the conviction. This forfeiture is in addition to any action of the Secretary of Energy under two other provisions of the FECA that have been incorporated into this title. Section 8106 of title 5, United States Code, provides that an employee who fails to make a required report or knowingly understates earnings forfeits compensation for any period for which the report was required. Section 8129 provides for the recovery of overpayments made to an individual due to a mistake in fact or law by decreasing later payments. Except for payments to dependents as calculated under section 8133 of title 5, United States Code, an individual confined for the commission of a felony may not receive benefits during the period of incarceration or retroactively after release. State and federal governments must make available to the Secretary of Energy, upon written request, the names and social security numbers of individuals who are incarcerated for felony offenses. SECTION 122. REGULATIONS--BERYLLIUM COMPENSATION APPEALS PANEL This section, modeled after 5 U.S.C. Sec. 8149, authorizes the Secretary of Energy to provide by regulation for the creation of the Beryllium Compensation Appeals Panel. This panel is intended to have the same adjudicatory authority over appeals from adverse determinations of claims under this title that the Employees' Compensation Appeals Board exercises over appeals from adverse determinations of claims under the FECA. SECTION 123. CIVIL SERVICE RETENTION RIGHTS This section provides that a federal employee who meets the definition of a covered employee within the meaning of section 103(3)(C) of this title has the same civil service retention rights as are applicable to federal employees by virtue of the provisions of 5 U.S.C. Sec. 8151. Civil Service retention rights are administered by the Office of Personnel Management; as with 5 U.S.C. Sec. 8151, see Charles J. McQuistion, 37 ECAB 193 (1985), this section is intended to be administered, enforced, and interpreted by OPM. SECTION 124. ANNUAL REPORT This section provides that the Secretary of Energy will prepare a report with respect to the administration of this title on a fiscal year basis, and will submit this report to Congress. SECTION 125. AUTHORIZATION OF APPROPRIATIONS This section authorizes appropriations and authorizes transfers from other DOE accounts, to the extent provided in advance in appropriations Acts, to carry out the purposes of this title. This section also provides that the Secretary limit the amount for the payment of compensation and other benefits to an amount not in excess of the sum of the appropriations to the Fund and amounts made available by transfer to the Fund. SECTION 126. CONSTRUCTION This section provides that any amendments to provisions of the Federal Employees' Compensation Act, 5 U.S.C. Sec. Sec. 8101-8151, which have been incorporated by reference into this title, will also be effective to proceedings under this title. SECTION 127. CONFORMING AMENDMENTS This section makes conforming amendments to criminal provisions of the United States Code (18 U.S.C. Sec. Sec. 1920, 1921, and 1922). SECTION 128. EFFECTIVE DATE This section provides that the title is effective upon enactment, and applies to all claims, civil actions, and proceedings ``pending on, or filed on or after, the date of the enactment'' of this title. Because compensation under this title constitutes a covered employee's exclusive remedy against the United States, and DOE's contractors and subcontractors, any claim against the United States (under the Federal Tort Claims Act) or against any of the other above-referenced entities that has not been reduced to a final judgment before the date is barred by this title. TITLE II--ENERGY EMPLOYEES PILOT PROJECT ACT section 201. short title This section designates this Act as the ``Energy Employees Pilot Project Act.'' section 202. pilot project This section directs the Secretary of Energy to conduct a pilot program to examine the possible relationship between workplace exposures to radiation, hazardous materials, or both and occupational illness or other adverse health conditions. section 203. physicians panel This section requires a panel of physicians who specialize in health conditions related to occupational exposure to radiation and hazardous materials to issue a report which examines whether 55 current and former employees of the Department of Energy's East Tennessee Technology Park may have sustained any illness or health condition as a result of their employment. section 204. secretary of energy finding The contractor is required by this section to provide the report of the panel to the Secretary of Energy, who will determine whether any of the employees who are covered by the report may have sustained an adverse health condition from their employment. section 205. award If the Secretary of Energy makes a positive finding under section 204 concerning an employee, the employee may receive an award of $100,000. If the employee is eligible for an award under title I, the employee may elect to receive payment under this title in place of compensation under title I. section 206. election This section provides that the employee is to make the election under section 205 within a certain period of time. Informed elections are irrevocable and binding on all survivors. section 207. survivor's election If an individual dies before making the election, the employee's survivor may make the election. The right to make an election shall be afforded to survivors in the order of precedence set forth in section 8109 of title 5, United States Code, which is based, in essence, on proximity of family relationship to the covered employee. section 208. status of award An award is not income under the Internal Revenue Code. section 209. payment in full settlement of claims against the united states, contractors, and subcontractors This section provides that employees at the facility eligible for benefits under this title can elect which remedy to pursue. If they elect to proceed under this title, then acceptance of payment under this title will be in full settlement of all claims against the United States, DOE, a DOE contractor, a DOE subcontractor, or an employee, agent, or assign of one of them arising out of the condition for which the payment was made, except that the employee would retain the right to proceed under a state workers compensation statute, subject to the reduction-of-benefits provision of subsection (c). Under that subsection, the benefits awarded to a claimant under this title would be reduced by the amount of any other payments received by that claimant because of the same illness or adverse health condition, excluding payments for medical expenses under a workers' compensation system. section 210. subrogation This section sets out the conditions under which the United States is subrogated to a claim. section 211. authorization of appropriation This section authorizes appropriations for the program and provides that authority under this title to make payments is effective in any fiscal year only to the extent, or in the amounts, provided in advance in an appropriation Act TITLE III--PADUCAH EMPLOYEES' EXPOSURE COMPENSATION ACT section 301. short title This section designates this Act as the ``Paducah Employees' Exposure Compensation Act.'' section 302. definitions This section defines a number of terms necessary to implement this legislation, including ``Paducah employee'' and ``specified disease'' section 303. paducah employees' exposure compensation fund This section establishes in the Treasury of the United States the Paducah Employee's [[Page S14739]] Exposure Compensation Fund. The amounts in the fund are available for expenditure by the Attorney General under section 305, and the Fund terminates 22 years after the date of enactment of this title. This section also authorizes appropriations to the Fund in the sums necessary to carry out the purposes of the title and provides that authority under this Act to enter into contracts or to make payments is not effective in any fiscal year except to the extent, or in the amounts, provided in advance in appropriations Acts. section 304. eligible employees This section sets forth who is eligible to receive compensation under this title and provides that an eligible employee who files a claim that the Attorney General determines meets the requirements of this title, receives $100,000 as compensation. A person eligible for compensation is a Paducah employee (as defined under section 302(2)) who was employed at the Paducah, Kentucky, gaseous diffusion plant for at least one year during the period beginning on January 1, 1953, and ending on February 1, 1992, who during that period was monitored through the use of dosimetry badges for exposure at the plant to radiation from gamma rays or who worked in a job that, as determined by regulation, led to exposure at the plant to radioactive contaminants, including plutonium contaminants; and who submits written medical documentation as to having contracted a specified disease after beginning employment at the plant during the indicated period and after being monitored or beginning work at a job that could have led to exposure as specified. section 305. determination and payment of claims Generally, this section sets forth the procedures for filing claims, authority for the Attorney General to consider claims and make compensation payments, consequences of payment of a claim, cost of administering the program, and appeals procedures. Subsection (a) provides that the Attorney General establish procedures whereby individuals may submit claims for payment under this title. Subsection (b) provides that the Attorney General determine whether a claim filed under this title meets the requirements of the title. It also provides for consultation with the Surgeon General and the Secretary of Energy in certain instances. Subsection (c) provides that the Attorney General pay, from amounts available in the Fund, claims filed under this title that the Attorney General determines meet the requirements of this title. This subsection also sets out the conditions under which payments are offset and the United States is subrogated to a claim. It also provides for payment to the survivor of a Paducah employee who is deceased at the time of payment under this section. Subsection (d) provides that the Attorney General complete the determination on each claim not later than twelve months after the claim is so filed. The Attorney General may request from any claimant, or from any individual or entity on behalf of any claimant, additional information or documentation necessary to complete the determination. Subsection (e) provides that employees at the Paducah facility eligible for benefits under this title can elect which remedy to pursue. If they elect to proceed under this title, then acceptance of payment under this title will be in full settlement of all claims against the United States, DOE, a DOE contractor, a DOE subcontractor, or an employee, agent, or assign of one of them arising out of the illness for which the payment was made, except for claims in an administrative or judicial proceeding under a state workers' compensation statute, subject to the reduction-of-benefits provision of subparagraph (3). Under that subparagraph, the benefits awarded to a claimant under this title would be reduced by the amount of any other payments received by that claimant because of the same specified illness, excluding payments for medical expenses under a workers' compensation system. Subsection (f) sets forth how costs of administering the title are paid. Subsection (g) provides that the duties of the Attorney General under this section cease when the Fund terminates. Subsection (h) provides that amounts paid to an individual under this section are not subject to federal income tax under the internal revenue laws of the United States; are not included as income or resources for purposes of determining eligibility to receive benefits described in section 3803(c)(2)(C) of title 31, United States Code or the amount of these benefits; and are not subject to offset under section 3701 et seq. of title 31, United States Code. Subsection (i) provides that the Attorney General may issue the regulations necessary to carry out this title. Subsection (j) provides that regulations, guidelines, and procedures to carry out this title shall be issued not later than 270 days after the date of enactment of this title. Subsection (k) sets forth administrative appeals procedures and procedures for judicial review. SECTION 306. CLAIMS NOT ASSIGNABLE OR TRANSFERABLE This section provides that a claim cognizable under this title is not assignable or transferable. SECTION 307. LIMITATIONS ON CLAIMS This section provides that claim to which this title applies shall be barred unless the claim is filed within 20 years after the date of the enactment of this title. SECTION 308. ATTORNEY FEES This section limits the amount of attorney fees for services rendered in connection with a claim under this title to no more than 10 percent of a payment made on the claim. An attorney who violates this section shall be fined not more than $5,000. SECTION 309. CERTAIN CLAIMS NOT AFFECTED BY AWARDS OF DAMAGES This section provides that a payment made under this title shall not be considered as any form of compensation or reimbursement for a loss for purposes of imposing liability on the individual receiving the payment, on the basis of this receipt; to repay any insurance carrier for insurance payments. A payment under this title does not affect any claim against an insurance carrier with respect to insurance. ____________________