[Pages S4826-S4856]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Ms. SNOWE:
S. 774. A bill to amend the Internal Revenue Code of 1986 to allow
the use of completed contract method of accounting in the case of
certain long-term naval vessel construction contracts; to the Committee
on Finance.
Ms. SNOWE. Mr. President, I rise today to once again introduce
legislation to simplify and restore fairness to the tax accounting
rules under which our six major U.S. naval shipyards determine their
tax liability on the naval ship contracts they are awarded by the Navy.
Quite simply, this legislation would permit naval shipyards to use a
method of accounting under which shipbuilders would pay income taxes
upon delivery of a ship rather than during construction. Under current
law, profits must be estimated during the construction phases of the
shipbuilding process and taxes must be paid on those estimated profits,
a process known as the ``Percent of Completion Method'' of accounting.
The major shortcoming of this method is that shipbuilders must report
progress payments as ``revenue'' rather than as a source of financing,
which had been recognized and permitted for the 64 years between 1918
and 1982. Additionally, it creates a ``legal fiction'' of an ``interim
profit,'' when in reality a profit or loss is not reasonably known
until after a ship is completed. This places a financial burden on
shipbuilders during the critical construction phase; reduces the
resources available to invest in facilities and processes to reduce
construction costs; places a burden on the cash flow management of the
shipbuilder; and weakens the financial health of the defense
shipbuilding industrial base.
The legislation being proposed would simply allow naval shipbuilders
and their team members to use a modified ``Completed Contract Method''
of accounting, under which the shipbuilder would pay taxes when the
ship is actually delivered to the Navy. In other words, the delivery of
each ship would be treated as the completion of the contract for
``Completed Contract'' purposes, regardless of how many ships are built
under a contract.
Prior to 1982, Federal law permitted shipbuilders to use this method
but the law was changed due to abuses by Federal contractors in another
sector, having absolutely nothing to do with shipbuilding. Moreover,
non-government shipbuilding contracts are already allowed to use this
method of accounting, and this legislation contains provisions designed
to prevent the types of abuses witnessed in the past. Specifically, the
bill would restrict shipyards from deferring tax payments for a period
beyond the time it takes to build a single ship.
This bill would not reduce the amount of taxes ultimately paid by the
shipbuilder. It simply would defer payment until the profit is actually
known upon delivery of the ship. I believe that this is the most fair
and most sensible accounting method. It is the method that naval
shipbuilders employed in the past. It is the method which commercial
builders are permitted to use to this day. This legislation has the
strong support of the major shipyards that build for the Navy. As such,
I strongly urge my colleagues to join me in a strong show of support
for this effort.
______

By Mrs. FEINSTEIN:

S. 775. A bill to amend the Robert T. Stafford Disaster Relief and
Emergency Assistance Act to make private, nonprofit medical facilities
that serve industry-specific clients eligible for hazard mitigation and
disaster assistance; to the Committee on Environment and Public Works.
Mrs. FEINSTEIN. Mr. President, I rise today to introduce a bill that
would allow private, non-profit medical facilities which service
industry-specific clients to be eligible for hazard mitigation and
disaster assistance. Under the current law, institutions such as these
are limited in their ability to receive the Federal funds needed for
both preparedness and response in the case of emergencies.
In particular, I speak today of the Motion Picture & Television,
MPTF, Hospital, located in the earthquake-prone San Fernando Valley.
Set up more than 80 years ago to provide members of the entertainment
industry with vital medical care and social services, the MPTF Hospital
is the only institution of its kind in the United States.
With an acute care hospital, six outpatient facilities staffed with
primary care physicians, a children's center, retirement facilities,
and programs for the elderly, the MPTF Hospital provides comprehensive
care for a significant sector of the population of the greater Los
Angeles community. It is the only non-profit institution providing
industry-specific health and human services to the entertainment
industry and to the general public.
This legislation is important because in the aftermath of the
Northridge Earthquake of 1994, considered one of the worst natural
disasters in U.S. history, the MPTF Hospital was unable to receive
federal assistance to repair structural and equipment damages suffered
from the earthquake. Furthermore, that same year, the California Senate
enacted legislation requiring all hospitals to be seismically
retrofitted by 2010. The costs of both the reparations and structural
upgrades are enormous, and the MPTF Hospital cannot receive federal
funds because as an institution serving an industry-specific clientele,
it does not qualify under the current definition of a ``private,
nonprofit facility'' within the Robert T. Stafford Disaster Relief and
Emergency Assistance Act of 1988, Stafford Act.
To address this problem, this legislation broadens that definition to
include tax-exempt facilities that provide medical services to specific
occupational or industry segments of the general public.
Under this change, facilities such as the MPTF Hospital would have
the opportunity to apply for federal assistance under the Stafford Act,
alongside other private, nonprofit institutions.
There is no up-front cost stemming from this amendment to the
Stafford Act. This bill simply puts the MPTF Hospital on equal footing
with other critical care facilities when applying for Federal disaster
assistance.

[[Page S4827]]

This legislation is timely and necessary. Hospitals such as the MPTF
deserve an opportunity to apply for Federal funding, and desperately
need this financial assistance in order to both meet California's 2010
deadline for seismic retrofitting and respond adequately to future
disasters. I call on this body to enact this legislation promptly.
______

By Mr. CAMPBELL:

S. 776. A bill to amend chapters 83 and 84 of title 5, United States
Code, to authorize payments to certain trusts under the Social Security
Act, and for other purposes; to the Committee on Governmental Affairs.
Mr. CAMPBELL. Mr. President, today I am introducing legislation that
would amend Title V of the United States Code. It authorizes the Office
of Personnel Management, OPM, to make payments to a disability trust or
a pooled trust which is set up for a disabled dependent of a Federal
worker in a way that would allow him or her to continue to receive
Medicaid benefits.
My bill would put disabled dependents of federal workers on a par
with disabled dependents of those in the private sector. In 1993,
Congress passed a statute allowing disabled persons to have trusts.
And, in 1999, the Supplemental Security Income, SSI, statute was
amended to conform with the basic Medicaid law. But, as current law is
interpreted, these protective trusts cannot be set up for disabled
dependents of federal workers in a way that allows them to keep their
other benefits.
This oversight can cause devastating and confusing circumstances for
disabled dependents and their guardians. In Colorado, Lisa Neikirk, a
Downs Syndrome child, became entitled to a small civil service
retirement annuity from her father when he died in 1994. This benefit
in the amount of $310 per month was just high enough to push her off
SSI and Medicaid and she lost her benefits at that time.
Because Congress had recently passed a Medicaid statute allowing
disabled people to have trusts, Lisa's mother created a trust for her.
However, the Social Security Administration took the position that OPM
statutes do not permit Lisa's benefit to be assigned to a trust without
negating her Medicaid benefits. The Social Security Administration
accepts these trusts with other assets but the OPM statute preexisted
the 1993 law and would not allow benefits to be assigned to these
trusts without this change. Lisa's situation is only one of several
such cases throughout the country.
The bill I am introducing would grant to OPM the discretion to pay a
retirement annuity to a disability trust which is set up for a person
in a way which would allow them to continue to receive Medicaid
benefits. This policy change has been very carefully drafted so that it
cannot be abused. It stipulates a trust that is qualified under
Medicaid law and adheres to two Medicaid statutes.
I believe it is important that we better protect disabled children of
Federal workers. We need to make it clear that disabled dependents of
Federal workers are protected by laws that now protect people in the
private sector. In today's uncertain world, I believe dependents of
federal workers need all the protection that is available to them under
the law. We must not let outdated federal statutes put federal workers
and their dependents at a disadvantage.
This legislation provides another step toward making our laws fair
for the disabled in our country. I urge my colleagues to support its
passage.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objective, the bill was ordered to be printed in the
Record, as follows:

S. 776

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

SECTION 1. AUTHORIZATION OF CERTAIN PAYMENTS UNDER THE CIVIL
SERVICE RETIREMENT SYSTEM AND THE FEDERAL
EMPLOYEES RETIREMENT SYSTEM TO CERTAIN TRUSTS
UNDER THE SOCIAL SECURITY ACT.

(a) Civil Service Retirement System.--
(1) Payments.--Section 8345(e) of title 5, United States
Code, is amended in the first sentence by inserting before
the period ``, or is a trustee under a trust meeting the
requirements of subparagraph (A) or (C) of section 1917(d)(4)
of the Social Security Act (42 U.S.C. 1396p(d)(4) (A) or
(C))''.
(2) Assignability of payments.--Section 8346(a) of title 5,
United States Code, is amended by striking ``except under''
and inserting ``except to a trust meeting the requirements of
subparagraph (A) or (C) of section 1917(d)(4) of the Social
Security Act (42 U.S.C. 1396p(d)(4) (A) or (C)) or under''.
(b) Federal Employees Retirement System.--
(1) Payments.--Section 8466(c) of title 5, United States
Code, is amended in the first sentence by inserting before
the period ``, or is a trustee under a trust meeting the
requirements of subparagraph (A) or (C) of section 1917(d)(4)
of the Social Security Act (42 U.S.C. 1396p(d)(4) (A) or
(C))''.
(2) Assignability of payments.--Section 8470(a) of title 5,
United States Code, is amended by striking ``except under''
and inserting ``except to a trust meeting the requirements of
subparagraph (A) or (C) of section 1917(d)(4) of the Social
Security Act (42 U.S.C. 1396p(d)(4) (A) or (C)) or under''.
______

By Mr. INHOFE (for himself and Mr. Baucus):
S. 777. A bill to amend the impact aid program under the Elementary
and Secondary Education Act of 1965 to improve the delivery of payments
under the program to local educational agencies; to the Committee on
Health, Education, Labor, and Pensions.
Mr. INHOFE. Mr. President, I rise today to introduce a bill to make
the Impact Aid Program a Federal entitlement.
Impact Aid is one of the oldest Federal education programs, dating
from the 1950's, and is meant to compensate a local school district for
financial losses resulting from Federal properties or lands in that
district. Congress met its obligation of fully funding Impact Aid until
the 1970's. When the funding was cut in 1971, many districts that
greatly depend on Impact Aid began to suffer. In the past few years,
the Impact Aid payment formula has become increasingly complex, causing
great funding disparities for the same types of students in different
districts.
I have consistently supported increased appropriations for Impact Aid
because it not only provides an essential revenue source for impacted
districts, but it is also a Federal obligation. Often, close to 90
percent of a local school's funding is comprised of the local tax base.
When the presence of the Federal Government in a community takes away
from this tax base, we must compensate for this loss. When we do not
fulfill our obligation by adequately funding Impact Aid, our children
suffer the consequence such as lower test scores, lower attendance
rates, crowded classrooms, and fewer and older facilities.
Although funding for Impact Aid has increased over the past few
years, it still remains under-funded. Today, I am taking the first step
to correct this inequity. My bill will require Congress to meet its
duty to these children and schools that have been under-funded for so
long. I urge my colleagues to join me in fulfilling our obligation by
permanently fully funding the Impact Aid program.
Mr. BAUCUS. Mr. President, I rise today to join my friend and
colleague Senator Inhofe in introducing a bill that will make a real
difference in schools on or near military bases, Indian reservations,
and other Federal lands. Our bill will make the Impact Aid Program a
Federal entitlement.
We require public schools to accept all children from military
families and tribal reservations. It is the right thing to do. But
families in Federal housing or on reservations do not pay local
property taxes, a traditional revenue source for school districts.
While Impact Aid was designed to make up the difference, we have not
met our obligation to public schools. Instead, we have let the Impact
Aid Program fall prey to the annual appropriations process. This means
that payments to Impact Aid schools are never guaranteed, are usually
underfunded, and rarely arrive on time. In fact, Impact Aid has not
been fully funded since the early 1980s. The result of this
underfunding can been seen in Impact Aid schools in States across the
country. Schools are cutting programs and staff, not buying new books
and materials, and deferring maintenance on buildings to help cover
classroom costs. As a result, schools like Hays Lodge Pole School in
Montana cannot teach their students and maintain their school facility;
in the last couple of years, the Hays Lodge Pole School has been
susceptible to electrical fires and other structural hazards.

[[Page S4828]]

I am so proud of the students, teachers, and administrators that
learn and work in our Impact Aid districts. They have gone above and
beyond to make due with scant resources. In many cases, however, we
have stretched school districts to the breaking point. We have an
obligation to our schools and the students. We can and must do better
than we have in the past.
The bill that Senator Inhofe and I are introducing today will make a
difference. It requires the Federal Government to meet its obligation
to these schools. As a result, districts will know when and how much
they will receive. The guesswork will vanish, and school leaders will
be able to focus on student achievement instead of budget games.
I recognize that creating a Federal entitlement program is not an
easy task. But Impact Aid is not like other discretionary programs. It
was set up to compensate school districts for the ``substantial and
continuing financial burden resulting from Federal activities.'' It is
not a program that supplements local programming. It is the only game
in town, and when we do not meet our Federal obligation, there is no
other program to pick up the slack. Other Federal education programs,
such as title I, supplement insufficient local resources.
Importantly, Impact Aid is a Federal program that addresses Federal
needs. Our bill recognizes that providing Impact Aid resources on time
and in full helps federally impacted students learn and achieve. It
also recognizes that Impact Aid funds are better spent in our schools
than on plane tickets and expenses for Impact Aid officials to come to
Washington to fight for dollars that they inherently deserve.
Finally, I want to say a little about my personal perspective on
education. I honestly believe there is nothing more important than
giving our children the best opportunities to succeed in life. That is
a principle I hold very deeply. Nothing we can do for our children will
make a bigger difference in their lives than giving them a solid
education. Education provides greater advantages in the workplace, and
greater personal enrichment; both of which lead to future personal and
professional success. I have always believed that a quality public
education system is not only the right of every child, but also the key
to smart economic development. The investments we make in our education
system today will provide our children with the skills and knowledge to
be successful in the 21st century economy.
Our bill recognizes the importance of education and makes sure that
our federally impacted school districts receive the money they deserve.
More importantly, our bill makes sure that students in federally
impacted schools will have an education that will prepare them for
personal and professional success.
______

By Mr. HAGEL (for himself, Mr. Ensign, Mr. Lugar, and Mr.
Inhofe):
S. 778. A bill to amend title XVII of the Social Security Act to
provide medicare beneficiaries with a drug discount card that ensure
access to affordable prescription drugs; to the Committee on Finance.
Mr. HAGEL. Mr. President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 778

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 ``Medicare
Rx Drug Discount and Security Act of 2003''.
(b) Table of Contents.--The table of contents of this Act
is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Voluntary Medicare Prescription Drug Discount and Security
Program.

``Part D--Voluntary Medicare Prescription Drug Discount and Security
Program

``Sec. 1860. Definitions.
``Sec. 1860A. Establishment of program.
``Sec. 1860B. Enrollment.
``Sec. 1860C. Providing enrollment and coverage information to
beneficiaries.
``Sec. 1860D. Enrollee protections.
``Sec. 1860E. Annual enrollment fee.
``Sec. 1860F. Benefits under the program.
``Sec. 1860G. Requirements for entities to provide prescription drug
coverage.
``Sec. 1860H. Payments to eligible entities for administering the
catastrophic benefit.
``Sec. 1860I. Determination of income levels.
``Sec. 1860J. Appropriations.
``Sec. 1860K. Medicare Competition and Prescription Drug Advisory
Board.''.
Sec. 3. Administration of Voluntary Medicare Prescription Drug Discount
and Security Program.
Sec. 4. Exclusion of part D costs from determination of part B monthly
premium.
Sec. 5. Medigap revisions.

SEC. 2. VOLUNTARY MEDICARE PRESCRIPTION DRUG DISCOUNT AND
SECURITY PROGRAM.

(a) Establishment of Program.--Title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.) is amended--
(1) by redesignating part D as part E; and
(2) by inserting after part C the following new part:

``Part D--Voluntary Medicare Prescription Drug Discount and Security
Program

``definitions

``Sec. 1860. In this part:
``(1) Covered drug.--
``(A) In general.--Except as provided in this paragraph,
the term `covered drug' means--
``(i) a drug that may be dispensed only upon a prescription
and that is described in subparagraph (A)(i) or (A)(ii) of
section 1927(k)(2); or
``(ii) a biological product described in clauses (i)
through (iii) of subparagraph (B) of such section or insulin
described in subparagraph (C) of such section,

and such term includes a vaccine licensed under section 351
of the Public Health Service Act and any use of a covered
drug for a medically accepted indication (as defined in
section 1927(k)(6)).
``(B) Exclusions.--
``(i) In general.--Such term does not include drugs or
classes of drugs, or their medical uses, which may be
excluded from coverage or otherwise restricted under section
1927(d)(2), other than subparagraph (E) thereof (relating to
smoking cessation agents), or under section 1927(d)(3).
``(ii) Avoidance of duplicate coverage.--A drug prescribed
for an individual that would otherwise be a covered drug
under this part shall not be so considered if payment for
such drug is available under part A or B for an individual
entitled to benefits under part A and enrolled under part B.
``(C) Application of formulary restrictions.--A drug
prescribed for an individual that would otherwise be a
covered drug under this part shall not be so considered under
a plan if the plan excludes the drug under a formulary and
such exclusion is not successfully appealed under section
1860D(a)(4)(B).
``(D) Application of general exclusion provisions.--A
prescription drug discount card plan or Medicare+Choice plan
may exclude from qualified prescription drug coverage any
covered drug--
``(i) for which payment would not be made if section
1862(a) applied to part D; or
``(ii) which are not prescribed in accordance with the plan
or this part.

Such exclusions are determinations subject to reconsideration
and appeal pursuant to section 1860D(a)(4).
``(2) Eligible beneficiary.--The term `eligible
beneficiary' means an individual who is--
``(A) eligible for benefits under part A or enrolled under
part B; and
``(B) not eligible for prescription drug coverage under a
State plan under the medicaid program under title XIX.
``(3) Eligible entity.--The term `eligible entity' means
any--
``(A) pharmaceutical benefit management company;
``(B) wholesale pharmacy delivery system;
``(C) retail pharmacy delivery system;
``(D) insurer (including any issuer of a medicare
supplemental policy under section 1882);
``(E) Medicare+Choice organization;
``(F) State (in conjunction with a pharmaceutical benefit
management company);
``(G) employer-sponsored plan;
``(H) other entity that the Secretary determines to be
appropriate to provide benefits under this part; or
``(I) combination of the entities described in
subparagraphs (A) through (H).
``(4) Poverty line.--The term `poverty line' means the
income official poverty line (as defined by the Office of
Management and Budget, and revised annually in accordance
with section 673(2) of the Omnibus Budget Reconciliation Act
of 1981) applicable to a family of the size involved.
``(5) Secretary.--The term `Secretary' means the Secretary
of Health and Human Services, acting through the
Administrator of the Centers for Medicare & Medicaid
Services.

``establishment of program

``Sec. 1860A. (a) Provision of Benefit.--The Secretary
shall establish a Medicare Prescription Drug Discount and
Security Program under which the Secretary endorses
prescription drug card plans offered by eligible entities in
which eligible beneficiaries

[[Page S4829]]

may voluntarily enroll and receive benefits under this part.
``(b) Endorsement of Prescription Drug Discount Card
Plans.--
``(1) In general.--The Secretary shall endorse a
prescription drug card plan offered by an eligible entity
with a contract under this part if the eligible entity meets
the requirements of this part with respect to that plan.
``(2) National plans.--In addition to other types of plans,
the Secretary may endorse national prescription drug plans
under paragraph (1).
``(c) Voluntary Nature of Program.--Nothing in this part
shall be construed as requiring an eligible beneficiary to
enroll in the program under this part.
``(d) Financing.--The costs of providing benefits under
this part shall be payable from the Federal Supplementary
Medical Insurance Trust Fund established under section 1841.

``enrollment

``Sec. 1860B. (a) Enrollment Under Part D.--
``(1) Establishment of process.--
``(A) In general.--The Secretary shall establish a process
through which an eligible beneficiary (including an eligible
beneficiary enrolled in a Medicare+Choice plan offered by a
Medicare+Choice organization) may make an election to enroll
under this part. Except as otherwise provided in this
subsection, such process shall be similar to the process for
enrollment under part B under section 1837.
``(B) Requirement of enrollment.--An eligible beneficiary
must enroll under this part in order to be eligible to
receive the benefits under this part.
``(2) Enrollment periods.--
``(A) In general.--Except as provided in this paragraph, an
eligible beneficiary may not enroll in the program under this
part during any period after the beneficiary's initial
enrollment period under part B (as determined under section
1837).
``(B) Special enrollment period.--In the case of eligible
beneficiaries that have recently lost eligibility for
prescription drug coverage under a State plan under the
medicaid program under title XIX, the Secretary shall
establish a special enrollment period in which such
beneficiaries may enroll under this part.
``(C) Open enrollment period in 2004 for current
beneficiaries.--The Secretary shall establish a period, which
shall begin on the date on which the Secretary first begins
to accept elections for enrollment under this part, during
which any eligible beneficiary may--
``(i) enroll under this part; or
``(ii) enroll or reenroll under this part after having
previously declined or terminated such enrollment.
``(3) Period of coverage.--
``(A) In general.--Except as provided in subparagraph (B)
and subject to subparagraph (C), an eligible beneficiary's
coverage under the program under this part shall be effective
for the period provided under section 1838, as if that
section applied to the program under this part.
``(B) Enrollment during open and special enrollment.--
Subject to subparagraph (C), an eligible beneficiary who
enrolls under the program under this part under subparagraph
(B) or (C) of paragraph (2) shall be entitled to the benefits
under this part beginning on the first day of the month
following the month in which such enrollment occurs.
``(4) Part d coverage terminated by termination of coverage
under parts a and b or eligibility for medical assistance.--
``(A) In general.--In addition to the causes of termination
specified in section 1838, the Secretary shall terminate an
individual's coverage under this part if the individual is--
``(i) no longer enrolled in part A or B; or
``(ii) eligible for prescription drug coverage under a
State plan under the medicaid program under title XIX.
``(B) Effective date.--The termination described in
subparagraph (A) shall be effective on the effective date
of--
``(i) the termination of coverage under part A or (if
later) under part B; or
``(ii) the coverage under title XIX.
``(b) Enrollment With Eligible Entity.--
``(1) Process.--The Secretary shall establish a process
through which an eligible beneficiary who is enrolled under
this part shall make an annual election to enroll in a
prescription drug card plan offered by an eligible entity
that has been awarded a contract under this part and serves
the geographic area in which the beneficiary resides.
``(2) Election periods.--
``(A) In general.--Except as provided in this paragraph,
the election periods under this subsection shall be the same
as the coverage election periods under the Medicare+Choice
program under section 1851(e), including--
``(i) annual coordinated election periods; and
``(ii) special election periods.

In applying the last sentence of section 1851(e)(4) (relating
to discontinuance of a Medicare+Choice election during the
first year of eligibility) under this subparagraph, in the
case of an election described in such section in which the
individual had elected or is provided qualified prescription
drug coverage at the time of such first enrollment, the
individual shall be permitted to enroll in a prescription
drug card plan under this part at the time of the election of
coverage under the original fee-for-service plan.
``(B) Initial election periods.--
``(i) Individuals currently covered.--In the case of an
individual who is entitled to benefits under part A or
enrolled under part B as of November 1, 2004, there shall be
an initial election period of 6 months beginning on that
date.
``(ii) Individual covered in future.--In the case of an
individual who is first entitled to benefits under part A or
enrolled under part B after such date, there shall be an
initial election period which is the same as the initial
enrollment period under section 1837(d).
``(C) Additional special election periods.--The
Administrator shall establish special election periods--
``(i) in cases of individuals who have and involuntarily
lose prescription drug coverage described in paragraph (3);
``(ii) in cases described in section 1837(h) (relating to
errors in enrollment), in the same manner as such section
applies to part B; and
``(iii) in the case of an individual who meets such
exceptional conditions (including conditions provided under
section 1851(e)(4)(D)) as the Secretary may provide.
``(D) Enrollment with one plan only.--The rules established
under subparagraph (B) shall ensure that an eligible
beneficiary may only enroll in 1 prescription drug card plan
offered by an eligible entity per year.
``(3) Medicare+choice enrollees.--An eligible beneficiary
who is enrolled under this part and enrolled in a
Medicare+Choice plan offered by a Medicare+Choice
organization must enroll in a prescription drug discount card
plan offered by an eligible entity in order to receive
benefits under this part. The beneficiary may elect to
receive such benefits through the Medicare+Choice
organization in which the beneficiary is enrolled if the
organization has been awarded a contract under this part.
``(4) Continuous prescription drug coverage.--An individual
is considered for purposes of this part to be maintaining
continuous prescription drug coverage on and after the date
the individual first qualifies to elect prescription drug
coverage under this part if the individual establishes that
as of such date the individual is covered under any of the
following prescription drug coverage and before the date that
is the last day of the 63-day period that begins on the date
of termination of the particular prescription drug coverage
involved (regardless of whether the individual subsequently
obtains any of the following prescription drug coverage):
``(A) Coverage under prescription drug card plan or
medicare+choice plan.--Prescription drug coverage under a
prescription drug card plan under this part or under a
Medicare+Choice plan.
``(B) Medicaid prescription drug coverage.--Prescription
drug coverage under a medicaid plan under title XIX,
including through the Program of All-inclusive Care for the
Elderly (PACE) under section 1934, through a social health
maintenance organization (referred to in section 4104(c) of
the Balanced Budget Act of 1997), or through a
Medicare+Choice project that demonstrates the application of
capitation payment rates for frail elderly medicare
beneficiaries through the use of a interdisciplinary team and
through the provision of primary care services to such
beneficiaries by means of such a team at the nursing facility
involved.
``(C) Prescription drug coverage under group health plan.--
Any prescription drug coverage under a group health plan,
including a health benefits plan under the Federal Employees
Health Benefit Plan under chapter 89 of title 5, United
States Code, and a qualified retiree prescription drug plan
(as defined by the Secretary), but only if (subject to
subparagraph (E)(ii)) the coverage provides benefits at least
equivalent to the benefits under a prescription drug card
plan under this part.
``(D) Prescription drug coverage under certain medigap
policies.--Coverage under a medicare supplemental policy
under section 1882 that provides benefits for prescription
drugs (whether or not such coverage conforms to the standards
for packages of benefits under section 1882(p)(1)) and if
(subject to subparagraph (E)(ii)) the coverage provides
benefits at least equivalent to the benefits under a
prescription drug card plan under this part.
``(E) State pharmaceutical assistance program.--Coverage of
prescription drugs under a State pharmaceutical assistance
program, but only if (subject to subparagraph (E)(ii)) the
coverage provides benefits at least equivalent to the
benefits under a prescription drug card plan under this part.
``(F) Veterans' coverage of prescription drugs.--Coverage
of prescription drugs for veterans under chapter 17 of title
38, United States Code, but only if (subject to subparagraph
(E)(ii)) the coverage provides benefits at least equivalent
to the benefits under a prescription drug card plan under
this part.

For purposes of carrying out this paragraph, the
certifications of the type described in sections 2701(e) of
the Public Health Service Act and in section 9801(e) of the
Internal Revenue Code of 1986 shall also include a statement
for the period of coverage of whether the individual involved
had prescription drug coverage described in this paragraph.
``(5) Competition.--Each eligible entity with a contract
under this part shall compete for the enrollment of
beneficiaries in a prescription drug card plan offered by the
entity on the basis of discounts, formularies,

[[Page S4830]]

pharmacy networks, and other services provided for under the
contract.

``providing enrollment and coverage information to beneficiaries

``Sec. 1860C. (a) Activities.--The Secretary shall provide
for activities under this part to broadly disseminate
information to eligible beneficiaries (and prospective
eligible beneficiaries) regarding enrollment under this part
and the prescription drug card plans offered by eligible
entities with a contract under this part.
``(b) Special Rule for First Enrollment Under the
Program.--To the extent practicable, the activities described
in subsection (a) shall ensure that eligible beneficiaries
are provided with such information at least 60 days prior to
the first enrollment period described in section 1860B(c).

``enrollee protections

``Sec. 1860D. (a) Requirements for All Eligible Entities.--
Each eligible entity shall meet the following requirements:
``(1) Guaranteed issuance and nondiscrimination.--
``(A) Guaranteed issuance.--
``(i) In general.--An eligible beneficiary who is eligible
to enroll in a prescription drug card plan offered by an
eligible entity under section 1860B(b) for prescription drug
coverage under this part at a time during which elections are
accepted under this part with respect to the coverage shall
not be denied enrollment based on any health status-related
factor (described in section 2702(a)(1) of the Public Health
Service Act) or any other factor.
``(ii) Medicare+choice limitations permitted.--The
provisions of paragraphs (2) and (3) (other than subparagraph
(C)(i), relating to default enrollment) of section 1851(g)
(relating to priority and limitation on termination of
election) shall apply to eligible entities under this
subsection.
``(B) Nondiscrimination.--An eligible entity offering
prescription drug coverage under this part shall not
establish a service area in a manner that would discriminate
based on health or economic status of potential enrollees.
``(2) Disclosure of information.--
``(A) Information.--
``(i) General information.--Each eligible entity with a
contract under this part to provide a prescription drug card
plan shall disclose, in a clear, accurate, and standardized
form to each eligible beneficiary enrolled in a prescription
drug discount card program offered by such entity under this
part at the time of enrollment and at least annually
thereafter, the information described in section 1852(c)(1)
relating to such prescription drug coverage.
``(ii) Specific information.--In addition to the
information described in clause (i), each eligible entity
with a contract under this part shall disclose the following:

``(I) How enrollees will have access to covered drugs,
including access to such drugs through pharmacy networks.
``(II) How any formulary used by the eligible entity
functions.
``(III) Information on grievance and appeals procedures.
``(IV) Information on enrollment fees and prices charged to
the enrollee for covered drugs.
``(V) Any other information that the Secretary determines
is necessary to promote informed choices by eligible
beneficiaries among eligible entities.

``(B) Disclosure upon request of general coverage,
utilization, and grievance information.--Upon request of an
eligible beneficiary, the eligible entity shall provide the
information described in paragraph (3) to such beneficiary.
``(C) Response to beneficiary questions.--Each eligible
entity offering a prescription drug discount card plan under
this part shall have a mechanism for providing specific
information to enrollees upon request. The entity shall make
available, through an Internet website and, upon request, in
writing, information on specific changes in its formulary.
``(3) Grievance mechanism, coverage determinations, and
reconsiderations.--
``(A) In general.--With respect to the benefit under this
part, each eligible entity offering a prescription drug
discount card plan shall provide meaningful procedures for
hearing and resolving grievances between the organization
(including any entity or individual through which the
eligible entity provides covered benefits) and enrollees with
prescription drug card plans of the eligible entity under
this part in accordance with section 1852(f).
``(B) Application of coverage determination and
reconsideration provisions.--Each eligible entity shall meet
the requirements of paragraphs (1) through (3) of section
1852(g) with respect to covered benefits under the
prescription drug card plan it offers under this part in the
same manner as such requirements apply to a Medicare+Choice
organization with respect to benefits it offers under a
Medicare+Choice plan under part C.
``(C) Request for review of tiered formulary
determinations.--In the case of a prescription drug card plan
offered by an eligible entity that provides for tiered cost-
sharing for drugs included within a formulary and provides
lower cost-sharing for preferred drugs included within the
formulary, an individual who is enrolled in the plan may
request coverage of a nonpreferred drug under the terms
applicable for preferred drugs if the prescribing physician
determines that the preferred drug for treatment of the same
condition is not as effective for the individual or has
adverse effects for the individual.
``(4) Appeals.--
``(A) In general.--Subject to subparagraph (B), each
eligible entity offering a prescription drug card plan shall
meet the requirements of paragraphs (4) and (5) of section
1852(g) with respect to drugs not included on any formulary
in the same manner as such requirements apply to a
Medicare+Choice organization with respect to benefits it
offers under a Medicare+Choice plan under part C.
``(B) Formulary determinations.--An individual who is
enrolled in a prescription drug card plan offered by an
eligible entity may appeal to obtain coverage under this part
for a covered drug that is not on a formulary of the eligible
entity if the prescribing physician determines that the
formulary drug for treatment of the same condition is not as
effective for the individual or has adverse effects for the
individual.
``(5) Confidentiality and accuracy of enrollee records.--
Each eligible entity offering a prescription drug discount
card plan shall meet the requirements of the Health Insurance
Portability and Accountability Act of 1996.
``(b) Eligible Entities Offering a Discount Card Program.--
If an eligible entity offers a discount card program under
this part, in addition to the requirements under subsection
(a), the entity shall meet the following requirements:
``(1) Access to covered benefits.--
``(A) Assuring pharmacy access.--
``(i) In general.--The eligible entity offering the
prescription drug discount card plan shall secure the
participation in its network of a sufficient number of
pharmacies that dispense (other than by mail order) drugs
directly to patients to ensure convenient access (as
determined by the Secretary and including adequate emergency
access) for enrolled beneficiaries, in accordance with
standards established under section 1860D(a)(3) that ensure
such convenient access.
``(ii) Use of point-of-service system.--Each eligible
entity offering a prescription drug discount card plan shall
establish an optional point-of-service method of operation
under which--

``(I) the plan provides access to any or all pharmacies
that are not participating pharmacies in its network; and
``(II) discounts under the plan may not be available.

The additional copayments so charged shall not be counted as
out-of-pocket expenses for purposes of section 1860F(b).
``(B) Use of standardized technology.--
``(i) In general.--Each eligible entity offering a
prescription drug discount card plan shall issue (and
reissue, as appropriate) such a card (or other technology)
that may be used by an enrolled beneficiary to assure access
to negotiated prices under section 1860F(a) for the purchase
of prescription drugs for which coverage is not otherwise
provided under the prescription drug discount card plan.
``(ii) Standards.--The Secretary shall provide for the
development of national standards relating to a standardized
format for the card or other technology referred to in clause
(i). Such standards shall be compatible with standards
established under part C of title XI.
``(C) Requirements on development and application of
formularies.--If an eligible entity that offers a
prescription drug discount card plan uses a formulary, the
following requirements must be met:
``(i) Pharmacy and therapeutic (p&t) committee.--The
eligible entity must establish a pharmacy and therapeutic
committee that develops and reviews the formulary. Such
committee shall include at least 1 physician and at least 1
pharmacist both with expertise in the care of elderly or
disabled persons and a majority of its members shall consist
of individuals who are a physician or a practicing pharmacist
(or both).
``(ii) Formulary development.--In developing and reviewing
the formulary, the committee shall base clinical decisions on
the strength of scientific evidence and standards of
practice, including assessing peer-reviewed medical
literature, such as randomized clinical trials,
pharmacoeconomic studies, outcomes research data, and such
other information as the committee determines to be
appropriate.
``(iii) Inclusion of drugs in all therapeutic categories.--
The formulary must include drugs within each therapeutic
category and class of covered drugs (although not necessarily
for all drugs within such categories and classes).
``(iv) Provider education.--The committee shall establish
policies and procedures to educate and inform health care
providers concerning the formulary.
``(v) Notice before removing drugs from formulary.--Any
removal of a drug from a formulary shall take effect only
after appropriate notice is made available to beneficiaries
and physicians.
``(vi) Grievances and appeals relating to application of
formularies.--For provisions relating to grievances and
appeals of coverage, see paragraphs (3) and (4) of section
1860D(a).
``(2) Cost and utilization management; quality assurance;
medication therapy management program.--
``(A) In general.--Each eligible entity offering a
prescription drug discount card plan shall have in place with
respect to covered drugs--

[[Page S4831]]

``(i) an effective cost and drug utilization management
program, including medically appropriate incentives to use
generic drugs and therapeutic interchange, when appropriate;
``(ii) quality assurance measures and systems to reduce
medical errors and adverse drug interactions, including a
medication therapy management program described in
subparagraph (B); and
``(iii) a program to control fraud, abuse, and waste.

Nothing in this section shall be construed as impairing an
eligible entity from applying cost management tools
(including differential payments) under all methods of
operation.
``(B) Medication therapy management program.--
``(i) In general.--A medication therapy management program
described in this paragraph is a program of drug therapy
management and medication administration that is designed to
ensure, with respect to beneficiaries with chronic diseases
(such as diabetes, asthma, hypertension, and congestive heart
failure) or multiple prescriptions, that covered drugs under
the prescription drug discount card plan are appropriately
used to achieve therapeutic goals and reduce the risk of
adverse events, including adverse drug interactions.
``(ii) Elements.--Such program may include--

``(I) enhanced beneficiary understanding of such
appropriate use through beneficiary education, counseling,
and other appropriate means;
``(II) increased beneficiary adherence with prescription
medication regimens through medication refill reminders,
special packaging, and other appropriate means; and
``(III) detection of patterns of overuse and underuse of
prescription drugs.

``(iii) Development of program in cooperation with licensed
pharmacists.--The program shall be developed in cooperation
with licensed pharmacists and physicians.
``(iv) Considerations in pharmacy fees.--Each eligible
entity offering a prescription drug discount card plan shall
take into account, in establishing fees for pharmacists and
others providing services under the medication therapy
management program, the resources and time used in
implementing the program.
``(C) Treatment of accreditation.--Section 1852(e)(4)
(relating to treatment of accreditation) shall apply to
prescription drug discount card plans under this part with
respect to the following requirements, in the same manner as
they apply to Medicare+Choice plans under part C with respect
to the requirements described in a clause of section
1852(e)(4)(B):
``(i) Paragraph (1) (including quality assurance),
including any medication therapy management program under
paragraph (2).
``(ii) Subsection (c)(1) (relating to access to covered
benefits).
``(iii) Subsection (g) (relating to confidentiality and
accuracy of enrollee records).
``(D) Public disclosure of pharmaceutical prices for
equivalent drugs.--Each eligible entity offering a
prescription drug discount card plan shall provide that each
pharmacy or other dispenser that arranges for the dispensing
of a covered drug shall inform the beneficiary at the time of
purchase of the drug of any differential between the price of
the prescribed drug to the enrollee and the price of the
lowest cost drug covered under the plan that is
therapeutically equivalent and bioequivalent.

``annual enrollment fee

``Sec. 1860E. (a) Amount.--
``(1) In general.--Except as provided in subsection (c),
enrollment under the program under this part is conditioned
upon payment of an annual enrollment fee of $25.
``(2) Annual percentage increase.--
``(A) In general.--In the case of any calendar year
beginning after 2005, the dollar amount in paragraph (1)
shall be increased by an amount equal to--
``(i) such dollar amount; multiplied by
``(ii) the inflation adjustment.
``(B) Inflation adjustment.--For purposes of subparagraph
(A)(ii), the inflation adjustment for any calendar year is
the percentage (if any) by which--
``(i) the average per capita aggregate expenditures for
covered drugs in the United States for medicare
beneficiaries, as determined by the Secretary for the 12-
month period ending in July of the previous year; exceeds
``(ii) such aggregate expenditures for the 12-month period
ending with July 2004.
``(C) Rounding.--If any increase determined under clause
(ii) is not a multiple of $1, such increase shall be rounded
to the nearest multiple of $1.
``(b) Collection of Annual Enrollment Fee.--
``(1) In general.--Unless the eligible beneficiary makes an
election under paragraph (2), the annual enrollment fee
described in subsection (a) shall be collected and credited
to the Federal Supplementary Medical Insurance Trust Fund in
the same manner as the monthly premium determined under
section 1839 is collected and credited to such Trust Fund
under section 1840.
``(2) Direct payment.--An eligible beneficiary may elect to
pay the annual enrollment fee directly or in any other manner
approved by the Secretary. The Secretary shall establish
procedures for making such an election.
``(c) Waiver.--The Secretary shall waive the enrollment fee
described in subsection (a) in the case of an eligible
beneficiary whose income is below 200 percent of the poverty
line.

``benefits under the program

``Sec. 1860F. (a) Access to Negotiated Prices.--
``(1) Negotiated prices.--
``(A) In general.--Subject to subparagraph (B), each
prescription drug card plan offering a discount card program
by an eligible entity with a contract under this part shall
provide each eligible beneficiary enrolled in such plan with
access to negotiated prices (including applicable discounts)
for such prescription drugs as the eligible entity determines
appropriate. Such discounts may include discounts for
nonformulary drugs. If such a beneficiary becomes eligible
for the catastrophic benefit under subsection (b), the
negotiated prices (including applicable discounts) shall
continue to be available to the beneficiary for those
prescription drugs for which payment may not be made under
section 1860H(b). For purposes of this subparagraph, the term
`prescription drugs' is not limited to covered drugs, but
does not include any over-the-counter drug that is not a
covered drug.
``(B) Limitations.--
``(i) Formulary restrictions.--Insofar as an eligible
entity with a contract under this part uses a formulary, the
negotiated prices (including applicable discounts) for
nonformulary drugs may differ.
``(ii) Avoidance of duplicate coverage.--The negotiated
prices (including applicable discounts) for prescription
drugs shall not be available for any drug prescribed for an
eligible beneficiary if payment for the drug is available
under part A or B (but such negotiated prices shall be
available if payment under part A or B is not available
because the beneficiary has not met the deductible or has
exhausted benefits under part A or B).
``(2) Discount card.--The Secretary shall develop a uniform
standard card format to be issued by each eligible entity
offering a prescription drug discount card plan that shall be
used by an enrolled beneficiary to ensure the access of such
beneficiary to negotiated prices under paragraph (1).
``(3) Ensuring discounts in all areas.--The Secretary shall
develop procedures that ensure that each eligible beneficiary
that resides in an area where no prescription drug discount
card plans are available is provided with access to
negotiated prices for prescription drugs (including
applicable discounts).
``(b) Catastrophic Benefit.--
``(1) Ten percent cost-sharing.--Subject to any formulary
used by the prescription drug discount card program in which
the eligible beneficiary is enrolled, the catastrophic
benefit shall provide benefits with cost-sharing that is
equal to 10 percent of the negotiated price (taking into
account any applicable discounts) of each drug dispensed to
such beneficiary after the beneficiary has incurred costs (as
described in paragraph (3)) for covered drugs in a year equal
to the applicable annual out-of-pocket limit specified in
paragraph (2).
``(2) Annual out-of-pocket limits.--For purposes of this
part, the annual out-of-pocket limits specified in this
paragraph are as follows:
``(A) Beneficiaries with annual incomes below 200 percent
of the poverty line.--In the case of an eligible beneficiary
whose income (as determined under section 1860I) is below 200
percent of the poverty line, the annual out-of-pocket limit
is equal to $1,500.
``(B) Beneficiaries with annual incomes between 200 and 400
percent of the poverty line.--In the case of an eligible
beneficiary whose income (as so determined) equals or exceeds
200 percent, but does not exceed 400 percent, of the poverty
line, the annual out-of-pocket limit is equal to $3,500.
``(C) Beneficiaries with annual incomes between 400 and 600
percent of the poverty line.--In the case of an eligible
beneficiary whose income (as so determined) equals or exceeds
400 percent, but does not exceed 600 percent, of the poverty
line, the annual out-of-pocket limit is equal to $5,500.
``(D) Beneficiaries with annual incomes that exceed 600
percent of the poverty line.--In the case of an eligible
beneficiary whose income (as so determined) equals or exceeds
600 percent of the poverty line, the annual out-of-pocket
limit is an amount equal to 20 percent of that beneficiary's
income for that year (rounded to the nearest multiple of $1).
``(3) Application.--In applying paragraph (2), incurred
costs shall only include those expenses for covered drugs
that are incurred by the eligible beneficiary using a card
approved by the Secretary under this part that are paid by
that beneficiary and for which the beneficiary is not
reimbursed (through insurance or otherwise) by another
person.
``(4) Annual percentage increase.--
``(A) In general.--In the case of any calendar year after
2005, the dollar amounts in subparagraphs (A), (B), and (C)
of paragraph (2) shall be increased by an amount equal to--
``(i) such dollar amount; multiplied by
``(ii) the inflation adjustment determined under section
1860E(a)(2)(B) for such calendar year.
``(B) Rounding.--If any increase determined under
subparagraph (A) is not a multiple of $1, such increase shall
be rounded to the nearest multiple of $1.
``(5) Eligible entity not at financial risk for
catastrophic benefit.--

[[Page S4832]]

``(A) In general.--The Secretary, and not the eligible
entity, shall be at financial risk for the provision of the
catastrophic benefit under this subsection.
``(B) Provisions relating to payments to eligible
entities.--For provisions relating to payments to eligible
entities for administering the catastrophic benefit under
this subsection, see section 1860H.
``(6) Ensuring catastrophic benefit in all areas.--The
Secretary shall develop procedures for the provision of the
catastrophic benefit under this subsection to each eligible
beneficiary that resides in an area where there are no
prescription drug discount card plans offered that have been
awarded a contract under this part.

``requirements for entities to provide prescription drug coverage

``Sec. 1860G. (a) Establishment of Bidding Process.--The
Secretary shall establish a process under which the Secretary
accepts bids from eligible entities and awards contracts to
the entities to provide the benefits under this part to
eligible beneficiaries in an area.
``(b) Submission of Bids.--Each eligible entity desiring to
enter into a contract under this part shall submit a bid to
the Secretary at such time, in such manner, and accompanied
by such information as the Secretary may require.
``(c) Administrative Fee Bid.--
``(1) Submission.--For the bid described in subsection (b),
each entity shall submit to the Secretary information
regarding administration of the discount card and
catastrophic benefit under this part.
``(2) Bid submission requirements.--
``(A) Administrative fee bid submission.--In submitting
bids, the entities shall include separate costs for
administering the discount card component, if applicable, and
the catastrophic benefit. The entity shall submit the
administrative fee bid in a form and manner specified by the
Secretary, and shall include a statement of projected
enrollment and a separate statement of the projected
administrative costs for at least the following functions:
``(i) Enrollment, including income eligibility
determination.
``(ii) Claims processing.
``(iii) Quality assurance, including drug utilization
review.
``(iv) Beneficiary and pharmacy customer service.
``(v) Coordination of benefits.
``(vi) Fraud and abuse prevention.
``(B) Negotiated administrative fee bid amounts.--The
Secretary has the authority to negotiate regarding the bid
amounts submitted. The Secretary may reject a bid if the
Secretary determines it is not supported by the
administrative cost information provided in the bid as
specified in subparagraph (A).
``(C) Payment to plans based on administrative fee bid
amounts.--The Secretary shall use the bid amounts to
calculate a benchmark amount consisting of the enrollment-
weighted average of all bids for each function and each class
of entity. The class of entity is either a regional or
national entity, or such other classes as the Secretary may
determine to be appropriate. The functions are the discount
card and catastrophic components. If an eligible entity's
combined bid for both functions is above the combined
benchmark within the entity's class for the functions, the
eligible entity shall collect additional necessary revenue
through 1 or both of the following:
``(i) Additional fees charged to the beneficiary, not to
exceed $25 annually.
``(ii) Use of rebate amounts from drug manufacturers to
defray administrative costs.
``(d) Awarding of Contracts.--
``(1) In general.--The Secretary shall, consistent with the
requirements of this part and the goal of containing medicare
program costs, award at least 2 contracts in each area,
unless only 1 bidding entity meets the terms and conditions
specified by the Secretary under paragraph (2).
``(2) Terms and conditions.--The Secretary shall not award
a contract to an eligible entity under this section unless
the Secretary finds that the eligible entity is in compliance
with such terms and conditions as the Secretary shall
specify.
``(3) Requirements for eligible entities providing discount
card program.--Except as provided in subsection (e), in
determining which of the eligible entities that submitted
bids that meet the terms and conditions specified by the
Secretary under paragraph (2) to award a contract, the
Secretary shall consider whether the bid submitted by the
entity meets at least the following requirements:
``(A) Level of savings to medicare beneficiaries.--The
program passes on to medicare beneficiaries who enroll in the
program discounts on prescription drugs, including discounts
negotiated with manufacturers.
``(B) Prohibition on application only to mail order.--The
program applies to drugs that are available other than solely
through mail order and provides convenient access to retail
pharmacies.
``(C) Level of beneficiary services.--The program provides
pharmaceutical support services, such as education and
services to prevent adverse drug interactions.
``(D) Adequacy of information.--The program makes available
to medicare beneficiaries through the Internet and otherwise
information, including information on enrollment fees, prices
charged to beneficiaries, and services offered under the
program, that the Secretary identifies as being necessary to
provide for informed choice by beneficiaries among endorsed
programs.
``(E) Extent of demonstrated experience.--The entity
operating the program has demonstrated experience and
expertise in operating such a program or a similar program.
``(F) Extent of quality assurance.--The entity has in place
adequate procedures for assuring quality service under the
program.
``(G) Operation of assistance program.--The entity meets
such requirements relating to solvency, compliance with
financial reporting requirements, audit compliance, and
contractual guarantees as specified by the Secretary.
``(H) Privacy compliance.--The entity implements policies
and procedures to safeguard the use and disclosure of program
beneficiaries' individually identifiable health information
in a manner consistent with the Federal regulations
(concerning the privacy of individually identifiable health
information) promulgated under section 264(c) of the Health
Insurance Portability and Accountability Act of 1996.
``(I) Additional beneficiary protections.--The program
meets such additional requirements as the Secretary
identifies to protect and promote the interest of medicare
beneficiaries, including requirements that ensure that
beneficiaries are not charged more than the lower of the
negotiated retail price or the usual and customary price.
The prices negotiated by a prescription drug discount card
program endorsed under this section shall (notwithstanding
any other provision of law) not be taken into account for the
purposes of establishing the best price under section
1927(c)(1)(C).
``(4) Beneficiary access to savings and rebates.--The
Secretary shall require eligible entities offering a discount
card program to pass on savings and rebates negotiated with
manufacturers to eligible beneficiaries enrolled with the
entity.
``(5) Negotiated agreements with employer-sponsored
plans.--Notwithstanding any other provision of this part, the
Secretary may negotiate agreements with employer-sponsored
plans under which eligible beneficiaries are provided with a
benefit for prescription drug coverage that is more generous
than the benefit that would otherwise have been available
under this part if such an agreement results in cost savings
to the Federal Government.
``(e) Requirements for Other Eligible Entities.--An
eligible entity that is licensed under State law to provide
the health insurance benefits under this section shall be
required to meet the requirements of subsection (d)(3). If an
eligible entity offers a national plan, such entity shall not
be required to meet the requirements of subsection (d)(3),
but shall meet the requirements of Employee Retirement Income
Security Act of 1974 that apply with respect to such plan.

``payments to eligible entities for administering the catastrophic
benefit

``Sec. 1860H. (a) In General.--The Secretary may establish
procedures for making payments to an eligible entity under a
contract entered into under this part for--
``(1) the costs of providing covered drugs to beneficiaries
eligible for the benefit under this part in accordance with
subsection (b) minus the amount of any cost-sharing collected
by the eligible entity under section 1860F(b); and
``(2) costs incurred by the entity in administering the
catastrophic benefit in accordance with section 1860G.
``(b) Payment for Covered Drugs.--
``(1) In general.--Except as provided in subsection (c) and
subject to paragraph (2), the Secretary may only pay an
eligible entity for covered drugs furnished by the eligible
entity to an eligible beneficiary enrolled with such entity
under this part that is eligible for the catastrophic benefit
under section 1860F(b).
``(2) Limitations.--
``(A) Formulary restrictions.--Insofar as an eligible
entity with a contract under this part uses a formulary, the
Secretary may not make any payment for a covered drug that is
not included in such formulary, except to the extent provided
under section 1860D(a)(4)(B).
``(B) Negotiated prices.--The Secretary may not pay an
amount for a covered drug furnished to an eligible
beneficiary that exceeds the negotiated price (including
applicable discounts) that the beneficiary would have been
responsible for under section 1860F(a) or the price
negotiated for insurance coverage under the Medicare+Choice
program under part C, a medicare supplemental policy,
employer-sponsored coverage, or a State plan.
``(C) Cost-sharing limitations.--An eligible entity may not
charge an individual enrolled with such entity who is
eligible for the catastrophic benefit under this part any
copayment, tiered copayment, coinsurance, or other cost-
sharing that exceeds 10 percent of the cost of the drug that
is dispensed to the individual.
``(3) Payment in competitive areas.--In a geographic area
in which 2 or more eligible entities offer a plan under this
part, the Secretary may negotiate an agreement with the
entity to reimburse the entity for costs incurred in
providing the benefit under this part on a capitated basis.
``(c) Secondary Payer Provisions.--The provisions of
section 1862(b) shall apply to the benefits provided under
this part.

[[Page S4833]]

``determination of income levels

``Sec. 1860I. (a) Determination of Income Levels.--
``(1) In general.--The Secretary shall establish procedures
under which each eligible entity awarded a contract under
this part determines the income levels of eligible
beneficiaries enrolled in a prescription drug card plan
offered by that entity at least annually for purposes of
sections 1860E(c) and 1860F(b).
``(2) Procedures.--The procedures established under
paragraph (1) shall require each eligible beneficiary to
submit such information as the eligible entity requires to
make the determination described in paragraph (1).
``(b) Enforcement of Income Determinations.--The Secretary
shall--
``(1) establish procedures that ensure that eligible
beneficiaries comply with sections 1860E(c) and 1860F(b); and
``(2) require, if the Secretary determines that payments
were made under this part to which an eligible beneficiary
was not entitled, the repayment of any excess payments with
interest and a penalty.
``(c) Quality Control System.--
``(1) Establishment.--The Secretary shall establish a
quality control system to monitor income determinations made
by eligible entities under this section and to produce
appropriate and comprehensive measures of error rates.
``(2) Periodic audits.--The Inspector General of the
Department of Health and Human Services shall conduct
periodic audits to ensure that the system established under
paragraph (1) is functioning appropriately.

``appropriations

``Sec. 1860J. There are authorized to be appropriated from
time to time, out of any moneys in the Treasury not otherwise
appropriated, to the Federal Supplementary Medical Insurance
Trust Fund established under section 1841, an amount equal to
the amount by which the benefits and administrative costs of
providing the benefits under this part exceed the enrollment
fees collected under section 1860E.

``medicare competition and prescription drug advisory board

``Sec. 1860K. (a) Establishment of Board.--There is
established a Medicare Prescription Drug Advisory Board (in
this section referred to as the `Board').
``(b) Advice on Policies; Reports.--
``(1) Advice on policies.--The Board shall advise the
Secretary on policies relating to the Voluntary Medicare
Prescription Drug Discount and Security Program under this
part.
``(2) Reports.--
``(A) In general.--With respect to matters of the
administration of the program under this part, the Board
shall submit to Congress and to the Secretary such reports as
the Board determines appropriate. Each such report may
contain such recommendations as the Board determines
appropriate for legislative or administrative changes to
improve the administration of the program under this part.
Each such report shall be published in the Federal Register.
``(B) Maintaining independence of board.--The Board shall
directly submit to Congress reports required under
subparagraph (A). No officer or agency of the United States
may require the Board to submit to any officer or agency of
the United States for approval, comments, or review, prior to
the submission to Congress of such reports.
``(c) Structure and Membership of the Board.--
``(1) Membership.--The Board shall be composed of 7 members
who shall be appointed as follows:
``(A) Presidential appointments.--
``(i) In general.--Three members shall be appointed by the
President, by and with the advice and consent of the Senate.
``(ii) Limitation.--Not more than 2 such members may be
from the same political party.
``(B) Senatorial appointments.--Two members (each member
from a different political party) shall be appointed by the
President pro tempore of the Senate with the advice of the
Chairman and the Ranking Minority Member of the Committee on
Finance of the Senate.
``(C) Congressional appointments.--Two members (each member
from a different political party) shall be appointed by the
Speaker of the House of Representatives, with the advice of
the Chairman and the Ranking Minority Member of the Committee
on Ways and Means of the House of Representatives.
``(2) Qualifications.--The members shall be chosen on the
basis of their integrity, impartiality, and good judgment,
and shall be individuals who are, by reason of their
education, experience, and attainments, exceptionally
qualified to perform the duties of members of the Board.
``(3) Composition.--Of the members appointed under
paragraph (1)--
``(A) at least 1 shall represent the pharmaceutical
industry;
``(B) at least 1 shall represent physicians;
``(C) at least 1 shall represent medicare beneficiaries;
``(D) at least 1 shall represent practicing pharmacists;
and
``(E) at least 1 shall represent eligible entities.
``(d) Terms of Appointment.--
``(1) In general.--Subject to paragraph (2), each member of
the Board shall serve for a term of 6 years.
``(2) Continuance in office and staggered terms.--
``(A) Continuance in office.--A member appointed to a term
of office after the commencement of such term may serve under
such appointment only for the remainder of such term.
``(B) Staggered terms.--The terms of service of the members
initially appointed under this section shall begin on January
1, 2005, and expire as follows:
``(i) Presidential appointments.--The terms of service of
the members initially appointed by the President shall expire
as designated by the President at the time of nomination, 1
each at the end of--

``(I) 2 years;
``(II) 4 years; and
``(III) 6 years.

``(ii) Senatorial appointments.--The terms of service of
members initially appointed by the President pro tempore of
the Senate shall expire as designated by the President pro
tempore of the Senate at the time of nomination, 1 each at
the end of--

``(I) 3 years; and
``(II) 6 years.

``(iii) Congressional appointments.--The terms of service
of members initially appointed by the Speaker of the House of
Representatives shall expire as designated by the Speaker of
the House of Representatives at the time of nomination, 1
each at the end of--

``(I) 4 years; and
``(II) 5 years.

``(C) Reappointments.--Any person appointed as a member of
the Board may not serve for more than 8 years.
``(D) Vacancies.--Any member appointed to fill a vacancy
occurring before the expiration of the term for which the
member's predecessor was appointed shall be appointed only
for the remainder of that term. A member may serve after the
expiration of that member's term until a successor has taken
office. A vacancy in the Board shall be filled in the manner
in which the original appointment was made.
``(e) Chairperson.--A member of the Board shall be
designated by the President to serve as Chairperson for a
term of 4 years or, if the remainder of such member's term is
less than 4 years, for such remainder.
``(f) Expenses and Per Diem.--Members of the Board shall
serve without compensation, except that, while serving on
business of the Board away from their homes or regular places
of business, members may be allowed travel expenses,
including per diem in lieu of subsistence, as authorized by
section 5703 of title 5, United States Code, for persons in
the Government employed intermittently.
``(g) Meetings.--
``(1) In general.--The Board shall meet at the call of the
Chairperson (in consultation with the other members of the
Board) not less than 4 times each year to consider a specific
agenda of issues, as determined by the Chairperson in
consultation with the other members of the Board.
``(2) Quorum.--Four members of the Board (not more than 3
of whom may be of the same political party) shall constitute
a quorum for purposes of conducting business.
``(h) Federal Advisory Committee Act.--The Board shall be
exempt from the provisions of the Federal Advisory Committee
Act (5 U.S.C. App.).
``(i) Personnel.--
``(1) Staff director.--The Board shall, without regard to
the provisions of title 5, United States Code, relating to
the competitive service, appoint a Staff Director who shall
be paid at a rate equivalent to a rate established for the
Senior Executive Service under section 5382 of title 5,
United States Code.
``(2) Staff.--
``(A) In general.--The Board may employ, without regard to
chapter 31 of title 5, United States Code, such officers and
employees as are necessary to administer the activities to be
carried out by the Board.
``(B) Flexibility with respect to civil service laws.--
``(i) In general.--The staff of the Board shall be
appointed without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service, and, subject to clause (ii), shall be paid without
regard to the provisions of chapters 51 and 53 of such title
(relating to classification and schedule pay rates).
``(ii) Maximum rate.--In no case may the rate of
compensation determined under clause (i) exceed the rate of
basic pay payable for level IV of the Executive Schedule
under section 5315 of title 5, United States Code.
``(j) Authorization of Appropriations.--There are
authorized to be appropriated, out of the Federal
Supplemental Medical Insurance Trust Fund established under
section 1841, and the general fund of the Treasury, such sums
as are necessary to carry out the purposes of this
section.''.
(b) Conforming References to Previous Part D.--
(1) In general.--Any reference in law (in effect before the
date of enactment of this Act) to part D of title XVIII of
the Social Security Act is deemed a reference to part E of
such title (as in effect after such date).
(2) Secretarial submission of legislative proposal.--Not
later than 6 months after the date of enactment of this
section, the Secretary of Health and Human Services shall
submit to the appropriate committees of Congress a
legislative proposal providing for such technical and
conforming amendments in the law as are required by the
provisions of this section.

[[Page S4834]]

(c) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
take effect on the date of enactment of this Act.
(2) Implementation.--Notwithstanding any provision of part
D of title XVIII of the Social Security Act (as added by
subsection (a)), the Secretary of Health and Human Services
shall implement the Voluntary Medicare Prescription Drug
Discount and Security Program established under such part in
a manner such that--
(A) benefits under such part for eligible beneficiaries (as
defined in section 1860 of such Act, as added by such
subsection) with annual incomes below 200 percent of the
poverty line (as defined in such section) are available to
such beneficiaries not later than the date that is 6 months
after the date of enactment of this Act; and
(B) benefits under such part for other eligible
beneficiaries are available to such beneficiaries not later
than the date that is 1 year after the date of enactment of
this Act.

SEC. 3. ADMINISTRATION OF VOLUNTARY MEDICARE PRESCRIPTION
DRUG DISCOUNT AND SECURITY PROGRAM.

(a) Establishment of Center for Medicare Prescription
Drugs.--There is established, within the Centers for Medicare
& Medicaid Services of the Department of Health and Human
Services, a Center for Medicare Prescription Drugs. Such
Center shall be separate from the Center for Beneficiary
Choices, the Center for Medicare Management, and the Center
for Medicaid and State Operations.
(b) Duties.--It shall be the duty of the Center for
Medicare Prescription Drugs to administer the Voluntary
Medicare Prescription Drug Discount and Security Program
established under part D of title XVIII of the Social
Security Act (as added by section 2).
(c) Director.--
(1) Appointment.--There shall be in the Center for Medicare
Prescription Drugs a Director of Medicare Prescription Drugs,
who shall be appointed by the President, by and with the
advice and consent of the Senate.
(2) Responsibilities.--The Director shall be responsible
for the exercise of all powers and the discharge of all
duties of the Center for Medicare Prescription Drugs and
shall have authority and control over all personnel and
activities thereof.
(d) Personnel.--The Director of the Center for Medicare
Prescription Drugs may appoint and terminate such personnel
as may be necessary to enable the Center for Medicare
Prescription Drugs to perform its duties.

SEC. 4. EXCLUSION OF PART D COSTS FROM DETERMINATION OF PART
B MONTHLY PREMIUM.

Section 1839(g) of the Social Security Act (42 U.S.C.
1395r(g)) is amended--
(1) by striking ``attributable to the application of
section'' and inserting ``attributable to--
``(1) the application of section'';
(2) by striking the period and inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(2) the Voluntary Medicare Prescription Drug Discount and
Security Program under part D.''.

SEC. 5. MEDIGAP REVISIONS.

Section 1882 of the Social Security Act (42 U.S.C. 1395ss)
is amended by adding at the end the following new subsection:
``(v) Modernization of Medicare Supplemental Policies.--
``(1) Promulgation of model regulation.--
``(A) NAIC model regulation.--If, within 9 months after the
date of enactment of the Medicare Rx Drug Discount and
Security Act of 2003, the National Association of Insurance
Commissioners (in this subsection referred to as the `NAIC')
changes the 1991 NAIC Model Regulation (described in
subsection (p)) to revise the benefit package classified as
`J' under the standards established by subsection (p)(2)
(including the benefit package classified as `J' with a high
deductible feature, as described in subsection (p)(11)) so
that--
``(i) the coverage for prescription drugs available under
such benefit package is replaced with coverage for
prescription drugs that complements but does not duplicate
the benefits for prescription drugs that beneficiaries are
otherwise entitled to under this title;
``(ii) a uniform format is used in the policy with respect
to such revised benefits; and
``(iii) such revised standards meet any additional
requirements imposed by the Medicare Rx Drug Discount and
Security Act of 2003;

subsection (g)(2)(A) shall be applied in each State,
effective for policies issued to policy holders on and after
January 1, 2005, as if the reference to the Model Regulation
adopted on June 6, 1979, were a reference to the 1991 NAIC
Model Regulation as changed under this subparagraph (such
changed regulation referred to in this section as the `2005
NAIC Model Regulation').
``(B) Regulation by the secretary.--If the NAIC does not
make the changes in the 1991 NAIC Model Regulation within the
9-month period specified in subparagraph (A), the Secretary
shall promulgate, not later than 9 months after the end of
such period, a regulation and subsection (g)(2)(A) shall be
applied in each State, effective for policies issued to
policy holders on and after January 1, 2005, as if the
reference to the Model Regulation adopted on June 6, 1979,
were a reference to the 1991 NAIC Model Regulation as changed
by the Secretary under this subparagraph (such changed
regulation referred to in this section as the `2005 Federal
Regulation').
``(C) Consultation with working group.--In promulgating
standards under this paragraph, the NAIC or Secretary shall
consult with a working group similar to the working group
described in subsection (p)(1)(D).
``(D) Modification of standards if medicare benefits
change.--If benefits under part D of this title are changed
and the Secretary determines, in consultation with the NAIC,
that changes in the 2005 NAIC Model Regulation or 2005
Federal Regulation are needed to reflect such changes, the
preceding provisions of this paragraph shall apply to the
modification of standards previously established in the same
manner as they applied to the original establishment of such
standards.
``(2) Construction of benefits in other medicare
supplemental policies.--Nothing in the benefit packages
classified as `A' through `I' under the standards established
by subsection (p)(2) (including the benefit package
classified as `F' with a high deductible feature, as
described in subsection (p)(11)) shall be construed as
providing coverage for benefits for which payment may be made
under part D.
``(3) Application of provisions and conforming
references.--
``(A) Application of provisions.--The provisions of
paragraphs (4) through (10) of subsection (p) shall apply
under this section, except that--
``(i) any reference to the model regulation applicable
under that subsection shall be deemed to be a reference to
the applicable 2005 NAIC Model Regulation or 2005 Federal
Regulation; and
``(ii) any reference to a date under such paragraphs of
subsection (p) shall be deemed to be a reference to the
appropriate date under this subsection.
``(B) Other references.--Any reference to a provision of
subsection (p) or a date applicable under such subsection
shall also be considered to be a reference to the appropriate
provision or date under this subsection.''.
______

By Mr. JEFFORDS (for himself, Mr. Lautenberg, Mr. Graham of Florida,
and Mr. Lieberman):
S. 779. A bill to amend the Federal Water Pollution Control Act to
improve protection of treatment works from terrorist and other harmful
and intentional acts, and for other purposes; to the Committee on
Environment and Public Works.
Mr. JEFFORDS. Mr. President, I rise today with Senators Lautenberg,
Graham of Florida, and Lieberman to introduce the Wastewater Treatment
Works Security and Safety Act. This legislation provides for the safety
and security of our Nation's wastewater treatment works by providing
needed funds to conduct vulnerability assessments and implement
security improvements. In addition, this bill will ensure long-term
safety and security by providing funds for researching innovative
technologies and enhancing proven vulnerability assessment tools
already in use.
Since the terrible events of September 11, we have taken several
comprehensive steps to protect our water supplies and infrastructure. I
have spoken on the many initiatives taking place on the Committee on
Environment and Public Works and at the Environmental Protection Agency
to protect our Nation's critical water infrastructure. I am pleased to
say that we have made some progress.
EPA worked with State and local governments to expeditiously provide
guidance on the protection of drinking water facilities from terrorist
attacks. Based on the recommendations of Presidential Decision
Directive 63, issued by President Clinton in 1998, the Environmental
Protection Agency and its industry partner, the Association of
Metropolitan Water Agencies, established a communications system, a
water infrastructure Information Sharing and Analysis Center, designed
to provide real-time threat assessment data to water utilities
throughout the Nation.
Last year, Senator Smith and I worked to include the authorization of
$160 million for vulnerability assessments at drinking water facilities
as part of the Public Health Security and Bioterrorism Preparedness and
Response Act of 2002. Despite our hard work during the conference, we
were unable to include a provision in that bill for wastewater
facilities due to jurisdictional issues in the House.
While these initial efforts are essential, our task is by no means
finished. We cannot forget the vital importance of protecting our
Nation's wastewater facilities. Everyday we take for granted the
hundreds of thousand of miles of

[[Page S4835]]

pipes buried underground and the thousands of wastewater treatment
works that keep our water clean and safe. Like all our Nation's
critical infrastructure, the disruption or destruction of these
structures could have a devastating impact on public safety, health,
and the economy.
The legislation I am introducing today will take us one step further
by authorizing support of ongoing efforts to develop and implement
vulnerability assessments and emergency response plans at wastewater
facilities.
Using existing tools such as the Sandia Laboratory's vulnerability
assessment tool or the Association of Metropolitan Sewerage
Association's Vulnerability Self-Assessment Tool, treatment works will
be able to securely identify critical areas of need. With the funds
provided by this bill, EPA will also ensure that treatment works remedy
areas of concerns. Using the results of the vulnerability assessment,
treatment works will develop or revise emergency response plans to
minimize damage if an attack were to occur.
This bill authorizes $180 million for fiscal years 2004 through 2008
for grants to conduct the vulnerability assessments and implement basic
security enhancements. The bill also recognizes the need to address
immediate and urgent security needs with a special $20 million
authorization over 2004 and 2005.
In my home State of Vermont, we have only three towns of over 25,000
people. The small water facilities serving these communities have been
particularly challenged to meet today's new homeland security
challenges. Many times, water managers operate the town's water
facilities as a part-time job or even as a free service. We must ensure
that they are afforded the same consideration under this act as the
medium and large facilities. This bill authorizes $15 million for
grants to help small communities conduct vulnerability assessments,
develop emergency response plans, and address potential threats to the
treatment works. It also instructs the Administrator of the EPA to
provide guidance to these communities on how to effectively use these
security tools.
To ensure the continued development of wastewater security
technologies, the Wastewater Treatment Works Security and Safety Act
authorizes $15 million for research for 2004 through 2008. It also
provides $500,000 to refine vulnerability self-assessment tools already
in existence.
I look forward to working with my colleagues on this legislation and
other efforts to enhance the security of our Nation's water
infrastructure in the weeks, months, and years to come. We truly have
something to protect--clean, safe, fresh water is worth our investment.
______

By Mr. McCAIN.
S. 784. A bill to revise the boundary of the Petrified Forest
National Park in the State of Arizona, and for other purposes; to the
Committee on Energy and Natural Resources.
Mr. McCAIN. Mr. President, I rise to introduce legislation to
authorize expansion of the Petrified Forest National Park in Arizona.
I'm pleased that Representative Rick Renzi will introduce companion
legislation in the House of Representatives.
The Petrified Forest National Park is a national treasure among the
Nation's parks, renowned for its large concentration of highly colored
petrified wood, fossilized remains, and spectacular landscapes.
However, it is much more than a colorful, scenic vista, for the
Petrified Forest has been referred to as ``one of the world's greatest
storehouses of knowledge about life on earth when the Age of the
Dinosaurs was just beginning.''
For anyone whom has ever visited this park, one is quick to recognize
the wealth of scenic, scientific, and historical values of this park.
Preserved deposits of petrified wood and related fossils are among the
most valuable representations of Triassic-period terrestrial ecosystems
in the world. These natural formations were deposited more than 220
million years ago. Scenic vistas, designated wilderness areas, and
other historically significant sites of pictographs and Native American
ruins are added dimensions to the park.
The Petrified Forest was originally designated as a National Monument
by former President Theodore Roosevelt in 1906 to protect the important
natural and cultural resources of the Park, and later re-designated as
a National Park in 1962. While several boundary adjustments were made
to the Park, a significant portion of unprotected resources remain in
outlying areas adjacent to the Park.
A proposal to expand the Park's boundaries was recommended in the
park's General Management Plan in 1992, in response to concerns about
the long-term protection needs of globally significant resources and
the Park's viewshed in nearby areas. For example, one of the most
concentrated deposits of petrified wood is found within the Chinle
encarpment, of which only thirty percent is included within the current
Park boundaries.
Increasing reports of theft and vandalism around the Park have
activated the Park, local communities, and other interested entities to
seek additional protections through a proposed boundary expansion. It
has been estimated that visitors to the Park steal about 12 tons of
petrified wood every year. Other reports of destruction to
archaeological sites and gravesites have also been documented. Based on
these continuing threats to resources intrinsic to the Park, the
National Parks Conservation Association listed the Petrified Forest
National Park on its list of Top Ten Most Endangered Parks in 2000.
Support for this proposed boundary expansion is extraordinary, from
the local community of Holbrook, scientific and research institutions,
state tourism agencies, and environmental groups, such as the National
Parks Conservation Association, NPCA. I ask unanimous consent that a
letter of support from the National Parks Conservation Association be
printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
National Parks

Conservation Association,

March 20, 2003.
Hon. John McCain,
U.S. Senate, Russell Senate Office Bldg.,
Washington, DC.
Dear Senator McCain: I wish to express the appreciation of
the National Parks Conservation Association (NPCA) for your
reintroduction of the Petrified Forest National Park
Expansion Act. Every day that passes without adequately
protecting the remarkable resources adjacent to this gem of
the National Park System places them and the park at greater
risk. NPCA strongly agrees with the National Park Service's
1992 findings that the park should be expanded. Now, with
your leadership and with private landowners within the
proposed expansion area anxious to sell their land, we
believe the time has come to pass this important legislation.
It is hard to imagine a better example of an outdoor
classroom than Petrified Forest National Park. This boundary
expansion will ensure long-term protection of globally
significant paleontological resources outside the park, which
are believed even to surpass those within the present park
boundary. Only 30 percent of the 22-mile long Chinle
escarpment, known to constitute the best record of Triassic
period terrestrial ecosystems found anywhere in the world, is
protected within the park. The opportunities for
schoolchildren in Arizona and elsewhere, for the scientific
community, and others to learn from the 225 million-year old
record entombed in these lands is truly incredible. The
lessons locked within Petrified Forest and the proposed
expansion lands can give us important perspectives about how
modern day challenges like global warming and biodiversity
relate to historical changes in the earth's climate and
environment, dating back to prehistoric times. And they can
excite the next generation of scientists the nation will need
to compete in the 21st century.
In addition to the Chinle, the expansion would protect
major ancestral puebloan archaeological sites dating as far
back as 7,000 years, and the incredible vista from the park's
Blue Mesa. It will also alleviate the threat of encroaching
incompatible development and will greatly enhance the
National Park Service's capability to protect the resources
from vandalism and illegal pothunting.
I have had the opportunity to discuss this expansion
proposal with Arizona's new governor, Janet Napolitano and
her staff and am very encouraged by their strong interest.
NPCA looks forward to working with you, your able staff, the
Arizona delegation, the new governor, and the park service to
build upon the progress we made in last year's negotiations
on the bill.
Expanding Petrified Forest National Park will be a gift the
American people will appreciate for generations to come. In
addition, I can think of no more fitting tribute to the
park's late superintendent, Michele Hellickson, than saving
the resource she fought to protect for so many years. Because

[[Page S4836]]

it provides such a compelling explanation about why this
expansion is so important, I am attaching an article by David
Gillette, the Colbert Curator of Paleontology at the Museum
of Northern Arizona, which was published in our magazine last
fall. Thank you for advancing this important proposal to
protect a truly remarkable resource for our nation and the
rest of the world.
Sincerely,
Craig D. Obey,
Vice President for Government Affairs.

The legislation I am introducing today is intended to serve as a
placeholder bill for further development of a boundary expansion
proposal. The legislation is identical to the version introduced in the
107th Congress. Several key issues remain that require resolution,
including the exact definition of the expanded boundary acreage as well
as the disposition and possible acquisition of private and State lands
within the proposed expansion area.
It's encouraging to note that the four major landowners within the
proposed boundary expansion area have expressed interest in the Park
expansion. Other public landowners, primarily the state of Arizona and
the Bureau of Land Management, have recognized the significance of the
paleontological resources on its lands adjacent to the Park. The
Arizona State Trust land Department closed nearby State trust lands to
both surface and subsurface applications. Additionally, the Bureau of
Land Management has identified its land-holdings within the proposed
expansion area for disposal and possible transfer to the Park.
Other issues involving additional private landholders and State trust
land must still be resolved. In particular, the State of Arizona has
specific requirements which must be addressed as the legislation moves
through the process, particularly with regard to compensation to the
state for any acquisitions of State trust lands by the Secretary of the
Interior, in keeping with the requirements of State law.
I fully intend to address these issues in consultation with affected
entities and resolve any additional questions within a reasonable time-
frame. A historic opportunity exists to alleviate major threats to
these nationally significant resources and preserve them for our
posterity.
On a personal note, I'd like to acknowledge the former Park
Superintendent of Petrified Forest National Park, Michele Hellickson,
who recently lost a battle with cancer a few months ago. She served as
Park Superintendent for nine years, from 1993 to 2002, and was one of
the most ardent supporters to protect the resources of this Park. Her
commitment to protect this incredible Park will long be remembered and
acknowledged.
I look forward to working with my colleagues on both sides of the
aisle to ensure swift consideration and enactment of this proposal.
Time is of the essence to ensure the long-term protection of these rare
and important resources for the enjoyment and educational value for
future generations.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:

S. 784

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 ``Petrified Forest National
Park Expansion Act of 2003''.

SEC. 2. FINDINGS AND PURPOSE.

(a) Findings.--Congress finds that--
(1) the Petrified Forest National Park was established--
(A) to preserve and interpret the globally significant
paleontological resources of the Park that are generally
regarded as the most important record of the Triassic period
in natural history; and
(B) to manage those resources to retain significant
cultural, natural, and scenic values;
(2) significant paleontological, archaeological, and scenic
resources directly related to the resource values of the Park
are located in land areas adjacent to the boundaries of the
Park;
(3) those resources not included within the boundaries of
the Park--
(A) are vulnerable to theft and desecration; and
(B) are disappearing at an alarming rate;
(4) the general management plan for the Park includes a
recommendation to expand the boundaries of the Park and
incorporate additional globally significant paleontological
deposits in areas adjacent to the Park--
(A) to further protect nationally significant
archaeological sites; and
(B) to protect the scenic integrity of the landscape and
viewshed of the Park; and
(5) a boundary adjustment at the Park will alleviate major
threats to those nationally significant resources.
(b) Purpose.--The purpose of this Act is to authorize the
Secretary of the Interior to acquire 1 or more parcels of
land--
(1) to expand the boundaries of the Park; and
(2) to protect the rare paleontological and archaeological
resources of the Park.

SEC. 3. DEFINITIONS.

In this Act:
(1) Map.--The term ``map'' means the map entitled
``Proposed Boundary Adjustments, Petrified Forest National
Park'', numbered ____, and dated ________.
(2) Park.--The term ``Park'' means the Petrified Forest
National Park in the State.
(3) Secretary.--The term ``Secretary'' means the Secretary
of the Interior.
(4) State.--The term ``State'' means the State of Arizona.

SEC. 4. BOUNDARY REVISION.

(a) In General.--The boundary of the Park is revised to
include approximately ______ acres, as generally depicted on
the map.
(b) Availability of Map.--The map shall be on file and
available for public inspection in the appropriate offices of
the National Park Service.

SEC. 5. ACQUISITION OF ADDITIONAL LAND.

(a) Private Land.--The Secretary may acquire from a willing
seller, by purchase, exchange, or by donation, any private
land or interests in private land within the revised boundary
of the Park.
(b) State Land.--
(1) In general.--The Secretary may, with the consent of the
State and in accordance with State law, acquire from the
State any State land or interests in State land within the
revised boundary of the Park by purchase or exchange.
(2) Plan.--Not later than 2 years after the date of
enactment of this Act, the Secretary shall, in coordination
with the State, develop a plan for acquisition of State land
or interests in State land identified for inclusion within
the revised boundary of the Park.

SEC. 6. ADMINISTRATION.

(a) In General.--Subject to applicable laws, all land and
interests in land acquired under this Act shall be
administered by the Secretary as part of the Park.
(b) Transfer of Jurisdiction.--The Secretary shall transfer
to the National Park Service administrative jurisdiction over
any land under the jurisdiction of the Secretary that--
(1) is depicted on the map as being within the boundaries
of the Park; and
(2) is not under the administrative jurisdiction of the
National Park Service on the date of enactment of this Act.
(c) Grazing.--
(1) In general.--The Secretary shall permit the
continuation of grazing on land transferred to the Secretary
under this Act, subject to applicable laws (including
regulations) and Executive orders.
(2) Termination of leases or permits.--Nothing in this
subsection prohibits the Secretary from accepting the
voluntary termination of a grazing permit or grazing lease
within the Park.
(d) Amendment to General Management Plan.--Not later than 3
years after the date of enactment of this Act, the Secretary
shall amend the general management plan for the Park to
address the use and management of any additional land
acquired under this Act.

SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated such sums as are
necessary to carry out this Act.
______

By Mr. BAUCUS (for himself, Mr. Grassley, Mr. Daschle, Mr.
Coleman, Mr. Harkin, Mr. Craig, Mr. Johnson, Mr. Burns, Mr.
Dorgan, Mr. Roberts, Mr. Dayton, Mr. Fitzgerald, Mrs. Lincoln,
Mr. Cochran, Mr. Hagel, Mr. Conrad, and Mr. Hatch):
S. 785. A bill to amend the Internal Revenue Code of 1986 to allow
the payment of dividends on the stock of cooperatives without reducing
patronage dividends; to the Committee on Finance.
Mr. BAUCUS. Mr. President, today I am introducing a very important
piece of legislation to modify the cooperative dividend allocation
rule. I would like to thank Senator Grassley and my other colleagues
that have signed on the bill for their support for correcting this
rule.
America's agriculture industry has not had it easy in recent years.
In Montana and other areas of the country, drought, low prices and the
economic downturn have hit our farms and ranches hard. Over the past
few years Congress has worked diligently to help our Nation's smaller
agriculture producers. However, there is more work to be done.
Senator Grassley and I recently introduced ``The Tax Empowerment and

[[Page S4837]]

Relief for Farmers and Fisherman Act'', TERFF, with the intention of
giving farmers the tools to help themselves. One provision within that
Act deals with the payment of dividends on cooperatives' stock. Today
we are introducing that provision on its own to emphasize the
importance of changing the dividend allocation rule.
Currently, the dividend allocation rule reduces patronage income when
a cooperative pays a dividend on capital stock from non-patronage
earnings. This reduces the amount cooperatives can pay back to their
farmer patrons and inhibits their ability to equity-finance operations.
Modifying this rule will make farmer cooperatives more competitive
and provide better access to capital. This piece of legislation will
help revitalize farmer cooperatives by providing more accurate tax
treatment for patronage and non-patronage income.
I look forward to working with my colleagues to enact the critical
piece of legislation.
I ask unanimous consent that the text of the legislation be printed
in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:

S. 785

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

SECTION 1. PAYMENT OF DIVIDENDS ON STOCK OF COOPERATIVES
WITHOUT REDUCING PATRONAGE DIVIDENDS.

(a) In General.--Subsection (a) of section 1388 of the
Internal Revenue Code of 1986 (relating to patronage dividend
defined) is amended by adding at the end the following new
sentence: ``For purposes of paragraph (3), net earnings shall
not be reduced by amounts paid during the year as dividends
on capital stock or other proprietary capital interests of
the organization to the extent that the articles of
incorporation or bylaws of such organization or other
contract with patrons provide that such dividends are in
addition to amounts otherwise payable to patrons which are
derived from business done with or for patrons during the
taxable year.''.
(b) Effective Date.--The amendment made by this section
shall apply to distributions in taxable years beginning after
the date of the enactment of this Act.

Mr. GRASSLEY. Mr. President, the Dividend Allocation Rule, DAR, is
the result of several old court cases and subsequent IRS interpretation
that applies only to cooperatives which are corporations. When a non
cooperative corporation pays a dividend to its shareholder the
corporation pays tax on the dividend issued and the shareholder pays a
tax on the dividend received, so they pay two levels of taxation. In
fact, under the President's dividend exclusion proposal as presented to
the U.S. Congress, the President of the United States makes a
compelling argument that being taxed twice is inherently unfair and it
would be good for the Nation's economy that only one level of tax
should be paid by the corporation and that the shareholder would
receive the dividend tax free.
Well--if two levels of taxation on corporations and their
shareholders is unfair and adverse to the creation of capital and the
economy--how would you like to try to operate as a fiscally sound
business entity if you had to figure out every day how you were going
to generate enough cash flow to pay THREE levels of taxation.
Current law requires corporate cooperatives to treat income from
their member-owners, patrons, separate from income of their non-members
money. Contributions and earnings used by the cooperative to operate is
typically called retained patronage. The member, unlike a shareholder,
has to pay income tax on that amount even if the Cooperative retains
the money for operation expenses. Then, because of the IRS' rules, when
the Cooperative returns money to its non-members it loses its corporate
deduction which in turn reduces the return of earnings that the patron
has already paid taxes on--the result is a triple layer of tax. This
rule is inherently unfair to our corporate cooperatives.
Now is the time to finally correct this injustice. The Congress
passed this bill in 106th Congress, but it was subsequently vetoed by
the President. It was a part of a bill I sponsored the ``Tax
Empowerment and Relief for Farmers and Fishermen, TERFF, Act'' in the
107th, and now it is time for the Senate to pass it again in the 108th.
As Chairman of the Finance Committee, I am proud to join with my
Ranking Member Max Baucus to introduce the bill to repeal the Dividend
Allocation Rule. We have been joined by many of our farm States'
Senators in a truly bipartisan effort to correct this financial
injustice.
The time to act is now and this bi-partisan legislation will
eliminate the adverse tax problem and will help rejuvenate over 100 of
our farmer cooperative networks in Iowa and nearly 3000 of our
cooperatives across the America.
______

By Mr. BINGAMAN (for himself, Mr. Rockefeller, and Mr. Breaux):
S. 786. A bill to amend the temporary assistance to needy families
program under part A of title IV of the Social Security Act to provide
grants for transitional jobs programs, and for other purposes; to the
Committee on Finance.
Mr. BINGAMAN. Mr. President, I rise today to introduce the Business
Links Act, on behalf of myself, Senator Rockefeller and Senator Breaux.
The Business Links Act is a companion bill to the Education Works
Act, which I introduced a short time ago. Both of these bills address
the need to support State efforts to use welfare to work strategies
that combine work with a flexible mix of education, training and other
supports. The Business Links Act, more specifically, provides resources
to States seeking to implement one of the most effective of these types
of programs: transitional jobs programs. These programs provide
subsidized, temporary, wage-paying jobs for 20 to 35 hours a week,
along with access to job readiness, basic education, vocational skills,
and other barrier-removal services based on individualized plans. The
Business Links Act would provide states with funding to implement these
transitional jobs programs and other training and support programs such
as Business Links.
Existing transitional jobs programs are achieving great outcomes.
Research has shown that 81 percent to 94 percent of those who completed
transitional jobs programs went on to unsubsidized jobs with wages, and
that most of these individuals moved into full-time employment.
Transitional jobs can be particularly effective for the hardest to
serve welfare recipients. For people who face barriers, or who lack the
skills or experience to compete successfully in the labor market, paid
work in a supportive environment, together with access to needed
services provides a real chance to move into stable, permanent
employment. Transitional jobs not only help individuals, but
communities as well. In providing work opportunities for hard-to-employ
individuals, these programs reduce pressure on local emergency systems
and decrease government expenditures on health care, food stamps, and
cash assistance.
Our legislation also supports ``business link'' programs that provide
individuals with fewer barriers and those who have historically found
only very low wage employment with intensive training and skill
development activities designed to lead to long-term, higher paid
employment. These programs are based on partnerships with the private
sector. In my home State, just such a program is producing great
results the Teamworks program. During a 12-week course, participants
are provided with training in life and employment skills, necessary
supports such as childcare and transportation, assistance in their job
search efforts and ongoing support for 18 months after job placement.
Impressively, the average wage of those completing the program is $1.50
per hour higher than other programs and job retention rates are 20
percent higher.
Additional Federal support for transitional job and business link
programs is sorely needed. The Welfare-to-work funds that have
previously been used to support these programs are nearly exhausted. In
addition, in a period of rising caseloads and state budget crises such
as we are now facing, funding transitional jobs solely with existing
TANF funds will be very difficult.
I urge my colleagues to join me in supporting the Business Links Act,
which will provide States with the tools they need to implement
programs that work. I ask unanimous consent that the text of the bill
be printed in the Record.

[[Page S4838]]

There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:

S. 786

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 ``Business Links Act of
2003''.

SEC. 2. TRANSITIONAL JOBS GRANTS.

(a) In General.--Section 403(a)(4) of the Social Security
Act (42 U.S.C. 603(a)(4)) is amended to read as follows:
``(4) Innovative business link partnership grants.--
``(A) In general.--The Secretary and the Secretary of Labor
(in this paragraph referred to as the ``Secretaries'')
jointly shall award grants in accordance with this paragraph
for projects proposed by eligible applicants based on the
following:
``(i) The potential effectiveness of the proposed project
in carrying out the activities described in subparagraph (E).
``(ii) Evidence of the ability of the eligible applicant to
leverage private, State, and local resources.
``(iii) Evidence of the ability of the eligible applicant
to coordinate with other organizations at the State and local
level.
``(B) Definition of eligible applicant.--
``(i) In general.--In this paragraph, the term `eligible
applicant' means a nonprofit organization, a local workforce
investment board established under section 117 of the
Workforce Investment Act of 1998 (29 U.S.C. 2832), a State, a
political subdivision of a State, or an Indian tribe.
``(ii) Grants to promote business linkages.--

``(I) Additional eligible applicant.--Only for purposes of
grants to carry out the activities described in subparagraph
(E)(i), the term `eligible applicant' includes an employer.
``(II) Additional requirement.--In order to qualify as an
eligible applicant for purposes of subparagraph (E)(i), the
applicant must provide evidence that the application has been
developed by and will be implemented by a local or regional
consortium that includes, at minimum, employers or employer
associations, and education and training providers, in
consultation with local labor organizations and social
service providers that work with low-income families or
individuals with disabilities.

``(C) Requirements.--
``(i) In general.--In awarding grants under this paragraph,
the Secretaries shall--

``(I) consider the needs of rural areas and cities with
large concentrations of residents with an income that is less
than 150 percent of the poverty line; and
``(II) ensure that--

``(aa) all of the funds made available under this paragraph
(other than funds reserved for use by the Secretaries under
subparagraph (J)) shall be used for activities described in
subparagraph (E);
``(bb) not less than 40 percent of the funds made available
under this paragraph (other than funds so reserved) shall be
used for activities described in subparagraph (E)(i); and
``(cc) not less than 40 percent of the funds made available
under this paragraph (other than funds so reserved) shall be
used for the activities described in subparagraph (E)(ii).
``(ii) Continuation of availability.--If any portion of the
funds required to be used for activities referred to in item
(bb) or (cc) of clause (i)(II) are not awarded in a fiscal
year, such portion shall continue to be available in the
subsequent fiscal year for the same activity, in addition to
other amounts that may be available for such activities for
that subsequent fiscal year.
``(D) Determination of grant amount.--
``(i) In general.--Subject to clause (ii), in determining
the amount of a grant to be awarded under this paragraph for
a project proposed by an eligible applicant, the Secretaries
shall provide the eligible applicant with an amount
sufficient to ensure that the project has a reasonable
opportunity to be successful, taking into account--

``(I) the number and characteristics of the individuals to
be served by the project;
``(II) the level of unemployment in the area to be served
by the project;
``(III) the job opportunities and job growth in such area;
``(IV) the poverty rate for such area; and
``(V) such other factors as the Secretary deems appropriate
in such area.

``(ii) Maximum award for grants to promote business
linkages or provide transitional jobs programs.--

``(I) In general.--In the case of a grant to carry out
activities described in clause (i) or (ii) of subparagraph
(E), an eligible applicant awarded a grant under this
paragraph may not receive more than $10,000,000 per fiscal
year under the grant.
``(II) Rule of construction.--Nothing in subclause (I)
shall be construed as precluding an otherwise eligible
applicant from receiving separate grants to carry out
activities described in clause (i) or (ii) of subparagraph
(E).

``(iii) Grant period.--The period in which a grant awarded
under this paragraph may be used shall be specified for a
period of not less than 36 months and not more than 60
months.
``(E) Allowable activities.--An eligible applicant awarded
a grant under this paragraph shall use funds provided under
the grant to do the following:
``(i) Promote business linkages.--

``(I) In general.--To promote business linkages in which
funds shall be used to fund new or expanded programs that are
designed to--

``(aa) substantially increase the wages of eligible
individuals (as defined in subparagraph (F)), whether
employed or unemployed, who have limited English proficiency
or other barriers to employment by creating or upgrading job
and related skills in partnership with employers, especially
by providing supports and services at or near work sites; and
``(bb) identify and strengthen career pathways by expanding
and linking work and training opportunities for such
individuals in collaboration with employers.

``(II) Consideration of in-kind, in-cash resources.--In
determining which programs to fund under this clause, an
eligible applicant awarded a grant under this paragraph shall
consider the ability of a consortium to provide funds in-kind
or in-cash (including employer-provided, paid release time)
to help support the programs for which funding is sought.
``(III) Priority.--In determining which programs to fund
under this clause, an eligible applicant awarded a grant
under this paragraph shall give priority to programs that
include education or training for which participants receive
credit toward a recognized credential, such as an
occupational certificate or license.
``(IV) Use of funds.--

``(aa) In general.--Funds provided to a program under this
clause may be used for a comprehensive set of employment and
training benefits and services, including job development,
job matching, workplace supports and accommodations,
curricula development, wage subsidies, retention services,
and such other benefits or services as the program deems
necessary to achieve the overall objectives of this clause.
``(bb) Provision of services.--So long as a program is
principally designed to assist eligible individuals, (as
defined in subparagraph (F)), funds may be provided to a
program under this clause that also serves low-earning
employees of 1 or more employers even if such individuals are
not within the definition of eligible individual (as so
defined).
``(ii) Provide for transitional jobs programs.--

``(I) In general.--To provide for wage-paying transitional
jobs programs which combine time-limited employment in the
public or nonprofit private sector that is subsidized with
public funds with skill development and activities to remove
barriers to employment, pursuant to an individualized plan
(or, in the case of an eligible individual described in
subparagraph (F)(i), an individual responsibility plan
developed for an individual under section 408(b)). Such
programs also shall provide job development and placement
assistance to individual participants to help them move from
subsidized employment in transitional jobs into unsubsidized
employment, as well as retention services after the
transition to unsubsidized employment.
``(II) Eligible participants.--The Secretary shall ensure
that individuals who participate in transitional jobs
programs funded under a grant made under this paragraph shall
be individuals who have been unemployed because of limited
skills, experience, or other barriers to employment, and who
are eligible individuals (as defined in subparagraph (F)),
provided that so long as a program is designed to, and
principally serves, eligible individuals (as so defined), a
limited number of individuals who are unemployed because of
limited skills, experience, or other barriers to employment,
and who have an income below 100 percent of the Federal
poverty line but who do not satisfy the definition of
eligible individual (as so defined) may be served in the
program to the extent the Secretaries determine that the
inclusion of such individuals in the program is appropriate.
``(III) Use of funds.--Funds provided to a program under
this clause may only be used in accordance with the
following:

``(aa) To create subsidized transitional jobs in which work
shall be performed directly for the program operator or at
other public and non profit organizations (in this subclause
referred to as `worksite employers') in the community, and in
which 100 percent of the wages shall be subsidized, except as
described in item (ff) regarding placements in the private,
for profit sector.
``(bb) Participants shall be paid at the rate paid to
unsubsidized employees of the worksite employer who perform
comparable work at the worksite where the individual is
placed. If no other employees perform the same or comparable
work then wages shall be set, at a minimum, at 50 percent of
the Lower Living Standard Income Level (commonly referred to
as the `LLSIL'), as determined under section 101(24) of the
Workforce Investment Act of 1998 (29 U.S.C. 2801(24)), for a
family of 3 based on 35 hours per week.
``(cc) Transitional jobs shall be limited to not less than
6 months and not more than 24 months, however, nothing shall
preclude a participant from moving into unsubsidized
employment at a point prior to the maximum duration of the
transitional job placement. Participants shall be paid wages
based on a workweek of not less than 30 hours per week or
more than 40 hours per week, except that a parent of a child
under the age of 6, a child who is disabled, or a child with
other special needs, or an individual who for other reasons
cannot successfully participate for 30

[[Page S4839]]

to 40 hours per week, may be allowed to participate for more
limited hours, but not less than 20 hours per week. In any
work week, 50 percent to 80 percent of hours shall be spent
in the transitional job and 20 percent to 50 percent of hours
shall be spent in education or training, or other services
designed to reduce or eliminate any barriers.
``(dd) Program operators shall provide case management
services and ensure access to appropriate education,
training, and other services, including job accommodation,
work supports, and supported employment, as appropriate and
consistent with an individual plan that is based on the
individual's strengths, resources, priorities, concerns,
abilities, capabilities, career interests, and informed
choice and that is developed with each participant. The goal
of each participant's plan shall focus on preparation for
unsubsidized jobs in demand in the local economy which offer
the potential for advancement and growth. Services shall also
include job placement assistance and retention services,
which may include coaching and work place supports, for 12
months after entry into unsubsidized placement. Participants
shall also receive support services such as subsidized child
care and transportation, on the same basis as those services
are made available to recipients of assistance under the
State program funded under this part who are engaged in work-
related activities.
``(ee) Providers shall work with individual recipients to
determine eligibility for other employment-related supports
which may include (but are not limited to) supported
employment, other vocational rehabilitation services, and
programs or services available under the Workforce Investment
Act of 1998 (29 U.S.C. 2801 et seq.), or the ticket to work
and self-sufficiency program established under section 1148,
and, to the extent possible, shall provide transitional
employment in collaboration with entities providing, or
arranging for the provision of, such other supports.
``(ff) Not more than 20 percent of the placements for a
grantee shall be with a private for-profit company, except
that such 20 percent limit may be waived by the Secretary for
programs in rural areas when the grantee can demonstrate
insufficient public and non-profit worksites. When a
placement is made at a private for-profit company, the
company shall pay 50 percent of program costs (including
wages) for each participant, and the company shall agree, in
writing, to hire each participant into an unsubsidized
position at the completion of the agreed upon subsidized
placement, or sooner, provided that the participant's job
performance has been satisfactory. Not more than 5 percent of
the workforce of a private for-profit company may be composed
of transitional jobs participants.

``(IV) Definition of transitional jobs program.--In this
clause, the term `transitional jobs program' means a program
that is intended to serve current and former recipients of
assistance under a State or tribal program funded under this
part and other low-income individuals who have been unable to
secure employment through job search or other employment-
related services because of limited skills, experience, or
other barriers to employment.

``(iii) Capitalization.--To develop capitalization
procedures for the delivery of self-sustainable social
services.
``(iv) Administrative expenditures.--Not more than 5
percent of the funds awarded to an eligible applicant under
this paragraph may be used for administrative expenditures
incurred in carrying out the activities described in clause
(i), (ii), or (iii) or for expenditures related to carrying
out the assessments and reports required under subparagraph
(H).
``(F) Definition of eligible individual.--In this
paragraph, the term `eligible individual' means--
``(i) an individual who is a parent who is a recipient of
assistance under a State or tribal program funded under this
part;
``(ii) an individual who is a parent who has ceased to
receive assistance under such a State or tribal program;
``(iii) an individual who is at risk of receiving
assistance under a State or tribal program funded under this
part;
``(iv) an individual with a disability; or
``(v) a noncustodial parent who is unemployed, or is having
difficulty in paying child support obligations, including
such a parent who is a former criminal offender.
``(G) Application.--Each eligible applicant desiring a
grant under this paragraph shall submit an application to the
Secretaries at such time, in such manner, and accompanied by
such information as the Secretaries may require.
``(H) Assessments and reports by grantees.--
``(i) In general.--An eligible applicant that receives a
grant under this paragraph shall assess and report on the
outcomes of programs funded under the grant, including the
identity of each program operator, demographic information
about each participant, including education level, literacy
level, prior work experience and identified barriers to
employment, the nature of education, training, or other
services received by the participant, the reason for the
participant's leaving the program, and outcomes related to
the placement of the participant in an unsubsidized job,
including 1-year employment retention, wage at placement,
benefits, and earnings progression, as specified by the
Secretaries.
``(ii) Assistance.--The Secretaries shall--

``(I) assist grantees in conducting the assessment required
under clause (i) by making available where practicable low-
cost means of tracking the labor market outcomes of
participants; and
``(II) encourage States to provide such assistance.

``(I) Application to requirements of the state program.--
``(i) Work participation requirements.--With respect to any
month in which a recipient of assistance under a State or
tribal program funded under this part who satisfactorily
participates in a business linkage or transitional jobs
program described in subparagraph (E) that is paid for with
funds made available under a grant made under this paragraph,
such participation shall be considered to satisfy the work
participation requirements of section 407 and be included for
purposes of determining monthly participation rates under
subsection (b)(1)(B)(i) of that section.
``(ii) Participation not considered assistance.--A benefit
or service provided with funds made available under a grant
made under this paragraph shall not be considered assistance
for any purpose under a State or tribal program funded under
this part.
``(J) Assessments by the secretaries.--
``(i) Reservation of funds.--Of the amount appropriated
under subparagraph (L) for each of fiscal years 2004 and
2005, $3,000,000 of such amount for each such fiscal year is
reserved for use by the Secretaries to prepare an interim and
final report summarizing and synthesizing outcomes and
lessons learned from the programs funded through grants
awarded under this paragraph.
``(ii) Interim and final assessments.--With respect to the
reports prepared under clause (i), the Secretaries shall
submit--

``(I) the interim report not later than 4 years after the
date of enactment of the Business Links Act of 2003; and
``(II) the final report not later than 6 years after such
date of enactment.

``(K) Evaluations.--
``(i) Reservation of funds.--Of the amount appropriated
under subparagraph (L) for a fiscal year, an amount equal to
1.5 percent of such amount for each such fiscal year shall be
reserved for use by the Secretaries to conduct evaluations in
accordance with the requirements of clause (ii).
``(ii) Requirements.--The Secretaries--

``(I) shall develop a plan to evaluate the extent to which
programs funded under grants made under this paragraph have
been effective in promoting sustained, unsubsidized
employment for each group of eligible participants, and in
improving the skills and wages of participants in comparison
to the participants' skills and wages prior to participation
in the programs;
``(II) may evaluate the use of such a grant by a grantee,
as the Secretaries deem appropriate, in accordance with an
agreement entered into with the grantee after good-faith
negotiations; and
``(III) shall include, as appropriate, the following
outcome measures in the evaluation plan developed under
subclause (I):

``(aa) Placements in unsubsidized employment.
``(bb) Retention in unsubsidized employment 6 months and 12
months after initial placement.
``(cc) Earnings of individuals at the time of placement in
unsubsidized employment.
``(dd) Earnings of individuals 12 months after placement in
unsubsidized employment.
``(ee) The extent to which unsubsidized job placements
include access to affordable employer-sponsored health
insurance and paid leave benefits.
``(ff) Comparison of pre- and post-program wage rates of
participants.
``(gg) Comparison of pre- and post-program skill levels of
participants.
``(hh) Wage growth and employment retention in relation to
occupations and industries at initial placement in
unsubsidized employment and over the first 12 months after
initial placement.
``(ii) Recipient of cash assistance under the State program
funded under this part.
``(jj) Average expenditures per participant.
``(iii) Reports to congress.--The Secretaries shall submit
to Congress the following reports on the evaluations of
programs funded under grants made under this paragraph:

``(I) Interim report.--An interim report not later than 4
years after the date of enactment of the Business Links Act
of 2003.
``(II) Final report.--A final report not later than 6 years
after such date of enactment.

``(L) Appropriation.--
``(i) In general.--Out of any money in the Treasury of the
United States not otherwise appropriated, there is
appropriated for grants under this section, $200,000,000 for
each of fiscal years 2004 through 2008.
``(ii) Availability.--Amounts appropriated under clause (i)
for a fiscal year shall remain available for obligation for 5
fiscal years after the fiscal year in which the amount is
appropriated.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on October 1, 2003.
______

By Mr. LEAHY (for himself and Mr. Kerry):
S. 787. A bill to provide for the fair treatment of the Federal
judiciary relating to compensation and benefits, and to instill greater
public confidence in the Federal courts; to the Committee on the
Judiciary.

[[Page S4840]]

Mr. LEAHY. Mr. President, Senator Kerry and I are pleased to
introduce the ``Fair and Independent Judiciary Act of 2003.'' This
legislation arises from our belief that we must remain steadfast in our
commitment to preserving the vitality of our third branch of
government. Ensuring a fair and independent judiciary is critical to
preserving the system of checks and balances established in our
Constitution. The Fair and Independent Judiciary Act includes measures
to respond to the shortfall in real judicial compensation, to repeal
the link of judicial pay to congressional pay, to improve survivorship
benefits, and to instill greater public confidence in our courts.
The National Commission on Public Service, a blue-ribbon panel of
experts headed by Paul Volcker, recently concluded that Congress'
budgetary treatment of this co-equal branch threatens its ability to
perform its essential mission. This legislation addresses a problem
that the Chief Justice has repeatedly brought to our attention--the
decline in real judicial salaries.
As a member of both the Senate Judiciary Committee and the
Appropriations Subcommittee on Commerce, Justice, State and the
Judiciary, I have worked hard to help preserve a fair and independent
judiciary. I was very disappointed that the Continuing Resolutions
approved by Congress failed to give the Federal judiciary a cost-of-
living adjustment, COLA, for fiscal year 2003.
Earlier this year, Senator Hatch and I were joined by Senator DeWine
and Senator Specter to cosponsor legislation in the Senate to provide
the Federal judiciary with a COLA for the present fiscal year. House
Judiciary Chairman Sensenbrenner was joined by that Committee's Ranking
Democratic Member, Congressman Conyers, and others to introduce
identical legislation. Congress eventually passed a measure to give the
Judiciary their cost of living adjustment for fiscal year 2003 but this
effort failed to compensate the judiciary for many other previously
skipped COLAs.
The Fair and Independent Judiciary Act would correct the earlier
failures to provide COLAs and prevent this situation from happening
again.
It is important to put our budgetary treatment of this co-equal
branch in historical context. In 1975, Congress enacted the Executive
Salary Cost-of-Living Adjustment Act, intended to give judges, Members
of Congress and other high-ranking Executive Branch officials automatic
COLAs as accorded other Federal employees unless rejected by Congress.
In 1981, Congress enacted Section 140 of Public Law 97-92, mandating
specific congressional action to give COLAs to judges.
Five times in the last decade Congress failed to provide the
Judiciary with a COLA. We believe that this treatment was unfair to the
judiciary and that we should restore their salaries to what they would
be had the COLAs been granted. In order to have their salaries reflect
the current cost of living we should unlink the salaries of Members of
Congress and Members of the Judiciary by repealing Section 140.
In their thorough report, the Volcker Commission recommended that
Congress unlink judicial salaries from those of Members of Congress.
The Commission explained that due to ``the reluctance of members of
Congress to risk the disapproval of their constituents . . . Congress
has regularly permitted salaries to fall substantially behind cost-of-
living increases.'' Urgent Business for America: Revitalizing the
Federal Government for the 21st Century, January 2003, Recommendation
10. Therefore, the Commission found that ``executive and judicial
salaries must be determined by procedures that tie them to the needs of
the government, not the career-related political exigencies of members
of Congress.''
The Fair and Independent Judiciary Act would restore the skipped cost
of living adjustments that occurred in 1995, 1996, 1997, 1999 and 2002
so that the salaries of our judges and justices are not outpaced by
inflation.
Chief Justice Rehnquist has called judicial pay ``the most pressing
issue'' facing the courts.
We look forward to Senate consideration of the Fair and Independent
Judiciary Act to restore previously skipped cost of living adjustments
for the Justices and judges of the United States. We hope we can all
work together to preserve the vitality of our third branch of
government and to instill even greater confidence in our federal
courts.
I ask unanimous consent that the January 6, 2003 editorial from the
Washington Post, and the text of the bill be printed in the Record.
There being no objection, the bill and additional material was
ordered to be printed in the Record, as follows:

Mr. Rehnquist's Pleas

Chief Justice William H. Rehnquist made two pleas in his
year-end report. Neither is much of a surprise, because on
both judicial salaries and the process by which judges get
nominated and confirmed Mr. Rehnquist has spoken before. Yet
familiarity should not obscure the importance of the
subjects. The chief justice is correct, and the failure year
after year of the political branches to remedy the problems
of which he complains is harmful.
Mr. Rehnquist once again stressed that the need to increase
judicial salaries is ``the most pressing issue'' facing the
courts. There is something demeaning about the chief justice
of the United States having to beg for the same cost-of-
living adjustments for judges that other federal employees
get as a matter of course. Congress's frequent failure in
recent years to increase judicial compensation contravenes
the promise it made in 1989, when it banned judges from
making outside income and promised regular raises in
exchange. Between 1969 and 2000, according to one study, real
salaries for lower-court judges declined by 25 percent. And
while judges got a raise last year, this year's cost-of-
living increase is, Mr. Rehnquist notes, very much in doubt.
The problem is that Congress has irrationally linked
judicial pay to the salaries of members of Congress, who face
a political problem whenever they seek to jack up their own
paychecks. The judges end up hostage to congressional
cowardice. This disparity between their salaries and other
lawyer compensation is enormous and growing. This encourages
judges to leave the bench, and provides a substantial
disincentive for first-rate people to become federal judges
in the first place.
Mr. Rehnquist also gave a timely reminder that the judicial
nominations process needs work. The chief justice is one of
the few people who has advocated for a reasonable process
irrespective of which party controls the presidency or the
Senate. So Mr. Rehnquist speaks with unusual moral authority
on this subject. And while he notes approvingly the 100
judges the 107th Congress confirmed, he warns that the
problem has not gone away. Having unified government may
temporarily ease the vacancy problem, he writes, but `there
will come a time when [unified government] is not the case,
and the judiciary will again suffer the delays of a drawn-out
confirmation process.'' Mr. Rehnquist rightly urged that the
political branches use this respite to ``fix the underlying
problems that have bogged down the . . . process for so many
years.'' On both pay and nominations, one can only wonder how
many more years the chief justice will have to repeat himself
before reason prevails.

S. 787

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 and Independent Federal
Judiciary Act of 2003''.

SEC. 2. SALARY ADJUSTMENTS.

(a) Restoration of Statutory Cost-of-Living Adjustments.--
The annual salaries for justices and judges are the
following:
(1) Chief Justice of the Supreme Court, $211,300.
(2) Associate Justices of the Supreme Court, $202,100.
(3) Judges, Court of Appeals, $174,600.
(4) Judges, Court of Military Appeals, $174,600.
(5) Judges, District Court, $164,700.
(6) Judges, Court of Federal Claims, $164,700.
(7) Judges, Court of International Trade, $164,700.
(8) Judges, Tax Court, $164,700.
(9) Judges, Bankruptcy, $151,524.
(b) Effective Date.--This section shall take effect on the
first day of the first applicable pay period beginning on or
after the date of enactment of this Act.

SEC. 3. REPEAL OF ANNUAL CONGRESSIONAL AUTHORIZATION FOR COST
OF LIVING ADJUSTMENT.

Section 140 of Public Law 97-92 (28 U.S.C. 461 note) is
repealed.

SEC. 4. SURVIVOR BENEFITS UNDER JUDICIAL SYSTEM AND OTHER
SYSTEMS.

(a) Creditable Years of Service.--Section 376 of title 28,
United States Code, is amended--
(1) in subsection (k)(3), by striking the colon through
``this section''; and
(2) in subsection (r), by striking the colon through
``other annuity''.
(b) Notification Period for Survivor Annuity Coverage.--
(1) In general.--Section 376 (a)(1) of title 28, United
States Code, is amended in the matter following subparagraph
(G) by striking ``six months'' and inserting ``1 year''.
(2) Effective date.--This subsection shall take effect on
the date of enactment of this Act and apply only to written
notifications

[[Page S4841]]

received by the Director of the Administrative Office of the
United States Courts after the dates described under clause
(i) or (ii) in the matter following subparagraph (G) of
section 376 (a)(1) of title 28, United States Code.

SEC. 5. CITIZENS' COMMISSION ON PUBLIC SERVICE AND
COMPENSATION.

(a) Appointments.--
(1) In general.--Not later than 60 days after the date of
enactment of this Act, the President shall appoint members to
the Citizens' Commission on Public Service and Compensation
under section 225 of the Federal Salary Act of 1967 (2 U.S.C.
351 et seq.).
(2) Membership.--Section 225(b) of the Federal Salary Act
of 1967 (2 U.S.C. 352) is amended--
(A) by striking paragraph (1) and inserting the following:
``(1) The Commission shall be composed of 11 members, who
shall be appointed from private life by the President. No
more than 6 members of the Commission may be affiliated with
the same political party.'';
(B) by striking paragraph (4); and
(C) by redesignating paragraphs (5) through (8) as
paragraphs (4) through (7), respectively.
(3) Quadrennial application.--Section 225(b)(8)(B) of the
Federal Salary Act of 1967 (2 U.S.C. 352(8)(B)), is amended
in the first sentence by striking ``1993'' each place that
term appears and inserting ``2006'' in each such place.
(b) Report.--The Citizens' Commission on Public Service and
Compensation shall prepare a report in accordance with
section 225 of the Federal Salary Act of 1967 (2 U.S.C. 351
et seq.) with respect to fiscal year 2003 and every fourth
fiscal year thereafter.

SEC. 6. JUDICIAL EDUCATION FUND.

(a) Establishment.--Chapter 42 of title 28, United States
Code, is amended by adding at the end the following:

``Sec. 630. Judicial Education Fund

``(a) In this section, the term--
``(1) `institution of higher education' has the meaning
given under section 101(a) of the Higher Education Act of
1965 (20 U.S.C. 1001(a));
``(2) `private judicial seminar'--
``(A) means a seminar, symposia, panel discussion, course,
or a similar event that provides continuing legal education
to judges; and
``(B) does not include--
``(i) seminars that last 1 day or less and are conducted
by, and on the campus of, an institute of higher education;
``(ii) seminars that last 1 day or less and are conducted
by national bar associations or State or local bar
associations for the benefit of the bar association
membership; or
``(iii) seminars of any length conducted by, and on the
campus of an institute of higher education or by national bar
associations or State or local bar associations, where a
judge is a presenter and at which judges constitute less than
25 percent of the participants;
``(3) `national bar association' means a national
organization that is open to general membership to all
members of the bar; and
``(4) `State or local bar association' means a State or
local organization that is open to general membership to all
members of the bar in the specified geographic region.
``(b) There is established within the United States
Treasury a fund to be known as the `Judicial Education Fund'
(in this section referred to as the `Fund').
``(c) Amounts in the Fund may be made available for the
payment of necessary expenses, including reasonable
expenditures for transportation, food, lodging, private
judicial seminar fees and materials, incurred by a judge or
justice in attending a private judicial seminar approved by
the Board of the Federal Judicial Center. Necessary expenses
shall not include expenditures for recreational activities or
entertainment other than that provided to all attendees as an
integral part of the private judicial seminar. Any payment
from the Fund shall be approved by the Board.
``(d) The Board may approve a private judicial seminar
after submission of information by the sponsor of that
private judicial seminar that includes--
``(1) the content of the private judicial seminar
(including a list of presenters, topics, and course
materials); and
``(2) the litigation activities of the sponsor and the
presenters at the private judicial seminar (including the
litigation activities of the employer of each presenter) on
the topic related to those addressed at the private judicial
seminar.
``(e) If the Board approves a private judicial seminar, the
Board shall make the information submitted under subsection
(d) relating to the private judicial seminar available to
judges and the public by posting the information on the
Internet.
``(f) The Judicial Conference shall promulgate guidelines
to ensure that the Board only approves private judicial
seminars that are conducted in a manner so as to maintain the
public's confidence in an unbiased and fair-minded judiciary.
``(g) There are authorized to be appropriated for deposit
in the Fund $2,000,000 for each of fiscal years 2003, 2004,
and 2005, to remain available until expended.''.
(b) Technical and Conforming Amendment.--The table of
sections for chapter 42 of title 28, United States Code, is
amended by adding at the end the following:

``630. Judicial Education Fund.''.

SEC. 7. PRIVATE JUDICIAL SEMINAR GIFTS PROHIBITED.

(a) Definitions.--In this section, the term--
(1) ``institution of higher education'' has the meaning
given under section 101(a) of the Higher Education Act of
1965 (20 U.S.C. 1001(a));
(2) ``private judicial seminar''--
(A) means a seminar, symposia, panel discussion, course, or
a similar event that provides continuing legal education to
judges; and
(B) does not include--
(i) seminars that last 1 day or less and are conducted by,
and on the campus of, an institute of higher education;
(ii) seminars that last 1 day or less and are conducted by
national bar associations or State or local bar associations
for the benefit of the bar association membership; or
(iii) seminars of any length conducted by, and on the
campus of an institute of higher education or by national bar
associations or State or local bar associations, where a
judge is a presenter and at which judges constitute less than
25 percent of the participants.
(3) ``national bar association'' means a national
organization that is open to general membership to all
members of the bar; and
(4) ``State or local bar association'' means a State or
local organization that is open to general membership to all
members of the bar in the specified geographic region.
(b) In General.--Not later than 240 days after the date of
enactment of this Act, the Judicial Conference of the United
States shall promulgate regulations to apply section 7353(a)
of title 5, United States Code, to prohibit the solicitation
or acceptance of anything of value in connection with a
private judicial seminar.
(c) Exception.--The prohibition under the regulations
promulgated under subsection (b) shall not apply if--
(1) the judge participates in a private judicial seminar as
a speaker, panel participant, or otherwise presents
information;
(2) Federal judges are not the primary audience at the
private judicial seminar; and
(3) the thing of value accepted is--
(A) reimbursement from the private judicial seminar sponsor
of reasonable transportation, food, or lodging expenses on
any day on which the judge speaks, participates, or presents
information, as applicable;
(B) attendance at the private judicial seminar on any day
on which the judge speaks, participates, or presents
information, as applicable; or
(C) anything excluded from the definition of a gift under
regulations of the Judicial Conference of the United States
under sections 7351 and 7353 of title 5, United States Code,
as in effect on the date of enactment of this Act.

SEC. 8. RECUSAL LISTS.

Section 455 of title 28, United States Code, is amended by
adding at the end the following:
``(g)(1) Each justice, judge, and magistrate of the United
States shall maintain a list of all financial interests that
would require disqualification under subsection (b)(4).
``(2) Each list maintained under paragraph (1) shall be
made available to the public at the office of the clerk for
the court at which a justice, judge, or magistrate is
assigned.''.

SEC. 9. AVOIDING IMPROPRIETY AND THE APPEARANCE OF
IMPROPRIETY IN ALL ACTIVITIES.

In accordance with the Code of Conduct for United States
Judges, a judge must avoid all impropriety and appearance of
impropriety. The prohibition against behaving with
impropriety applies to both the professional and personal
conduct of a judge. Therefore, a judge should not hold
membership in any organization, except for religious or
fraternal organizations, that practices discrimination on the
basis of race, gender, religion, or national origin.
______

By Mr. HOLLINGS (for himself, Mr. Brownback, Mr. Rockefeller, Mr.
Inouye, Ms. Cantwell, and Mr. Kerry):
S. 788. A bill to enable the United States to maintain its leadership
in aeronautics and aviation; to the Committee on Commerce, Science, and
Transportation.
Mr. HOLLINGS. Mr. President, I rise today to address a crucial issue
that is affecting our competitiveness in the world economy. Since that
first flight in 1903 when the Wright brothers took off on our great
journey, the United States has piloted the course of aerospace and
aviation technology development. Now that leading role is being
threatened. The European Union has embarked on an ambitious plan to
dominate the industry that historically we have led. Last year, for the
first time, Airbus surpassed Boeing, by grabbing 54 percent of the
market share in terms of aircraft units.
Air travel is critical to our competitiveness in the global economy.
The movement of passengers and goods throughout our nation feeds
American business and keeps us close to our families and friends. The
impact of civil aviation on the U.S. economy exceeds $900 billion a
year, which is 9 percent of

[[Page S4842]]

the Gross National Product. In terms of jobs, civil aviation employs 11
million Americans. We can not sit idle as this important industry is
threatened.
To compete we must have the most advanced and safest technology; yet
the Air Traffic Management System in the United States is still reliant
on ground-based technology that was developed over 30 years ago.
Congress, FAA, NASA and the aviation industry must work together to
update this system to accommodate future aviation demand and to take
advantage of satellite navigation and advances in aircraft avionics.
Historically upgrades to air traffic management have been slow and
often come in over budget. We must focus on creating the next
generation of air traffic management technology in a more efficient and
effective manner that will enhance safety and increase capacity.
Aerospace and aviation advancement are also dependent upon a well-
trained and skilled workforce. According to the Commission Report on
Aerospace, 26 percent of the science, engineering and manufacturing
workforce will be eligible to retire in the next five years. New
entrants to the aerospace industry are at a historical low as the
number of layoffs have increased. In order to maintain our dominance in
aerospace, we must continue to foster a qualified workforce.
Our international competitors have been persistent in providing
government support to aerospace research and aeronautical advancement.
The subsidies offered by our foreign competitors, hinder the U.S.
companies that often bear the majority of the burden for research and
development. In order to give our companies a competitive advantage and
to ensure that advances in aviation and aerospace technology continue,
Congress must invest ample resources in fundamental aeronautical
research. The President's FY 04 budget proposal cuts investment in FAA
and NASA research, engineering and development. This will only hasten
our descent in this industry. During this time of competing interests
for the Federal dollar we cannot be too quick to divest ourselves from
needed research that will renew our aviation business and maintain our
global dominance.

To turn an idea into a product, the process is often tedious and
long. NASA and FAA must promote technological advancement and enable
American industry to bring their products to market. Collaboration with
government and industry is critical to ensure that research efforts
lead to viable products that will enhance our aerospace and aviation
industry.
As we reflect on the last 100 years of advancement in the aviation
and aerospace fields we cannot help to be proud of our accomplishments.
But, we cannot afford to be content with those successes. We must look
higher, faster, and farther than we have before--that is the American
prerogative. And so with the help of my colleagues Senators Brownback,
Rockefeller, Inouye, Cantwell and Kerry, I have crafted legislation to
increase aeronautical research, nurture our industry's workforce, and
ensure a collaborative partnership between government and private
industry with the goal of ensuring the ``Second Century of Flight'' is
as exciting and awe inspiring as the first.
______

By Mr. Nelson of Florida (for himself and Mrs. Boxer):
S. 789. A bill to change the requirements for naturalization through
service in the Armed Forces of the United States; to the Committee on
the Judiciary.
Mr. NELSON, of Florida. Mr. President, I rise on behalf of myself and
Mrs. Boxer to introduce the Citizenship for Service Members Act of
2003. This legislation reduces the waiting period for service members
during peace time from 3 years to 2 years, waives all fees related to
naturalization, and allows for naturalization proceedings to occur
overseas.
Everyday now we see our young men and women fighting and dying in
Iraq and Afghanistan to protect freedom and democracy. One of the
strengths of our military has always been its diversity. From the birth
of our Nation, our military has attracted people from all walks of life
including people who have immigrated to the United States to pursue
freedom, prosperity, and security.
Young men and women join the military in the hopes of achieving a
better life while serving our country in the most difficult and
honorable way. These young people enjoy various benefits for
volunteering to protect American citizens such as assistance with
college tuition, a secure and rewarding career in the military, and for
some, the hope of gaining American citizenship.
Non-citizens fighting in our military side by side with American
citizens is a tradition that dates back to the Civil War, when recently
arrived Irish immigrants fought for the Union. After World Wars I and
II over 140,000 legal permanent resident participants gained
citizenship. Currently there are 3,400 legal permanent residents in the
Marines alone who have been deployed overseas. Further, Miami, FL and
Los Angeles, CA contribute the second and third highest number of legal
permanent residents to the military.
Under current law, in the absence of an Executive Order eliminating
the time of service requirement altogether, men and women may apply for
citizenship after completing three years of service. This legislation
would shorten that period to 2 years making it more likely that the
service member will gain citizenship prior to finishing his first
enlistment. Additionally, this legislation waives all fees related to
naturalization eliminating a possible financial barrier. Finally, this
bill allows for service members to complete the naturalization process
overseas eliminating the sometimes unnecessarily lengthy and expensive
trips back to the United States.
Citizenship is a momentous honor and the ultimate goal of nearly
every person who immigrates to the United States. Naturalization is
especially critical to the thousands of young men and women who are
placing their lives at risk every day to defend the citizens and ideals
of the United States. These men and women desire citizenship so that
they can become a recognized member of the country that they have
chosen to defend.
In addition, citizenship confers certain benefits upon servicemen and
women. For example, while a legal permanent resident may enlist in the
United States military, he or she is barred from becoming a
commissioned officer, obtaining positions that require security
clearances, becoming a part of any aircrews or rising to the level of
special operations.
We continue to see the great sacrifices these young men and women
make on a daily basis. There is no greater show of patriotism than to
join our armed forces and fight under the American flag. Over 30,000
men and women from countries ranging from Canada to Japan to Cuba have
volunteered to put their lives on the line to defend the United States.
We owe it to these brave men and women to help them obtain the
citizenship they have clearly earned.
I ask unanimous consent that the text of this legislation be printed
in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:

S. 789

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 ``Citizenship for
Servicemembers Act of 2003''.

SEC. 2. REQUIREMENTS FOR NATURALIZATION THROUGH SERVICE IN
THE ARMED FORCES OF THE UNITED STATES.

(a) Reduction of Period for Required Service.--Section
328(a) of the Immigration and Nationality Act (8 U.S.C.
1439(a)) is amended by striking ``three years'' and inserting
``2 years''.
(b) Prohibition on Imposition of Fees Relating to
Naturalization.--Title III of the Immigration and Nationality
Act (8 U.S.C. 301 et seq.) is amended--
(1) in section 328(b)--
(A) in paragraph (3)--
(i) by striking ``honorable. The'' and inserting
``honorable (the''; and
(ii) by striking ``discharge.'' and inserting ``discharge);
and''; and
(B) by adding at the end the following:
``(4) notwithstanding any other provision of law, no fee
shall be charged or collected from the applicant for filing a
petition for naturalization or for the issuance of a
certificate of naturalization upon citizenship being granted
to the applicant, and no clerk of any State court shall
charge or collect any fee for such services unless the laws
of the State require such charge to be made, in

[[Page S4843]]

which case nothing more than the portion of the fee required
to be paid to the State shall be charged or collected.''; and
(2) in section 329(b)--
(A) in paragraph (2), by striking ``and'' at the end;
(B) in paragraph (3), by striking the period at the end and
inserting ``; and''; and
(C) by adding at the end the following:
``(4) notwithstanding any other provision of law, no fee
shall be charged or collected from the applicant for filing a
petition for naturalization or for the issuance of a
certificate of naturalization upon citizenship being granted
to the applicant, and no clerk of any State court shall
charge or collect any fee for such services unless the laws
of the State require such charge to be made, in which case
nothing more than the portion of the fee required to be paid
to the State shall be charged or collected.''.
(c) Naturalization Proceedings Overseas for Members of the
Armed Forces.--Notwithstanding any other provision of law,
the Secretary of Homeland Security, the Secretary of State,
and the Secretary of Defense shall ensure that any
applications, interviews, filings, oaths, ceremonies, or
other proceedings under title III of the Immigration and
Nationality Act (8 U.S.C. 301 et seq.) relating to
naturalization of members of the Armed Forces are available
through United States embassies, consulates, and as
practicable, United States military installations overseas.
(d) Technical and Conforming Amendment.--Section 328(b)(3)
of the Immigration and Nationality Act (8 U.S.C. 1439(b)(3))
is amended by striking ``Attorney General'' and inserting
``Secretary of Homeland Security''.
______

By Mr. LUGAR:
S. 790. A bill to authorize appropriations for the Department of
State for fiscal years 2004 and 2005, to authorize appropriations under
the Arms Export Control Act and the Foreign Assistance Act of 1961 for
security assistance for fiscal years 2004 and 2005, and for other
purposes; to the Committee on Foreign Relations.
Mr. LUGAR. Mr. President, by request, I introduce for appropriate
reference a bill entitled the Foreign Relations Authorization Act,
Fiscal Years 2004 and 2005.
This proposed legislation has been requested by the Department of
State and I am introducing it in order that there may be a specific
bill to which Members of the Senate and the public may direct their
attention and comments.
I reserve my right to support or oppose this bill, as well as to make
any suggested amendments to it, when the matter is considered by the
Committee on Foreign Relations.
I ask unanimous consent that the bill be printed in the Record,
together with a section-by-section analysis of the bill and the letter
from the Assistant Secretary of State for Legislative Affairs dated
April 2, 2003.
There being no objection, the material was ordered to be printed in
the Record, as follows:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Foreign Relations
Authorization Act, Fiscal Years 2004 and 2005.''

SEC. 2. ORGANIZATION OF ACT INTO TITLES; TABLE OF CONTENTS.

(a) Titles.--This Act is organized into eight Titles as
follows:
TITLE I--AUTHORIZATION OF APPROPRIATIONS
TITLE II--DEPARTMENT OF STATE AUTHORITIES AND ACTIVITIES
TITLE III--ORGANIZATION AND PERSONNEL OF THE DEPARTMENT OF STATE
TITLE IV--INTERNATIONAL ORGANIZATIONS
TITLE V--SUPPORTING THE WAR ON TERRORISM
TITLE VI--SECURITY ASSISTANCE
TITLE VII--INTERNATIONAL PARENTAL CHILD ABDUCTION PREVENTION ACT OF
2003
TITLE VIII--MISCELLANEOUS PROVISIONS

Subtitle A--Streamlining Reporting Requirements

Subtitle B--Other Matters

(b) The table of contents for this Act is as follows:
Sec. 1. Short Title
Sec. 2. Organization of Act into Titles; Table of Contents

TITLE I--AUTHORIZATION OF APPROPRIATIONS

Sec. 101. Administration of Foreign Affairs
Sec. 102. International Organizations and Conferences
Sec. 103. International Commissions
Sec. 104. Migration and Refugee Assistance
Sec. 105. Centers and Foundations

TITLE II--DEPARTMENT OF STATE AUTHORITIES AND ACTIVITIES

Sec. 201. Reimbursement Rate for Airlift Services Provided to the
Department of State
Sec. 202. Grant Authority to Promote Biotechnology
Sec. 203. Immediate Response Facilities
Sec. 204. Mine Action Programs Grant Authority
Sec. 205. The U.S. Diplomacy Center
Sec. 206. Public Affairs Grant Authority

TITLE III--ORGANIZATION AND PERSONNEL OF THE DEPARTMENT OF STATE

Sec. 301. Cost of Living Allowances
Sec. 302. Waiver of Annuity Limitations on Re-Employed Foreign Service
Annuitants
Sec. 303. Fellowship of Hope Program
Sec. 304. Claims for Lost Pay
Sec. 305. Suspension or Enforced Leave
Sec. 306. Home Leave
Sec. 307. Ombudsman for the Department of State
Sec. 308. Repeal of Recertification Requirement for Senior Foreign
Service

TITLE IV--INTERNATIONAL ORGANIZATIONS

Sec. 401. Raising the Cap on Peacekeeping Contributions

TITLE V--SUPPORTING THE WAR ON TERRORISM

Sec. 501. Designation of Foreign Terrorist Organizations

TITLE VI--SECURITY ASSISTANCE

Sec. 601. Restrictions on Economic Support Funds for Lebanon
Sec. 602. Thresholds for Congressional Notification of FMS and
Commercial Arms Transfers
Sec. 603. Bilateral Agreement Requirements Relating to Licensing of
Defense Exports
Sec. 604. Authorization of Appropriations--Foreign Military Financing,
International Military Education and Training, and
Nonproliferation, Anti-Terrorism, Demining, and Related
Programs
Sec. 605. Cooperative Threat Reduction Permanent Waiver
Sec. 606. Congressional Notification for Comprehensive Defense Export
Authorizations
Sec. 607. Expansion of Authorities for Loan of Material, Supplies, and
Equipment for Research and Development Purposes
Sec. 608. Establish Dollar Threshold for Congressional Notification of
Excess Defense Articles that are Significant Military
Equipment
Sec. 609. Waiver of Net Proceeds Resulting from Disposal of U.S.
Defense Articles Provided to a Foreign Country on a Grant
Basis
Sec. 610. Transfer of Certain Obsolete or Surplus Defense Articles in
the War Reserve Stockpiles for Allies to Israel
Sec. 611. Additions to U.S. War Reserve Stockpiles for Allies
Sec. 612. Provision of Cataloging Data and Services
Sec. 613. Provision to Exercise Waivers with Respect to Pakistan

TITLE VII--INTERNATIONAL PARENTAL CHILD ABDUCTION PREVENTION ACT OF
2003

Sec. 701. Short Title
Sec. 702. Inadmissibility of Aliens Supporting International Child
Abductors and Relatives of Such Abductors

TITLE VIII--MISCELLANEOUS PROVISIONS

Sec. 801. Reports on Benchmarks for Bosnia
Sec. 802. Report Concerning the German Foundation ``Remembrance,
Responsibility, and the Future''
Sec. 803. Report on Progress in Cyprus
Sec. 804. Reports on Activities in Colombia
Sec. 805. Report on Extradition of Narcotics Traffickers
Sec. 806. Report on Terrorist Activity in Which United States Citizens
Were Killed and Related Matters
Sec. 807. Report and Waiver Regarding Embassy in Jerusalem
Sec. 808. Report on Progress toward Regional Nonproliferation
Sec. 809. Report on Annual Estimate and Justification for Sales Program
Sec. 810. Report on Foreign Military Training
Sec. 811. Report on Human Rights Violations by IMET Participants
Sec. 812. Report on Development of the European Security and Defense
Identity (ESDI) Within the NATO Alliance
Sec. 813. Report on Transfers of Military Sensitive Technology to
Countries and Entities of Concern
Sec. 814. Nuclear Reprocessing Transfer Waiver
Sec. 815. Complex Foreign Contingencies

TITLE I--AUTHORIZATION OF APPROPRIATIONS

SEC. 101. ADMINISTRATION OF FOREIGN AFFAIRS.

The following amounts are authorized to be appropriated for
the Department of State under ``Administration of Foreign
Affairs'' to carry out the authorities, functions, duties,
and responsibilities in the conduct of foreign affairs of the
United States and for other purposes authorized by law:

[[Page S4844]]

(1) Diplomatic and consular programs.--For ``Diplomatic and
Consular Programs'' of the Department of State $4,163,544,000
for the fiscal year 2004, and such sums as may be necessary
for the fiscal year 2005.
(A) Worldwide security upgrades.--Of the amounts authorized
to be appropriated by subparagraph (1), $646,701,000 for the
fiscal year 2004, and such sums as may be necessary for the
fiscal year 2005 are authorized to be appropriated only for
worldwide security upgrades.
(2) Capital investment fund.--For ``Capital Investment
Fund'' of the Department of State, $157,000,000 for the
fiscal year 2004, and such sums as may be necessary for the
fiscal year 2005.
(3) Embassy security, construction and maintenance.--For
``Embassy Security, Construction and Maintenance,''
$1,514,400,000 for the fiscal year 2004, and such sums as may
be necessary for fiscal year 2005.
(4) Educational and cultural exchange programs.--For
``Educational and Cultural Exchange Programs,'' $345,346,000
for the fiscal year 2004, and such sums as may be necessary
for fiscal year 2005.
(5) Representation allowances.--For ``Representation
Allowances,'' $9,000,000 for the fiscal year 2004, and such
sums as may be necessary for fiscal year 2005.
(6) Protection of foreign missions and officials.--For
``Protection of Foreign Missions and Officials,'' $10,000,000
for the fiscal year 2004 and such sums as may be necessary
for the fiscal year 2005.
(7) Emergencies in the diplomatic and consular service.--
For ``Emergencies in the Diplomatic and Consular Service,''
$1,000,000 for the fiscal year 2004, and such sums as may be
necessary for the fiscal year 2005.
(8) Repatriation loans.--For ``Repatriation Loans,''
$1,219,000 for the fiscal year 2004, and such sums as may be
necessary for the fiscal year 2005.
(9) Payment to the american institute in taiwan.--For
``Payment to the American Institute in Taiwan,'' $19,773,000
for the fiscal year 2004, and such sums as may be necessary
for fiscal year 2005.
(10) Office of the inspector general.--For ``Office of the
Inspector General,'' $31,703,000 for the fiscal year 2004,
and such sums as may be necessary for the fiscal year 2005.

SEC. 102. INTERNATIONAL ORGANIZATIONS AND CONFERENCES.

(a) Assessed Contributions To International
Organizations.--There are authorized to be appropriated for
``Contributions to International Organizations,''
$1,010,463,000 for the fiscal year 2004 and such sums as may
be necessary for the fiscal year 2005, for the Department of
State to carry out the authorities, functions, duties, and
responsibilities in the conduct of the foreign affairs of the
United States with respect to international organizations and
to carry out other authorities in law consistent with such
purposes.
(b) Contributions For International Peacekeeping
Activities.--There are authorized to be appropriated for
``Contributions for International Peacekeeping Activities,''
$550,200,000 for the fiscal year 2004, and such sums as may
be necessary for the fiscal year 2005, for the Department of
State to carry out the authorities, functions, duties, and
responsibilities of the United States with respect to
international peacekeeping activities and to carry out other
authorities in law consistent with such purposes. Funds
appropriated pursuant to this paragraph are authorized to be
available until expended.
(c) Foreign Currency Exchange Rates.--In addition to
amounts authorized to be appropriated by subsection
(a), there are authorized to be appropriated such sums as
may be necessary for each of the fiscal years 2004 and
2005 to offset adverse fluctuations in foreign currency
exchange rates. Amounts appropriated under this subsection
shall be available for obligation and expenditure only to
the extent that the Director of the Office of Management
and Budget determines and certifies to Congress that such
amounts are necessary due to such fluctuations.

SEC. 103. INTERNATIONAL COMMISSIONS.

The following amounts are authorized to be appropriated
under ``International Commissions'' for the Department of
State to carry out the authorities, functions, duties, and
responsibilities in the conduct of the foreign affairs of the
United States and for other purposes authorized by law:
(a) International Boundary and Water Commission, United
States and Mexico.--For ``International Boundary and Water
Commission, United States and Mexico''--
(1) for ``Salaries and Expenses,'' $31,562,000 for the
fiscal year 2004, and such sums as may be necessary for the
fiscal year 2005; and
(2) for ``Construction,'' $8,901,000 for the fiscal year
2004, and such sums as may be necessary for the fiscal year
2005;
(b) International Boundary Commission, United States and
Canada.--For ``International Boundary Commission, United
States and Canada,'' $1,261,000 for the fiscal year 2004 and
such sums as may be necessary for the fiscal year 2005.
(c) International Joint Commission.--For ``International
Joint Commission,'' $7,810,000 for the fiscal year 2004 and
such sums as may be necessary for the fiscal year 2005.
(d) International Fisheries Commissions.--For
``International Fisheries Commissions,'' $20,043,000 for the
fiscal year 2004 and such sums as may be necessary for the
fiscal year 2005.

SEC. 104. MIGRATION AND REFUGEE ASSISTANCE.

There are authorized to be appropriated for ``Migration and
Refugee Assistance'' for authorized activities $760,197,000
for the fiscal year 2004 and such sums as may be necessary
for the fiscal year 2005.

SEC. 105. CENTERS AND FOUNDATIONS.

(a) Asia Foundation.--There are authorized to be
appropriated for ``The Asia Foundation'' for authorized
activities, $9,250,000 for the fiscal year 2004 and such sums
as may be necessary for the fiscal year 2005.
(b) National Endowment for Democracy.--There are authorized
to be appropriated for the ``National Endowment for
Democracy'' for authorized activities, $36,000,000 for the
fiscal year 2004 and such sums as may be necessary for the
fiscal year 2005.
(c) Center for Cultural and Technical Interchange Between
East and West.--There are authorized to be appropriated for
the ``Center for Cultural and Technical Interchange Between
East and West'' for authorized activities, $14,280,000 for
the fiscal year 2004 and such sums as may be necessary for
the fiscal year 2005.

TITLE II--DEPARTMENT OF STATE AUTHORITIES AND ACTIVITIES

SEC. 201. REIMBURSEMENT RATE FOR AIRLIFT SERVICES PROVIDED TO
THE DEPARTMENT OF STATE.

Section 2642(a) of Title 10 (10 U.S.C. 2642(a)) is amended
by inserting ``or the Department of State'' after ``Central
Intelligence Agency''.

SEC. 202. GRANT AUTHORITY TO PROMOTE BIOTECHNOLOGY.

The Secretary of State is authorized to support, by grants,
cooperative agreements or contract, outreach and public
diplomacy activities regarding the benefits of agricultural
biotechnology, science-based regulatory systems, and the
application of the technology for trade and development.
Except as otherwise specifically authorized, the total amount
of grants made in any one fiscal year pursuant to this
authority shall not exceed $500,000.

SEC. 203. IMMEDIATE RESPONSE FACILITIES.

(a) Section 604(b) of the Secure Embassy Construction and
Counterterrorism Act of 1999 (P.L. 106-113, 22 U.S.C. 4865
note) is amended by:
(1) redesignating subsection (b)(1) as ``(b)(1)(A)'' and by
redesignating subsection (b)(2) as ``(b)(1)(B)''; and
(2) by deleting the period after the words ``set forth in
section 606'' at the end of subsection (b), and adding the
following: ``; or
``(2) providing facilities to support immediate response
efforts in times of emergency.''
(b) The Foreign Service Buildings Act of 1926 (P.L. 69-186,
22 U.S.C. 292 et seq.) is amended by adding the following new
section at the end:
``Sec. 13. Of the amounts appropriated to carry out the
Foreign Service Buildings Act of 1926 and the Secure Embassy
Construction and Counterterrorism Act 10 of 1999, not to
exceed $15,000,000 in any fiscal year may be made available
to provide immediate response diplomatic facilities through a
reprogramming of funds, notwithstanding any advance
congressional notification requirements contained in any
other law. In the case of any such reprogramming that would
otherwise be subject to a requirement of advance
congressional notification, notification to the Committee on
Foreign Relations and the Committee on Appropriations of the
Senate and the Committee on International Relations and the
Committee on Appropriations of the House of Representatives
shall be provided as soon as practicable, but not later than
3 days after the obligation or expenditure of such funds and
shall contain an explanation of the circumstances requiring
the deployment of immediate response facilities.''

SEC. 204. MINE ACTION PROGRAMS GRANT AUTHORITY.

The Secretary of State is authorized to support public-
private partnerships for mine action programs by grant,
cooperative agreement, or contract. Except as otherwise
specifically authorized, the total amount of grants made in
any one fiscal year pursuant to this authority shall not
exceed $450,000.

SEC. 205. THE U.S. DIPLOMACY CENTER.

Title I of the State Department Basic Authorities Act of
1956 (22 U.S.C. 2651a et. seq.) is amended by adding the
following new section:

``SEC. 59. THE U.S. DIPLOMACY CENTER.

``(a) Activities.--
``(1) The Secretary of State is authorized to provide--by
contract, grant or otherwise--for appropriate museum visitor
and educational outreach services, including but not limited
to, organizing conference activities, museum shop, and food
services, in the public exhibit and related space utilized by
the U.S. Diplomacy Center (``USDC'') program.
``(2) The Secretary of State may pay all reasonable
expenses of conference activities conducted by the USDC,
including refreshments and travel of participants.
``(3) Any revenues generated under the authority of
paragraph (1) for visitor services may be retained and
credited to any appropriate Department of State appropriation
to recover the costs of operating the USDC.
``(b) Disposition of USDC Artifacts and Materials.--
``(1) All historic documents, artifacts or other articles
permanently acquired by the Department of State and
determined by the Secretary of State to be suitable for
display in the USDC shall be considered to be the

[[Page S4845]]

property of the Secretary in his or her official capacity and
shall be subject to disposition solely in accordance with
this subsection.
``(2) Sale or Trade--Whenever the Secretary of State or
his/her designee determines that--
``(A) any item covered by paragraph (1) no longer serves to
further the purposes of the USDC as established in the
Collections Management Policy, or
``(B) in order to maintain the standards of the collections
of the USDC, a better use of that article would be its sale
or exchange,

``the Secretary may sell the item at fair market value,
trade, or transfer it, without regard to the requirements of
the Federal Property and Administrative Services Act of 1949.
The proceeds of any such sale may be used solely for the
advancement of the USDC's mission; in no event shall proceeds
be used for anything other than acquisition or direct care of
collections.
``(3) Loans--The Secretary of State may also lend items
covered by paragraph (1), when not needed for use or display
in the USDC, to the Smithsonian Institution or a similar
institution for repair, study, or exhibition.''
(c) Except as may be identified subject to reprogramming
procedures, the Bureau of Public Affairs may not expend more
than $950,000 for fiscal year 2004, and such sums as may be
necessary for fiscal year 2005, for the U.S. Diplomacy
Center.

SEC. 206. PUBLIC AFFAIRS GRANT AUTHORITY.

To the extent that the Secretary of State is otherwise
authorized by law to provide for public affairs activities,
the Secretary may do so by grant, cooperative agreement, or
contract.

TITLE III--ORGANIZATION AND PERSONNEL OF THE DEPARTMENT OF STATE

SEC. 301. COST OF LIVING ALLOWANCES.

Section 5924 of Title 5, United States Code, is amended as
follows:
(a) by revising section (4)(A) to read as follows:
``(A) An allowance not to exceed the cost of obtaining such
kindergarten, elementary and secondary educational services
as are ordinarily provided without charge by the public
schools in the United States (including activities required
for successful completion of a grade or course and such
educational services as are provided by the States under the
Individuals with Disabilities Education Act), plus in those
cases when adequate schools are not available at the post of
the employee, board and room, and periodic transportation
between that post and the school chosen by the employee, not
to exceed the total cost to the Government of the dependent
attending an adequate school in the nearest United States
locality where an adequate school is available, without
regard to section 3324(a) and (b) of title 31. When travel
from school to post is infeasible, travel may be allowed
between the school attended and the home of a designated
relative or family friend or to join a parent at any
location, with the allowable travel expense not to exceed the
cost of travel between the school and post. The amount of the
allowance granted shall be determined on the basis of the
educational facility used.''
(b) by revising section (4)(B) to read as follows:
``(B) The travel expenses of dependents of an employee to
and from a secondary, post-secondary or post-baccalaureate
educational institution, not to exceed one annual trip each
way for each dependent. An allowance payment under
subparagraph (A) of this paragraph (4) may not be made for a
dependent during the 12 months following his arrival at the
selected educational institution under authority contained in
this subparagraph (B).'', and
(c) by inserting a new section 4(C) as follows:
``(C) Allowances provided pursuant to subparagraphs (A) and
(B) above may include, at the election of the employee and in
lieu of transportation thereof, payment or reimbursement of
the costs incurred to store the baggage at or in the vicinity
of the school during the dependent's annual trip between the
school and the employee's duty station, provided that such
payment or reimbursement may not exceed the cost that the
Government would incur to transport the baggage with the
dependent in connection with the annual trip.''

SEC. 302. WAIVER OF ANNUITY LIMITATIONS ON RE-EMPLOYED
FOREIGN SERVICE ANNUITANTS.

(a) Section 824(g) of the Foreign Service Act of 1980 (22
U.S.C. 4064(g)) is amended to read as follows:
``(g) The Secretary may waive the application of paragraphs
(a) through (d) of this section, on a case by case basis, for
an annuitant re-employed on a temporary basis--
(i) if, and for so long as, the authority is necessary due
to an emergency involving a direct threat to life or property
or other unusual circumstances; or
(ii) in positions for which there is exceptional difficulty
in recruiting or retaining a qualified employee.''
(b) Effective October 1, 2005, section 824(g), as amended
by this section, is further amended to read as follows:
``(g) The Secretary may waive the application of paragraphs
(a) through (d) of this section, on a case by case basis, for
an annuitant re-employed on a temporary basis, but only if,
and for so long as, the authority is necessary due to an
emergency involving a direct threat to life or property or
other unusual circumstances.''

SEC. 303. FELLOWSHIP OF HOPE PROGRAM.

The Secretary of State is authorized to establish the
Fellowship of Hope program under which employees of the
governments of designated countries may be assigned to an
office of profit or trust in the Department of State and
continue to receive salary and other benefits from those
governments, in exchange for assignments of a member of the
Foreign Service to the governments of the designated foreign
countries. The Secretary of State shall administer this
program in a manner consistent with the national security and
foreign policy interests of the United States, in
consultation with the Attorney General and the Director of
Central Intelligence.

SEC. 304. CLAIMS FOR LOST PAY.

Section 2 of the State Department Basic Authorities Act (22
U.S.C. 2669) is amended by adding a new subsection (o) as
follows:
``(o) make administrative corrections or adjustments to an
employee's pay, allowances, or differentials, resulting from
mistakes or retroactive personnel actions, as well as provide
back pay and other categories of payments under the Back Pay
Act as part of the settlement or compromise of administrative
claims or grievances filed against the Department.''

SEC. 305. SUSPENSION OR ENFORCED LEAVE.

(a) Notwithstanding any other provision of law, and pending
final resolution of the matter, the Secretary may suspend a
member of the Foreign Service without pay, or place the
member on enforced leave without pay,
(1) where there is an investigation regarding the
revocation of an employee's security clearance or a
suspension of an employee's security clearance; or
(2) where there is reasonable cause to believe a member has
committed a crime for which a sentence of imprisonment may be
imposed and there is a nexus to the efficiency of the
Service; or
(3) for such other cause as will promote the efficiency of
the service;
(b) Any member suspended or placed on enforced leave
pursuant to subsection (a) shall be entitled to--
(1) at least 30 days advance written notice of the specific
reasons for such suspension, unless there is reasonable cause
to believe the employee has committed a crime for which a
sentence of imprisonment may be imposed;
(2) a reasonable time, not less than seven days, to answer
orally and in writing;
(3) be represented by an attorney or other representative;
and
(4) a final written decision.
(c) Any member suspended or placed on enforced leave
pursuant to this section shall be entitled to grieve such
action in accordance with procedures applicable to grievances
under chapter 11 of this Act. The review by the Foreign
Service Grievance Board with respect to such a grievance
shall be limited:

(1) in the case of an action pursuant to subparagraph

(a)(1) only to a determination whether the procedures set
forth in subsection (b) were followed, and
(2) in the case of an action pursuant to subparagraph
(a)(2), only to a determination of whether the reasonable
cause requirements have been fulfilled and whether there is a
nexus between the conduct and the efficiency of the Service;
and
(3) in the case of a suspension pursuant to subparagraph
(a)(3), only to a determination whether the action promotes
the efficiency of the service.
(4) In no case regarding an appeal pursuant to this section
may the Foreign Service Grievance Board order prescriptive
relief.

SEC. 306. HOME LEAVE.

(a) Section 901(6) of the Foreign Service Act (22 U.S.C.
4081(6)) is amended by striking ``unbroken by home leave''
wherever that phrase occurs.
(b) Section 903(a) of the Foreign Service Act (22 U.S.C.
4083) is amended by striking ``18 months'' and inserting ``12
months.''

SEC. 307. OMBUDSMAN FOR THE DEPARTMENT OF STATE.

(a) There is established in the Office of the Secretary of
State the position of Ombudsman. The Ombudsman shall report
directly to the Secretary of State.
(b) At the discretion of the Secretary of State, the
Ombudsman shall participate in meetings regarding the
management of the Department in order to assure that all
employees may contribute to the achievement of the
Department's responsibilities and to promote the career
interests of all employees.
(c) Conforming Amendment.--Subsection (c) of section 172 of
the Foreign Relations Authorization Act, Fiscal Years 1988
and 1989 (as codified in 22 U.S.C. 2664a(c)) is deleted, and
subsection (d) renumbered accordingly.

SEC. 308. REPEAL OF RECERTIFICATION REQUIREMENT FOR SENIOR
FOREIGN SERVICE.

Section 305(d) of the Foreign Service Act of 1980 (22
U.S.C. 3945(d)) is hereby repealed.

TITLE IV--INTERNATIONAL ORGANIZATIONS

SEC. 401. RAISING THE CAP ON PEACEKEEPING CONTRIBUTIONS.

(a) In General.--Section 404 of the Foreign Relations
Authorization Act, Fiscal Years 1994 and 1995 (Public Law
103-236) is amended by amending subparagraph (B), added by
Section 402 of P.L. 107-228 (FY 2003 Foreign Relations
Authorization Act), to amend subparagraph (iv) as follows and
add subparagraph (v) at the end:

[[Page S4846]]

``(iv) For assessments made during calendar year 2004, 27.1
percent.
``(v) For assessments made during calendar year 2005, 27.1
percent.''

TITLE V--SUPPORTING THE WAR ON TERRORISM

SEC. 501. DESIGNATION OF FOREIGN TERRORIST ORGANIZATIONS.

Section 219 of the Immigration and Nationality Act (8
U.S.C. 1189) is amended as follows:
(a) Duration of Designation.--
(1) In subparagraph 219(a)(4)(A), by striking the words
``Subject to paragraphs (5) and (6), a'' and adding ``A'' and
by striking the words ``for a period of 2 years beginning on
the effective date of the designation under paragraph
(2)(B)'' and adding ``until revoked under paragraphs (5) or
(6) or set aside pursuant to subparagraph (c)'' in lieu
thereof;
(2) by revising subparagraph 219(a)(4)(B) to read as
follows:
``(B) Review of designation upon petition.--
``(i) In general.--The Secretary shall review the
designation of a foreign terrorist organization under the
procedures set forth in (ii)-(iii) if the designated
organization files a petition for revocation within the
petition period. If the organization has not previously filed
a petition for revocation under this subparagraph, the
petition period begins once two years have elapsed from the
date of designation. If the designated organization has
previously filed a petition under this subparagraph, then the
petition period begins once two years have elapsed from the
date of its last petition.
``(ii) Procedures.--Any foreign terrorist organization that
submits a petition under this subparagraph must provide
evidence in that petition that the relevant circumstances
described in paragraph (1) no longer exist with respect to
the organization.
``(iii) The Secretary shall complete his or her review of
any petition from a designated organization that is filed
within the petition 20 period and shall make a determination
concerning revocation of the designation within 180 days
after receiving the petition. The Secretary may consider
classified information in making a determination in response
to a petition. Classified information shall not be subject to
disclosure for such time as it remains classified, except
that such information may be disclosed to a court ex parte
and in camera for purposes of judicial review under
subsection (c). A determination under this clause shall be
published in the Federal Register, and any revocation under
this subparagraph shall be made under the procedures set
forth in paragraph (6).
(3) by adding a new subparagraph 219(a)(4)(C) to read as
follows:
``(C) Other review of designation.--
``(i) In general.--The Secretary shall review the
designation of each foreign terrorist organization at least
once every four years in order to determine whether it should
be revoked pursuant to paragraph (6) . If such review does
not take place pursuant to subparagraph (4)(B) in response to
a petition for revocation that is filed during the petition
period, then it shall be conducted pursuant to procedures to
be developed by the Secretary, and neither the results of
such review nor the applicable procedures shall be reviewable
in any court.
``(ii) The Secretary shall publish the results of any
review conducted pursuant to this subparagraph in the Federal
Register.
(4) in subparagraph 219(a)(6)(A), by deleting the words
``or a redesignation made under paragraph (4)(B)'' and by
adding ``at any time, and shall revoke a designation upon
completion of a review conducted pursuant to subparagraphs
(4)(B) or (4)(C)'';
(5) in subparagraph 219(a)(6)(A)(i), by deleting the words
``or a redesignation'';
(6) in subparagraph 219(a)(7), by deleting ``, or the
revocation of a redesignation under paragraph (6),'';
(7) in subparagraph 219(a)(8), by deleting ``, or if a
redesignation under this subsection has become effective
under subsection (b)(4)(B),'' and by deleting ``or
redesignation.'';
(b) Aliases.--By inserting a new subsection (b) as follows
and relettering the following subsections accordingly:
``(b) Amendments to a Designation.
``(1) In general.--The Secretary is authorized to amend a
designation under the provisions of this subsection if the
Secretary finds that the organization has changed its name,
adopted a new alias, dissolved and then reconstituted itself
under a different name or names, or merged-with another
organization.
``(2) Procedure.--Such amendments shall be effective upon
publication in the Federal Register and the provisions of
subparagraphs (a)(2)(B) and (a) (2)(C) shall apply. The
procedures and rules set forth in paragraphs (a)(4), (5),
(6), (7), and (8) shall also apply to amended designations.
``(3) Any such amendment shall be reported to the
appropriate Congressional committees within 30 days of
publication pursuant to subparagraph (a)(2)(A)(i).
``(4) The administrative record may be amended to include
such new or additional names and any additional relevant
information to support the amendment.
``(5) The Secretary may consider classified information in
making an amendment under this subsection. Classified
information shall not be subject to disclosure for such time
as it remains classified, except that such information may be
disclosed to a court ex parte and in camera for purposes of
judicial review under subsection (c).''; and
(c) Technical Amendments.--
(i) In subparagraph 219(a)(3)(B), by changing ``subsection
(b)'' to ``subsection (c)''.
(ii) In subsection 219(c)(1), as amended by this section,
by striking the phrase after ``publication'' and before ``in
the United States Court of Appeals'' and inserting ``in the
Federal Register of a designation, an amended designation, or
a determination in response to a petition for revocation, the
designated organization may seek judicial review in the
United States'' in lieu thereof.
(iii) In subsection 219(c)(2), (3), and (4), as amended by
this section, by adding ``, amendment, or determination''
after ``designation'' wherever it occurs.
(d) Savings Provision.--The term ``designation'' includes
all previous redesignations made pursuant to subparagraph
219(a)(4) prior to the effective date of this Act, and such
redesignations shall continue to be effective until revoked
as provided in paragraphs (a)(5) or (a)(6).

TITLE VI--SECURITY ASSISTANCE

SEC. 601. RESTRICTIONS ON ECONOMIC SUPPORT FUNDS FOR LEBANON.

Section 1224 of the Foreign Relations Authorization Act,
Fiscal Year 2003'' is amended by inserting after ``lapses.'':
``c. Exception.--Subsection (a) shall not apply to such
assistance otherwise subject to the restriction set forth
therein that is made available to address the water needs of
Southern Lebanon.''

SEC. 602. THRESHOLDS FOR CONGRESSIONAL NOTIFICATION OF FMS
AND COMMERCIAL ARMS TRANSFERS.

The Arms Export Control Act is amended--
(a) in section 36(b)--
(1) in paragraph (1)--
(A) by striking ``Subject to paragraph 6, in'', and
inserting in lieu thereof ``(1) In'';
(B) by striking ``$14,000,000'' and inserting in lieu
thereof ``$100,000,000'';
(C) by striking ``$50,000,000'' and inserting in lieu
thereof ``$200,000,000''; and
(D) by striking ``$200,000,000'' and inserting in lieu
thereof ``$500,000,000''; and
(E) by inserting ``and in any case in which the President
concludes doing so would be appropriate,'' before ``before
such letter of offer is issued'';
(2) in paragraph (5)(C)--
(A) by striking ``Subject to paragraph (6), if'' and
inserting in lieu thereof ``If'';
(B) by striking ``$14,000,000'' and inserting in lieu
thereof ``$100,000,000'';
(C) by striking ``$50,000,000'' and inserting in lieu
thereof ``$200,000,000''; and
(D) by striking ``$200,000,000'' and inserting in lieu
thereof ``$500,000,000'';
(E) by inserting ``and in any case in which the President
concludes doing so would be appropriate,'' before ``then the
President shall submit''; and
(3) by striking paragraph (6);
(b) in section 36(c)--
(1) in paragraph (1)
(A) by striking ``Subject to paragraph (5), in'', and by
inserting in lieu thereof ``In'';
(B) by striking ``$14,000,000'' and inserting in lieu
thereof ``$100,000,000'';
(C) by striking ``$50,000,000'' and inserting in lieu
thereof ``$200,000,000'';
(D) by inserting ``and in any case in which the President
concludes doing so would be appropriate,'' before ``before
issuing such license''; and,
(2) in paragraph 2 by striking ``(A) and (B)'' and
inserting in lieu thereof ``(A), (B) and (C)'';
(3) by striking paragraph (5);
(c) in section 3(d)--
(1) in paragraphs (1) and (3)(A) by striking ``Subject to
paragraph (5), the'' and inserting in lieu thereof ``The'';
(2) in paragraphs (1) and (3)(A) by striking
``$14,000,000'' and inserting in lieu thereof
``$100,000,000''; and,
(3) in paragraphs (1) and (3)(A) by striking
``$50,000,000'' and inserting in lieu thereof
``$200,000,000''; and
(4) by striking paragraph (5).

SEC. 603. BILATERAL AGREEMENT REQUIREMENTS RELATING TO
LICENSING OF DEFENSE EXPORTS.

The Arms Export Control Act is amended in section 38(j) as
follows
(a) by adding a new paragraph (5):
``(5) Waiver.--Any of the requirements for a bilateral
agreement set forth in paragraph (2) may be waived if the
President determines that to do so is important to the
national interests, in particular the foreign policy, of the
United States, and, prior to exercising this authority,
provides notification to the appropriate congressional
committees of his intent to exercise this authority, the
justification for, and the extent of the exercise of this
authority. The certification requirement of paragraph 3(A)
may be met where the President has exercised this
authority.''
(b) by adding a new paragraph (4)(C):
``(C) United states origin defense items.--The term `United
States origin defense items' means those defense items that
would be exempt from United States defense export licensing
requirements under an anticipated country exemption extended
in accordance with the authority of this subsection.''

SEC. 604. AUTHORIZATION OF APPROPRIATIONS.

(a) Grants Under Arms Export Control Act.--There is
authorized to be appropriated to the President for grant
assistance under section 23 of the Arms Export Control Act
(22 U.S.C. 2763) and for the subsidy cost, as defined in
section 502(5) of the Federal Credit Reform Act of 1990, of
direct loans under such section $4,414,000,000 for fiscal
year 2004

[[Page S4847]]

and such sums as may be necessary for FY 2005.
(b) International Military Education and Training.--There
is authorized to be appropriated to the President $91,700,000
for fiscal year 2004 and such sums as may be necessary for
fiscal year 2005 to carry out chapter 5 of part II of the
Foreign Assistance Act of 1961, as amended (22 U.S.C. 2347,
et seq.).
(c) Nonproliferation, Anti-Terrorism, Demining, and Related
Programs.--There is authorized to be appropriated under
``Nonproliferation, Anti-Terrorism, Demining, and Related
Programs'' $385,200,000 for fiscal year 2004 and such sums as
may be necessary for fiscal year 2005.

SEC. 605. COOPERATIVE THREAT REDUCTION PERMANENT WAIVER.

(a) Authority To Waive Restrictions and Eligibility
Requirements.--if the President submits the certification and
report described in subsection (b) with respect to an
independent state of the former Soviet Union for a fiscal
year--
(1) the restrictions in subsection (d) of section 1203 of
the Cooperative Threat Reduction Act of 1993 (22 U.S.C. 5952)
shall cease to apply, and funds may be obligated and expended
under that section for assistance, to that state during that
fiscal year; and
(2) funds may be obligated and expended during that fiscal
year under section 502 of the FREEDOM Support Act (22 U.S.C.
5852) for assistance or other programs and activities for
that state even if that state has not met one or more of the
requirements for eligibility under paragraphs (1) through (4)
of that section.
(b) Certification and Report.--
(1) The certification and report referred to in subsection
(a) are a written certification submitted by the President to
Congress that the waiver of the restrictions and requirements
described in paragraphs (1) and (2) of that subsection during
such fiscal year is important to the national security
interests of the United States, together with a report
containing the following:
(A) A description of the activity or activities that
prevent the President from certifying that the state is
committed to the matters set forth in the provisions of law
specified in paragraphs (1) and (2) of subsection (a) in
such fiscal year.
(B) An explanation of why the waiver is important to the
national security interests of the United States.
(C) A description of the strategy, plan, or policy of the
President for promoting the commitment of the state to, and
compliance by the state with, such matters, notwithstanding
the waiver.
(2) The matter included in the report under paragraph (1)
shall be submitted in unclassified form, but may include a
classified annex.

SEC. 606. CONGRESSIONAL NOTIFICATION FOR COMPREHENSIVE
DEFENSE EXPORT AUTHORIZATIONS.

Section 36(d)(1) of the Arms Export Control Act (P.L. 90-
629) is amended to add the following new sentences at the end
after ``subsection.'':
``Notwithstanding section 27(g) of this Act, the provisions
of this subsection shall also apply in the case of an
approval under section 38 of this Act of a comprehensive
export authorization provided for in section 126.14 of the
International Traffic in Arms Regulations where the estimated
total value of the transfers anticipated at the time of
application meets the value thresholds of subsection (c)(1).
The provisions shall also apply to amendments to such
comprehensive authorizations that involve the addition to the
authorization of a new country entering into a related
cooperative agreement with the United States Government or
memorandum of understanding with the Department of Defense to
participate in cooperative activities referred to in such
authorizations.''

SEC. 607. EXPANSION OF AUTHORITIES FOR LOAN OF MATERIAL,
SUPPLIES, AND EQUIPMENT FOR RESEARCH AND
DEVELOPMENT PURPOSES.

Section 65 of the Arms Export Control Act (22 U.S.C. 2796d)
is amended--
(a) in paragraph (1) of subsection (a)--
(1) by striking ``Except as provided in subsection (c), the
Secretary of Defense, with the concurrence of the Secretary
of State, may loan to a country that is a NATO or major non-
NATO ally'' and inserting ``Except as provided in subsection
(c), the Secretary of Defense may loan to--
``(i) a NATO organization or a country that is a NATO ally:
``(ii) a major non-NATO ally; or
``(iii) a friendly foreign country''; and
(2) by striking ``The Secretary may accept as a loan or a
gift from a country that is a NATO or major non-NATO ally''
and inserting ``The Secretary may accept as a loan or a gift
from--
``(i) a NATO organization or a country that is a NATO ally;
``(ii) a major non-NATO ally; or
``(iii) a friendly foreign country''; and
(b) by amending subsection (d) to add after ``United
States)'' the following:
``and the term 'friendly foreign country' means any country
not a member of the North Atlantic Treaty Organization
designated as a friendly foreign country for purposes of
section 27(j)(2) of this Act''.

SEC. 608. ESTABLISH DOLLAR THRESHOLD FOR CONGRESSIONAL
NOTIFICATION OF EXCESS DEFENSE ARTICLES THAT
ARE SIGNIFICANT MILITARY EQUIPMENT.

Section 516(f)(1) of the Foreign Assistance Act of 1961, as
amended, (22 U.S.C. 2321j) is amended by striking the clause
``excess defense articles that are significant military
equipment (as defined in section 47(9) of the Arms Export
Control Act) or''.

SEC. 609. WAIVER OF NET PROCEEDS RESULTING FROM THE DISPOSAL
OF U.S. DEFENSE ARTICLES PROVIDED TO A FOREIGN
COUNTRY ON A GRANT BASIS.

Section 505(f) of the Foreign Assistance Act of 1961, as
amended, (22 U.S.C. 2314(f)) is amended:
(1) by striking in the second sentence ``In the case of
items which were delivered prior to 1985, the'' and inserting
in lieu thereof ``The''; and,
(2) by adding after the second sentence the following:
``A waiver is not required for a country to retain such net
proceeds if the net proceeds are five per cent or less of the
original acquisition value of the items.''.

SEC. 610. TRANSFER OF CERTAIN OBSOLETE OR SURPLUS DEFENSE
ARTICLES IN THE WAR RESERVE STOCKPILES FOR
ALLIES TO ISRAEL.

(a) Authority.--(1) Notwithstanding Section 514 of the
Foreign Assistance Act of 1961, as amended, (22 U.S.C.
2321h), the President may transfer to Israel, in return for
concessions to be negotiated by the Secretary of Defense, any
or all of the items described in paragraph (2).
(2) The items referred to in paragraph (1) are munitions
such as armor, artillery, automatic weapons ammunition,
missiles, and other munitions that--
(A) are obsolete or surplus items;
(B) are in the inventory of the Department of Defense;
(C) are intended for use as reserve stocks for Israel; and
(D) as of the date of enactment of this Act, are located in
a stockpile in Israel.
(b) Concessions.--The value of concessions negotiated
pursuant to subsection (a) shall be at least equal to the
fair market value of the items transferred. The concessions
may include cash compensation, services, waiver of charges
otherwise payable by the United States, and other items of
value.
(c) Advance Notification of Transfer.--Not less than 30
days before making a transfer under the authority of this
section, the President shall transmit to the Committee on
Foreign Relations and Armed Services Committee of the Senate
and the Committee on International Relations and the Armed
Services Committee of the House of Representatives a
notification of the proposed transfer. The notification shall
identify the items to be transferred and the concessions to
be received.
(d) Expiration of Authority.--No transfer may be made under
the authority of this section five years after the date of
enactment of this Act.

SEC. 611. ADDITIONS TO U.S. WAR RESERVE STOCKPILES FOR
ALLIES.

Section 514(b)(2) of the Foreign Assistance Act of 1961 as
amended, (22 U.S.C. 2321h(b)) is amended--
(1) in subparagraph (A) by striking ``$50,000,000'' and
``2001'', and inserting in lieu thereof ``$100,000,000'' and
``2004'', respectively; and,
(2) in subparagraph (B) by striking $50,000,000'' and
``Republic of Korea'' and inserting in lieu thereof
``$100,000,000'' and ``Israel'', respectively.

SEC. 612. PROVISION OF CATALOGING DATA AND SERVICES.

Section 21(h)(2) of the Arms Export Control Act (22 U.S.C.
2761(h)(2)) is amended by striking ``or to any member
government of that Organization if that Organization or
member government'' and inserting ``, to any member of that
Organization, or to the government of any other country if
that Organization, member government, or other government''.

SEC. 613. PROVISION TO EXERCISE WAIVERS WITH RESPECT TO
PAKISTAN

Public Law 107-57, an Act to Authorize the President to
Exercise Waivers of Foreign Assistance Restrictions with
Respect to Pakistan, is amended--
(1) in section 1(a), by striking ``2002'', wherever
appearing (including in the caption), and inserting in lieu
thereof ``2004'';
(2) in section 1(b), by striking ``2003'', wherever
appearing (including in the caption), and inserting in lieu
thereof ``2005'';
(3) in section 2, by striking ``prior to January 1,
2001,'';
(4) in section 3(2), by striking ``Foreign Operations,
Export Financing, and Related Programs Appropriations Acts,
2002, as is'' and inserting in lieu thereof ``annual foreign
operations, export financing, and related programs
appropriations Acts for fiscal years 2002, 2003, 2004, and
2005, as are''; and
(5) in section 6, by striking ``2003'' and inserting in
lieu thereof ``2005''.

TITLE VII--INTERNATIONAL PARENTAL CHILD ABDUCTION PREVENTION ACT OF
2003

To amend the Immigration and Nationality Act to render
inadmissible to the United States certain relatives of
international child abductors, and for other purposes.

SEC. 701. SHORT TITLE.

This Act shall be cited as the ``International Parental
Child Abduction Prevention Act of 2003.''

SEC. 702. INADMISSIBILITY OF ALIENS SUPPORTING INTERNATIONAL
CHILD ABDUCTORS AND RELATIVES OF SUCH
ABDUCTORS.

(a) In General.--Section 212(a)(10)(C)(ii) of the
Immigration and Nationality Act (8 U.S.C. 1182(a)(10)(C)
(ii)) is amended--

[[Page S4848]]

(1) in subclause (I), by striking the comma at the end and
inserting in its place a semicolon;
(2) in subclause (II), by striking the comma before ``or''
at the end and inserting in its place a semicolon;
(3) by amending subclause (III) to read as follows:
``(III) is a spouse (other than a spouse who is the parent
of the abducted child), son or daughter (other than the
abducted child), grandson or granddaughter (other than the
abducted child), parent, grandparent, sibling, cousin, uncle,
aunt, nephew, or niece of an alien described in clause (i),
or is a spouse of the abducted child described in clause (i),
if such person has been designated by the Secretary of State,
in the Secretary of State's sole and unreviewable
discretion,'';
(4) by separating the final general clause from subclause
(III) as amended by subsection (a) (3) of this section; and
(5) by amending the final general clause to read as
follows:
``is inadmissible until the child described in clause (i)
is surrendered to the person granted custody by the order
described in that clause, and such person and child are
permitted to return to the United States or such person's
place of residence, or until the abducted child is 21 years
of age.''
(b) Authority To Cancel Certain Designations;
Identification of Aliens Supporting Abductors and Relatives
of Abductors; Entry of Abductors and Other Inadmissible
Aliens in Visa Lookout System; Definitions.--Section
212(a)(10)(C) of the Immigration and Nationality Act (8
U.S.C. 1182(a)(10)(C)) is amended by adding at the end the
following:
``(iv) Authority to cancel certain designations.--The
Secretary of State may, in his sole and unreviewable
discretion and at any time, cancel a designation made
pursuant to Section 212(a)(10)(C)(ii)(III) .
``(v) Identification of aliens supporting abductors and
relatives of abductors.--In all instances in which the
Secretary of State knows that an alien has committed an act
described in clause (i), the Secretary of State shall take
appropriate action to identify the individuals who are
potentially inadmissible under clause (ii).
``(vi) Entry of abductors and other inadmissible persons in
visa lookout system.--In all instances in which the Secretary
of State knows that an alien has committed an act described
in clause (i), the Secretary of State shall take appropriate
action to cause the entry into the visa lookout system of the
name or names of, and identifying information about, such
individual and of any persons identified pursuant to clause
(v) as potentially inadmissible under clause (ii).
``(vii) Definitions.--For purposes of this subparagraph--
``(I) the term `child' means a person under twenty-one
years of age regardless of marital status;'' and
``(II) the term `sibling' includes step-siblings and half-
siblings.''
(c) Annual Report.--The Secretary of State shall submit to
the Committee on International Relations and the Committee on
the Judiciary of the United States House of Representatives,
and the Committee on Foreign Relations and the Committee on
the Judiciary of the United States Senate, for the year
beginning on the first day of the first full month after the
date of enactment of this Act, and for each of the four
subsequent years, an annual report that describes the
operation of Section 212(a)(10)(C) of the Immigration and
Nationality Act, as amended by this Title, during the year to
which the report pertains. Each such annual report shall be
submitted not later than 60 days after the end of the
applicable reporting period. As part of the required
description of the Act's operation, and to the extent
corresponding data are reasonably available, each such annual
report shall specify,
(1) the number of cases known to the Secretary of State,
disaggregated according to the nationality of the aliens
concerned, in which a visa was denied to an applicant on the
basis of the applicant's inadmissibility under Section
212(a)(10)(C) during the reporting period; and
(2) the cumulative total number of cases known to the
Secretary of State, disaggregated according to the
nationality of the aliens concerned, in which a visa was
denied to an applicant on the basis of the applicant's
inadmissibility under Section 212(a)(10)(C) since the
beginning of the first reporting period; and
(3) the number of cases known to the Secretary of State,
disaggregated according to the nationality of the aliens
concerned, in which an alien's name was placed in the visa
lookout system on the basis of the alien's inadmissibility or
potential inadmissibility under Section 212(a)(10)(C) during
the reporting period; and
(4) the cumulative total number of names, disaggregated
according to the nationality of the aliens concerned, known
to the Secretary of State to appear in the visa lookout
system on the basis of the aliens' inadmissibility or
potential inadmissibility under Section 212(a)(10)(C) at the
end of the reporting period.

TITLE VIII--MISCELLANEOUS PROVISIONS

Subtitle A--Streamlining Reporting Requirements

SEC. 801. REPORTS ON BENCHMARKS FOR BOSNIA.

Section 7(b)(2) of the 1998 Supplemental Appropriations and
Rescissions Act (Public Law 105-174, 112 Stat. 64) and
Section 1203 of the Strom Thurmond National Defense
Authorization Act for Fiscal Year 1999 (Public Law 105-261)
are repealed.

SEC. 802. REPORT CONCERNING THE GERMAN FOUNDATION
``REMEMBRANCE, RESPONSIBILITY, AND THE
FUTURE''.

Section 704 of the Foreign Relations Authorization Act,
Fiscal Year 2003 (Public Law 107-228) is repealed.

SEC. 803. REPORT ON PROGRESS IN CYPRUS.

Section 620C(c) of the Foreign Assistance Act of 1961
(Public Law 87-195) is amended by:
(a) striking in the second sentence ``within 60 days after
the date of enactment of this section and at the end of each
succeeding 60-day period''; and
(b) inserting in its place ``on a semiannual basis''.

SEC. 804. REPORTS ON ACTIVITIES IN COLOMBIA.

Section 694 of the Foreign Relations Authorization Act,
Fiscal Year 2003 (Public Law 107-228) is repealed.

SEC. 805. REPORT ON EXTRADITION OF NARCOTICS TRAFFICKERS.

Section 3203 of the 2001 Military Construction
Appropriations Act (Public Law 106-246) is repealed.

SEC. 806. REPORT ON TERRORIST ACTIVITY IN WHICH UNITED STATES
CITIZENS WERE KILLED AND RELATED MATTERS.

Section 805 of the Admiral James W. Nance and Meg Donovan
Foreign Relations Authorization Act, Fiscal Years 2000 and
2001 (22 U.S.C. 2656f note), as amended by section 216 of the
Foreign Relations Authorization Act, Fiscal Year 2003 (Public
Law 107-228), is repealed.

SEC. 807. REPORT AND WAIVER REGARDING EMBASSY IN JERUSALEM.

The Jerusalem Embassy Act of 1995 (Public Law 104-45) is
amended as follows:
(a) in section 6, by:
(1) striking ``SEMIANNUAL'' in the section heading;
(2) and by striking ``every six months thereafter'' and
inserting in its place ``each year thereafter''; and
(b) in section 7(a)(2) by striking ``for an additional six
month period'' and inserting in its place ``for an additional
one year period''.

SEC. 808. REPORT ON PROGRESS TOWARD REGIONAL
NONPROLIFERATION.

Section 620F(c) of the Foreign Assistance Act of 1961 (22
U.S.C. 2376(c)) is repealed.

SEC. 809. REPORT ON ANNUAL ESTIMATE AND JUSTIFICATION FOR
SALES PROGRAM.

Section 25 of the Arms Export Control Act (22 U.S.C. 2765)
is repealed.

SEC. 810. ANNUAL FOREIGN MILITARY TRAINING REPORT.

Section 656 of the Foreign Assistance Act of 1961 is
amended as follows:
(a) in paragraph (a)--
(1) by striking ``January 1'' and inserting in lieu thereof
``March 1'',
(2) after ``personnel'' by inserting ``, excluding training
provided through sales,''
(3) after ``State'' by inserting ``, which was completed'',
(4) by striking all that follows after ``previous fiscal
year'' before the period, and
(5) by inserting the following new second sentence:
``This paragraph shall not apply with respect to any NATO
member, Australia, New Zealand or Japan unless the
Secretaries jointly determine, after consultation with
Congress, that inclusion of any such country in the report is
warranted.'', and
(6) by striking (a) (2);
(b) in paragraph (b)--
(1) in subparagraph (1) after ``purpose for the activity,''
by inserting ``and'' and after ``operation'' by striking all
that follows before the period,
(2) in subparagraph (3) after ``activity'' the first time
it occurs by striking all that follows before the period;
(c) in paragraph (c) after ``unclassified form'' by
striking all that follows before the period; and
(d) in paragraph (d) by striking ``All unclassified
portions of the'' and inserting in lieu thereof ``The''.''

SEC. 811. REPORT ON HUMAN RIGHTS VIOLATIONS BY IMET
PARTICIPANTS

(a) Section 549 of the Foreign Assistance Act of 1961 (22
U.S.C. 2347(h)) is repealed.
(b) Section 548 of the Foreign Assistance Act of 1961 (22
U.S.C. 2347g) is amended by striking paragraphs (b) and (c)
in their entirety and inserting the following:
``(b) Information on Human Rights'' Abuses. Upon request of
the Secretary of State for information regarding foreign
personnel or military units, the Secretary of Defense shall
provide such information contained in the database to the
Secretary of State. If the Secretary of State determines that
a foreign person identified in the database maintained
pursuant to this section was involved in a violation of
internationally recognized human rights, the Secretary of
State shall so advise the Secretary of Defense, who shall in
turn ensure that the database is updated to contain such fact
and all relevant information.''

SEC. 812. REPORT ON THE DEVELOPMENT OF THE EUROPEAN SECURITY
AND DEFENSE IDENTITY (ESDI) WITHIN THE NATO
ALLIANCE.

Section 1223 of the Strom Thurmond National Defense
Authorization Act for Fiscal Year 1999 (Public Law 105-261;
112 Stat. 2075 and 2155, respectively) is repealed.

SEC. 813. REPORT ON TRANSFERS OF MILITARY SENSITIVE
TECHNOLOGY TO COUNTRIES AND ENTITIES OF
CONCERN.

The National Defense Authorization Act for Fiscal Year 2000
(Public Law 106-65; 113

[[Page S4849]]

Stat. 542, 697, 706, 748, 756, 779, and 798, respectively) is
amended in section 1402, by striking subsection (b)(2).

Subtitle B--Other Matters

SEC. 814. NUCLEAR REPROCESSING TRANSFER WAIVER

Section 102(a)(2) of the Arms Export and Control Act
(Public Law 90-629) (22 U.S.C. 2799aa-1) is amended in the
first sentence by deleting the phrase ``in any fiscal year''
and the phrase ``during that fiscal year''.

SEC. 815. COMPLEX FOREIGN CONTINGENCIES.

(a) Purposes.--The President should ensure that assistance
provided to address complex foreign crises is designed to
respond on an urgent, flexible basis, including at the
outset, to mitigate without regard to scale of the crisis,
but taking account of the gravity of the crises, political
crises threatening democratic institutions, food,
agricultural or health crises, fiscal or economic crises
affecting countries, regions or ethnic groups. The response
should be designed to best serve United States foreign policy
interests, including the restoration or maintenance of peace
and security.
(b) Whenever the President determines it to be important to
the national interest he is authorized to furnish on such
terms and conditions as he may determine assistance under
this section for the purpose of responding to complex foreign
crises.
(c) There is hereby established a United States Complex
Foreign Contingency Fund to carry out the purposes of this
section. There is authorized to be appropriated to the
President from time to time such amounts as may be necessary
for the fund to carry out the purposes of this section, which
may be made available notwithstanding any other provision of
law. Amounts appropriated hereunder shall remain available
until expended.

SECTIONAL ANALYSES

TITLE I--AUTHORIZATION OF APPROPRIATIONS

SEC. 101. ADMINISTRATION OF FOREIGN AFFAIRS.

This section authorizes appropriations under the heading
``Administration of Foreign Affairs'' for fiscal years 2004
and 2005. It includes funds for executive direction and
policy formulation, conduct of diplomatic relations with
foreign governments and international organizations,
effective implementation of consular programs and its border
security component, the acquisition and maintenance of office
space and living quarters for the United States missions
abroad, provision of security for those operations, and
information resource management.
In particular, this section provides authorization of
appropriations for the necessary expenses of the Department
of State and the Foreign Service, not otherwise provided for,
including expenses authorized by the State Department Basic
Authorities Act. These expenses include an authorization for
worldwide security upgrades. This section also includes
authorization of appropriations for the conduct of U.S.
public diplomacy programs, capital investment,
representation, protection of foreign missions and officials,
emergencies in the diplomatic and consular service,
repatriation loans, and payment to the American Institute in
Taiwan. This section includes the funding for the final year
of the Department's Diplomatic Readiness Initiative aimed to
hire 1158 additional employees beyond attrition over a three-
year period to fill our staffing gaps (particularly in
critical overseas positions), provide a ``personnel
complement'' to allow for training, and respond quickly to
crises and emerging policy priorities.

SEC. 102. INTERNATIONAL ORGANIZATIONS AND CONFERENCES.

This section authorizes appropriations for fiscal years
2004 and 2005 under the heading ``International Organizations
and Conferences.'' It authorizes the necessary funds for U.S.
contributions of its assessed share of the expenses of the
United Nations and other international organizations of which
the United States is a member. In addition, provision is made
for assessed contributions to international peacekeeping
activities under United Nations auspices.
This section also authorizes such sums as may be necessary
for each of the fiscal years 2004 and 2005 to offset adverse
fluctuations in foreign currency exchange rates.

SEC. 103. INTERNATIONAL COMMISSIONS.

This section authorizes appropriations for fiscal years
2004 and 2005 under the heading ``International
Commissions.'' It authorizes funds necessary to enable the
United States to meet its obligations as a participant in
international commissions, including those dealing with
American boundaries and related matters with Canada and
Mexico, and international fisheries commissions.

SEC. 104. MIGRATION AND REFUGEE ASSISTANCE.

This section authorizes appropriations for fiscal years
2004 and 2005 under the heading ``Migration and Refugee
Assistance'' to enable the Secretary of State to provide
assistance and make contributions for migrants and refugees,
including contributions to international organizations such
as the United Nations High Commissioner for Refugees and the
International Committee for the Red Cross, through private
volunteer agencies, governments, and bilateral assistance, as
authorized by law.

SEC. 105. CENTERS AND FOUNDATIONS.

This section authorizes appropriations for fiscal years
2004 and 2005 for the East-West Center, the National
Endowment for Democracy, and the Asia Foundation.

TITLE II--DEPARTMENT OF STATE AUTHORITIES AND ACTIVITIES

SEC. 201. REIMBURSEMENT RATE FOR AIRLIFT SERVICES PROVIDED TO
THE DEPARTMENT OF STATE.

The Department of Defense provides a variety of airlift
support for official Secretary of State overseas travel on a
reimbursable basis. The airlift mission involves, for
example, transporting armored vehicles necessary to provide a
safe environment for the Secretary, when such vehicles are
not available in country. The Department of Defense has a
two-tiered rate structure for charging for such support. At
present the Department of State is paying the higher rate,
which is nearly twice as much as the lower. This section
would authorize the Department of State to pay the Department
of Defense for airlift services at the Department of Defense
rate.
Legislation has already been enacted under which the CIA
receives the Department of Defense rate on missions, which
the Secretary of Defense has determined to be related to
national security objectives (10 U.S.C. 2642). The Secretary
of State's travel is similarly aimed at national security
objectives, and similar treatment is therefore warranted.
This section would therefore amend 10 U.S.C. 2642 to add the
Department of State.

SEC. 202. GRANT AUTHORITY TO PROMOTE BIOTECHNOLOGY.

The Department plays a critical role in U.S. Government
efforts to ensure that foreign governments consider
biotechnology and its applications in agriculture/food on the
basis of science. Currently, the Department does not have
grant authority for funds that the Bureau of Economic and
Business Affairs (EB) receives for biotechnology policy
programs and for the Business Financial Incentive Fund.
Unlike a contractual arrangement, where a contractor provides
a good or service to the governmental agency in return for
payment, the grant process allows the government and the
grantee to enter into a partnership to achieve a shared
objective that serves the public good. Grant and cooperative
agreement authority would enable the Department to use these
funds more effectively, permitting it to work more directly
with universities, non-governmental organizations,
international organizations, private voluntary organizations,
scientific groups, and private sector associations. It is
anticipated that grants and cooperative agreements, as well
as contracts, would be used to support public-private
partnerships, workshops, seminars, media events, speaker
programs, and publications. The Department will implement
this authority in compliance with applicable statutory and
regulatory guidelines governing grants and cooperative
agreements. This section provides for up to $500,000 in grant
authority each fiscal year.

SEC. 203. IMMEDIATE RESPONSE FACILITIES.

In recent years, the Department has experienced a need to
stand up a diplomatic facility on very short notice to
achieve urgent, high-visibility foreign policy objectives.
The most dramatic cases were the situations in Nairobi,
Kenya, and Dar Es Salaam, Tanzania, immediately after the
1998 bombings. A recent example is the immediate temporary
facilities in Kabul in the aftermath of the war. Other
circumstances demanding immediate action would include, for
example, destruction or incapacitation of a U.S. diplomatic
facility by a terrorist attack, a natural disaster, or a war
or insurrection to which the U.S. is not a party. To ensure
that the Department has the flexibility to respond rapidly in
emergency situations, this section would provide that not to
exceed $15,000,000 of the funds appropriated under the
heading ``Embassy Security, Construction, and Maintenance''
may be reprogrammed to provide immediate response facilities
without having to provide advance congressional notification
pursuant to any other provision of law, including but not
limited to section 34(a) of the State Department Basic
Authorities Act of 1956 (22 U.S.C. 2706). In such instances
where advance notification would otherwise be required, the
Department is required to notify and provide an explanation
of the circumstances requiring the deployment of immediate
response facilities to the Committee on Appropriations and
the Committee on International Relations of the House of
Representatives and the Committee on Appropriations and the
Committee on Foreign Relations of the Senate as soon as
practicable, but not later than 3 days after the obligation
or expenditure of such funds. This post-notification
procedure is similar to the one provided for in Section 34(c)
of the Basic Authorities Act of 1956 for situations involving
substantial risk to human health or welfare.
This authority will not be used to circumvent advance
notification where a facility is not an immediately-needed
response to an urgent situation. It will be used for existing
posts or facilities, but not to stand up a new post or commit
initial funds toward a long-term project, such as
construction of a New Embassy Compound. Thus, for example,
had this authority existed at the time of the war in
Afghanistan, it would have been appropriately used for the
Phase 1 immediate temporary facilities, but not for the Phase
2 embassy annex and reconstruction.

SEC. 204. MINE ACTION PROGRAMS GRANT AUTHORITY.

The Department, through its Office of Mine Action
Initiatives and Partnerships (PM/MAIP), is actively working
with non-governmental organizations, foundations, and
companies to raise awareness and resources for mine action.
In particular, the

[[Page S4850]]

Department has developed over two dozen public-private
partnerships which promote mine clearance; survivors
assistance, education programs, and research and development
of promising technologies for finding and destroying
landmines. To maximize the effectiveness of these public-
private partnerships, it is important that the Department
have the ability to enter into grants and cooperative
agreements. Unlike a contractual arrangement, where a
contractor provides a good or service to the governmental
agency in return for payment, the grant process allows the
government and the grantee to enter into a partnership to
achieve a shared objective that serves the public good. This
section provides for up to $450,000 in grant authority each
fiscal year.
By being able to provide grants and enter into cooperative
agreements with organizations participating in the public-
private partnership program, the Department would be able to
provide support to such private sector projects as training
demining personnel and mine-detecting dogs; developing
training materials and mine risk education materials that
teach children and adults about how to recognize, report, and
avoid landmines; and research and development into new
technologies to increase the effectiveness and speed of
detecting and removing landmines. To the maximum extent
feasible, grants and cooperative agreements would be used to
support mine action activities of non-governmental
organizations. The Department will implement this authority
in compliance with all statutory and regulatory guidelines
governing grants and cooperative agreements.

SEC. 205. THE U.S. DIPLOMACY CENTER.

This section would provide necessary authorities for the
operation of the new U.S. Diplomacy Center at the Department
of State. As envisioned, this Center would be dedicated to
creating a better understanding of the history and practice
of United States diplomacy. The Center would organize and
sponsor educational and outreach programs, including
conferences, seminars, and educational materials. It would
also include a museum area, focusing on the history of U.S.
diplomacy in safeguarding U.S. security, searching for peace,
increasing prosperity, promoting U.S. values, and protecting
U.S. lives abroad. As is customary in connection with such
activities, the Center should include appropriate visitor
services such as a museum shop, and should be able to pay for
reasonable expenses in connection with conferences and
outreach activities, such as refreshments and travel of
participants. This legislation would provide clear statutory
authority in these areas. Authority is also provided to
retain fees to support the Center's activities. It would also
include authority to dispose and lend museum artifacts and
materials, similar to the authority already provided to the
Department of State for the Diplomatic Reception Areas on the
seventh and eighth floors of the Harry S Truman Building.
Consistent with the Code of Ethics for Museums of the
American Association of Museums, the legislation provides
that proceeds from disposition of museum holdings can only be
used for collection purposes. This section also provides
that, except as may be identified subject to reprogramming
procedures, the Bureau of Public Affairs may not expend more
than $950,000 in fiscal year 2004 and such sums as may. be
necessary in fiscal year 2005 for the U.S. Diplomacy Center.

SEC. 206. PUBLIC AFFAIRS GRANT AUTHORITY.

The Department is actively pursuing outreach programs
designed to educate the American public about foreign affairs
issues and the development and implementation of foreign
policy. In particular, the Bureau of Public Affairs is
working with a number of nonprofit organizations (such as
academic institutions of higher learning,
organizations representing associations of American
educators, local organizations or community groups, and
broadcasting entities) in order to reach different sectors
of the domestic audience.
In certain situations, a grant or cooperative agreement is
a more appropriate vehicle than a contractual agreement to
meet the Department's goals. Unlike a contractual
arrangement, where a contractor provides a good or service to
the governmental agency in return for payment, the grant
process allows the government and the grantee to enter into a
partnership to achieve a shared objective that serves a
public good. In this case, the shared purpose is to educate
the American public on foreign affairs matters in a factual
and fair manner.
The Department would continue to use its existing contract
authority for many activities and would exercise authority to
enter into grants and cooperative agreements only in those
limited instances where appropriate. The Department will
implement this authority in compliance with applicable
statutory and regulatory guidelines governing grants and
cooperative agreements.

TITLE III: ORGANIZATION AND PERSONNEL OF THE DEPARTMENT OF STATE

SEC. 301. COST OF LIVING ALLOWANCES.

The proposed changes to the education allowance in 5 U.S.C.
5924(4) would: (1) allow for educational travel to the United
States for children in kindergarten through 12th grade, when
schools at post are not adequate; (2) allow for educational
travel to a school outside the United States for children at
the secondary and college level; (3) provide for educational
travel at the graduate level for children who are still
dependents; (4) permit payment of fees required by overseas
schools for successful completion of a course or grade; and
(5) allow the option of storing a child's personal effects
near the school during their trip home, rather than
transporting it back and forth.
Currently, when families are serving in a post without
adequate local school facilities, the law allows for
transportation of children in kindergarten through 12th grade
to the nearest place where there is adequate education. For
instance, if an employee is assigned to Guinea-Bissau,
transportation for his/her dependents is calculated based on
hub-points in Europe (London and Rome). This causes
significant financial hardships for families, who are often
serving in the most difficult overseas assignments, and whose
children are in school in the United States. By changing the
wording of the law to allow transportation back to the United
States, the transportation component will ensure that parents
can afford to send their children to the United States for an
American education.
On the other hand, when a child has reached the secondary
or post-secondary level, aside from a limited exception,
current law allows payment for travel only to and from a
school in the United States. This amendment would permit
transportation to schools outside the United States as well.
It would also allow educational travel at the post-
baccalaureate level, when a child is still a dependent but
has graduated from college. This would be consistent with
what is allowed for military member dependents.
Overseas schools frequently require participation in
programs that would not fall into the category of
expenses considered ``ordinarily provided without charge
in the United States,'' as described in 5 U.S.C.
5924(4)(A). For example, students may be required to
participate in a cultural studies program that may include
mandatory field trips. The proposed amendment would allow
associated costs to be paid with the education allowance.
Finally, the proposed amendment would allow for local
storage of a child's effects in lieu of transporting them
back and forth during school closings for students in
kindergarten and elementary school as well as higher levels
of education, provided that payment for local storage would
not exceed the cost of transport. Section 319 of the FY 2003
Foreign Relations Authorization Act (P.L. 107-228) added this
option for educational travel under 5 U.S.C. 5924(4)(B), and
this amendment would extend the option to educational travel
under 5 U.S.C. 5924(4)(A).
In addition, this section makes technical amendments
including Puerto Rico as part of the ``United States,''
eliminating language referring to the Canal Zone, and
removing a reference to an irrelevant statute.

SEC. 302. WAIVER OF ANNUITY LIMITATIONS ON RE-EMPLOYED
FOREIGN SERVICE ANNUITANTS.

Foreign Service annuitants hired on a full-time basis have
their annuities terminated. Those employed on a parttime,
intermittent or temporary basis face a cap on the total sum
of their salary and their retirement annuity. The ``dual
compensation restrictions'' on Foreign Service annuitants,
many of whom have unique experience and talents, hamper the
Department's ability to hire these individuals to meet
mission needs. This section amends the Foreign Service Act to
allow the Secretary of State and heads of other relevant
agencies to waive these restrictions for positions for which
there is exceptional difficulty in recruiting or retaining a
qualified employee.
Section 824(g) of the Foreign Service Act was last amended
in 1988 to authorize the Secretary to waive the annuity
limitations on re-employed Foreign Service annuitants on a
case by case basis if the annuitant is reemployed on a
temporary basis due to an emergency involving a direct threat
to life or property or other unusual circumstances. This
amendment extended to the 10 Foreign Service a waiver
authority that had existed and currently exists for the Civil
Service.
Subsection (a) again seeks to amend section 824(g) of the
Foreign Service Act, and again to extend a waiver authority
to the Foreign Service that already exists for the Civil
Service. It would provide the Secretary authority to waive
the annuity limitations for annuitants reemployed on a
temporary basis in positions for which it is exceptionally
difficult to recruit or retain qualified employees. This
authority, which we do not expect to be used very often,
would better enable the Department to recruit and retain.
highly qualified persons necessary, for example, to meet our
mission needs in the war on terrorism and in our public
diplomacy efforts.
Subsection (b) indicates that effective October 1, 2005,
section 824(g) will revert to its current form.

SEC. 303. FELLOWSHIP OF HOPE PROGRAM.

This section clarifies the authority underlying a current
exchange program between the foreign affairs agencies of the
United States, the European Union, and its member states,
created to promote collaboration among its young leaders.
Under this very successful program, Foreign Service officers
are identified on an annual basis to serve one-year details
at the European Union in Brussels and designated European
foreign ministries. After the Foreign Service Officers
complete the details at the EU or in the foreign ministries,
they are assigned to a position in the U.S. embassy in the
relevant

[[Page S4851]]

European capital. Conversely, the State Department also will
receive members of the diplomatic corps from the European
Union and designated foreign ministries. While the present
program is limited to EU members, it may be that this program
could be extended to other designated countries.
This provision renders moot a potential legal concern under
the Emoluments Clause of the Constitution (Article 1, section
9, clause 8). The Emoluments Clause provides that no person
holding an office of profit or trust under the United States
may, without the consent of Congress, accept an emolument
from a foreign state. Under the Fellowship of Hope program,
diplomats from the Commission and designated foreign
countries accept an emolument from a foreign state through
the course of compensation by their own government.
However, these diplomats are also holding an office of
profit or trust in the U.S. government. Explicit
Congressional authority for the exchange program would
obviate any issue regarding the Emoluments Clause.
The Secretary will be responsible for administering this
program consistent with the national security and the foreign
policy interests of the United States. In particular, it
should be noted that information security considerations have
been carefully considered in the implementation of this
exchange program. Moreover, the Secretary will consult with
the Department of Justice or the Central Intelligence Agency,
as appropriate, to meet these responsibilities.

SEC. 304. CLAIMS FOR LOST PAY.

This section clarifies the Department's authority to make
technical corrections or enter into settlements of claims or
grievances brought by its employees involving lost pay,
allowances, or differentials. These complaints may involve
simple technical ``glitches'' in the payment of salary or
benefits, for which the Department (like other agencies)
routinely retroactively corrects the payment or makes a
payment as appropriate. Administrative adjustments also may
be required in order, for example, that a member of the
Foreign Service is made whole in connection with a
retroactive promotion.
In addition, the Department routinely settles non-Title VII
claims brought by Civil Service employees before the Merit
Systems Protection Board, or those brought by Foreign Service
employees before the Foreign Service Grievance Board. In
settling or compromising such claims, the normal authority
for the payment of back pay would be the Back Pay Act (5
U.S.C. 5596). However, as is the case with most settlements,
the Department does not usually make any admission as to
liability, and therefore does not make a finding of an
unwarranted or unjustified personnel action under the
provisions of the Back Pay Act. This section would make clear
that no such finding would be necessary in the event of a
settlement or compromise of a claim or grievance which
otherwise is in accordance with all provisions of the Back
Pay Act.
The Department is seeking this provision as clarification
to resolve back pay claims consistent with the spirit of
conciliation that underlies settlements generally. This
provision is not meant to question the current ability of
agencies to settle claims without admitting fault.

SEC. 305. SUSPENSION OR ENFORCED LEAVE.

This amendment brings the Foreign Service into parity with
the Civil Service. Current statutes, in particular, 5 U.S.C.
7512 and 7513, permit an indefinite suspension or enforced
leave of an employee during an investigation into the
revocation of a security clearance, where a security
clearance has been suspended, where there is reasonable cause
to believe the employee has committed a crime for which a
sentence of imprisonment may be imposed, or for such other
cause as will promote the efficiency of the service. The due
process requirements in this amendment are the same as those
afforded Civil Service employees.
``Reasonable cause'' may include, but is not limited to, an
indictment or circumstances attendant to an arrest or
investigation conducted by the Department or criminal law
enforcement authorities. The Board is substantially
constrained in what it may review with respect to suspensions
and enforced leave authorized by this amendment. The Board
will not, for example, have the authority to review the
merits of any security clearance revocation investigation,
which triggers a suspension under this amendment. In
reviewing any suspension or enforced leave under this
amendment, it is the Department's expectation that the
considerable body of law interpreting 5 U.S.C. sections 7512
and 7513 will guide the Board. Decisions as to whether or not
to grant the employee back pay upon the resolution of the
underlying matter will be at the discretion of the
Department. Under no circumstance may the Board grant
prescriptive relief with respect to an indefinite suspension
or enforced leave.

SEC. 306. HOME LEAVE.

This section reduces the time period for eligibility for
home leave from 18 to 12 months. In addition, this amendment
provides that members may take authorized rest and
recuperation travel under section 4081(6) even if they take
accrued, unused home leave authorized by this amendment.
This would ensure that eligibility for R&R would not be
affected if someone took home leave while on other travel
to the United States.
The effect of these two amendments will be to facilitate
members to take home leave during tours of duty (including at
R&R posts) rather than at the end of their tours of duty as
is the Department's current practice. The Department does not
plan, however, to change its current policies related to the
authorization of home leave travel, i.e., that members take
home leave normally at the end of a two-year tour or at the
midpoint of a four-year tour. This amendment simply provides
some flexibility.

SEC. 307. OMBUDSMAN FOR THE DEPARTMENT OF STATE.

In section 172 of the Foreign Relations Authorization Act,
FY 1988 and 1989 (P.L. 100-204), the Congress expressed its
objective that the contributions of Civil Service employees
to the Department of State would not be overlooked and would
be adequately protected. It therefore established an
Ombudsman for Civil Service Employees in the Office of the
Secretary. This section is intended to enhance the
responsibilities of the Ombudsman to better serve the
Department's mission.
This provision further ensures that the Ombudsman would
continue to report directly to the Secretary, and will have
the ability to participate in meetings regarding management
of the Department in order to be able to protect the
interests of all Department employees.

SEC. 308. REPEAL OF RECERTIFICATION REQUIREMENT FOR SENIOR
FOREIGN SERVICE.

This section repeals the provision in the Foreign Service
Act that requires the Secretary to establish a
recertification requirement for members of the Senior Foreign
Service (SFS) that is equivalent to the recertification
process for the Senior Executive Service (SES).
In section 1321 of the Homeland Security Act of 2002 (P.L.
107-296), the Congress repealed the recertification 14
requirements for SES employees contained in title 5 of the
United States Code. The rationale was that these periodic
recertification requirements for the SES did not serve a
useful purpose. We believe the same rationale applies to the
SFS.

TITLE IV--INTERNATIONAL ORGANIZATIONS

SEC. 401 RAISING THE CAP ON PEACEKEEPING CONTRIBUTIONS.

This provision would set at 27.1% for calendar years 2004
and 2005 the cap on UN peacekeeping assessments. This would
allow the United States to pay its peacekeeping assessment in
full in 2004 and 2005. This provision will allow us to avoid
accruing future peacekeeping arrears.

TITLE V--SUPPORTING THE WAR ON TERRORISM

SEC. 501. DESIGNATION OF FOREIGN TERRORIST ORGANIZATIONS.

Overview: This section amends section 219 of the
Immigration and Nationality Act (``INA'') (8 U.S.C. 1189),
authorizing the Secretary of State, in consultation with the
Attorney General and the Secretary of the Treasury (the
``Secretary''), to designate foreign terrorist organizations
(``FTOs''), in order to improve the statutory designation
procedures. It eliminates the statute's redesignation
provision, requiring the Secretary instead to review FTO
designations regularly, and it adds a procedure for amending
designations.
Amending the Redesignation Requirement: The Duration of
Designation provision removes the requirement for the
Secretary to redesignate FTOs every two years for
designations to remain in effect. It permits an FTO
designation to remain in effect until it is revoked by an Act
of Congress or by the Secretary or set aside by the United
States Court of Appeals for the District of Columbia Circuit.
The Review of Designation upon Petition provision requires
the Secretary to review the designation of an FTO if a
designated organization petitions the Secretary for
revocation once two years have elapsed from the date of its
designation. It also requires such review if an organization
files another petition once two years have elapsed from the
date of its last petition. This provision requires the
Secretary to issue a determination on a petition for
revocation within 180 days. It also permits an organization
to petition for judicial review of the Secretary's
determination within 30 days after that determination is
published in the Federal Register.
The Other Review of Designation provision requires the
Secretary to review the designation of each FTO at least once
every four years in order to determine whether it should be
revoked, even if the organization does not submit a petition
for revocation. Absent such a petition, this automatic review
would be completed according to procedures to be developed by
the Secretary, and there would be no judicial review. This
periodic review is intended as an 17 automatic check on the
continued vitality of a designation, even in the absence of a
petition for revocation by the designated organization.
With 36 FTOs designated as of March 2003, and others on the
way to designation, the demands that the current statutory
requirement to redesignate organizations every two years
imposes on the interagency counterterrorism workforce are
great. Each redesignation requires an interagency review
process and preparation of an administrative record that can
take months. The time demands associated with proving
repeatedly

[[Page S4852]]

that terrorist groups have retained their character as
terrorists significantly drain resources from other pressing
counterterrorism work, including the pursuit of additional
designations pursuant to section 219 of the INA, section
212(a)(3)(B) of the INA (8 U.S.C. 1182) (designation of
terrorist organizations for immigration purposes), and
Executive Order 13224 (terrorist financing).
The proposed changes would streamline the current
procedures and permit a more effective use of USG resources,
while ensuring that the Secretary would regularly review an
organization's designation to determine if it should be
revoked. The terrorist threat we face has increased greatly
since section 219 was enacted in 1996, and now more than
ever, the USG needs to marshal its counterterrorism resources
as efficiently as possible.
Aliases: Section 219 does not contain any explicit
statutory authority or guidance for making additional alias
designations after an organization is designated as an FTO.
In designating FTOs, the Secretary of State routinely lists
the names of the designated entities together with their
aliases, a practice that has been upheld by the United States
Court of Appeals for the District of Columbia Circuit.
Recently, certain groups that have been designated as FTOs
have changed their names in an effort to evade asset freezing
and other consequences of designation. Some FTOs have
dissolved and reconstituted themselves under a different name
or names, or merged with other organizations, even while
retaining the capability and intent to engage in terrorist
activity or terrorism. The difficulty of identifying all of
an organization's aliases also can slow down the process of
designating an organization as an FTO, creating unnecessary
delays that weaken an otherwise powerful tool for combating
international terrorism.
This section would enhance the effectiveness and efficiency
of the designation process by adding explicit, streamlined
procedures for adding new aliases to an underlying
designation. It would allow the Secretary, or the Secretary's
designee if the Secretary subsequently delegates that
authority, to amend the existing administrative record for an
organization's designation, rather than requiring the
Secretary to create an additional administrative record in
support of the amendment.
This section would require the Secretary of State (or the
Secretary's designee if the Secretary delegates that
authority) to make amendments in consultation with the
Attorney General and the Secretary of the Treasury (or their
designees if they delegate that authority), ensuring that
amendments reflect the expertise of Justice and Treasury.
Because it is a criminal offence to provide material support
or resources to a designated FTO, and because of the asset
blocking consequences of FTO designation, it is important
that designations be made in consultation with Justice and
Treasury. An organization covered by any such amendment also
would have the ability to seek judicial review of the
amendment or submit a petition to the Secretary for
revocation of an amendment.

TITLE VI--SECURITY ASSISTANCE

SEC. 601. RESTRICTIONS ON ECONOMIC SUPPORT FUNDS (ESF) FOR
LEBANON.

The annual restriction that $10M of the ESF designated for
Lebanon be withheld from central government until the
President certifies their armed forces effectively assert
authority over Lebanon's southern border accomplishes little
beyond reducing the amount of ESF available to that country.
Since none of our ESF assistance monies go directly to the
government, but rather to NGOs, this restriction serves
neither as a carrot nor a stick from the perspective of the
Lebanese government. Rather, this provision restricts our
ability to promote democracy and economic development
precisely when we have a strong interest in helping Lebanon
rebuild its institutions. We believe that using this money in
water projects in southern Lebanon will help defuse Lebanese-
Israeli tensions and would directly support USG efforts to
assure careful management of scarce water resources. Amending
this section to allow this funding to be used for water
projects would provide more transparency to Lebanese water
management and thereby more comfort to Israel, than would be
done by keeping this funding in escrow.

SEC. 602. THRESHOLDS FOR CONGRESSIONAL NOTIFICATION OF FMS
AND COMMERCIAL ARMS TRANSFERS.

This section reflects the need for meaningfully increasing
the congressional notification thresholds for arms sales and
exports beyond the relatively modest increases for NATO and
Japan, Australia and New Zealand enacted in section 1404 of
the FY 2003 Foreign Relations Authorization Act. These recent
increases will only minimally reduce the number of
congressional notifications required and will, therefore,
result in the continued notification of what are often rather
insignificant sales of defense articles or services,
particularly since the recent threshold increases apply to so
few countries.
The proposed revision would in effect repeal the modest
increases enacted last year and substitute in their place new
notification thresholds for defense sales and
exports applicable to all countries as follows:
$100,000,000 for Major Defense Equipment; $200,000,000 for
other defense articles and services; and, $500,000,000 for
design and construction services, sold via Foreign
Military Sales. The Administration plans to enhance its
process for consultation on cases of lesser value that may
nonetheless be sensitive in order to ensure an opportunity
for Congressional input and oversight. In that regard, the
Administration would be prepared to an exchange of letters
with the chairs and ranking members of the SFRC and the
HIRC, indicating that we would notify cases of concern to
the committees even though they might be of a lesser value
than the higher thresholds proposed by in this amendment.

SEC. 603. BILATERAL AGREEMENT REQUIREMENTS RELATING TO
LICENSING OF DEFENSE EXPORTS.

The Security Assistance Act of 2000 converted into a legal
requirement the policy which set as a prerequisite for a
foreign country qualifying for a country exemption from
defense export licensing that the country have entered into a
binding bilateral agreement committing it to apply specific
defense export controls comparable to those of the United
States. Fundamental differences between U.S. law and the
legal regimes of the two countries with which the U.S.
commenced negotiations in July 2000, Australia and the U.K.,
have proven that the specific commitments required by the law
are in many instances too strict or specific, making it very
difficult, if not impossible, to conclude an agreement that
will satisfy all the Act's requirements.
To overcome this undue constraint on the President's
otherwise extremely flexible authorities to control
commercial defense trade, it is imperative, at very least,
that appropriate legislative relief be provided. The
amendment would allow the President to waive any of the law's
specific requirements for the agreement. This would give the
Administration, in this case the State Department, latitude
to conclude the best agreements that are achievable, and that
represent in its judgment sufficient significant improvements
in a country's defense export regulatory regime so as to
justify extending an exemption from U.S. defense export
licensing requirements. A second proposed revision would
narrow the scope of the commitments required of a foreign
country, to comport more with reasonable expectations that a
country would be 21 required to apply its enhanced defense
export controls mainly to U.S. origin defense items that are
exempt from U.S. licensing, which are harder to keep track
of, versus those items in that country that are subject to
U.S. licenses.

SEC. 604. AUTHORIZATION OF APPROPRIATIONS.

Subsection (a) authorizes $4,414,000,000 for fiscal year
2004 and such sums as may be necessary for fiscal year 2005
for Foreign Military Financing (``FMF'').
Subsection (b) authorizes $91,700,000 for fiscal year 2004
and such sums as may be necessary for Fiscal Year 2005 for
the International Military Education and Training (IMET)
program. This requested level of funding for 2004 is an
increase of $6,700,000 over the Congress' authorization of
appropriations for fiscal year 2003 and reflects the
Administration's strong support for the IMET program.
Subsection (c) authorizes $385,200,000 for fiscal year 2004
and such sums as may be necessary for fiscal year 2005 for
``Nonproliferation, Anti-Terrorism, Demining, and Related
Programs.''

SEC. 605. COOPERATIVE THREAT REDUCTION PERMANENT WAIVER.

This section provides a permanent annual waiver for the
restrictions contained in subsection (d) of 22 U.S.C. 5952
and the requirements of section 502 of the Freedom Support
Act (Public Law 102-511). Section 1306 of the National
Defense Authorization Act for FY 2003 (Public Law 107-314)
provided authorization for an annual waiver only for Fiscal
Years 2003 through 2005. This permanent annual waiver would
ensure continuity for program planning purposes.

SEC. 606. CONGRESSIONAL NOTIFICATION FOR COMPREHENSIVE
DEFENSE EXPORT AUTHORIZATION.

This provision amends section 36(d) of the Arms Export
Control Act to require congressional defense export
notifications for comprehensive defense export
authorizations. Specifically, the existing procedures for
such notifications of commercial defense exports
applicable under section 36(c) shall now apply in the case
of comprehensive defense export authorizations set forth
in section 126.14 of the International Traffic in Arms
Regulations where the estimated total value of the
transfers anticipated at the time of application meets the
value thresholds of subsection (c) (1). The amendment
addresses a Congressional concern that the congressional
notification provided by the Administration for the Global
Project Authorization, a type of comprehensive defense
export authorization provided for in the above mentioned
regulation, may not have necessarily been viewed to be
covered by section 36(c), despite the willingnesss to
provide such notification. This amendment will clarify
that such notifications are to be provided, pursuant to
the statute.

SEC. 607. EXPANSION OF AUTHORITIES FOR LOAN OF MATERIAL,
SUPPLIES, AND EQUIPMENT FOR RESEARCH AND
DEVELOPMENT PURPOSES.

The amendment would expand the scope of the authority under
section 65 of the Arms Export Control Act to loan items for
cooperative research and development beyond the current NATO
and major non-NATO ally recipients to include ``friendly
foreign countries'' as that term is used in section 27(j)(2)
of the Act. It would permit the loan authority to be used in
a manner that corresponds

[[Page S4853]]

to that for the countries with which cooperative activities
may be conducted under section 27.

SEC. 608. ESTABLISH DOLLAR THRESHOLD FOR CONGRESSIONAL
NOTIFICATION OF EXCESS DEFENSE ARTICLES THAT
ARE SIGNIFICANT MILITARY EQUIPMENT.

This proposal seeks to establish the same dollar limit for
advance notification to Congress for all excess defense
articles. Currently, Congress requires advance notification
of all transfers of excess defense articles that are
Significant Military Equipment (SME), whereas Congress only
receives advance notification for those transfers of other
excess defense articles valued at $7 million or more. SME are
articles for which special export controls are warranted
because of their capacity for substantial military utility of
capability. This proposal would apply the $7 million advance
notice threshold to transfers of all excess defense 23
articles, including SME. This would reduce the number of
congressional notifications sent annually to Congress.

SEC. 609. WAIVER OF NET PROCEEDS RESULTING FROM DISPOSAL OF
U.S. DEFENSE ARTICLES PROVIDED TO A FOREIGN
COUNTRY ON A GRANT BASIS.

This proposal allows the President to waive the requirement
that net proceeds resulting from the disposal of defense
articles provided to a foreign country on a grant basis be
paid to the United States. Existing law limits the waiver
authority to items delivered before 1985. This proposal
supports the goal of reducing the volume of defense articles
worldwide, and reduces the potential that Defense articles
inadvertently may fall into the hands of parties hostile to
the United States. This legislation would retain the
requirement that the net proceeds greater than 5 percent of
the original acquisition value needs to be paid to the United
States Government, absent a Presidential determination that a
waiver is in the national interest of the United States.

SEC. 610. TRANSFER OF CERTAIN OBSOLETE OR SURPLUS DEFENSE
ARTICLES IN THE WAR RESERVE STOCKPILES FOR
ALLIES TO ISRAEL.

This proposal provides the United States increased
authority to transfer obsolete or surplus defense items to
Israel, in exchange for concessions to be negotiated by the
Secretary of Defense. Section 514 of the Foreign Assistance
Act (FAA) of 1961 (22 U.S.C. 2321h) provides that defense
articles included in DoD War Reserve Stocks (WRS) be
transferred to foreign governments only through Foreign
Military Sales (where the foreign government buys the
articles) or through grant military assistance (where the
value of the article is counted against military assistance
appropriations provided for the recipient country). The DoD
maintains a WRS stockpile in Israel. This is a separate
stockpile of U.S.-owned munitions and equipment set aside,
reserved, or intended for use as war reserve stocks by the
U.S. and which may be transferred to the Government of Israel
in an emergency, subject to reimbursement. The DoD now seeks
authority from Congress to transfer to Israel certain of
these WRS stocks to Israel. In return for transferring these
stocks to Israel, the U.S. would negotiate equivalent value
concessions from the Government of Israel. This initiative is
not without precedent. During 1995-96 pursuant to section
509 of the FY94/FY95 Foreign Relations Authorization Act
(P.L. 103-236), the U.S. Government provided $66.62M (fair
market value) of WRS equipment to the Republic of Korea
(ROK) for equivalent value concessions. This proposal
would allow the U.S. to receive fair market value
consideration, relieve the U.S. Government of storage and
other stockpile maintenance costs, and avoid millions in
cost to demilitarize, destroy, or retrograde munitions and
equipment back to the U.S.

SEC. 611. ADDITIONS TO U.S. WAR RESERVE STOCKPILES FOR
ALLIES.

This proposal would allow the United States to transfer
excess items to the DoD War Reserve Stock in Israel. Section
514(a) of the Foreign Assistance Act (FAA) of 1961, provides
for DoD War Reserve Stockpiles in a host country that remain
the property of the U.S. government. These stockpiles enable
equipment and supplies to be prepositioned in key parts of
the world to enhance U.S. and host country defense readiness.
DoD maintains a War Reserve Stockpile in Israel that directly
supports the U.S. European Command's strategy for the defense
of Israel. This proposal is necessary to allow the U.S. to
transfer excess items to the War Reserve Stockpile in Israel.
The transfer allows excess assets to remain under U.S. title
but shifts the costs for maintenance, storage,
transportation, and demilitarization of the excess munitions
to Israel. By agreement with Israel, the U.S. does not pay
for the storage, maintenance, transport, and warehousing of
assets designated as War Reserve Stockpile, although the
assets remain under U.S. title.

SEC. 612. PROVISION OF CATALOGING DATA AND SERVICES.

The United States provides cataloging data and services to
the North Atlantic Treaty Organization (NATO) and member
governments on a reciprocal basis. The United States also
provides such services to several non-NATO countries, such as
Australia and New Zealand, but on a reimbursable basis under
foreign military sales. There are instances when the
interests of the United States would best be served if such
data and services could be provided to a non-NATO country
under a reciprocal agreement. This section would authorize 25
the President to provide such services to non-NATO countries
on a reciprocal basis.
For almost 50 years, the NATO Codification System, which is
based on United States standards for naming, describing and
numbering items of supply, has served as the cornerstone for
interoperability between the United States and its NATO
allies. Many non-NATO countries that participate in joint
exercises and deployments with the United States have adopted
the NATO Codification System. Facilitating the provision of
United States cataloging data for materials produced in the
United States has been and continues to be in the Nation's
strategic interest. This is especially true in light of
contingency operations that have and may be initiated in the
war on terrorism.

SEC. 613. PROVISION TO EXERCISE WAIVERS WITH RESPECT TO
PAKISTAN.

This amending legislation would extend the authority
contained in P.L. 107-57 to make inapplicable for FY 2004
foreign assistance restrictions relating to coups with
respect to Pakistan and. would waive for FY 2005 any coup
restrictions applicable in that year so long as the President
exercised that authority prior to October 1, 2005, the
amended and extended date of expiration of this amendment. It
would also make inapplicable foreign assistance restrictions
relating to debt with respect to Pakistan through fiscal year
2005. With respect to missile sanctions, the amendment would
extend the authority of current law waiving the notification
period for a missile sanction waiver with respect to any
sanctions imposed on foreign persons in Pakistan. It would
also continue the reduced notification period for drawdowns
and transfer of excess defense articles.
The coup waiver of section 508 of the Foreign Operations
Appropriations Act in Section 1 is most critical for
Pakistan. Section 1(b)(1), as amended, would legislatively
extend the authority to waive coup-related sanctions for
Pakistan for FY 2004 and FY 2005--the President has waived
the sanction for FY 2003 under the current authority. Five
(5) days advance notice to Congress required under P.L 107-57
is continued. Section 2, as amended, would waive the
requirement for a 45 day advance notification to Congress
prior to waiving the missile 26 sanctions imposed on Pakistan
pursuant to section 73 of the AECA with respect to any such
sanctions imposed on foreign persons in Pakistan (versus
waiving only with respect to those sanctions imposed prior to
January 1, 2001, which would have already expired in any
event). Section 3 exempts Pakistan from foreign assistance
prohibitions in section 512 of the Foreign Operations
Appropriations Act relating to loan defaults by foreign
nations and similar restrictions contained in the Foreign
Assistance Act through fiscal year 2005, the period through
which the exemptions or waiver authority with respect to the
coup sanctions would be extended by these amendments.

TITLE VII--INTERNATIONAL PARENTAL CHILD ABDUCTION PREVENTION ACT OF
2003

General: The International Parental Child Abduction
Prevention Act of 2003 would amend Section 212(a)(10)(C) of
the Immigration and Nationality Act (INA) and is proposed to
provide additional tools to deter international parental
child abduction and/or wrongful retention, and to create
incentives for the return of children abducted from or
wrongfully retained outside the United States by their
foreign national parent or others., This measure's efficacy
in particular cases of international child abduction will
necessarily depend in large part on the degree to which the
taking parent and/or their family members desire to travel to
the United States and apply for a visa. Unlike legislation
proposed last year in the Government Reform Committee, this
measure would not adversely affect the lives or travel of
innocent adult American citizens. This legislation also
seeks. to avoid certain counterproductive definitional
difficulties from which the earlier proposals suffered, while
achieving many of the same results intended.
Section 702(a)(3). This provision would expand the range of
persons who could be designated inadmissible by the Secretary
of State in international child abduction and wrongful
retention cases, even though those individuals were not
culpable in the abduction or wrongful retention. This would
be accomplished by amending existing subclause (III) of INA
212(a)(10)(C)(ii) to include a wider range of persons who
could be designated inadmissible based on their familial
connections to an abducting alien.
Sections 702(a)(4) and (5). This language specifies the
circumstances under which inadmissibility based on any one of
subclauses I, II, or III of INA 212(a)(10)(C)(ii) will
terminate. It also makes a purely technical amendment to
clarify that the concluding clause of (C)(ii) is the
operative provision for subclauses (C)(ii)(I), (II), and
(III). As originally enacted, the concluding clause is
erroneously printed as if it were part of subclause (III),
when it in fact clearly applies to each of subclauses (I)-
(III). Finally, the concluding clause is amended to provide
that inadmissibility based on (C)(ii) would terminate with
the return of the abducted child or the child's attainment of
age 21.
Section 702(b). This would create new subsections (iv)-
(vii). Subsection (iv) would (1) make explicit the Secretary
of State's authority to cancel designations of
inadmissibility applicable to relatives of abductors,

[[Page S4854]]

and (2) make clear that inadmissibility pursuant to
subclauses (I) and (II) (which is not discretionary) will
expire only on occurrence of the events specified in INA
212(a)(10)(C)(ii) (the return of the abducted child or the
child reaching age 21). These amendments will maximize the
leverage available to the Department when inadmissibility is
used to encourage relatives to place pressure on abductors
for the return of abducted children.
New subsection (v) would require the Department of State to
identify the persons potentially inadmissible under clause
(ii) of INA 212(a)(10)(C) .
New subsection (vi) would require the Department to enter
the names of persons inadmissible or potentially inadmissible
for a visa under subsections (i) or (ii) of INA 212(a)(10)(C)
into the visa lookout system. Together these requirements
would codify what the Department does through its intake
procedures to ensure that individuals who may be inadmissible
under the provisions of subsections (C)(i) and (ii) are
identified and that their names are entered into the visa
lookout system.
New subsection (vii) defines ``child'' in a way that is not
inconsistent with the word's meaning throughout the INA while
taking account of concerns about abducted or wrongfully
retained children who marry at very young ages, often against
their will. The definition proposed seeks to avoid the
unintended consequences of potential alternatives. For
example, H.R. 5715, introduced last session, would have
effectively created a class of permanent children for
purposes of the visa ineligibility laws, frustrating the
Department's efforts to promote reconciliation and contact
within what are often multinational families. The effect of
the definition proposed in H.R. 5715 would have been to
compromise the rights normally accorded adult U.S. citizens
to travel while doing little to promote the return of
abducted or wrongfully removed children. This subsection also
changes the definition of ``sibling'' to include step- and
half-siblings.
Section 702(c). Finally, this Title includes a requirement
that the Department of State report to Congress annually for
five years with a description of the operation of
212(a)(10)(C), including data on the number of visas denied
and names entered into the visa lookout system on the basis
of the statute. The report will provide Congress with
information useful to its ongoing communication with the
Department about the effectiveness of efforts to deter
international parental child abductions and to promote the
return of abducted and wrongfully retained American children
to the United States.

TITLE VIII--MISCELLANEOUS PROVISIONS

Subtitle A--Streamlining Reporting Requirements

SEC. 801. REPORTS ON BENCHMARKS FOR BOSNIA.

This section would eliminate reporting requirements on
progress toward achieving the benchmarks for a sustainable
peace process in Bosnia that must be done as long as U.S.
ground combat forces continue to participate in the SFOR.
Significant reductions in U.S. and allied troops have
continued regularly since 1998. Regular briefings to
congressional staff (and Members, as desired) are sufficient
to address continuing concerns. This is a very timeconsuming
report for the Departments of State and Defense.

SEC. 802. REPORT CONCERNING THE GERMAN FOUNDATION
``REMEMBRANCE, RESPONSBILITY, AND THE FUTURE.''

This section would repeal this semi-annual report required
by section 704 of the FY 2003 Foreign Relations Authorization
Act. The State Department, in particular the office of the
Special Envoy on Holocaust Issues, offers regular formal and
informal briefings to Members and staff on this issue. This
report duplicates the information conveyed at these
briefings. Moreover, we have no authority to require the
``Eagleburger Commission'' (the International Commission on
Holocaust Era Insurance Claims, or ICHEIC) or the Conference
on Jewish Material Claims against Germany to supply the data
needed for this report.

SEC. 803. REPORT ON PROGRESS IN CYPRUS.

This report is currently due every two months. This section
would change it to a semi-annual requirement. The
Administration is in regular contact with Congress on the
Cyprus situation. Generally, the situation does not change
rapidly in two months. If it did, the Administration would
brief Congress immediately.

SEC. 804. REPORTS ON ACTIVITIES IN COLOMBIA.

This section repeals the two reports required by section
694 of the FY 2003 Authorization Act (P.L. 107-228).
Section 694(a) requires the Secretary, not later than 180
days after the enactment of the Foreign Relations
Authorization Act, Fiscal Year 2003, and annually thereafter
to report to Congress on the status of activities funded or
authorized, in whole or in part, by the Department or the
Department of Defense in Colombia to promote alternative
development, recovery and resettlement of internally
displaced persons, judicial reform, the peace process, and
human rights. This report duplicates material from a number
of other reports on Colombia:
USAID includes much of the information that Section 694(a)
requires in the Congressional Budget Justification it submits
annually. For each program area, USAID provides progress on
implementation.
Although it does not specifically address U.S.-funded
activities, the Department's annual Country Reports on Human
Rights Practices contain detailed information concerning
human rights and internally displaced persons in Colombia.
Although not specifically required to report on internally
displaced persons, judicial reform, the peace process, and
general human rights matters, a number of other reports
typically include information on these issues:
Pursuant to section 564(c) of the FY 2003 Foreign
Operations, Export Financing, and Related Programs
Appropriations Act (P.L. 108-7), the Secretary is required to
submit two reports and certifications to Congress in
conjunction with the obligation of funds for the Colombian
Armed Forces describing actions taken by the Colombian Armed
Forces to meet the human rights conditions on the provision
of assistance in section 564(a).
Pursuant to section 3204(e) of the Military Construction
Appropriations Act, 2001 (P.L. 106-246), the President is
required to report to Congress semiannually through Fiscal
Year 2005 on costs incurred by any department, agency, or
other entity of the executive branch during the two previous
quarters in support of Plan Colombia. Each of those reports
includes information on subobligations of funds by the
Department of State in support of Plan Colombia.
Pursuant to section 3204(f) of P.L. 106-246, the President
provides a bimonthly, classified report to Congress on the
aggregate number, locations, activities, and lengths of
assignments for all U.S. military personnel and U.S.
individuals civilians retained as contractors involved in the
antinarcotics campaign in Colombia. These reports include
certain information on contract personnel who are
participating in U.S.-funded efforts to promote alternative
development, recovery and resettlement of internally
displaced persons, judicial reform, the peace process, or
human rights.
Finally, it is burdensome and inefficient to require the
Department of State to report on activities of the Department
of Defense.
Section 694(b) requires an annual report on the activities
of U.S. businesses that have entered into agreements in the
previous 12-month period with the Departments of State or
Defense to carry our counternarcotics activities in Colombia.
Information responding to some of the information sought in
this report is available in the classified report we submit
to the Congress bimonthly pursuant to section 3204(f) of P.L.
106-246. We also cannot easily track and report on DOD's
contract activities.
We are also concerned that recurrent, public reporting of
the names of businesses under contract to the Department of
State to support counternarcotics activities is likely to
increase the security risks to these businesses and their
employees both in Colombia and the United States. The
Department finances contracts for counternarcotics support in
Colombia expressly because the Colombian National Police
cannot meet the need for all services. P.L. 106-246, as
amended by the FY 2002 Foreign Operations Act (P.L. 107-115),
already provides limitations on the numbers of U.S. contract
personnel permitted in Colombia in support of
counternarcotics programs. Moreover, the Department is making
every effort to minimize the number of U.S. citizen personnel
employed by its contractors. The U.S. Embassy in Colombia
continually assesses the potential for U.S. businesses to be
involved in hostilities, and the risks to personal safety of
their personnel. These risks vary widely from day to day and
week to week. A report at any given moment in time would not
have general applicability.

SEC. 805. REPORT ON EXTRADITION OF NARCOTICS TRAFFICKERS.

This section repeals Section 3203 of the 2001 Military
Construction Appropriations Act. This section requires the
Secretary of State to report biannually during the period
Plan Colombia resources are made available on extradition of
narcotics traffickers from any country receiving assistance
in support of Plan Colombia from the U.S. This reporting
requirement is burdensome and duplicative of other required
reports. For instance, section 696 of the FY 2003 Foreign
Relations Authorization Act requires the Secretary of State
to submit a report on extradition practice between the United
States and governments of all foreign countries with which
the United States has an extradition relationship that
contains numerous similar requirements. This section 696
report includes: an aggregate list, by country, of the number
of extradition requests made by the United States to that
country in 2002; the number of fugitives extradited by that
country to the United States in 2002; an aggregate list, by
country, of the number of extradition requests made by that
country to the United States in 2002 and the number of
fugitives extradited by the United States to that country in
2002; any other relevant information regarding difficulties
the United States has experienced in obtaining the
extradition of fugitives; and a summary of the Department's
efforts in 2002 to negotiate new or revised extradition
treaties and its agenda for such negotiations in 2003.
Additionally, the Department's annual International Narcotics
Control Strategy Report also contains certain information
about extradition from countries worldwide with which we have
extradition treaties in force. We would also be happy to
brief members of Congress or their staffs on any issues of
particular concern.

[[Page S4855]]

SEC. 806. REPORT ON TERRORIST ACTIVITY IN WHICH UNITED STATES
CIVILIANS WERE KILLED AND RELATED MATTERS.

This section would eliminate this semi-annual report. The
information is already available elsewhere: the Americans
killed overseas in terrorist attacks are prominently listed
in the Introduction to the Department's annual Patterns of
Global Terrorism report to Congress, and the names are
available on the State Department's Rewards for Justice
web-site. PLO activities are also covered in the semi-
annual PLO Compliance with Obligations Under the Oslo
Accords Report. Moreover, the names and details of
Americans killed overseas in terrorist attacks are well
covered in the press. The separate compilation and
preparation of a report specifically on American
casualties diverts scarce manpower resources from other
activities to fight terrorism.

SEC. 807. REPORT AND WAIVER REGARDING EMBASSY IN JERUSALEM.

This section would make the waiver and accompanying report
an annual, rather than semi-annual, requirement. The
Jerusalem Embassy Act prohibits obligation of more than our
annual overseas building acquisition and maintenance
appropriation unless the Secretary reports to Congress that
we have opened an embassy in Jerusalem. This prohibition may
be waived for successive six-month periods on ``national
security interest'' grounds; each waiver must be accompanied
by a report detailing progress made during the preceding six
months on moving our embassy to Jerusalem. Although the
reports have not significantly varied from one another, they
still require a significant amount of work to draft and
clear.

SEC. 808. REPORT ON PROGRESS TOWARD REGIONAL
NONPROLIFERATION.

This section repeals section 620F(c) of the Foreign
Assistance Act of 1961 which addresses efforts made by the
United States to achieve regional agreement on nuclear
nonproliferation in South Asia and a list of obstacles to
such an agreement. The report is duplicative, since South
Asia nonproliferation issues are covered extensively in other
classified and unclassified reports by State and the CIA. For
example, India and Pakistan are included in the major
nonproliferation report done annually pursuant to section
1308 of the FY 2003 Foreign Relations Authorization Act and
in the CIA's annual ``721 Report'' on proliferation
activities.

SEC. 809. REPORT ON ANNUAL ESTIMATE AND JUSTIFICATION FOR
SALES PROGRAM.

Section 25(a) requires the President to submit a report to
the SFRC, HIRC, and the House and Senate Appropriations
Committees by February 1 of each year listing all FMS and
commercial sales of military hardware anticipated in the
coming year. Preparation of this report is extremely labor-
intensive, as security assistance officers at U.S. embassies
around the world must begin compiling data in October.
Unfortunately, while this report grows in size and complexity
each year, its value and utility are increasingly
questionable. Since the report includes all possible U.S.
sales of military equipment (760 in 2002) and has a dollar
threshold for reporting sales that is half that required for
congressional notification of actual sales, it includes a
large number of potential sales that are too minor to have
genuine military significance, or, in fact, never
materialize. In recent years, less than 20% of the entries on
the report (58 pages long in 2002) result in actual sales
during the reporting year. It is also redundant as a
reporting channel. The congressional committees that receive
this report also receive similar data for FMS sales on a
quarterly basis from reports provided under DSCA under
section 36(a)(6) of the AECA which cover all projected FMS
sales through the end of the year. Furthermore,
prenotification consultations assure that congressional staff
are advised of potentially controversial transfers well in
advance of formal notification.

SEC. 810. REPORT ON FOREIGN MILITARY TRAINING.

This section seeks to bring the military training report
required by section 656 of the Foreign Assistance Act of 1961
into conformity with a very similar report required in the
annual Foreign Operations Appropriation Acts (FOAA) and to
eliminate those portions of the current section 656
requirement that make it necessary to classify major portions
of the report. We intend to seek a similar amendment to the
FOAA requirement.
To bring the section 656 requirement into conformity with
that of the FOAA, this amendment ``excludes training provided
through sales'' from the reporting requirement and changes
the date upon which the report is due to the Congress from
January 31 to March 1.
To eliminate the portions of the report that must be
classified due to foreign policy or force protection reasons,
this amendment would eliminate the requirement to report on
projected training (i.e., ``training proposed for the current
fiscal year''), training locations, the U.S. military units
providing the training, and training provided through sales.
With these changes, a completely unclassified report could be
produced that would be accessible to a wider public audience.

SEC. 811. REPORT ON HUMAN RIGHTS VIOLATIONS BY IMET
PARTICIPANTS.

This section would repeal the report on human rights
required by section 549 of the Foreign Assistance Act of 1961
(added by section 1212 of the FY 2003 Foreign Relations
Authorization Act). This report requires the Secretary of
State to submit an annual report ``describing, to the extent
practicable, any involvement of any foreign military or
defense ministry civilian participant in . . . [the IMET
program] in a violation of internationally recognized human
rights.'' This provision sends the very dangerous signal that
the USG will be tracking anyone enrolled in IMET thereafter.
This will deter people from participating in IMET and, thus,
damage U.S. national security interests. Moreover, while the
Bureau of Democracy and Human Rights maintains data necessary
to prepare the annual Human Rights Report, data is not
systematically collected on individual human rights
violators. As a result, if the department were required to
report on human rights violators who attended IMET courses
prior to the enactment of the Leahy Laws, we would be forced
to rely on the records and memories of security assistance
officers in U.S. embassies around the world which would
likely be of uneven quality.

SEC. 812. REPORT ON DEVELOPMENT OF THE EUROPEAN SECURITY AND
DEFENSE IDENTITY (ESDI) WITHIN THE NATO
ALLIANCE.

The provision in section 1223 (22 U.S.C. 1928 note)
requires the Secretary of Defense to provide Congress with
various reports on the development of the European Security
and Defense Identity (ESDI) within the NATO Alliance. The
ESDI would enable the Western European Union, with the
consent of the NATO Alliance, to assume the political control
and strategic direction of specified NATO assets and
capabilities. This report is obsolete and provides
information of limited utility. The requested information is
no longer relevant and does not reflect the shift in focus
between the European Union and NATO.

SEC. 813. REPORT ON TRANSFERS OF MILITARY SENSITIVE
TECHNOLOGY TO COUNTRIES AND ENTITIES OF
CONCERN.

The provision in section 1402(b)(2) (22 U.S.C. 2778)
requires the Secretary of Defense, in consultation with the
Joint Chiefs of Staff and the Director of Central
Intelligence, to provide Congress with an assessment of the
cumulative impact of licenses granted by the U.S. for exports
of technologies and technical information with potential
military applications during the preceding 5-calendar year
period on the military capabilities of such countries and
entities, and countermeasures that may be necessary to
overcome the use of such technologies and technical
information. This report is redundant with reports already
submitted to Congress by the Department of State, the
Department of Commerce, and the Central Intelligence Agency.

Subtitle B--Other Matters

SEC. 814. NUCLEAR REPROCESSING TRANSFER WAIVER.

This section would amend section 102(a) of the Arms Export
Control Act so as to permit Presidential waivers to be
granted once again on a one-time, rather than fiscal year,
basis. When the Nuclear Proliferation Prevention Act of 1994
(NPPA) folded section 670 of the Foreign Assistance Act (the
so-called ``Glenn Amendment'', dealing with nuclear
reprocessing transfers) into the Arms Export Control Act as a
new section 102(a), the NPPA modified the waiver authority
originally in section 670. This change eliminated the
President's ability to grant one-time waivers from sanctions
(cutoff of U.S. economic and military assistance) and
replaced it with a requirement that any waivers may only be
granted in the fiscal year to which they will apply. The
ramifications of this change only became clear after there
were real cases to deal with. Specifically, any country,
having once been determined by President to have violated
section 102(a), is placed in an enduring and
unchangeable state of annual jeopardy of a U.S. aid
cutoff. This is the case even where the activity that
triggered the violation was subsequently terminated, the
countries involved are not proliferation threats, and the
U.S. is fully satisfied with these countries' current
nuclear nonproliferation policies and practices. We do not
believe that this was the intent of Congress when it made
the waiver provision change.
The re-establishment of the authority for the President to
grant one-time waivers under section 102(a) would not
eliminate our nuclear nonproliferation leverage under this
section since the President has the authority to impose
sanctions should any resumed or new activities occur. More
importantly, the processing of annual waivers from section
102(a) sanctions for situations long since satisfactorily
resolved is not a constructive use of this and future
Presidents' time and has a continuing potential to be an
irritant to our relations with these countries. The President
has no authority to put this situation to rest once and for
all absent a change in the law to allow, once again, one-time
waivers for Glenn Amendment violations.

SEC. 815. COMPLEX FOREIGN CONTINGENCIES.

This section authorizes the President to provide assistance
to quickly and effectively respond to or prevent unforeseen
complex foreign crises. This authority will be used to
provide assistance for a range of foreign assistance
activities, including support for peace and humanitarian
intervention operations to prevent or to respond to foreign
territorial disputes, armed ethnic and civil conflicts that
pose threats to regional and international peace, and acts of
ethnic cleansing, mass killing or genocide. Use of this
authority will require a determination

[[Page S4856]]

by the President that a complex emergency exists and that it
is in the national interest to furnish assistance in
response. These authorities will not be used to fund
assistance activities in response to natural disasters
because existing contingency funding is available for that
purpose. This section authorizes appropriation of such sums
as may be necessary.

Department of State,

Washington, DC, April 2, 2003.
Hon. Richard G. Lugar,
Chairman, Committee on Foreign Relations,
U.S. Senate.
Dear Mr. Chairman: I am pleased to transmit proposed
legislation to authorize appropriations for the Department of
State to carry out its authorities and responsibilities in
the conduct of foreign affairs for fiscal years 2004 and
2005.
The attached FY 2004-2005 Foreign Relations Authorization
Bill also contains provisions related to Department of State
authorities and activities, organization and personnel,
international organizations, security assistance, child
abduction prevention, and other miscellaneous provisions.
Key sections for the Department, in addition to the FY
2004-2005 authorization of appropriations, would raise the
peacekeeping assessment cap, provide for a permanent annual
CTR waiver, and provide for greater flexibility in our
administration of security assistance. Also included is an
emergency fund for complex foreign crises which may be
important to operations in Iraq.
Title VII of the proposed legislation, the International
Parental Child Abduction Prevention Act of 2003, is designed
to deter international abductions and unlawful retentions and
pressure an abductor to return a child to the parent with
lawful custody. This could provide an important new lever in
addressing child abductions worldwide.
The FY 2004 Budget contains the first step toward a capital
security cost sharing program that will ensure that all
agencies and departments pay a fair share of the cost of new,
secure diplomatic and consular facilities. The full program
implementation is now under development, and a legislative
proposal may be forwarded at a later date. Other provisions
may be submitted in the near future in a supplemental
package. The Office of Management and Budget advises that
there is no objection to the submission of this proposed
legislation to the Congress and that its enactment would be
in accord with the President's program.
We look forward to working with the Committee on this
important legislation.
Sincerely,

Paul V. Kelly,

Assistant Secretary,
Legislative Affairs.

____________________