4014 CONGRESSIONAL RECORD-SENATE

SENATE-Friday, March 7, 1986 March 7, 1986

<Legislative day of Monday, February 24, 1986)

The Senate met at 10 a.m., on the expiration of the recess, and was called to order by the President pro tempore [Mr. THURMOND].

The PRESIDENT pro tempore. Our prayer this morning will be offered by the Reverend Chris Halverson, pastor of Chesterbrook Presbyterian Church, Falls Church, VA.

PRAYER The Reverend Richard C. Halverson,

Jr., pastor, Chesterbrook Presbyterian Church, Falls Church, VA, offered the following prayer:

Let us pray. Father in Heaven, on behalf of the

people of the Senate, who experience great trials, burdens, and disappoint­ments, we recall the words of a well­known hymm:

"What a friend we have in Jesus, all our sins and griefs to bear! What a privilege to carry everything to God in prayer! Oh, what peace we often for­f eit, Oh what needless pain we bear, all because we do not carry everything to God in prayer."

Lord, this is a prayer for prayer. By Your spirit assist all the adorations, intercessions, and petitions that come to You from here. May they be sincere not sermonic, effectual rather than ritualistic.

We ask this that You might become known and glorified throughout the country as a God Who is, Who hears, and Who answers prayer.

In Christ's name. Amen.

Senator THURMOND, they are ready to do business, amendments can be of­fered, votes can be taken. I hope that we would push ahead until 3 or 4 o'clock this afternoon on this matter and then again on Monday. We would like to conclude action on the bal­anced budget amendment not later than Thursday of next week because we have a number of other items that we need to consider in the next 2 or 3 weeks.

Mr. President, I have been advised that the Fed has dropped the discount rate to 7 percent, which ought to be good news for most Americans, par­ticularly the American farmer. There was some indication that there was a glitch in the farm bill that we passed, one word-instead of "shall" it should have been "should." I hope it is not necessary to delay that bill any longer. It was with reference to the Harkin amendment, which everyone under­stood. The record is clear that it was discretionary, that it was a sense-of­the-Senate resolution, but we are now in consultation with lawyers all over town on both sides trying to determine if in effect what we passed was manda­tory, although it was intended only as a sense-of-the-Senate resolution urg -ing the Secretary to make advanced loan payments.

Mr. President, I reserve the remain­der of my time.

RECOGNITION OF SENATOR McCONNELL

RECOGNITION OF THE MAJORITY LEADER

The PRESIDING OFFICER. Under the previous order, the Senator from Kentucky is recognized for not to

The PRESIDENT pro tempore. The exceed 15 minutes. able majority leader is recognized.

SCHEDULE Mr. DOLE. Mr. President, under the

standing order the leaders have 10 minutes each, and I will reserve the time of the distinguished minority leader and the remainder of any time I do not use; then special orders for Sen­ators McCONNELL and PROXMIRE for not to exceed 15 minutes each, with routine morning business not to extend beyond 10:45 a.m., with state­ments limited therein to not more than 5 minutes each. Then we go back to the balanced budget constitutional amendment. Pending is the amend­ment in the nature of a substitute, amendment No. 1652.

As I understand the distinguished chairman of the Judiciary Committee,

WALKING HAND IN HAND Mr. McCONNELL. Mr. President,

one of the principal tasks we have as U.S. Senators is to do our very best to make the world a safer place for gen­erations to come. I was recently re­minded of this awesome responsibility when reading a poem written by a very bright little 10-year-old girl in Louis­ville, KY, who just happens to be my daughter Claire. Mr. President, I should like to share this message with all of my colleagues and all those who read the CONGRESSIONAL RECORD. I ask unanimous consent that it appear in the RECORD.

There being no objection, the poem was ordered to be printed in the RECORD, as follows: Reply to me, leader of this land

Shall these nations ne'er walk hand in hand.

And shall the Union and the States, Ne'er walk peacefully through each others

gates. Will you not hear your children's plea, To live in peace and comfort with thee. Should I, <in this war>. be the first to

perish, In this land that we all cherish. Reply to me, leader of this land, Shall these nations ne'er walk hand in

hand.

THE BUSINESS OF CONFLICT AND THE LIABILITY LOTTERY Mr. McCONNELL. Mr. President,

the liability insurance crisis has been exerting growing pressure on our abili­ty to cope with the costs of litigation, and to ensure against risks in a wide variety of fields. It is a crisis of the highest order, for it threatens both our economic well-being and our sense of community and cooperation. When the threat of being sued is foremost in one's mind, a subtle but insidious change in one's attitude about society takes place.

In the past 2 days, both daily news­papers in Washington devoted editori­al space to this crisis. The Washington Post published a piece entitled "The Business of Conflict," by Robert J. Samuelson, while the Washington Times published a commentary by Raymond Price entitled "The Liability Lottery." I ask unanimous consent that the text of both articles be pub­lished in full in today's RECORD at the conclusion of my remarks.

The PRESIDING OFFICER. With­out objection, it is so ordered.

CSee exhibit 1.J Mr. McCONNELL. Mr. President,

the Samuelson piece correctly noted that we need to come to grips with the reality that the business of law is an economic business. Consequently, Mr. Samuelson noted, "We need legal rules with proper economic incentives. In damage suits, the losing side should always pay the other side's legal fees. This would deter weak suits by reduc­ing the pressure for expedient settle­ments that are less than the cost of litigation. And a losing defense ulti­mately would pay if its delays ran up the other side's costs."

In essence, this is an argument for adoption of what the legal profession calls the English rule-having the losing party in litigation pay all of the costs, including the other party's at­torney fees. Currently, in this country, we follow the American rule, with

e This "bullet" symbol identifies statements or insertions which are not spoken by the Member on the floor.

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4015 each side paying its own attorney fees. If you sue and lose, you pay the filing fees and other expenses, but these are usually minimal compared to the at­torney fees involved. Remarkably, almost no other country in the world takes such an approach. They all use the English rule and, not surprisingly, they have been spared the liability crisis that we now face.

I believe Mr. Samuelson may be cor­rect, and I have been for some time considering the need for American courts to abandon the incentive to sue, which the American rule represents. The bill I have introduced to deal with the liability crisis, S. 2046, currently takes a different approach, limiting contingency fees for attorneys and im­posing sanctions for frivolous litiga­tion. But shifting attorney fees to the losing party may be an appropriate complement to that proposal, and I intend to explore that issue in connec­tion with S. 2046 at the hearing the Judiciary Committee holds on my bill on March 26, 1986.

EXHIBIT 1 [From the Washington Post, Mar. 5, 1986]

THE BUSINESS OF CONFLICT

<By Robert J. Samuelson> We now are seeing the glimmers of a new

legal crisis in America. It arises from the clamor over liability insurance and a vague unease that lawyers are exercising too much influence. The United States has more law­yers <an estimated 675,000 of them in 1985) per capita than any other major nation. Since 1950, their numbers have grown twice as fast as the population. But our sense that lawyers are meddling too much sits awk­wardly with the great American faith in law as a remedy for almost any ill. Or, as the title of a recent book put it, "Sue the B*st*rds."

The key to understanding this confusion­if not entirely dispelling it-is to grasp a basic truth. Lawyers and law firms are busi­nesses, and their business is conflict. Cre­ative lawyering often means exploiting or creating conflicts. Just as companies devel­op new products, so lawyers search for new legal theories on which to sue. Rights of action are lawyers' markets. But their eco­nomic self-interest-their legal innova­tions-may subvert their social usefulness. The civil-justice system's essential purpose is to resolve conflict, not to excite it.

It's often a pretense that lawyers repre­sent other people's grievances rather than their own economic interests. In thousands of cases, lawyers, not their supposed clients, are the main aggressors. In the early 1980s, for example, many new "high-technology" companies sold stock to the public. Many of these admittedly speculative stocks subse­quently collapsed. Now there are dozens of suits against these companies, their officers, accountants and insurance companies alleg­ing that investors were misled. But the suits have been brought by a few law firms on a contingency-fee basis. The lawyers-who typically take 30 percent or more of a settle­ment or damages-stand to win the most.

Of course, a rising tide of lawsuits is not the only reason for more lawyers. Greater government regulation, complicated tax rules and expanding international business all have contributed. But the growth of law­suits also has a big multiplier effect. It re-

quires defense lawyers and lawyers to advise people and companies how to avoid being sued. Consider the evidence of more litiga­tion:

Since 1970, membership of the Association of Trial Lawyers of America has nearly tri­pled, to 60,000. <In the same period, the number of lawyers rose 90 percent.) To belong, half a lawyer's work must be repre­senting people in personal-injury cases.

The number of product-liability cases filed in federal courts has risen from 1,579 in 1975 to 10,745 in 1984. Although most cases are settled before trial, the volume of jury awards in product-liability and medical-mal­practice suits roughly tripled between 1975 and 1984, says Jury Verdict Research Inc.

Since the mid-1970s, suits against officers and directors of public corporations-from shareholders, employes, customers and others-have more than doubled, according to The Wyatt Co., a Chicago actuarial firm. Many of these cases are contingency-fee cases.

To be fair, the liability-insurance mess­complaints from doctors, cities, consulting engineers, day-care centers and others that insurance is too costly or unavailable-is not entirely the doing of lawyers. The insurance industry bears much of the blame. A few years ago, companies lowered premiums to compete for business. They expected to earn lush profits by investing premium income at high interest rates. Declining interest rates wrecked that gamble and, combined with steep insurance losses, triggered premium increases and coverage cutbacks. But the in­surers ' blunder only mitigates the role of lawyers.

If courts adopt expansive liability doc­trines, then the costs-not just insurance­will be huge. The gravest danger is becom­ing a precautionary society. Unintended side effects already are emerging. The threat of suits has driven some drug companies from manufacturing vaccines; consulting engi­neers refuse to work on hazardous sites for fear of suits. Companies are losing outside directors for lack of liability coverage. As at­torney Peter Huber argues, courts deal poorly with the full effects of products whose public benefits overwhelm the risks. Courts see only mistakes. "Beneficiaries of risk-reducing products ... do not litigate," be writes.

Stating the problem is easier than solving it. Lawsuits are an important discipline on corporate and individual irresponsibility. They do compensate victims. There is no neat dividing line between too much or too little liability. But we can impose self-re­straint on the legal system by treating law­yers for what they are-businesses. We need legal rules with proper economic incentives. In damage suits, the losing side should always pay the other side's legal fees. This would deter weak suits by reducing the pres­sure for expedient settlements that are less than the cost of litigation. And a losing de­fense ultimately would pay if its delays ran up the other side's costs.

These common-sense ideas strike many lawyers as radical. They aren't. One inevita­ble complaint is that having losers pay would make it tougher for people of modest means to bring legitimate cases to court. This is nonsense. The reality is that the contingency-fee lawyer already is financing these cases. Strong cases would be more at­tractive under this system, because aside from the contingency fee, the lawyer also would recover costs. But weak cases would be less attractive <the losing contingency-fee lawyer would pay the other side's legal

fees>. and they should be. The system exists to settle conflicts, not to generate lawyer caseloads. In a subtle way, commercial inter­ests of lawyers corrupt the law.

So let the lawyers grumble. If the current insurance mess leads to any good, it will be renewed political interest in our legal system. And that is as it should be. To para­phrase an old cliche: Law sometimes is too important to be left to lawyers.

[From the Washington Times, Mar. 6, 1986] THE LIABILITY LOTTERY

<By Raymond Price> Suddenly, the great American liability lot­

tery isn't as much fun as it used to be. Its costs are coming home.

Sure, people still dream of striking it rich in the courts. Newspaper readers still are entranced by stories about $50 million damage suits, though the competition is such that a publicity-seeking plaintiff may soon have to demand $50 billion to get a real headline. Fathers still want their daughters to become lawyers so they can get on the gravy train. But it's dawning on people that there is, after all, no free lunch. The $55 billion that America's lawyers got last year in legal fees had to come from somewhere. Someone had to pay for all those multimillion-dollar damage settle­ments. The insurance business is not a public charity.

In some of the high-risk medical speciali­ties-notably obstetrics, neurosurgery, and anesthesiology-individual premiums for malpractice coverage now reach $100,000 a year and more. Manufacturers have been plunged into a legal jungle of often bizarre product-liability cases. In the last decade, while the number of medical malpractice suits doubled, the number of product-liabil­ity suits increased tenfold.

One result is that major pharmaceutical companies are pulling back from vaccine de­velopment; the legal risks are too great. And G.D. Searle & Co. recently stopped offering its widely used intrauterine contraceptive device, not because the product was unsafe-it wasn't-but because it was cost­ing the company too much to defend itself against lawsuits.

Now, cities and towns are finding their li­ability insurance premiums tripled and quadrupled. This means increased taxes and decreased municipal services. Ski operators are being driven to the wall by insurance costs. So are bar and restaurant owners, and even commercial fishermen.

The nationwide explosion of insurance rates is partly the fault of the insurance in­dustry's own fierce competition for new business during the period of high interest rates a few years ago. In order to get premi­um income for high-interest investments, in­surers wrote risky policies and kept premi­ums too low. But this is a cyclical phenome­non, which would right itself in time.

More fundamentally, the insurance crisis is one that we've brought on ourselves.

One of the more endearing American traits is the habit of siding with the under­dog. But underdogs are not always right, and the habit can become downright larce­nous-especially when coupled with the popular notion that deep pockets are there to be picked.

We have to restore, somehow, the old sense of individual responsibility: the notion, however quaint, that if I slip on the sidewalk and break my arm, it's my prob­lem. I should have looked where I was going. The first thing the typical American

4016 CONGRESSIONAL RECORD-SENATE March 7, 1986 does today when he slips on a sidewalk is to call a lawyer, in the hope that he can make a killing. It's the next best thing to winning the lottery and not that much difference. It's the promise of something for nothing, of riches from nowhere.

The costs of the litigation explosion go far beyond soaring insurance premiums and bloated costs of everything we buy. It has changed the nature of our society, and changed it for the worse.

We've gone from a presumption of good faith to a presumption of bad faith , from co­operation to exploitation. And we've been led there by tort lawyers and consumer ac­tivists, telling us there's a scapegoat for ev­erything and there's a pot of gold in the courtroom.

If you're my age, you remember the days when the natural reaction to finding some­one injured and bleeding beside the road was to render first aid. Now it's to call an ambulance and not touch the injured person without a lawyer present. If the pa­tient dies before the ambulance gets there, too bad-but at least you won't be wiped out by a damage suit.

In the real world, accidents happen. Behind the litigation explosion also lies an assumption that life is meant to be risk-free and painless, and anything that causes pain is somebody else's fault and entitles us to compensation. This is the most insidious doctrine of all, and it's no wonder t hat young people raised on it fall into the escap­ism of drugs and the bleakness of despair. Life is not risk-free. It never has been, it never will be, and those who ultimately tri­umph over its challenges are those who don't expect it to be.

The nation's lunge into litigiousness is costing us heavily in our pocketbooks. But its greater harm may be to our spirit .

RECOGNITION OF SENATOR PROXMIRE

The PRESIDING OFFICER. Under the previous order, the Senator from Wisconsin [Mr. PROXMIRE] is recog­nized for not to exceed 15 minutes.

HOW SERIOUS IS SOVIET ARMS CONTROL CHEATING?

Mr. PROXMIRE. Mr. President, has the Soviet record of compliance with arms control treaties destroyed the value of those treaties as a means of limiting nuclear arms competition be­tween the two superpowers? Would this country's national security be better served if we stopped compliance with the SALT II Treaty which ex­pired December 31, 1985? Should the United States continue to comply with the Limited Test Ban Treaty and espe­cially with the 150-kiloton limitation on underground nuclear weapon tests? In view of the alleged Soviet violation of the Anti-Ballistic Missiie Treaty and the President's determination to develop a missile defense that would sooner or later clash directly with the ABM Treaty, should the United States attempt to limit ABM research, test­ing, production and deployment to continue to comply with the ABM treaty?

Mr. President, to its great credit the U.S. Defense Department, working through the Air Force as its executive agency, has published an excellent, carefully documented, and detailed ex­amination of these questions by a dis­tinguished Harvard scholar, James A. Schear. This study appeared in a spe­cial edition published by the Defense Department on December 4. The arti­cle reflects the judgment of Mr. Schear, not of the Defense Depart­ment. But Mr. President, the examina­tion is so comprehensive, the objectivi­ty and balance in the presentation so consistent, that Mr. Schear's conclu­sions merit our respect.

This is a very critical issue. What I am talking about is the significance of the alleged violations by the Soviet Union of our arms control treaties. This is what the scholar, who speaks in a Defense Department publication, says:

From the strategic standpoint, the present compliance problems are greatly out­weighed by the beneficial effects of existing restraints on Soviet forces. The array of SALT limitations that both sides have ob­served since 1980-including the aggregate limits on strategic launchers, the limits on the numbers of missile-carrying submarines, and the warhead ceilings for land-based bal­listic missiles-are strategically far more im­portant than the treaty provisions presently in dispute.

But Mr. Schear sees arms control in trouble, not because present arms con­trol treaties have failed to work to ad­vance the security of both the United States and the Soviet Union. They have done that. He believes that ero­sion of the treaties is certain, unless both sides take steps to remedy the erosion and soon. Where are the com­pliance problems and what do we do about them?

KRASNOYARSK RADAR

First, the well-known Krasnoyarsk radar. Both the location of this large phased array radar and its alleged ca­pabilities appear to be prima facie vio­lations of the ABM Treaty. The treaty specifically confines such radars in numbers, size, and locations. The Krasnoyarsk facility certainly violates the location requirement of the treaty which confined LPAR's to each coun­try's perimeter. Krasnoyarsk is hun­dreds of miles inside the Soviet perim­eter in central Siberia. The Soviets claim that its purpose is for space tracking of satellites, which is permit­ted by the treaty. The United States claims that its purpose is to give early warning of incoming missiles, which is expressly prohibited by the ABM Treaty. From a strategic standpoint the radar gives virtually no advantage to the Soviets. It could only work in ABM defense if it operated with nearby engagement radars and inter­ceptor squadrons. Are there any? No. It would take years to make such hardware available. The radar would also have to be hardened and protect-

ed with air defenses. Any evidence of this? Again, no. But the Krasnoyarsk facility is troublesome anyway because it does represent an explicit treaty vio­lation. If construction is not stopped, the integrity of the treaty suffers. If this violation does not stop by ending construction of the large phased array radar, other violations of genuine mili­tary significance could develop on either or both sides. The United States could proceed in this case with its an­nounced policy of proportional re­sponse. The Soviets could push their exploitation of this violation with other violations.

Second, there is the issue of ABM component mobility and concurrent testing. The treaty prohibits mobile or transportable radars. Reason: Either side could stockpile mobile radars and deploy them rapidly to break out sud­denly into an effective ABM system. The Russians claim these radars cannot be moved around or hidden. They can be disassembled, transport­ed, and moved around in a matter of months. But to do so there would have to be extensive advance preparation of the deployment site. This scholar, who is analyzing the compliance with the treaties, Schear of Harvard, concludes:

Certainly they are not capable of being re­located within the rapid time frame from several days up to a week-that would estab­lish them unambiguously as mobile rather than fixed systems.

This United States charge of Soviet violation has less force.

Third, we have the most serious im­mediate military problem of the al­leged violations of arms control trea­ties by the Soviets. That is what is called by that complicated term the encryption of telemetry. Why is this so critical? Here is why: Telemetry is the only certain way to make firm esti­mates of the launchweight, and throw­weight for lifting power of ICBM's. Without it, it is impossible to reliably monitor the quality improvements in Soviet missiles. That makes it impossi­ble to determine the degree of compli­ance or violation of treaties limiting missile capabilities. Encryption means that the information is concealed by using a code that is not available to the other side. In the case of "encryp­tion of telemetry" the violations are necessarily alleged, not clear or patent. Why? Because the SALT II Treaty's language can easily be inter­preted as not prohibiting telemetry. Here it is from article XV:

Each party is free to use various met hods of transmitt ing t elemetric information during testing, including its encryption, except that, in accordance with the provi­sions of paragraph 3 of Article XV <the gen­eral prohibition on general conceal­ment> ... neither party shall engage in de­liberate denial of telemetric information such as through the use of telemetry en­cryption, whenever such denial impedes ver-

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4017 ification of compliance with the provisions of the Treaty.

When SALT II was negotiated it was expected that after it was ratified compliance standards could be devel: oped in the Standing Consultative Commission. But the U.S. Senate did not ratify SALT II. And the Soviets announced that they would not engage in any sec discussions to im­plement the unratified agreement. Here is a serious compliance problem that could have military significance. But we have a remedy. A remedy is to ratify the SALT II Treaty, then press for compliance standards in the Stand­ing Consultative Commission.

Fourth, there are the strategic of­fensive programs. The United States claims the Soviets have violated the SALT II Treaty with respect to the Soviet SS-25 missile and the SS-16 mobile missile. Are these new missiles and therefore violations as defined by SALT II? The United States says yes. The Soviets say no. SALT II defines a new missile by whether it involved changes in the missile's fuel type, number of stages, variations of 5 per­cent or more in its length, largest di­ameter, launchweight and throw­weight. Change in any one of these factors would classify a missile as a "new type." On the basis of throw­weight the SS-25 certainly appears to be a new missile. The Soviets deny this. They say that it is simply a modi­fication of a missile of the 1960's, the SS-13. They argue that the United States understates the throwweight of the SS-13, so it exaggerates the differ­ence between the SS-25 and the SS-13. The United States counters that even if this were true the missile would be illegal because the weight of the warhead is less than 50 percent of the overall throwweight of the missile. Encryption of the necessary data makes this one a hard one to assess, but it appears that the Soviets are wrong. This is a violation. As a viola­tion of the treaty, this is a serious action by the Soviets. From a strategic or military standpoint it is not. It is true that its mobility and single war­head mode could cause problems for intelligence monitoring and verifica­tion. But the deployment of a single warhead on a mobile launcher in­creases strategic stability. It is precise­ly what the United States is wisely doing with the Midgetman missile. Now how about the SS-16? The SS-16 alleged violation comes down to whether or not U.S. intelligence is on target. No question about it. Both sides would agree that SALT II bans the SS-16. The Soviets say they are not producing or deploying the SS-16. The United States argues that a cer­tain number of stockpiled SS-16 boost­ers-30 to 80-were built during the missile's testing program and are being kept on the ready as operationally tested force. As a technical objection

the United States has a good point. From a substantive standpoint there is not much to worry about with this particular missile. The missile has not been fired in more than 8 years. Its last reported test was a failure. Mr. Schear, the Harvard scholar, con­cludes:

The SS-16 issue is negligible in strategic and political terms, and in the absence of further information to indicate that the SS-16 is an active program, the administration protest is extremely weak.

50 KILOTON LIMIT

Mr. Schear does not discuss United States allegations of Soviet violations of the 150-kiloton limit on under­ground nuclear weapon explosions. The recent letter from President Reagan to Secretary Gorbachev pro­posing a meeting of United States and Soviet expects to examine these charges is the most constructive arms control action so far by the Reagan administration. It may establish the basis for future compliance. The Sovi­ets have claimed that the difference in United States and Soviet geologic for­mations explain the apparent seismic measurement of Soviet weapons explo­sions that have appeared to violate the limits by as much as 20 percent. Some American experts agree. The Reagan initiative indicates that the superpow­ers are on their way toward reconcil­ing these particular alleged Soviet vio­lations.

In summary, of all these violations certainly the encryption of telemetry carries the one, significant, military threat. And there we have an available remedy. What is it? It is to ratify SALT II in this body, the Senate, and proceed to the Standing Consultative Commission to develop compliance standards.

STAR WARS AND PROPORTIONAL RESPONSE

On the side of U.S. violations, cer­tainly by all odds the most serious is the U.S. vigorous proceeding with SDI, or star wars. Here is an activity that will bluntly and directly repudiate the Anti-Ballistic Missile CABMJ Treaty. The Senate ratified that treaty by an overwhelming 87-to-2 vote in 1972. The other serious U.S. policy threat to arms control is in the President's an­nounced "proportional response" reac­tion to allegations of Soviet cheating. What does that mean? It means when we think they cheat, we cheat. Our cheating is based on our allegation. Obviously we invite the Soviet Union to do the same. The allegations as we have seen from the careful review by James Schear may or may not be sound or accurate. Proportional re­sponse means we act on the basis of suspicion as well as fact. It is a sure and certain formula for destroying arms control.

MYTH OF THE DAY Mr. PROXMIRE. Mr. President, my

myth of the day is that an alternative definition of the Federal budget defi­cit has been found which shows we do not have a serious fiscal crisis and therefore no painful budget cuts are required.

As a drowning person reaches for any slender reed, the fiscal "I'm all right Jack" crowd has begun to franti­cally cling to the alternative budget approach suggested by the widely re­spected Northwestern University econ­omist, Robert Eisner.

On February 7, I discussed why I be­lieve Dr. Eisner's approach is seriously flawed. Today, I want to point out that even Eisner's own data shows the unique and serious nature of the cur­rent budget deficits.

Dr. Eisner produces what he calls an adjusted high employment budget measure and calculates its surplus or deficit since 1955.

Between 1955 and 1981 Dr. Eisner's measure of the budget yields deficits in only 5 years. According to Dr. Eisner's measure, the largest deficit in that period equalled 0.64 percent of GNP.

Between 1981 and 1982 there is a dramatic shift in Dr. Eisner's measure of the budget position. The surplus of 1.45 percent of GNP in 1981 becomes a record deficit of 2.01 percent of GNP in 1982. The change of 3.46 percentage points is the largest movement from surplus to deficit in Eisner's study. The 2.01 percent of GNP deficit in 1982 is more than three times greater than the previous largest deficit. Even worse, Eisner's calculations find that the 1984 deficit reaches 2.37 percent of GNP a result far outside the range of all previous data.

Clearly, the fiscal "I'm all right, Jack" crowd has found a reed that is simply too slim and short.

Mr. President, the truth is that the deficit by any other measure is still too large and serious to be merely de­fined away. We cannot avoid the pain­ful choices necessary to restore fiscal sanity.

Mr. President, I yield the floor.

ROUTINE MORNING BUSINESS The PRESIDING OFFICER. Under

the previous order, there will now be a period for the transaction of routine morning business for not to extend beyond 10:45 a.m. with statements therein limited to 5 minutes each.

TAX AMNESTY LEGISLATION Mr. DIXON. Mr. President, I am

glad to see a cosponsor of my tax am­nesty legislation in the Chair in the person of the distinguished Senator from New York State, and I wanted to take this opportunity this morning to

4018 CONGRESSIONAL RECORD-SENATE March 7, 1986

say that the Washington Post had an editorial in its Wednesday, March 15, edition which I take exception to. I have written the Washington Post a letter which is being hand-delivered this morning. I wanted to read the letter into the CONGRESSIONAL RECORD because I think it expresses the view of many other like-minded Senators concerning the question of tax amnes­ty.

My letter of March 7 to the editor of the Washington Post says:

DEAR EDITOR: The Washington Post's March 5, 1986 editorial, "Flaws in Tax Am­nesty" reflects a fundamental misunder­standing of the kind of program I and other advocates of this idea are proposing.

Let me start by stating that I agree that we should go after uncollected taxes by giving the Internal Revenue Service the tools it needs to do its job. The IRS has been inadequately funded for years. My bill, S. 203. the Federal Tax Delinquency Amnes­ty Act, and the other bills that have since been introduced, all provide substantial ad­ditional resources for the Service.

My bill and the others are not simply am­nesty bills; they all propose amnesties fol­lowed by tougher enforcement efforts by an expanded IRS. It is this kind of balanced approach that will help make a federal am­nesty a success without undermining the kind of voluntary compliance on which our tax laws ultimately depend.

Tougher enforcement, however, does not substitute for amnesty; it complements it. Tougher enforcement provides an incentive for tax delinquents to take advantage of the one-time amnesty opportunity being of­fered. The idea is very simple: take advan­tage of the opportunity to come forward voluntarily or take a much increased risk of being caught. with greatly increased penal­ties if you are caught, after the amnesty.

The experience of states like Illinois, Mas­sachusetts. California and New York pro­vides an indication that a federal amnesty can be successful. What's more, given the size of the federal compliance problem, a federal amnesty would not have to be as successful as some of the state amnesties to produce billions of dollars, perhaps as much as $20 billion or more. The IRS itself esti­mates that the 1985 "tax gap"-the amount legally owed and due that was not collect­ed-is approximately $100 billion. It esti­mates overall tax compliance at only about 81 percent.

A poll conducted for the Service provides additional support for those figures. It found that 20 percent of taxpayers admitted cheating on their taxes. All the evidence, therefore, points to an enormous amount of uncollected taxes that an amnesty could help collect, and not, as the Post argues. to "money that does not exist".

The evidence also argues against the Post's assertion that a federal amnesty would lead people to "naturally expect others to follow", and therefore cheat on their taxes in anticipation of it. Tax cheat­ing in Massachusetts didn't rise after the amnesty; it fell . People understood that am­nesty was a one-time event. and highly-pub­licized enforcement activities reinforced the point.

Finally, I have to disagree with the edito­rial's argument that tax amnesty consti­tutes an inequitable benefit for cheaters at the expense of honest taxpayers. In town meetings around my state, in meetings before chambers of commerce. and before

literally hundreds of groups of Illinoisans. I have asked whether those in attendance would support a tax amnesty / tougher en­forcement plan. Virtually all of the hands always go up, because they know that an amnesty will bring in revenue that would probably otherwise not be collected-reve­nue that will help reduce the risk of legisla­tion being enacted that raises their taxes.

You don"t have to rely on my word, though. State Legislature~ didn't enact am­nesties over the opposition of honest tax­payers. They were enacted because honest taxpayers recognized the benefits of an am­nesty / tougher enforcement program.

A federal tax amnesty / tougher enforce­ment plan will work. The rapidly growing level of support for amnesty legislation in Congress demonstrates the strength of the arguments for this idea. In an era dominat­ed by $200 billion budget deficits and the need to comply with Gramm-Rudman-Hol­lings deficit reduction targets, there is no reason to forego the substantial revenue an amnesty /tougher enforcement program can provide. -

Mr. President, first of all, is there a need for revenue this year? That is question one.

I believe that the $144 billion deficit threshold requirement of Gramm­Rudman-Hollings indicates that we have to either cut or find $38 billion.

At our conference this past week, our distinguished ranking member of the Budget Committee, Senator LAWTON CHILES, the distinguished senior Senator from Florida, said that figure is approximately correct, $38 billion.

A lot of different numbers have been used about tax amnesty, but I am here to say once again on the floor of this Senate Mr. President, that tax amnes­ty will bring in $20 to $25 billion. If you have to find $38 billion, with the President saying to the Congress, "Make my day," and if people like the Presiding Officer and this Senator do not want to make the President's day, then you cannot have any kind of a substantial tax bill. The only way to get some money, if you do not want to go into $38 billion worth of draconian cuts, is a tax amnesty program.

So let us face it. With all this busi­ness about "I like it or I do not like it," or "I want it or I do not want it," let me tell you something: We all have to get some revenue. The question is, What are the alternatives?

There is a proposed oil import fee. Some like it and some do not. The Senator from New York now in the Chair does not want it. The Northeast quadrant of the country does not want it. The President has changed his mind as of the other day and says he does not want it. So you will not have an oil import fee.

If you want to raise cigarette taxes and taxes on booze, it is OK with this Senator for Illinois. But I suspect there are Senators from States like North Carolina, Kentucky, and some others, that will not like the idea of a cigarette tax. Those fellows have

pretty good lung power and I suspect they might talk a bit on that.

There are some other possibilities concerning the corporate tax and the individual tax that we talk about, but we talk about it a lot more than we get it on line.

So I say the bottom line is tax am­nesty and we ought to get shaking on that question.

I do not need to convince the present Presiding Officer, but I want to answer some of the arguments against tax amnesty.

First of all, there are those who say if you have a tax amnesty, folks will wait around for the next one and it will reduce compliance.

No. 1, I am only for one tax amnesty in this century, for the remainder of this century-one.

When I talked to the President at the White House, I made that clear. Every person who has talked about tax amnesty, every sponsor that I know of, has indicated there will be just one. So we are not talking about more tax amnesties. We are talking about one single, solitary, isolated in­stance of a tax amnesty in this fiscal year to meet our problems under Gramm-Rudman-Hollings this year.

From the standpoint of compliance, when people say that compliance will go down, that is not true. The evi­dence has been that in every State that has had a tax amnesty-Illinois, Massachusetts, and New York being the most successful ones-compliance has gone up, not down. Why? Because you put more people on the rolls when they come in and "fess up" and pay up. You increase the penalties and you put on additional agents to enforce the law. All those things together in­crease compliance, not reduce compli­ance. So that argument is specious. That argument is without any value.

Some would argue that there are all kinds of citizens out there who would say, "This would not be right. I am an honest taxpayer. It is not fair to the honest taxpayers to give amnesty to some who have not paid."

Mr. President, I want the record to show that this Senator from Illinois has made over 100 speeches in his State on tax amnesty to town hall meetings, chamber of commerce groups, Kiwanis meetings, Rotary meetings, labor union groups, and others. Every time I say, "Here is a different alternative."

I talk about taxes, I talk about dra­conian cuts in the budget, and I talk about tax amnesty. "What do you want?"

Everybody says, "We want tax am­nesty. Give us tax amnesty. Why will they not do it?"

I am not talking about 80- or 90-per­cent support. I am talking about the closest thing to 100-percent support you will ever see in a room. I want to

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4019 say that for those who look at this from the political standpoint who say, "I do not know whether it will sell back home," it sells.

So I would say we have here a thing, Mr. President, that will work. It has worked in the States. It will increase, not decrease, compliance. It is only a one-shot deal, but it will bring in a lot of money on a one-shot deal and answer the problems of Gramm­Rudman in this particular year. It will increase compliance for the future. I say it is an idea whose time has come.

I want to thank the Presiding Offi­cer and others who have joined me. I have no pride of authorship, Mr. President. There are a number of bills around here. One is by my distin­guished friend from New Jersey, Sena­tor LAUTENBERG; one by my distin­guished friend from Montana, Senator BA ucus. I believe my distinguished friend from Minnesota, Senator BOSCHWITZ, has a bill. There are others.

It is an idea whose time has come. I have no pride of authorship in it. My bill is S. 203. If the majority leader wants to take it over tomorrow and be the principal sponsor, I will join him. We ought to pass this legislation. We ought to figure it into the mix when we deal with Gramm-Rudman-Hol­lings this year. I think it is a partial solution to a major problem in the country.

I yield the floor.

CONCLUSION OF MORNING BUSINESS

The PRESIDING OFFICER. Is there further morning business? If not, morning business is closed.

BALANCED BUDGET CONSTITUTIONAL AMENDMENT The PRESIDING OFFICER <Mr.

PRESSLER). The clerk will report Senate Joint Resolution 225.

The legislative clerk read as follows: A joint resolution <S.J. Res. 225) propos­

ing an amendment to the Constitution relat­ing to a Federal balanced budget.

The Senate resumed consideration of the joint resolution.

Pending: Thurmond amendment No. 1652, in the nature of a substitute.

Mr. WEICKER. Mr. President, I rise in opposition to the amendment. All I can say is, here we go again. Unable to utilize the powers that have been given to each one of us individually in the Constitution, we attack the Con­stitution itself.

There may be many things wrong in this Nation. Certainly, we consider the deficit wrong. It may be that there are problems in the farm communities; there are problems among the poor in our urban areas. I can go down the whole checklist.

Indeed, those matters are trouble­some and they are wrong. But there is nothing wrong with the Constitution of the United States. No, we cannot improve upon it when it comes to guaranteeing the independence of our judiciary.

No, we cannot improve upon it inso­far as the religious liberty that it gives to each one of us as Americans. And, no, we cannot improve upon it in the sense of Congress and the Executive effectively discharging their duties under that Constitution. The problem is not the Constitution of the United States; the problem exists with each individual Member in the U.S. Senate and in the House of Representatives and in the White House of the United States.

If we want to balance the budget, we can balance the budget right now. Whom are we kidding? All the author­ity that is needed is here to balance the budget. All the authority is in the White House to balance the budget.

Mind you, when the President of the United States comes to the people of the United States and to the Congress with his budget in hand, he does not even advocate a balanced budget. He wants a balance-the-budget constitu­tional amendment but he does not ad­vocate a balanced budget.

Many of my colleagues who advocate a balance-the-budget constitutional amendment, when it comes time for specific votes to balance the budget, will not do it.

I want to go back just a few minutes to the time when Gramm-Rudman was passed. I ask anybody to look at the record immediately after passing Gramm-Rudman here, in the Senate of the United States. The first three votes called for the following meas­ures. One was to reduce defense spend­ing by 5 percent. There were seven of us who voted for that. The next one was to increase the gasoline tax by 18 cents a gallon and apply the proceeds to the deficit. There were nine of us who voted for that. And finally, it was proposed to include Social Security and the other entitlements in the budget reform process. There were 27 of us who voted for that. So having made this grandiose statement about balancing the budget, given the oppor­tunity to balance it, nobody wanted to do it.

The political system of this Nation, which has served us well over the cen­turies depends on one key factor: ac­countability; accountability of the in­dividual Senator and Representative. Specifically, when any one of us stands on this floor and votes on an issue, we know that that vote will be held up for review come election time. It may be good, it may be bad; but it is out there for evaluation by the elec­torate. In effect, what Gramm­Rudman tries to do and now this con­stitutional amendment definitely does

is so to fog the scenery that nobody will know who voted on what. So nobody will be accountable.

The American people are as much involved in this debate as are the Sen­ators on this floor. The American people have not exercised their right to achieve a balanced budget by virtue of either electing or def eating Con­gressmen or Senators who either spend too much or do not raise enough revenue or have their priorities mixed up.

I have already heard the term used in this debate, "Government," as if this were something separate and apart from the people. "Government can do this, Government cannot do this." Well, to put it in Ben Franklin's words, in this Nation, the people rule. The Government and the people are not something separate and apart. These are the words politically thrown about.

"Washington cannot do this; Gov­ernment cannot do this."

Washington is the people. This is a representative democracy. There is no such thing as "Government." There are individual Senators, Congressmen, and a President, no such thing as Gov­ernment in terms of this accountabil­ity factor.

I have sat here over the last few years and I have seen exactly what it is we have done. It is not very hard to fathom. None of the Republicans want to cut defense spending, none of the Democrats wants to in any way cut the entitlements, and neither the Re­publicans nor the Democrats want to raise taxes. And everyone wonders why we have a deficit.

Do you think there is anything wrong with the Constitution? I say there is something wrong with the rea­soning of the people who act like that. And there is a lot wrong with the people who elect those types of people. If they cannot see through it, they de­serve this mess as much as any one of us in this Chamber.

Did anybody not find it ironic when the President of the United States, in his State of the Union speech, comes with a speech which in effect guaran­tees a deficit but he asks for a balance­the-budget constitutional amendment? Everybody applauds. That to me is very much like the quarterback lead­ing the team on the field going up in the stands and saying, "We want a touchdown." If the President wants a balanced budget, let him balance it.

If my good friends here want to bal­ance the budget, balance it. Do not come in here with a broad statement saying we want a constitutional amendment to balance it.

Is there one Senator who will stand up in his place and say we do not have the power to balance the budget right now? Is there anybody who would say that? No. The statement is made

4020 CONGRESSIONAL RECORD-SENATE March 7, 1986 "Government can't do its job." What that means is we cannot do our job.

I submit there is a very simple remedy for it in this country: If they do not do the job, kick them out.

I enjoy being a U.S. Senator. I enjoy seeing myself on television and in print. I think it is great. I enjoy all the amenities of the Capitol. But there also come those very tough moments which also relate to this job. Those are the disagreeable moments when, yes, you have to go ahead and raise taxes; and yes, you have to cut some popular programs.

The chicanery that has been going on in terms of perception on this floor in the past several years is beyond belief-and also in the other body. Let me give a good example. As most of my colleagues know. I Chair the Senate Subcommittee on Appropria­tions that handles all the health, edu­cation, science funding and the entitle­ments-Medicare, Medicaid. I found it incredible-anybody who knows the operations of the Government would­when under Gramm-Rudman, Social Security was exempted. The explana­tion was, to the elderly of America, "If we exempt Social Security, you are fine, you are in great shape." Doing that has resulted in the fact that we have had to cut back on funding for the National Institute on Aging; we have had to cut back on funding for the National Institutes of Health in their research into the aging process and maladies like Alzheimer's disease and so on.

Do you think people just live for Social Security rather than a quality of life? We know the population of those over 65 is going to double by the year 2020. The population over 85 is going to double by the year 2010. Are we going to say, "You are all on Social Security so we will take care of you, even though you will not have any quality of life when you get to those ages?"

Exempting Social Security required a cut in housing for the elderly. Do you think the elderly are being served if there is no housing for the elderly in this country? Now they have no roof over their heads and no health care, but we have taken care of them be­cause Social Security is equated with the fact that if we do that, we are taking care of the elderly.

I say to the ladies and gentlemen on this floor, it seems to me our job is to deal with those things with a great deal more precision than that.

That is the type of legerdemain which has been going on here vis-a-vis the budget process, and when all else fails-and "all else" being when we fail-then let us screw up the Consti­tution. And if we change the Constitu­tion, everybody out there is going to say, "Hey, hey, they want to go ahead and balance the budget. That Con­gressman or Senator must be OK."

Do you know why this thing is even going to come close to passage this time? Because there are 34 Senators up for reelection and it is going to take a lot of courage for a Senator who is up for reelection to vote against this because at election time his opponent is going to say, "Hey, you are against a balanced budget."

Well, I would suggest to the voters, if they want to find out who is for and against a balanced budget, take a look at the record of that Senator and see what it is that that Senator has voted for, what he has voted to cut, what revenues has he raised. That is what he should be doing in the course of his job, not just making some broad state­ment, again I repeat, "Let us have a constitutional amendment to balance the budget."

The budget is going to be balanced by human beings, deficits are going to be incurred by human beings, not just some words on a piece of paper. And I again repeat the example of Gramm­Rudman. Take a look at that CONGRES­SIONAL RECORD and see what happened within 2 hours after the Senate-passed Gramm-Rudman calling for a bal­anced budget. Within 2 hours three amendments with a direct opportunity to do just that and not one of them got more than 27 votes. As I say, one of them got seven votes and one nine votes.

This amendment is going to balance nothing. And in the process, what you are going to do is take this great treas­ure, which has lasted throughout the years, the Constitution of the United States, and our generation will have trashed its broad and its great princi­ples to achieve a particular political or philosophical end or to try to remedy a problem that we ourselves have cre­ated within our generation.

Now, maybe we have to leave our children deficits. I think that is wrong, but at least we do not have to go ahead and leave them a deficit when it comes to the principles of the Consti­tution of the United States.

The very people who brought you this disastrous economic plan now want to change the Constitution. The very people who could not force their will upon the courts of this Nation so that independent justice is to be guar­anteed for every American wanted to change the Constitution so that the judiciary came under the power of Congress and their remedies. The very people who cannot force their religion on me or my children want to change the Constitution so they can. Oh, no if there is anything that has been mag­nificent in terms of what it gives to us, as to our ideals, as to how we view each other as citizens, as to what our rights are, it is that great document. Our economic policies have failed in the last several years. That is what has produced the deficit. What did the Constitution have to do with this defi-

cit? Nothing. It was conceived of in the White House, on the floor of the Senate and the floor of the House, and it was created in the White House, on the floor of the Senate, and this House. If there is to be a remedy, it has to be in the White House, the floor of the Senate, and this House and not in that document.

My God, this place does not even have the courage to go ahead by simple majority and vote taxes, and what does this amendment call for? A constitutional majority? We cannot even do it by simple majority? Are we going to have a constitutional majori­ty? I think the American people had best come to grips as to what the issue is, and very simply it is, to use the trite expression, "You cannot have your cake and eat it, too."

We did not earn those tax cuts of several years ago. We had bigger and bigger defense spending. We had yet to get on top of our discretionary spending, and we were giving out tax cuts. If you want tax cuts, then you cut your spending. There is absolutely no difference in the policies of Ronald Reagan and Lyndon Johnson, abso­lutely none. One was an active war, which you could see. The other is this imaginary conflict of the future for which we have to prepare. But in both instances neither would raise taxes to pay for either the imaginary conflict or the real one. And so we went into economic disaster under Johnson and that is exactly what has happened under Reagan as far as the deficit is concerned.

If you want to have the opportunity for your children to go on to college in this Nation under Pell grants or stu­dent loans, you have to pay for it. If you do not want to pay for it, fine, say we should not have that opportunity available to all Americans. Do you want to know what the great strength of this Nation is today? It is what is up here, what is in the minds of millions of kids across this country, which was not the case when the only reason that you went to college was that you were rich. That is not security. That is what makes us preeminent in technol­ogy around the world, be it in the field of biotechnology, be it in the field of nuclear physics, be it in computers, whatever. But, yes, people had to pay for that. The beneficiaries did not. But those who did realized the value to the Nation.

Do you want to make sure that people have a roof over their heads, whether it is middle America, which is subsidized by virtue of the tax deduc­tion on interest payments? Is that a good policy? Have we paid for it? Yes. And the net result is we have a middle class in this Nation, unlike that of any other world, which has a stake, some­thing in their hand, in the economic success of the United States. That is

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4021 what has given us a great political sta­bility. I think that was well worth spending the money on.

Likewise we are hopeful that even though we are confronted with the most baffling disease of all time, AIDS, in the shortest possible time the virus was identified, has been cloned, and because of that we will be able to successfully, within the next couple of years, confront this deadliest of all diseases ever known to mankind. Do you like that? Well, we paid for it in the sense of the National Institutes of Health and the money that went into biomedical research. No disease in the history of man has been identified so fast and, considering the complex­ity, no disease has ever had such early promise of its def eat by the forces of medical science. It did not come cheap. The National Institutes of Health take some money. But I think that was money well spent. I would be willing to have my taxes pay for that.

Do you like the idea that today's re­tarded child enjoys a state of the art vis-a-vis education that almost guaran­tees that child a place in the main­stream of our society by the end of its high school years? Something abso­lutely unheard of 30 or 40 years ago. Unheard of. Yes, and the American people paid for it through Public Law 94-142, the Education of All Handi­capped Children's Act.

The economic benefit, of course, is tremendous. More and more, the phys­ically and mentally disabled are never going to the institutions in the first in­stance. So it was not just a matter of having dealt with it as a matter of the heart but fiscally it made a lot of sense, but we had to pay for it.

I could go down a whole checklist of achievements by this Nation. This is not in any manner, shape, or form a filibuster. I will get to that.

The fact is that however we spent our money-and there have been some failures along the way-the success of the United States in terms of a quality of life for its people is unparalleled in the history of the world. And men and women on this floor had to make some pretty gutsy choices, first to devise the opportunities in terms of legislation but then to ask for the money to pay for it. And now, all of a sudden, our so­ciety is turning inward and everybody who has crossed the line is shutting the door behind them on the other fellow.

There is never going to be an easy way to balance the budget-never. Choices will have to be made by indi­vidual men and women, not by a mech­anism such as Gramm-Rudman or a constitutional amendment.

Yes, they will have to take the un­popular stand of asking for the money to pay for these programs. It is this type of choice which is involved in the process I referred to earlier as one of accountability.

If the individual Members of the U.S. Senate and the House of Repre­sentatives care to cloak themselves in a fog, then rest assured that the United States of America itself will be in a fog; because there is no difference between these representatives and the corporate body known as the United States of America, any more than there is a difference between these Members and the 250 million people of the United States.

If we do not have a balanced budget and we have a deficit, in the final analysis you can put it right at the doorstep of every American-not 100 Senators or 435 Representatives or one President, but 250 million people who did not want a balanced budget, who did not want to pay for their obli­gations or to create the opportunities for their fell ow Americans.

I remember, as I was growing up-I was not in the Senate, but I followed politics closely-that the favorite sport was the finger pointing that we in the Northeastern United States used to engage in as to the lack of civil rights legislation. We used to say that the reason why there was no civil rights legislation was that a few Southern Senators were blocking it. Well, I think history now shows that it was not a few Southern Senators blocking it. The bigotry and the prejudice in Connecticut was as great as in any other part of the country, and the same could be said of all 50 States in the Union. So it was the United States that did not want civil rights legisla­tion.

When the United States, in the main urged on by the sacrifice of Dr. King, wanted civil rights, we rolled it through here-we rolled it through here-and no Southern Senator or anybody else could stand in the way.

Now, when the American people want a balanced budget, it will roll through here, and you will not need to modify the Constitution or pass Gramm-Rudman. But the American people have to get out and vote, and they have to kick out the Congress­men and Senators who refuse to bal­ance that budget. I apologize if they have to spend 5 minutes of their busy days, 1 day every 2, 4, or 6 years, to do that. So, indeed, if the laziness is sometimes great on the Senate floor, it is even greater among the American people.

I large part, all of us, as I say, have denied much of the future and the heritage of our own children. Certain­ly, we have done it fiscally. At least, conceptually and in terms of ideals, let us not do it so far as the Constitution is concerned. There is nothing wrong with the Constitution of the United States. Indeed, if you want to be in­spired sometimes, just pick up a copy and start to read it.

Every recent constitutional amend­ment I have seen come on the floor of

the U.S. Senate-and, believe me, there are a lot of them-only dilutes the rights that we have as Americans and demenas us as a nation-every one of them, this included.

Do you know how many of these things we have now? One hundred fourteen constitutional amendments. Here is a computer list. It goes go and on. One hundred fourteen constitu­tional amendments.

Mr. President, I am almost through speaking, and I will make a few com­ments relative to the course of events in this debate. Briefly, I want the record to again show that I am pre­pared to have an up-and-down vote on this right now-on the amendment. The reason why I said that yesterday and the reason why I am saying it again today is that I have a feeling that, come the middle of next week, we are going to hear: "We want a vote on this, and this has been filibustered, and so forth; cloture might be filed."

I want to make it clear that I intend to speak no longer on this matter than what I have said here today. I might speak again next week, but no longer today. I am quite prepared to have an up-and-down vote on the issue today. But when I hear rumors that we have to vote on this finally by the end of next week, we have sat here week after week after week with little debate and very little to show for it.

Here we have an amendment to the Constitution of the United States, and we are going to rush this thing through. Believe me, the minute I see that we are going to rush it through, at that point in the game, yes, I am going to start to talk.

I gather that my friend from Illi­nois, who is one of the cosponsors of this legislation, will have something to say. If no one else has something to say, let us get on with the vote. I think we all understand that is going to be decided by one or two votes, one way or the other, and I do not think that is going to change.

Again, I make the parliamentary sce­nario clear to everybody: I would rather have a vote on the issue than on cloture, because, frankly, that re­quires more to pass it. But I do insist that we have an intelligent debate here as to the merits of this matter and the American people are fully ap­prised of what they are trading, what they are giving up.

Right now, this is not under the pro­prietorship-I am talking about the Constitution-of the U.S. Senate or the House of Representatives or the President or the Republican or Demo­cratic leadership. It belongs to the American people. Do not let them take that away. Once that process starts, there is no end to it.

I think it is the ultimate hypocrisy that the Senate of the United States, unable to balance this budget over the

4022 CONGRESSIONAL RECORD-SENATE March 7, 1986 years, now wants to change the Con­stitution-just as I said the same thing about the President of the United States when he delivered his State of the Union Message. If we want to bal­ance it balance it.

Mr. SIMON. Mr. President, I should like to make a few comments on the speech of my friend from Connecticut.

He has talked about the need for in­telligent debate, and he has added to that intelligent debate. I have great respect for him, as he knows. Fre­quently, we vote together.

I agree with one of the things he mentioned, we have to face up to this deficit and part of that solution is rev­enue increase.

And I am not just saying this after the election. During my election I said the same thing and one of my oppo­nent's ads was "If you like Walter Mondale's tax increase you will love PAUL SIMON'S tax increase."

But the reality is we have a serious problem. We agree on that. There has been-and there are references to this going all the way back to John Adams-an unwritten constitutional amendment t)lat we balance the budget.

So from the beginning of this coun­try until the end of 1917 people were astonished because we had a Federal indebtedness of $3 billion and it seemed to violate all our traditions, and it did violate our traditions.

The Senator from Connecticut says no one will be accountable under the balanced budget amendment. The re­ality is no one is accountable right now. We need to put some discipline into the budget.

Over the last 3 years we have in­creased the indebtedness of this coun­try $600 billion. I mentioned this yes­terday and I repeat it again today. That means in just the last 3 years we have added $50 billion in interest in perpetuity. As a result, we cannot do the very things that the Senator from Connecticut has been talking about.

I hate to see a budget that comes down here requesting $58 million less in cancer research. I happen to be in­terested in cystic fibrosis for personal reasons. I want research done in this area. The Senator from Connecticut and I share a great interest in doing more for the handicapped of this country. With $50 billion that we are going to waste on interest in perpetui­ty, we could be doing all kinds of great things in this country.

The Senator from Connecticut says we have the power to move now on the budget deficit. He is correct. We have the power. We do not have the will­power and we need something to give us more backbone.

In theory, we do not need this. In practice, it is all too evident that we do. We now have an indebtedness of $2 trillion.

I agree with the Senator from Con­necticut that we should not be chang­ing the Constitution on a whim. I assume he is opposed to the constitu­tional amendment to require prayer in the schools. I know that amendment is well motivated. It is not the kind of thing we should be doing. I will be joining him in that fight.

But I point out to the Senator from Connecticut and to my colleagues who fear the change in the Constitution that 32 States have now had a call for a constitutional convention. Those who favor a balanced budget say that four more may join in this call. I do not know if they will or not. But I do not want to have a constitutional con­vention. I think it would be bad for this country. We do not know what they would come up with.

What we have here before us is a sensibly, carefully crafted constitu­tional amendment.

Let me address two other points the Senator from Connecticut made. The original constitutional amendment proposed by the White House tied spending to a percentage of the GNP. I voted against that. If that were here, I would vote against it again. Only once in all the years since 1945 has there been a tax increase that has not passed by more than a constitutional majority. So section 2 of this amend­ment is really not a major impedi­ment.

Then, the Senator makes orie other point that I partially agree with and partially disagree with. He says when the American people want a balanced budget amendment, we are going to get it. The difficulty is the American people want a balanced budget. They also want cuts in taxes, and they want more spending. We have given them two out of the three.

What we have done, and the Senator from Connecticut is an exception to this rule, and I commend him for being an exception to this rule, we have elected too many people to this body and the other body who hold their finger to the winds and say, "What is popular today." We had better say what is the right thing to do for our children and our grandchil­dren, and we better be willing to do not just what the American people want, but to do some unpopular things. The Senator from Connecticut has been willing to do that; I commend him. I commend him for his contribu­tion. I disagree with his conclusion.

I look forward to joining him in op­position to the prayer-in-school amendment and/or constitutional amendments.

But this one I think is needed. The PRESIDING OFFICER. The

Senator from Connecticut. Mr. DODD. First of all, before begin­

ning my remarks, Mr. President, let me say how deeply I regret being on the opposite side of this issue from my

good friend from Illinois for whom I have the highest regard and respect. I served with him in the other body, and we were elected to Congress in the same year. It is a very rare occasion indeed when I find myself in disagree­ment with the distinguished Senator from Illinois.

Mr. President, I do rise to join with my colleague from Connecticut, Sena­tor WEICKER, and others, to voice my very strong opposition to this balanced budgt constitutional amendment, Senate Joint Resolution 225.

The committee report states that this proposed amendment represents both responsible economic and consti­tutional policy. In my view, Mr. Presi­dent, it represents neither.

First, let me make clear what I do not oppose. I believe, as I believe do the overwhelming majority of our col­leagues in this body and the other body, that there is no question we need to clearly reduce the present run­away Federal deficit. We must alter our present course of deficit financing before it is too late. Under the current situation, business as usual simply is no longer acceptable.

We all know that. We all understand that. And certainly that was the reason this Congress, in just the last session, took an extraordinary step in the form of the Gramm-Rudman-Hol­lings amendment.

Indeed, I was one of the original co­sponsors of that effort, one which was ultimately supported by an over­whelming majority of this and the other body. I cosponsored the Gramm­Rudman-Hollings legislation because I thought it represented a serious at­tempt to provide a clear method for reducing the intolerable Federal defi­cit and a timetable for achieving that reduction. Creating a fair and humane Federal spending plan which complies with Gramm-Rudman-Hollings is cer­tainly one of the greatest challenges we face in this Congress or ever.

Mr. President, we will be forced to make choices-all of us. Even the President of the United States will have to make choices, and no doubt we will be fighting over those choices in an effort to determine what the prior­ities of this country ought to be.

But a tough political struggle were real, hard choices are made certainly is the only way to address the disas­trous deficit situation facing this coun­try today.

But let us be clear, Mr. President, about what we are considering today. The balanced budget constitutional amendment is not, like the Gramm­Rudman-Hollings legislation, simply an attempt to reduce the crippling Federal deficit. The proposed amend­ment, dangerous and deceptive in its simplicity, goes much further than that. With one quick stroke, it man­dates that, year after year, total out-

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4023 lays shall not exceed total receipts. Once Gramm-Rudman-Hollings gets us back on track, as I hope it does, to an economy free from the burden of adding to the existing $2 trillion defi­cit, the constitutional amendment would kick in to mandate that this Congress operate on a balanced budget each and every fiscal year thereafter.

If not in design, Mr. President, then certainly in effect, this amendment would serve to bind the hands of Con­gress to the grave detriment of the American people. If not in design, Mr. President, then in effect, Senate Joint Resolution 225 will do nothing less than straitjacket all future congresses as they attempt to mold our national policy through the years and imple­ment that policy through vital spend­ing and budgeting decisions.

The proponents argue that a consti­tutional amendment is necessary most of all to ensure that Members of Con­gress are ultimately accountable for those spending and taxing decisions.

I am all for fiscal accountability. We all are. Indeed, in 1982, I sponsored a piece of legislation called "Pay-As­You-Go," introduced in the House as well, which provided an alternative to the balanced budget constitutional amendment offered at that time. That legislation would have mandated that increased spending be accompanied by a commensurate increase in revenues or a corresponding reduction. I was of­fering a statute, Mr. President, not a substitute constitutional amendment.

As desirable as fiscal accountability may be, however, it takes a back seat to the health and welfare of the Amer­ican people. This amendment, if rati­fied, stands ready, I believe, to jeop­ardize that same health and welfare.

The proposed amendment simply does not, as its proponents suggest, represent responsible economic policy. In fact, adhering rigidly to a balanced budget policy for any given year may operate only to destabilize our econo­my. For instance, in a period of reces­sion when tax revenues are low and a budgetary deficit appears likely, this amendment would demand that we either reduce expenditures or raise taxes. Both of those alternatives would further reduce economic activi­ty and thereby destabilize the econo­my.

Economists, like politicians, do not always agree. But both conservative and liberal economists agree on this: Balancing the budget in hard times could very well be a grave and serious mistake.

What Congress should strive to achieve each year is a balanced econo­my, which may or may not call for a balanced budget for that year. Over the past half century, we have devel­oped a system to cushion the Nation's fall when times are hard, and to mod­estly restrain the economy when the boom is on. The system has taken

much of the pain out of the vicious boom-and-bust cycles so common in our history. This amendment would inject that pain back in again. Remem­ber-when Herbert Hoover tried to balance the budget in response to the cash of 1929, it brought ruinous finan­cial depression upon our people. I do not want to see-nor do I believe anyone else here would want to see­that pain inflicted upon the American people ever again.

Senate Resolution 225 itself implicit­ly recognizes the need for deficit fi­nancing in certain situations since it provides for a waiver of the balanced­budget requirement upon a three­fifths vote of bpth Houses. Proponents who say that this waiver provision adequately ensures the flexibility needed for budget policy are only de­luding themselves: This "escape hatch" gives enormous power to a mi­nority to block appropriations, compli­cating and retarding a process which is already too slow and much too vulner­able to delaying tactics.

This same escape-hatch provision is a telltale sign that the amendment is not only bad economic policy, but bad constitutional policy as well, which is far more threatening than the short­term economic policies may be. The notion of allowing Congress to sus­pend the Constitution by a 60-to-40 vote is nothing less than farcical. Sup­pose the Founders had seized upon this idea. "We shall have free speech, unless Congress votes 60 to 40 against. We shall have due process, unless 60 Members decide not. We shall have trial by jury, equal rights, income taxes, popular election of Senators, unless 60 percent of congressional Members, in their infinite wisdom, think it not best." The Founders were interested in controlling the power of Congress, not expanding it.

Embodying-entombing-a balanced budget principle in the Constitution of the United States is a very, very dan­gerous precedent. The Constitution was intended and should continue to be an honored blueprint of representa­tive Government and a guarantee of individual freedom. It should not be used as a vehicle for social and eco­nomic theories or policies. To freight the Constitution with social and eco­nomic theories trivializes that vital document and runs the risk of distort­ing its true nature and purpose. Trying to use the Constitution as a tool to achieve some budgetary goal neither produces the kind of result we all want, nor does any service to our great law of the land.

Even if this proposed amendment represented good economic and consti­tutional policy, which it does not, it is still crippled by severe practical prob­lems. The balanced budget amend­ment tells us where to go but does not give us even a slight idea or clue as to how to get there or stay there. Nor

does it provide how to enforce its man­date should Congress be unable or un­willing to operate on a balanced budget. The committee report makes clear that the courts should not be in­volved with enforcing its provisions. That leaves us with one thing: an un­workable and unenforceable constitu­tional amendment.

In addition, the proposed amend­ment completely ignores the responsi­bility of its most vociferous supporter, President Reagan. Under the amend­ment, there is no requirement that the President submit to Congress a bal­anced budget. But Congress does not legislate in a vacuum: The budget process is, or perhaps more accurately should be, a shared function of the legislative and executive branches. It is time we recognize the fundamental principle that both Congress and the President-and the President, I would emphasize-have important roles to play in formulating and implementing a national budget.

It is high time that the President himself comes to grips with that reali­ty as well. Since assuming office, Presi­dent Reagan has not once submitted to Congress a budget which has been balanced. I, for one, am growing quite weary, as I know others are, of the ad­ministration's bumper-sticker mentali­ty in this particular arena. Bumper stickers, ones like "Balance the Budget Now," may catch the eye and garner attention for the driver of the car, but they do very little either to explain the underlying causes or to help constructively to achieve a solu­tion. It is time to pull off the bumper stickers and start drawing up and fol­lowing the roadmap.

This Congress will have its hands full, as we all know, following the roadmap it developed last session. Gramm-Rudman-Hollings is not going to be an easy piece of legislation to im­plement, but it is a statute and only a statute. It can be corrected. Making the difficult choices that Gramm­Rudman-Hollings will entail requires all of the energy and commitment this honorable body collectively can muster. Reducing the enormous Fed­eral deficit should be our focus this year and in the years ahead. We should not be distracted from that vital effort by the proposed constitu­tional amendment before us. We should give Gramm-Rudman-Hollings all the time, attention, and commit­ment it will need to work.

I conclude, Mr. President, with sev­eral questions: Why are we debating this proposed constitutional amend­ment at this time? Why is the Presi­dent centering focus on the amend­ment at this juncture? Why are we spending time on this proposal which would not even take effect for years to come-precious time which could be bette~ spent making the vital choices

4024 CONGRESSIONAL RECORD-SENATE March 7, 1986 under the law as it exists today? I sus­pect, Mr. President, that the answer to these questions has a lot to do with the fact that this administration wants to keep the debate and the energy focused at a "bumper sticker," severely superficial level.

Today, the people of our Nation need and deserve less rhetoric and more commitment to action. They need and deserve fewer gestures devoid of meaning and more displays of resolve. They need and deserve deeds, not daydreams. This particular resolution is nothing more than a day­dream.

I would add, Mr. President, that the very amendment which is before this body at this juncture may make the case on its own better than any state­ment or argument from those of us ex­pressing opposition to the underlying proposition-this amendment which concerns matters of how we would deal with raising taxes, and whether or not there would be a rollcall vote, and which percentage of the body would be involved.

I would ask my colleagues to think for a second about what we are doing here. Look at the language of this amendment, as meritorious as it may be. Certainly it is a sound idea if one were trying to fashion something to answer the various questions being raised about how this particular amendment would work. But, do we really want to write this language, as intelligent as it may be, do we really want these words included in the Con­stitution of the United States-to triv­ialize that document with whether or not there ought to be a rollcall vote in the U.S. Senate on a particular propo­sition? What a disservice, what an insult it is to the powerful, simple, direct language of the Constitution, to add specific language to deal with the details of whether or not this body ought to have 50 Members present, and whether or not there ought to be a rollcall vote-as if the Constitution were some regulation, or as if some­how this were a city council meeting.

That is not what the Founding Fa­thers were doing when they wrote the Constitution. They were setting out that road map of broad, basic princi­ples which has guided this country well for almost 200 years. In 3 years we will celebrate 200 years of that doc­ument. And here we are, just prior to that anniversary, about to make the Constitution nothing more than a statute or a regulation.

Again, I emphasize, no matter how intelligent or well-meaning this par­ticular amendment may be: just think about this particular language. Take a look at the Constitution. I urge my colleagues-as I know they do with great frequency in looking over the Constitution-to read those amend­ments, read those original articles, and then read this proposed amendment.

I imagine that, 200 years from now, people reading the Constitution will look at this particular language, and ask themselves: How could a Congress of the United States, which had inher­ited a great document with simple, direct, forceful language which has served the country through great trial and tribulation, a great Civil War, a great depression, great conflicts inter­nationally, a great civil rights debate, add this kind of language to the Con­stitution? Is that going to be the legacy of this Congress when we are judged by history as to what we did on our watch over the Constitution of the United States? Do we really want our legacy to read as this amendment would suggest? I think not.

So, Mr. President, I urge my col­leagues, despite whatever other dis­agreements we may have about wheth­er or not we ought to have a balanced budget in any particular year or strive to it, to move away from this proposed amendment. I know my good friend from Connecticut, who I see on the floor here, was disappointed in my vote on Gramm-Rudman-Hollings. But my argument to him at the time was that at least Gramm-Rudman-Hollings is something we can work with. If it does not work well, then we can change it. It only takes a simple ma­jority vote. But I would never support writing Gramm-Rudman-Hollings into the Constitution of the United States. We went through that process last year.

Let us give Gramm-Rudman-Hol­lings the chance it needs to work.

Mr. President, I join with my col­league from Connecticut and others, with all due respect to the proponents of this proposition, and urge my col­leagues in the days ahead, as we con­sider this constitutional amendment, to think hard, to think long, to think about that responsibility, and to think what the cold eye of history will say about this Congress if this is our con­tribution to the Constitution of the United States.

Mr. President, I yield the floor. Mr. DECONCINI addressed the

Chair. The PRESIDING OFFICER. The

Senator from Arizona. Mr. DECONCINI. As usual, the dis­

tinguished Senator from Connecticut is most eloquent in his presentation. The Senator from Connecticut points out that the constitutional amend­ment is permanent-indeed, it is-as the supreme law of the land. The Gramm-Rudman-Hollings legislation is just legislation and subject to ready change.

I think that is where the Senator from Connecticut and the Senator from Arizona have tough, differences of opinion here as to what is needed. I respect the strong belief of the Sena­tor from Connecticut that all we need is a piece of legislation. Some may be-

lieve that we do not have to worry about long-time concerns of the deficit because, after all, we have had a 200 year history, and we have only had the last 25 years where we have had badly unbalanced budgets. Maybe that is not, in the mind of the Senator from Connecticut, strong enough evidence that we need to amend the Constitu­tion. And I take responsibility, as the Senator from Connecticut does. We have not been able to balance the budget more than once in the last 25 years.

I was not here in 1969. I believe that was when it last not balanced. There are a lot of reasons why the budget has been in imbalance. But the facts are we have not balanced it. So along comes "a bad idea whose time has come," to quote Senator RUDMAN. The Gramm-Rudman-Hollings proposal is supposed to change all this. Though this Senator did not vote for its final passage, certainly, I can see why it passed. It passed because Congress and the President are not willing to bite the bullet, and do what is necessary.

What makes us think, No. 1, that it is going to be held constitutional? That is debatable.

No. 2, what makes us think we will not change it by a majority vote; No. 3, that we will not change it or walk away from it after 1991 assuming that we did comply with the intent of that legislation?

Well, those are certainly unknown. Certainly based on the recent history of this body we are very likely to aban­don it.

I was here in 1978 when we passed the Harry Byrd amendment to an ap­propriations bill which mandated a balanced budget in 1979. That was the law. It was the law of this land. It was signed into law by the President, and passed by both Houses. Nobody thought about vetoing that.

What happened? The next year we had an unbalanced budget. If my recollection is correct, there were about 50-some billion dollars that we went ahead and spent. I do not think the Gramm-Rudman-Hollings is any­thing but a preliminary leading up to the need for a constitutional amend­ment.

I do not fault anybody who voted for it. That was their judgment. They must have concluded that we had to do something severe. And we did. The severity of the implementing process of Gramm;Rudman is going to be much more unfair than the goal of this constitutional amendment that would require the Congress to balance its receipts and its expenditures.

The importance of the argument here, it seems to me, is, Can we do it in a different way? If I concluded from the Senator from Connecticut that we could-and obviously he thinks we could, we will through Gramm-

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4025 Rudman-Hollings, and we should not impose this on us in a constitutional manner in the future-I would say fine. But in the short 9 years that I have been here-and the Senator from Connecticut has witnessed this-it is not going to happen. It has not hap­pened.

I certainly do not blame him. He has stood on this floor offering cuts in areas which he felt were unnecessary, as this Senator has. What happens? At the end of the year the deficit has grown. That is nothing for any of us to be proud of.

But I do agree with the Senator from Connecticut, that the President has not been a helpful player in this process. There may be some merit to the Senator's one criticism of this amendment that it does not require that the President submit a balanced budget. I think that should be part of this amendment, but in the effort to reach a consensus on this amendment. I have yielded to those who do not want an added role for the President in the budget process.

So we all have our own approaches to even the constitutional amendment. The Senator from Alabama just walked in. He has some excellent ideas on when we should waive this amend­ment such as in time of military crises or confrontations that the United States is involved in.

The first time I introduced a bal­anced budget constitutional amend­ment it was relatively simple. It stated that if there was a deficit at the end of the year, all taxes be raised propor­tionately to pick up that deficit. That did not go over very well, I must admit.

I remember the finance chairman at that time, the Senator from Louisiana, thought that was not anything that would be too popular-to have an automatic tax under the constitution.

But it would have certainly con­fronted every year the fact that those of us in Congress who let the expendi­tures exceed receipts have to go home and answer, "Why did you raise our taxes?"

As I know the Senator from Con­necticut knows so well, you never get thanked for raising taxes. People do not come up and say, "Thank you for raising my taxes." That is not done.

But they do expect us to bring about a balanced budget. We have a real crisis in this country. That is the answer to the question of the Senator from Connecticut as to why we are doing this now. We are doing this now because in 25 years only once did we have a balanced budget. Only once.

To me, that is more than a crisis. It is a catastrophe. It is one that in the early 1980's nearly led us to financial disaster.

We cannot wait any longer. We need the help of the Senator from Con­necticut to suggest proposals or

amendments-they will be considered here-to make this workable. We need more Senators to stand up and debate this issue and to come forward with ideas. But ultimately, we need to pass a constitutional amendment that is going to no longer permit Congress to just pass legislation that will permit this country to go into debt deeper and deeper.

It is my hope, as this debate is laid out for the next few days that we will certainly see the need, which is very clear to this Senator. Perhaps others feel it is not so clear, that we do not want to get into constitutional man­dates. It is this Senator's observation and opinion that we really have no al­ternative.

Mr. President, there is one other item I wanted to call to the attention of the body, and particularly the Sena­tor from Connecticut, who again I compliment on his outstanding presen­tation, though we are in disagreement.

He asked whether it was wise to have a three-fifths vote required in a constitutional amendment to permit a deficit. This is done, of course, to give Congress a degree of flexibility in fiscal matters and to avoid pro-cyclical effects.

I think it is important to note that there are eight times listed in the Gramm-Rudman-Hollings legislation where a three-fifths vote is necessary.

One of the times is under 302(f), which prohibits consideration of legis­lation providing budget authority or outlays in excess of the committee's section 302(b) reports.

There are several other sections. Section 305(b)(2) prohibits nonger­mane amendments to budget resolu­tions, and by reference to reconcilia­tion bills.

Certainly, by statute, apparently it is OK to impose a three-fifths vote. I have no quarrel with placing the same discipline on the Congress of the United States if they want to spend deficit dollars.

I can quite frankly see times when the Congress would need to spend def­icit dollars but it would take a super­majority.

Mr. President, I suggest the absence of a quorum.

The PRESIDING OFFICER. The clerk will call the roll.

The assistant legislative clerk pro­ceeded to call the roll.

Mr. HATCH. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER. With­out objection, it is so ordered.

Mr. HATCH. Mr. President, the dis­tinguished Senator from Illinois has some questions and I will do my best to answer them.

Mr. SIMON. I thank my colleague from Utah.

Yesterday, several questions were asked concerning how the amendment

would be enforced. To clarify this sub­ject, I wish to discuss with the Senator from Utah how this amendment realis­tically will be implemented and en­forced in his opinion.

Mr. HATCH. In the first place, we should note that this amendment will not go into effect until 1991 or the second year after ratification, which­ever is later. This means that Senate Joint Resolution 225 will not be a binding part of the Constitution until after Gramm-Rudman is targeted to have achieved a balanced budget. In any event, Congress will have ample lead time to bring the budget into bal­ance before the provisions of Senate Joint Resolution 225 take effect.

Mr. SIMON. I thank my colleague, and I agree with what he has had to say.

The real difficulty of the amend­ment is in the mind of some people not adequate lead time. If Senate Joint Resolution 225 were ratified as the 27th amendment to the Constitu­tion, it would require that outlays not exceed receipts for any fiscal year. What happens, however, if suddenly near the end of a fiscal year in August or September, the economy turns sharply downward? Outlays would rise as more people qualify for entitlement programs and receipts would fall. A deficit would be likely with only a month to change course. How could Congress comply with the amend­ment?

Mr. HATCH. That is a very good question. Senate Joint Resolution 225 is flexible enough to allow Congress and the President several options to deal with this situation. For example, Congress could employ an option used by many States, namely a contingency fund. A contingency fund would be es­sentially a national "rainy day" sav­ings program. Congress could set aside a certain portion of receipts in an in­terest bearing account until needed to offset outlay overruns or revenue shortfalls. Then as the economy recy­cled back toward prosperity, the fund could again be replenished. This would have beneficial countercyclical effects.

Mr. SIMON. I like the idea of the contingency fund.

But isn't it a bit unrealistic to think Congress will set aside a contingency fund when it currently runs such out­landish deficits?

Mr. HATCH. Under current circum­stances, it sounds unrealistic, but re­member this will all take place under a new order. Gramm-Rudman will pre­sumably have balanced the budget and Congress will have the binding obliga­tion to maintain that balance. Under those circumstances, it is certainly more feasible. In any event, a rainy day fund is only one option. Let me list others: For instance: First, Con­gress could have automatic provisions to trigger spending cuts in less essen-

4026 CONGRESSIONAL RECORD-SENATE March 7, 1986 tial programs when outlays threaten to exceed receipts. Second, Congress may have automatic provisions to trig­ger a surtax when certain events tran­spire. Third, Congress may rescind some spending it had earlier obligated. This may sound difficult, but business­es and families must make cuts in dif­ficult times and Congress may see the wisdom of applying the same business and family principles to Government.

Mr. SIMON. I agree with my col­league and particularly since we are not a State legislative body. We are meeting almost year round. It seems to me it is very possible to work that out.

But the Senator from Utah has men­tioned only Congress. Does the Presi­dent have any role in this process?

Mr. HATCH. As the Senator's ques­tion appropriately suggests, the Presi­dent is equally bound by the Constitu­tion to use his authority to comply with Senate Joint Resolution 225. The Executive would check and balance Congress to ensure compliance with the balanced budget norm. For in­stance: first, the President would have the responsibility to recommend spending cuts and rescissions to Con­gress. Second, the President could also call for a tax increase. Third, another option would be to use the deferral power granted by the 1974 Budget Act to postpone spending until a later fiscal year. If the President did not feel that Congress was responsive to his recommendations, he could use his "bully pulpit." If Congress, on the other hand, did not like the priorities used by the President in def erring spending, it could pass a bill setting its own priorities for deferral or rescission or tax increases.

So you have all of these aspects or all of these alternatives or options, and the President is not bef elt of op­tions here.

Mr. SIMON. And as the Senator points out, this does apply to the President. There are those who are suggesting that we should amend this proposed amendment to require the President to report a balanced budget but, in fact, we can do that statutorily, or that is clearly the implication of the amendment already.

Mr. HATCH. That is right. Mr. SIMON. Let us say that this is

all transpiring in a recession. Some of those options are not feasible. After all, unemployment would theoretically be on the rise, increasing outlays and depleting receipts.

A contingency fund might be an answer in some events. But what if Congress has not done this? What do we then?

Mr. HATCH. The Senator is describ­ing perfectly the circumstances that justify the authorization by three­fifths vote of a specific excess of out­lays over receipts to cope with the re­cession. Once again, the amendment

has the flexibility to respond to the the Members of Congress who choose circumstance. Congress is made more not to uphold the balanced budget responsible under this amendment, norm. Thus political accountability is but no one said the job of Congress- a powerful tool. One other point rele­man would be an easy one. In fact, it vant to the Senator's question. The has been a little to easy in the past to · Founding Fathers of our Nation ap­duck the hard choices suggested by parently thought that several hundred the Senator's question by simply bor- legislators are no more likely than five rowing from the future for every new Justices or one President to either vio­spending need or emergency without late or evade their oaths of office be­ever a promise to repay. Senate Joint cause the framers made many provi­Resolution 225 r~quires. Congress. to sions of the Constitution depend for choos.e a~onl?'.st its optIC.ms or, with their implementation solely upon Con­full Just1f1cat1on, to waive the bal- gress or another constitutional entity. anced bu.dget norm du~ing genuine Mr. SIMON. Is the Senator suggest­e~ergenc1es._ The three-fifths v<;>te re- ing that the judiciary will have no role qmreme:r:it w:1ll .ensure th8:t .the c1rcum- in enforcing this amendment? stances JUst1fym~ a spe.c1f1c excess of Mr. HATCH. Certainly the case or ~mtlays over receipts is m fact a genu- controversy requirements of article me emergency· . III, under the standing, political ques-

Mr. SIMON. I agree with my col- tion, and justiciability doctrines, will league that Congr~ss has taken ti;ie preclude the J·udiciary fro review·ng easy out. I hope this amendment will . . m . ~ . force us not to take this easy out. I be- any budget determmat1ons. Th~ JUd1c1-lieve it will. ary coul?, howev~r. un?er. article II.I

What if Congress does not produce become .mvolved m rev1ewmg comph­the three-fifths vote or take any of ance with the procedur~s of the the corrective options the Senator a~endment .. For example, if Congress mentioned earlier? tried to waive the balanced. budget

Mr. HATCH. The first part of the amenru:nent for 10 .years with. one answer is that the President checks three-fifths vote, this would v10late Congress with his deferral authority the specific langual?'.e that a waiver or by appealing directly to the people take place for each fiscal year .. Thus a to request a three-fifths waiver. But Congressman would have standmg and the Senator's question goes further. the Court would have an available He seems to be suggesting that Con- remedy to strike down the last 9 years gress, which as I have pointed out has of th~ waiver as unconstitutional. several options, would choose not to Most important, however, the courts carry out the mandate of the Consti- could not allocate resources or other­tution. On that point I am confident wise involve itself in appropriating or that Members of Co~gress as well as making spending cuts because of the the President, who are required by ar- article III ~octrines and because arti­ticle VI to take an oath to uphold the cle I commits that task solely to Con-Constitution, will uphold that oath. gress.

Mr. SIMON. I concur in that answer. So other than isolated, very unique Incidentally, I have never heard circumstances where a Member of anyone stand up on the floor of the Congress may have standing and other House or Senate and say the heck justiciability doctrines permit, article with the Constitution. We do hold the III is likely to bar judicial decisions Constitution sacred. concerning budgetary priorities.

Mr. HATCH. Even State legislators Mr. SIMON. I would add, I do not uphold their State constitutions, even think we can expect the courts to get under the toughest of circumstances. involved because we will enact imple­In Utah we have had some real possi- menting legislation. In addition, there ble deficit situations and Democrats clearly will be a powerful moral force and Republicans both consider it an here with the Constitution. absolute obligation to balance the Mr. HATCH. I agree with that. budget under the Utah State constitu- Mr. SIMON. But is it not unusual to tion and statute. expect the courts to stay out of this

I think that is true of most States in matter? the Union. Mr. HATCH. Not at all. After all,

Mr. SIMON. And the Senator thinks the limitations on judicial review are it will be true, as he suggests here. found in the "case or controversy" re-

This seems to suggest that the pro- quirements of article III. Moreover, posed article 27 of the Constitution many provisions of the Constitution would ultimately rest alone on the are beyond judicial review. The fram­good faith of Members of Congress? ers envisioned that Congressmen and

Mr. HATCH. Not entirely. Remem- the President would be bound to ber that the President and ultimately uphold the Constitution just as well as the people will require compliance judges. Accordingly, some of the provi­with the Constitution. One of the vir- sions of the Constitution going to the tues of this amendment is that it pro- heart of the democratic process are vides to the people readily understand- not judicially enforceable. For exam­able political information, in the form ple, article I, section 5, states that of just few votes, about just who are "each house shall be the judge of elec-

.

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4027 tions." Article VI, section 4, guaran­tees each State a "republican govern­ment." The courts have no role in en­forcing those provisions.

Moreover, the courts have declined to review the validity of State ratifica­tions of constitutional amendments and have denied standing to enforce whether a Member of Congress may hold an office of the United States­article I, section 6. In fact, the courts have no role in enforcing the require­ment, directly relevent to this process, that a "regular statement and account of the receipts and expenditures of all public money shall be published." Ulti­mately the framers of the Constitu­tion relied on the theory that the peo­ple's representatives will not violate their trust.

Mr. SIMON. Mr. President, I would add that this is an area where there may be some disagreement. The Sena­tor from Utah and I had a little infor­mal discussion before on this subject. I do not know precisely who would have standing if we get to the point of get­ting the courts involved. But I think the reality is we can avoid that. And if we pass this, and if we pass proper im­plementing legislation, which I am confident we would, then I do not think there would be a problem.

Mr. HATCH. I might mention, not only are there standing problems, and I believe I stated them pretty careful­ly, but there are also justiciability problems and political question prob­lems. So it is very unlikely that the courts, except in isolated circum­stances like the one instance I men­tioned, would get involved in this matter.

Mr. SIMON. I concur with my col­league on that. I thank him for yield­ing.

Mr. HATCH. I understand the dis­tinguished Senator from Nebraska has some questions he would like to ask.

Mr. EXON addressed the Chair. The PRESIDING OFFICER. The

Senator from Nebraska. Mr. EXON. Mr. President, I was lis­

tening to the discussion, as opposed to debate, I think, on the matter before us in my office and heard the discus­sion that I thought was very enlight­ening between my two colleagues who have just finished a colloquy.

I was in the middle of going over a suggested colloquy that had been sub­mitted to our office by one of the drafters of this amendment. As I un­derstood it, that colloquy was to at least partially take care of some cor­rections to the answers to some ques­tions that this Senator raised on the floor yesterday. And while I was in the middle of approving or trying to ap­prove the colloquy, I heard the collo­quy taking place on the floor of the Senate without this Senator being in­volved.

Now, it is not particularly important except that I would like to make the

record straight and very clear and have some understandings once again on the matter that is under discussion.

As I understand it, a colloquy pretty much along the general lil\e of the written colloquy that this Senator was to be involved in has just taken place. I congratulate and thank the Senator from Utah and the Senator from Illi­nois for clarifying some of the impres­sions that may have been erroneous in answers to questions that this Senator raised in debate on the floor last night.

I would emphasize once again, Mr. President, that this Senator is in sup­port of this constitutional amendment to balance the budget, as he has been in support of every type of similar amendment that has been offered since I have been here. But I would like to become involved in this now, since I brought up some of these mat­ters yesterday, and maybe get an answer specifically to two or three questions that originally indicated that I would be involved in the collo­quy that has just taken place.

My first question is: Is the amend­ment self-enforcing? And, if possible, I would like to have a yes or no answer from the proponents of the amend­ment that I am trying very hard, and intend, to support.

Mr. HATCH. I would be happy to re­spond to the Senator's question. I apologize for going ahead with the col­loquy without the Senator being here.

Mr. EXON. I could not hear the Senator.

Mr. HATCH. I say, I apologize for going ahead without the Senator being here. I did not realize he was asked to be here, so please forgive · us for that.

But the answer is that the amend­ment is intended to be self-executing in the sense that the judiciary will not have any implementation role, but in­stead Congress and the President will implement the amendment.

Mr. EXON. Is it intended to be self­executing?

Mr. HATCH. Yes. We do not com­template that the courts will be uti­lized in executing this amendment, with a few narrow exceptions like the one I cited. If, for. instance, the Con­gress decides, say, to waive the bal­anced-budget provision by one three­fifths vote for the next 10 years, then I think any Member of Congress would have standing to sue to enforce the explicit provision of the amend­ment itself which says the votes have to occur in a year. There may be some isolated instance like that where standing may be imposed.

Mr. EXON. Well, the question then comes--

Mr. SIMON. If my colleague will yield on the last question.

Mr. EXON. Yes; I am glad to yield to my friend.

Mr. SIMON. It is not self-enforcing, as Gramm-Rudman is. We do not do something and there is going to be across-the-board cuts. So the amend­ment is not self-enforcing in that way.

Mr. EXON. I think the amendment is not self-enforcing from the usual understanding of that phrase; stating it another way, I suspect that if this becomes law, as I hope it will, that we are going to have to take some addi­tional legislative action to make it en­forced. Is that correct?

Mr. HATCH. Yes. As far as imple­mentation, there is no question that Congress would have to pass imple­menting legislation to make it eff ec­tive.

In that sense, it is not self-executing. We do have a form of implementing legislation in the form of Gramm­Rudman, not specifically passed to im­plement this amendment. It would be the obligation of Congress, after the amendment is passed by both Houses and ratified by three-quarters of the States to, of course, enact legislation that would cause this to come about. Gramm-Rudman might serve as a pat­tern for that legislation to implement Senate Joint Resolution 225.

I might mention that that is a very important point that the distinguished Senator from Nebraska has brought up. I would also like to say, for the record, that I know that Senator SIMON, Senator THURMOND, Senator DECONCINI and I, and others who have had to carry these matters through the Judiciary Committee, have always appreciated the support and the help and the intelligent support of the dis­tinguished Senator from Nebraska. It means a lot to us to have him, as a former Governor of a very important State, stand up on the floor of the U.S. Senate and realize the efficacy of having a balanced budget constitution­al amendment. I would feel remiss if I did not make that clear in this RECORD today. He supported us the last time, and we are grateful to have his sup­port this time.

Mr. SIMON. And, if this Senator could add, I appreciate it particularly because he has a record of fiscal re­straint and soundness and so his sup­port of this constitutional amendment is particularly appreciated.

Mr. EXON. I thank both of my friends.

Now, the second question, because I think it is very important that we have not only the language of this matter but also what the intent, the legislative intent, is, in case, as I sus­pect, this is going to come before the courts in some form or another at some time in the future if it ever be­comes law.

Question No. 2: Does the amend­ment expand the role of the President beyond his current powers?

..

4028 CONGRESSIONAL RECORD-SENATE March 7, 1986 Mr. HATCH. The answer to that is

simply, no. It does not expand the role beyond the President's current powers.

I would suggest this amendment to Senate Joint Resolution 225 does not mention the President at all. This should not suggest in the slightest that the President will not be expect­ed to comply with the amendment. The President will certainly be expect­ed to help insure that the outlays shall not exceed receipts in any fiscal year.

It is clearly not the intent of the amendment, however, to establish any new authority of the President absent congressional action, or implementa­tion, or to imply any reordering of the separation of powers balance between the branches of the National Govern­ment.

This amendment clearly does not invest in the President any new au­thority over the impoundment of the appropriated funds. Congress, howev­er, may choose in its wisdom, if it wants to, to amend existing impound­ment statutes consistent with the Con­stitution and establish greater author­ity in the President to carry out his section 1 obligations by impounding funds. But I doubt that is going to be the case. This is left to future Con­gresses. This Congress would not confer that authority in this constitu­tional amendment. We choose not to require that in this particular amend­ment.

In the absence of such legislation, it is still expected that the President will exercise his budget proposing author­ity, his veto authority, and any other authority presently available to him to carry out the mandate of the section 1 provision.

The same of course is expected of Congress. The President is invested with no new substantive authorities­impoundment, line-item vetoes, and so forth-but is obligated to exercise his excising authority in light of new con­stitutional directions.

He is charged by this amendment with exercising the veto authority, his proposal authority, his executive or administrative authority generally in behalf of the new obligations set forth in this amendment. In other words, he is given new standards by which to ex­ercise his present authority, but is given no new substantive authority.

I hope that makes it clear to my dis­tinguished colleague and friend, and I share his concern about the matter.

Mr. SIMON. If I can add, I concur completely with my colleague from Utah. I would add it neither expands the role of the President nor restricts the role of the President.

Mr. HATCH. That is right. Mr. SIMON. Neither one. Mr. HATCH. His present authority

will continue. He has new responsibil­ities because of the amendment.

Mr. SIMON. That is correct. Mr. EXON. I thank my friends. So I guess the answer to question

No. 2: Does the amendment expand the role of the President beyond his current power is no. But the statement that has just been given by my col­league from Utah with regard to the President has joint responsibilities with the Congress in this is the heart and soul of the amendment that I have tried to off er in the past almost successfully I believe 2 years ago, and therefore it is incorporated by intent at least, and so established in debate here today that we expect the Presi­dent to be involved in the process.

Mr. HATCH. If I can say one other thing, one reason we are making sure of that is because of the leadership of the Senator from Nebraska. We appre­ciate his leadership in this area. I hope we have made it abundantly and final­ly clear.

Mr. EXON. Question No. 3: Will the courts gain new authority over the budget issue and priorities if this amendment becomes a part of the Constitution?

Mr. HATCH. The answer is a defi­nite no. The court will not need new authority.

HOW IS AMENDMENT TO BE ENFORCED? IS THE JUDICIARY TO BE THE ENFORCING AGENT?

Mr. HATCH. I share the concern about judicial activism in the courts of this land. I think the courts have in­creasingly abused their proper author­ity. On the other hand, what we do not want to do is interfere with the truly legitimate functions of the courts in our system of government. I believe that Senate Joint Resolution 225 has established the correct bal­ance in refusing to establish constitu­tional sanctions for the Federal courts to involve themselves in fundamental macroeconomic questions, while not undermining their equally fundamen­tal obligation to say what the law is." Marbury v. Madison, 1 cranch 137, 177 0803).

While there are a number of Mem­bers in this body whose confidence in the idea of judicial self-restraint has been badly undermined through the years, nevertheless it is the view of the Judiciary Committee that traditional judicial and constitutional conceptions of justiciability, and standing, as well as the idea of what constitutes a politi­cal question best reserved to nonjudi­cial branches of the Government, suf­fice to insure that the courts will not involve themselves, as a normal matter, in reviewing the operations of the budget process. This, certainly, is the clear intent and expectation of the authors of Senate Joint Resolution 225.

I might say in summary that, while the authors have chosen consciously not to prohibit judicial review alto­gether of cases and controversies aris­ing in the context of the proposed

amendment in the belief that the most serious and unambiguous violations of its provisions ought to be subject to external check. First, Congress and the President each are expected to es­tablish appropriate provisions for com­plying with the amendment. Second, Congress and the President each are expected to monitor the actions of the other branch and to the extent of their existing authority enforce the provisions of the amendment against that branch.

Finally, the public is expected to be, and I think will be, in a superior posi­tion to monitor the actions of both of these branches of Government, and where they fall short of complying adequately with the provisions of the amendment by enforcing it through the electoral process. Only as a final resort and only under the most com­pelling circumstances as, for example, when the practices of either the Con­gress or the Executive undermines the ability of the amendment to be self-en­forcing is there anticipated to be a sig­nificant or effective role for the judi­cial branch. It is a highly limited, but I believe, a desirable role.

I believe the Senator has again raised an important constitutional question. We have tried to answer it in the committee report as best as we can. We have tried to establish an ex­tremely difficult balance in this area. I think the Senator's concerns are seri­ous and thoughtful ones.

Article III limits Federal courts to the adjudication of cases or controver­sies. The case or controversy require­ment has several aspects which pre­clude judicial involvement in budget decisions. In the first place, we should consider justiciability. This constitu­tional requirement poses the ques­tions, Is this dispute appropriate for judicial resolution? and, Is there a remedy that a judge can order? and, Is this committed to other branches of Government? Since article 1, sections 8 and 9, state that appropriations and borrowing are the exclusive province of the legislative and executive branches, the Federal courts have no apparent judicial remedy for a process committed to other branches. The court cannot appropriate, neither can it order Congress to do so because of the breadth of the speech and debate clause of article 1, section 6.

Another article III doctrine involves political question. This constitutional requirement poses the questions, Is there a judicially discoverable and manageable standard for resolution of this dispute? and, Has this dispute been committed by the Constitution to another branch? and, Is there a pros­pect of embarrassment and irresolva­ble conflict arising from differing an­swers by different branches to the same question? and, Can the court re­solve the dispute without expressing a

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4029 lack of respect for coordinate branches of Government? The constitutional commitment of spending decisions to Congress, the absence of any standard to govern judicial budget decisions, and the potential for irresolvable clashes with equal branches of gov­ernment make judicial enforcement of budget allocations a clear political question.

Finally we have the barrier of stand­ing. This constitutional requirement poses the question, Does this party have personal stake in the outcome beyond the generalized grievance common to other members of the public? Any alleged breach of the amendment could only be for violation of some budget aggregate, not from wrongful appropriation for some spe­cific purpose. Thus, no taxpayer or Congressman is likely to show that a particular program or single appro­priation caused the aggregate deficit. Moreover, his interest in the aggre­gates would be no different from any other citizen. Standing is extremely unlikely for the purpose of allocating spending.

The judiciary would have a role, un­likely to be impeded by the case or controversy doctrine, in enforcing the procedures of Senate Joint Resolution 225. If, for example, Congress tried to vote by three-fifths to waive the bal­anced budget for the next 10 years, a Congressman would have standing to complain that he is being denied the opportunity to do his constitutional duty of voting for each fiscal year on a waiver. Moreover, there would be a justiciable remedy not involving allo­cation of funds-the Court could simply strike down the last 9 years of the 10-year waiver as unconstitutional. Similarly, the Court could decide the validity of the claim by some future President that this amendment grant­ed him line-item veto authority.

Mr. EXON. I concur completely with my friend from Utah, and my friend from Illinois. I assume the Senator agrees with that.

Mr. SIMON. I do. I think the earlier outline of the Senator from Utah with some rare exceptions indicates there could be some involvement but those exceptions will be rare indeed.

Mr. EXON. I thank the Senator very much for the direct and forward answer to my questions. That clears it up as far as this Senator is concerned. I hope it might clear it up for the record sometime in the future when as I suspect it will come up in future dis­cussions.

Mr. HATCH. I thank the Senator. He has done the United States and this amendment a great service in rais­ing these questions, and allowing us to set the record straight because I think this record will govern the implemen­tation of this amendment once it is ratified by the States, assuming it is passed by the Congress this year.

With that, if the distinguished Sena­tor from Illinois has nothing more to say, I will suggest the absence of a quorum.

The PRESIDING OFFICER <Mr. GORTON). The clerk will call the roll.

The legislative clerk proceeded to call the roll.

Mr. SIMON. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER. With­out objection, it is so ordered.

Mr. SIMON. Mr. President, this morning's Washington Post has a column by Roy Ash, who served this Nation with great distinction as Direc­tor of the Office of Management and Budget in past administrations. Mr. Ash is questioning the wisdom of going ahead with the balanced budget amendment. He basically has two points.

One is what do we do at the end of the fiscal year if we suddenly find our­selves with a $20 billion deficit.

I think that has been answered by my colleague from Utah, Senator HATCH, and answered very effectively.

The other point he raises is that our defense capability has the most to lose under the proposed amendment.

I would argue precisely the opposite. First of all, if there is if it a real emer­gency, there has never been a difficul­ty in passing things through Congress. On the Gulf of Tonkin resolution, there was a question of its wisdom in retrospect, but it passed 88 to 2. There has never been a problem of passing legislation if it is a real emergency.

Second, defense is going to lose as much as anything, including Boeing in the State of Washington, Mr. Presi­dent, will lose as much as anything, if we have a weakened economy.

Defense, along with education, health care, and everything else loses when our economy is weakened.

I would point out, finally, that the purpose of defense is not only to resist an aggressor who may attack us sud­denly. The purpose of defense is also to deter an aggressor from moving qui­etly, in the case of a possible aggres­sion by the Soviet Union, moving qui­etly into other countries, in underde­veloped lands. The best way we deter that kind of aggression is by maintain­ing a sound economy; by discouraging people from moving in the direction of Marxism because of the difficulties they face.

The appeal of Marxism has never been what it stands for but what it is opposed to. Desperate, hungry people sometimes move in that direction.

If we maintain a sound economy, we are going to provide an example that will help the United States politically. A sound economy will help our de­fense capability and will, in those quite ways that are so extremely im­portant, deter and discourage any pos­sible aggressor.

Mr. President, I suggest the absence of a quorum.

The PRESIDING OFFICER. The clerk will call the roll.

The legislative clerk proceeded to call the roll.

Mr. HELMS. Mr. President, I ask unanimous consent that further pro­ceedings under the quorum call be dis­pensed with.

The PRESIDING OFFICER <Mr. EAST). Without objection, it is so or­dered.

Mr. HELMS. I thank the Chair. Mr. President, in listening to the dis­

cussion of the proposed constitutional amendment to balance the Federal budget, it has occurred to me that it is not a matter of our not having been warned about the profligacy and the irresponsibility of Congress and others over the past generation. For example, in 1802 Thomas Jefferson wrote:

If we can prevent the government from wasting the labors of the people, under the pretense of taking care of them, they must become happy.

Then, in 1816, about 14 years later, Mr. Jefferson wrote:

I place economy among the first and most important of republican virtues, and public debt as the greatest of the dangers to be feared.

Then, a couple of years after that, Mr. Jefferson wrote:

To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servi­tude.

So, very plainly, Mr. President, Thomas Jefferson tried to warn us. What has happened in the past gen­eration? We have chosen, as Mr. Jef­ferson put it, "profusion and servi­tude."

According to the estimates of the Office of Management and Budget, our gross Federal debt at the end of this fiscal year will be $2,112,000,000,000. I read an estimate just the other day by a distinguished economist who said that if the Federal Government did its bookeeping just as businesses are required to do theirs, the Federal debt total would be in excess of $3.5 trillion. But let us use the $2.112 trillion estimated debt at the end of this fiscal year. This amounts to more than half on the pro­jected U.S. gross national product.

The interest alone on the national debt for this year is estimated to be over $142 billion-meaning, of course, that the taxpayers will shell out more in interest payments this year, by far, than it cost to operate the entire Fed­eral Government about 20 year ago.

As a matter of fact, some of us may remember when President Lyndon Johnson became distressed when he learned that he was to be the sitting President when the first Federal

4030 CONGRESSIONAL RECORD-SENATE March 7, 1986 budget that exceeded $100 billion was to be proposed.

Mr. President, there would be no economic crisis today if we were not obliged to include in the budget the $142 billion that will have to be paid in interest on the Federal debt. The Fed­eral Government would not be skim­ming $142 billion off the top of the taxpayers' money. Obviously, that money would be left in the private sector: Homebuilding could proceed and expand. Citizens could buy homes and cars and other consumer goods they need. Businesses could afford to expand. Jobs would be created. Unem­ployment would be minimal.

Mr. President, I recall very well, prior to my seeking election to the Senate in 1972, wondering if the pic­ture, even of that day, did not consti­tute a national disgrace in terms of the prolif era ti on of the Federal Gov­ernment, its powers, and its spending. But if I had that feeling then, 14 years ago or more, how much greater is the feeling today! It is indeed a national disgrace, a symbol of profligacy and even cowardice, a matter of political ambition run amuck, and the timidity of Congress and-let us put it like it is-the recklessness of Congress, the inclination to play politics with the public purse. All this has brought us to where we are today, to a Federal debt of more than $2 trillion.

When I look at those figures, which boggle the mind, I wonder what Thomas Jefferson would .say could he walk on this floor today, having given us fair warning. I suspect he would say, "I told you so;" and I suspect that he would be telling us in the Senate and in the House of Representatives, "You are making the American people pay the price for your profligacy, for your recklessness."

In any case, after looking at the fig­ures I have just recited, I find it diffi­cult to understand how anyone in this Chamber can stand up and object to a constitutional limitation on Federal spending. How in the world can they say that we do not need a constitution­al amendment? Certainly we need it, because Congress has demonstrated over and over again that it will not vol­untarily discipline itself.

I listen to the hue and cry about the so-called Gramm-Rudman-Hollings legislation, and I find myself in wonder, not only at the misrepresenta­tions, but also at the objections to Congress even making a gesture to dis­cipline itself. That is all Gramm­Rudman-Hollings is-a gesture, an effort, to discipline ourselves at long last.

I had a conversation with a distin­guished constituent the other day on the telephone. He said: "Jesse, there is a strong belief among the people with whom I associate that the folks in Congress feel that the Federal Gov­ernment is entitled to all the money

that the taxpayer earns, while you fel­lows sit up there and decide how much you're going to let the taxpayers keep out of their earnings."

There is something to what he said. But I must exclude myself from that characterization, because I have voted against so many excessive spending proposals in this Chamber that my lib­eral editor friends in North Carolina­who never saw a spending bill they didn't like-have sarcastically called me "Senator No."

I recall that in my 1978 campaign, some of my advisers were saying, "We have to tone down this image of your voting against all these Federal pro­grams."

I said: "I don't want to tone it down, because I believe the people of North Carolina sent me to Washington to vote no when excessive spending pro­posals are presented to the Senate."

I recall that on one occasion I was to address a group of people in Raleigh, NC. I had just come from one of these meetings, where I was advised to soften my image as a Senator who voted "no" so frequently on these spending bills.

As I was walking to the podium, I wondered how I should begin. I looked out on the audience and hestitated. Then I said, "I am Senator No, and I am glad to be here.'.'

To my great satisfaction, the audi­ence was on its feet and waving nap­kins and cheering.

That was the end of the "Senator No" business. I have not heard that epithet since.

So it is not unpopular politically or otherwise to have concern for the tax­payers of this country, let alone the solvency of America.

I am always fascinated to hear politi­cal outcries against what are called "the Reagan deficits.''

These outcries almost always come from politicians, editors, columnists, and television commentators, who down through the years have advocat­ed more and more Federal spending.

Not only do they have the cart before the horse, they have the Con­stitution all mixed up, because the last time I checked no President, Ronald Reagan included, is empowered to spend a dime that is not first appropri­ated by the Congress of the United States.

And the last time I checked, Mr. President, spending measures must originate in the House of Representa­tives, and I do not want to be unkind to the distinguished Speaker of the House of Representatives, but all that being so, perhaps we should hereafter refer to the deficit as the "Tip O'Neill deficit". But I really do not want to do that. Mr. President, I do not care which party straightens out this coun­try just so one of them does.

I think it is high time that we laid aside politics, faced the reality of the

situation, and moved to discipline our­selves and thereby ensure some hope for the young people of this country who are coming along and who are en­titled to have the heritage of freedom that we in this body inherited.

But the fact remains, Mr. President, that when the Federal Government imposes taxes equal to the amount of expenditures, the citizens know to what degree they are being burdened to pay for Federal spending. Congress is supposed to be required to justify expenditures, which are popular or necessary, with equal taxes, which are never popular. But that has not been the case for a generation or more. We now stand in confrontation with the reality that when the Government spends more than it receives in taxes, Congress is hiding from the American people the true cost of what it is that we are doing here.

So it has been a game of political charades. Everyone in this body has been aware of what has been going on. This busiess of buying special interest groups with Federal money is the old shell game of something for nothing. It has all of the straightforwardness of a con game. It is a classic free lunch, with everyone knowing that there is no such thing.

As the debate proceeds on this pro­posal for a constitutional amendment to require a balanced Federal budget, I, for one, believe we should examine the voting records of Senators. Let us find out who has been where and who has been doing what down through the years. Let us find out what has been the voting practice of those Sena­tors who today are so adamant in their opposition to a balanced Federal budget constitutional amendment.

But let us examine all Senators and their voting records, and let us have it spread on the record how Senators have voted down through the years on the appropriation bills that have ex­ceeded the Federal budget-or, to put it bluntly, who are the budget-busting Senators?

The point is this, Mr. President: There is not a single Member of the Senate who would go out and throw away his or her own money. Senators have a right to do that, but they don't do it. They vote to throw away some­one else's money, to wit, the taxpay­ers' money.

I recall the story of Davy Crockett. When Davy was a Member of the House of Representatives, there was a legislative proposal, as I recall it, to give a sum of the taxpayers' money to the widow of a distinguished naval of­ficer who had died. The widow had al­ready received her late husband's pen­sion. There was a rush to pass the pro­posal and to give the lady additional money.

I cannot quote Davy Crockett pre­cisely. I read the story a long time ago.

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4031 But in effect, Davy got up and said, "I respect the late admiral as much as anybody in this Chamber I regret his death as much as anybody in this Chamber. But, gentlemen, it is not our money to give."

Then he made a proposition to his fell ow Members of the House of Rep­resentatives. He said, "I am the poor­est Member of this body but I will make this bargain with my colleagues. If you will give a month's pay to the widow of this distinguished naval offi­cer, I will give a month's pay. And we have a right to do that. What we don't have a right to do is to give away somebody else's money."

He had no takers. Everyone 'was sorry for the lady until it came to the spending of his own money.

There is not a Member of the Senate who, as a successful man or woman, would throw away the profits or assets of his or her business. A successful business person knows that he or she has a legal obligation to the stockhold­ers and employees of the business and they also know that if they do waste the assets and profit of the business, that business will not survive very long.

How is it, then, Mr. President, that when these same individuals come to­gether to sit in the Senate or in the House of Representatives they aban­don the very concept and practices that were perfectly natural and in­stinctive before they entered the legis­lative arena?

Let me give you an example; a small example, but an example nonetheless.

During the past several weeks, this Senate debated at great length the question of whether to test TV cover­age of Senate activities. Not once in the debate-not once, Mr. President­did I hear one of the proponents of this bill express the slightest concern as to where the $3.5 million will come from to pay for TV in the Senate. Not once did I hear one of the proponents of the bill question whether this money could be better spent. Why? I do not know, maybe it is because $3.5 million is a trival amount these days in terms of a trillion dollar Federal budget. Maybe $3.5 million is so trivial that we do not even bother to think about it anymore.

Now, I have no heartburn one way or the other about TV in the Senate. I did object to the use of that legislative umbrella to try to ram down the throats of the minority rule changes in the Senate that I considered to be not only unwise, but dangerous, in terms of the meaning and purpose of the U.S. Senate.

But, in any event, Mr. President, we managed without TV in the Senate for almost 200 years, and I would have thought that somewhere along the line one of the proponents of TV in the Senate would have said, "Well, we

are talking about $3.5 million that we do not have to spend right now."

I thought that the passage of Gramm-Rudman-Hollings was a sign that the Senate had finally recognized its obligation to the American taxpay­er to reduce the level of Federal spending. And I hope that that is indeed the case; as a matter of fact, I pray that that will prove to be the case.

But what do we hear? Scarcely a day passes that we do not have great de­bates in this Senate from Senators who want to exempt various spending proposals from the effects of Gramm­Rudman-Hollings.

Mr. President, I still hope that we can make responsible and difficult de­cisions prescribed by the Balanced Budget and Emergency Deficit Reduc­tion Act to reduce the deficit to zero by 1991. I think we ought to do it more quickly than that. But surely there is enough intestinal fortitude and good sense in this body to do it by 1991. We have a perfect opportunity with the proposal now before this Senate to create the political environment for the future in which a zero deficit can be achieved and maintained.

Mr. President, I shall conclude in a moment, and I appreciate the Chair's indulging me with this recitation of thoughts that have occurred to me throughout the weeks preceding this day. I am obliged to recall for the record a statement that Ronald Reagan made in 1980. He said:

Excessive Federal spending and deficits have become so engrained in Government today that a constitutional amendment is necessary to limit this spending.

And I suggest, Mr. President, that Ronald Reagan was right then-and he is right this day in insisting that there be a constitutional amendment to require a balanced Federal budget, because the size of the current deficit proves beyond any doubt that Mr. Reagan was correct in 1980.

Some of our colleagues will argue that a constitutional amendment is not the correct approach to balancing the budget. Mr. President, again let me say, with all respect to any of my colleagues who make that claim: That is a cop-out. These voices will say, "All that is needed is for Congress to exer­cise the political courage to vote against unnecessary spending."

Oh, yes, that is correct. But we have not had that courage. We have not had that sense of responsibility. And the arithmetic is evident for all to see that this Congress has been derelict. And I hope I will never hear again a description of the Federal deficit as being a Reagan deficit. Look at the cost of paying the interest on the Fed­eral debt. I recited the figures earlier.

Most of the deficit-most of the defi­cit, Mr. President-can be charged to the profligacy, the irresponsibility, the apathy of years gone by when there

was no hesitation about spending vastly more than the Federal Govern­ment took in in revenue.

Mr. President, I certainly do not sug­gest that the ratification of this con­stitutional amendment requiring a bal­anced budget will solve all of the eco­nomic problems facing our Nation, but it will surely do one thing. It will bring a degree of honesty and discipline that is long overdue around this place. This discipline is imperative. And the other side of the coin is clear: The cost of not balancing the Federal budget is just too high.

Maybe what I am saying is, we are now at put-up or shut-up time. We can manufacture all grades of excuses for what we do or fail to do, but I do not believe we will fool the American people if we renege on this opportuni­ty. If we are unwilling at this crucial time to accept a discipline that admit­tedly will be difficult-some will even say it is impossible-then we are saying that there is no remedy. And that simply is not true.

Mr. President, I hope that the Senate will move rapidly to approve this proposed constitutional amend­ment to balance the Federal budget. Remembering, as we do, that Jeffer­son warned us in the first place of the consequences of not being prudent, of not being responsible.

I shall conclude, as I began, by quot­ing Thomas Jefferson in 1802 when he said "If we can prevent the Govern­ment from wasting the labors of the people under the pretense o.f taking care of them, they must become happy." And he also said, "I place the economy as being the first and most important of republican virtues, and public debt as the greatest of the dan­gers to be feared."

With the testimony of Thomas Jef­ferson, Mr. President, I rest my case.

I thank the Chair and I yield the floor.

Mr. MATHIAS addressed the Chair. The PRESIDING OFFICER. The

Senator from Maryland. Mr. MATHIAS. Mr. President, today

the Senate considers the most recent effort to achieve through legislative fiat what we have failed to achieve through the constitutional process of representative government, which is a balanced Federal budget. This latest cure of our deficit ills would amend the Constitution of the United States to make deficit spending unconstitu­tional, except in times of war, or when a supermajority of the Congress voted in favor of it.

Mr. President, let me make clear that I am for efficiency and economy in Government. I am for prudence, even for frugality in Government, and, if necessary, Mr. President, for austeri­ty in Government. But I think we have to take some philosophical note of the fact that today we are being

4032 CONGRESSIONAL RECORD-SENATE March 7, 1986 asked to do something a little differ­ent than being efficient, economic, prudent, frugal, or austere. We are being asked to take the first step in the path of enshrining in the Consti­tution a significant economic hypothe­sis. And that hypothesis is the desir­ability of a Federal budget that- is pre­cisely in balance.

God forbid. It could be in surplus. That is historically not impossible. This country has sometimes had a budget surplus, unhappily not in our generation. But it has occurred.

As far as I can tell, economists are far from unanimous about the accura­cy of this particular hypothesis-espe­cially, if it is applied at all times and under all conditions. But it does seem to raise the question whether or not an economic theory-however much it has been touted and revered-belongs in the fundamental charter of rights and liberties of the United States of America. I think the confusion that could be engendered by enshrining a particular economic theory in the Constitution is very amply demon­strated by the deliberations which we enjoyed in the Committee on the Judi­ciary. The committee, after a lot of discussion and thoughtful, eloquent debate came up with the rather re­markable result that we approved two-not one, but two-amendments to the Constitution of the United States. Well, this is rather extraordi­nary. I cannot recall, Mr. President, in the quarter century that I have served in Congress that we have gotten to the situation where we could not make up our minds on what to do about a sub­ject so we just pass out two bills, report two bills.

It is like the old story that I remem­ber Governor Tuck, of Virginia, used to tell in the other body. Governor Tuck represented a congressional dis­trict down near South Boston, VA, which is sheep country. He used to say that when they introduced a bill in the general assembly in Richmond about dogs killing sheep, that some of his friends were for it and some of his friends were against it, and he was going to stick firmly with his friends.

That is what the Judiciary Commit­tee has done on the subject of this bal­anced budget amendment. We are sticking firmly with our friends, and we have several different ideas of what it ought to be so we passed out both of them with the imprimatur of approval of the Committee on the Judiciary. Despite the long hours of hearings, and the members of the committee worked very hard on this, despite the tireless work of the chairman of the committee, the Senator from South Carolina CMr. THURMOND], and of the chairman of the Subcommittee on the Constitution, the Senator from Utah CMr. HATCH], the committee was unable to agree on a single formula­tion for the amendment.

Now, lo and behold, here on the floor of the Senate we have a third version which is a hybrid, which has sprung forth.

I think that an objective observer would feel that the committee's inabil­ity to propound a single text for the proposed amendment would be a signal, a warning, that the particular wording of a balanced budget amend­ment may be out of date before it ever goes into effect. This is especially true since the ratification process is very lengthy, and usually takes several years to accomplish.

I find it very difficult to conceive of any formulation, or any combination of words that will achieve the goal of mandating a balanced budget. At best, any of these proposed amendments will raise false expectations. At worst, they could lead to concerted efforts to circumvent the provisions. And, of course, the latter result would have an effect beyond the mere question of a balanced budget because it would go to respect for constitutional provisions and enforcement of the organic law.

It is a curious thing that many of those who are supporting this consti­tutional amendment are among those who are against judicial activism, those who are against the intervention of Federal judges into the political and social life of this country, those who question the President's nominees for the Federal bench say, "Are you a ju­dicial activist? If you are, we may not want to confirm you." Yet, this bal­anced budget amendment is an invita­tion to judicial activism.

For myself, I think the Federal judges have done very important and useful things in this country.

But for those who do not agree with that judgment, I would suggest that they think twice about supporting a balanced-budget amendment to the Constitution.

One of the Senators who has spoken on the subject this week, a very ener­getic evangelist of the balanced-budget gospel, was very candid in describing what he felt was a major problem, and he asked, "How in the world are we going to enforce it?"

Well, none of the three balanced­budget amendments to the Constitu­tion that I assume are now pending­you can take your choice-includes a specific enforcement mechanism.

The Judiciary Committee rejected an amendment which would have granted explicit standing for citizen suits to enforce both the balanced budget and the tax limitation sections of the resolutions reported by the committee. The majority report of the committee indicates that judicial in­volvement would be rare.

I think, if we ever heard of it, that that is wishful thinking. That is the people who object to judicial activism saying that, "Well, judicial involve­ment will be rare because citizens will

lack standing to bring suit on viola­tions."

But if people cannot go to court to enforce the amendment, then it has to be self-enforcing or we have to admit that it is not enforceable. Therefore, it may or may not achieve the goal of a balanced budget. Failure could erode respect for other provisions of the Constitution.

Passage of an amendment that may not be enforceable is an exercise in public relations, not in constitutional law. If the Judiciary Committee was correct that citizens do not have the right to come to court, I think we have to question whether we are providing an adequate redress for grievances as contemplated by the Constitution.

But if the Judiciary Committee is in­correct, if the committee was wrong and citizens do have standing to sue to enforce the amendment, then I would submit to those who do not like judi­cial activism that Federal judges could become intimately involved in every facet of spending; intimately involved in every tax decision.

The Judiciary could be called on to determine the constitutionality of vir­tually every spending bill passed by the Congress and signed by the Presi­dent. How is that for judicial activism?

Every Member of the Senate, I am sure, acts in obedience to his oath to support and defend the Constitution. If no other enforcement is possible, only the Congress, itself, through its own rules and decisions, can police ad­herence to the Constitution. But, with respect to deficit reduction, the goal of a balanced budget constitutional amendment, we have already bound ourselves by statute, which we are equally sworn to obey.

We did it 3 months ago, when we adopted the Gramm-Rudman-Hollings amendment to the debt-ceiling legisla­tion. Somewhat paradoxically, we boosted the national debt to $2 trillion and then said we were going to reduce the deficit. That is a little like bring­ing two forms of a budget-balancing amendment to the Senate floor. We can go both ways at once.

The Gramm-Rudman-Hollings amendment includes a series of statu­tory and rule changes that require more than a simple majority to ap­prove budgets that do not meet the deficit target levels. As we all know, under Gramm-Rudman-Hollings these deficit target levels decrease until 1991 when theoretically a balanced budget will be achieved.

The proposed constitutional amend­ment would probably be enforced against Congress in essentially the same way that Gramm-Rudman-Hol­lings is enforced. The question has to occur as the whether or not we should allow time to see how well the statuto­ry mechanism works before taking the dramatic step of amending the Consti-

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4033 tution to achieve the same goal in the same way.

I would also suggest that before pre­scribing any additional balanced budget medication, we might evaluate the effects on the economy and on the interests of the United States, both at home and abroad, of the Gramm­Rudman-Hollings cure. Our experi­ence over the next 4 years will prob­ably teach us a lot about the benefits and shortcomings of the drive for a precisely balanced budget.

But if we now adopt and send to the States a constitutional amendment on the subject, then that wisdom will come too late because the long road back from the constitutional-amend­ing process is just as long as the road through the process. It is just as time­consuming and lengthy to repeal a constitutional amendment as it is to adopt it.

Why is the Senate being asked at this moment to embark on a path that seems, at least to me, to have so many pitfalls?

In my view, the support for a consti­tutional amendment on a balanced budget is based on a false premise. The premise that the Constitution, itself, is somehow flawed, and that but for this error in the original drafting of the document our fiscal house might be in order. We might not owe to the world $2 trillion.

I have trouble with this assumption. The Constitution, without any further amendment, grants ample power to the Congress and to the President to adopt a balanced budget now, today. We have lived under the Constitution for almost 200 years. The deficit di­lemma is of much more recent vintage. As I said earlier, we have gone through periods in which we have had a budget surplus. We have had modest deficits. But a national debt of over $2 trillion is a very recent phenomenon.

The deficit problem is not the fault of any inadequacies of the Constitu­tion. It is the fault of Presidents of the United States, Presidents of both par­ties, who have proposed spending measures in excess of Federal reve­nues without proposing adequate taxes to finance those spendings prior­ities.

It is the fault of the Congress, the Congress in different periods with ma­jorities from both parties, which, al­though it has consistently reduced the spending demands of all recent Presi­dents-and I would repeat that, the Congress has consistently reduced the spending demands of all recent Presi­dents; we have not voted as much as Presidents have wanted us to appro­priate-but in spite of that, we have just as consistently been unwilling to deny any President his wish to in­crease spending without increasing taxes.

We ought to remember before we proceed to graft one of these amend-

ments, or a hybridization of these amendments, on to the Constitution, that any President, any year, even this year, can submit a balanced budget. We do not need a change in the Con­stitution to have that happen.

In fact, there is no constitutional amendment that can substitute for Executive responsibility, and no con­stitutional amendment that can sub­stitute for congressional responsibility. We cannot assert that with a constitu­tional amendment, we can balance the budget unless we are prepared to con­cede that without one, we cannot do it. I am not prepared to make that con­cession.

I must confess that it is unthinkable to me that the 75 Members of the Senate who voted for Gramm­Rudman-Hollings are now ready, 3 months later, to throw in the towel. They are ready to throw in the towel before the fight has even begun. For these reasons, Mr. President, I shall oppose the constitutional amend­ments, all three of them; individually and collectively, I shall oppose them. I think they are untimely, I think they are unnecessary, and I think they are unwise.

Mr. SIMON addressed the Chair. The PRESIDING OFFICER. The

Senator from Illinois. Mr. SIMON. Mr. President, I want

first to commend my colleague from Maryland even as I take just a few minutes to disagree with him. He has, by all odds, been one of the finest Members of this body or the other body in my not quite 11 V:! years of ob­serving him. He has made tremendous contributions and I am honored to serve with him.

Mr. MATHIAS. Mr. President, if the Senator from Illinois will yield--

Mr. SIMON. I shall be pleased to yield.

Mr. MATHIAS. Regardless of what errors of judgment he may hereafter correct, I am grateful for his kind and generous words.

Mr. SIMON. I thank the Senator. If I may take just a few minutes to

counter what the Senator from Mary­land has said. He talked about the sanctity of the Constitution. I agree with him on the sanctity of the Con­stitution. But there has been an un­written part of the Constitution and if I may have his attention on just this one item, the Senator from Mary­land--

Mr. MATHIAS. The Senator has my undivided and total attention.

Mr. SIMON. There is one item that I think concerns him more than any other. That is the sanctity of the Con­stitution. I point out two things here. One is an unwritten part of the Con­stitution and the unwritten amend­ment-the phrase goes back to John Adams-is that we are going to bal­ance the budget. It was just taken for granted.

The first time in our history that we had any significant debt was in 1917, since the beginning of this country. In 1917, we accumulated a total indebted­ness of $3 billion. So that unwritten amendment, in a sense, has been part of the Constitution, except that all of a sudden, that unwritten amendment we started to violate.

The second point I think is an ex­tremely important point. Thirty-two States have called for a constitutional convention. I know the Senator from Maryland joins me in believing it would be very unwise to have a consti­tutional convention. Some of those who favor this believe they are going to get four additional States to have that call this year. If two additional States provide that call, we shall have a constitutional convention that could come up with a budget amendment that will not be as carefully crafted as this one. Or the convention could come up with who knows what in the way of amendments-abortion, getting rid of part of the Bill of Rights-who knows what? Having a carefully craft­ed amendment-and I think this is­really would be helpful. I think this amendment is in the spirit of the thinking of the Senator from Mary­land, if I may say so.

Mr. MATHIAS. The Senator from Il­linois, of course, does pose a very real problem. He talks about the sanctity of the Constitution. I agree with that and I have pointed out that we got along for nearly 200 years without se­rious deficits. I am not sure it was an unwritten amendment to the Contitu­tion or unwritten provision of the Con­stitution more than it was the simple common sense of our predecessors. But to do one unwise thing to avoid another is a heavy price to pay. I admit that there are times in human experience that we are tempted to do that. It is a little like the fell ow who hit his thumb with a hammer because he wanted to forget his toothache. I am not sure that that is the most de­sirable way to handle one deficit prob­lem.

I regret-more than regret, I fear­the size of the deficit. I agree that something serious has to be done with it. But I think the serious things that have to be done do not involve length­ening the Constitution. They involve a little more spending restraint-here, on the floor, and enacting a tax bill to raise some revenue-here, on the Senate floor.

If we spent one-tenth the time deal­ing with the arithmetic that we are spending on constitutional language, we would be way down the road to solving the problem. The arithmetic is that we need to have some more reve­nue and we need to cut out some of the spending. And I am prepared to do both.

4034 CONGRESSIONAL RECORD-SENATE March 7, 1986 Mr. SIMON. Let me add that I could

not concur more with the. Senator on those two points. I am ready to do both also.

Let me take just a few minutes to re­spond to a few other points; then I shall yield to my friend from the State of Washington [Mr. GORTON].

The question· of judicial involvement was brought up again. There is some disagreement among members of the Committee on the Judiciary as to who might have standing to sue. But I think there is general agreement among those of us who favor this reso­lution that it would be a rarity for the courts to get involved.

Members do not purposely violate the Constitution of the United States. We do hold the Constitution sacred. Further if this resolution passes, Con­gress will set up a mechanism to im­plement.

My colleague from Maryland says that if Gramm-Rudman-Hollings works, the constitutional amendment is not going to be needed. No. 1, if it works than it can do no harm. It is there and it is a safety for the future.

No. 2, unfortunately, as the Senator from North Carolina who is presiding right now-my friend, Senator EAST­and Senator GORTON and others here know, the same simple majority that passed Gramm-Rudman-Hollings can repeal Gramm-Rudman-Hollings. I voted for Gramm-Rudman-Hollings. I think we need serious medicine. But it is too easy to get rid of.

The Senator from Maryland says why, at this moment, do it? It is very interesting that the first person to lead in Congresss, in the Senate, on the whole question of a balanced budget was a predecessor from the State of Maryland, Senator Millard Tydings, back in 1954.

The Senator from Maryland says we owe to the world $2 trillion. He is cor­rect. We owe the world. That is one of the problems. That is one of the rea­sons we have to do something. Sixty percent of the deficit that we will create this year is going to be pur­chased by people outside of this coun­try.

As I said earlier, he said we have the power to balance the budget now. We do. We do not have the willpower to do it. That is why we need the re­straint of the Constitution. I have great respect for our colleague from Maryland, as I do for others who oppose this measure. But I think, on balance, we have to face the reality. We have a group of very talented men and women in this body and in the other body across the Capitol. But we have held our finger to the wind and the public has said, "Spend more and cut taxes.'' Congress has done both and we have done it at the peril of the future. We cannot continually spend one-fifth or one-fourth more than we

take in, year after year, without jeop­ardizing our whole economy.

That is where we are. I think we are in a more serious economic situation than many of my colleagues realize and I think this constitutional amend­ment can be a step in the right direc­tion.

Mr. President, I yield the floor. Mr. GORTON addressed the Chair. The PRESIDING OFFICER. The

Senator from Washington. Mr. GORTON. Mr. President, at this

stage of the debate over Senate Joint Resolution 225, I can state my position simply and I hope rather briefly.

As was the case in 1982 when we dealt with this subject in a slightly dif­ferent form, I feel the proposal to rep­resent extremely bad policy and a threat to the nature of the Constitu­tion of the United States, which has not historically included precise re­strictions of this sort on the way in which the Congress of the United States and the President set substan­tive public policy.

In one major respect, however, Mr. President, it seems to me that the ar­gument against a constitutional amendment on this subject is far stronger in 1986 than it was in 1982. In 1982, we dealt with abstractions. We had not dealt precisely with the proc­ess for getting to a balanced budget, or to the extent that we did in 1985, even with its urgency.

It would seem to me that the debate which consumed the majority of the time and the effort and the attention of Members of both Houses of Con­gress between September and Decem­ber of 1985 should illustrate graphical­ly the lack of wisdom of this proposal. During that period of time we debated at length and ultimately passed what is now known as the Gramm-Rudman­Hollings balanced budget amendments of 1985. Of course, the sponsors of that proposal had a goal identical to that of the sponsors of this constitu­tional amendment. It was in their view, as it is that of the sponsors of this amendment, that budget deficits are gravely injurious to the economic and fiscal health of the United States of America, and that that burden on our economy should be removed.

The success of Gramm-Rudman-Hol­lings in the political sense of having had it pass the Congress of the United States and having been signed into law by the President of the United States, it seems to me, has been graphically and affirmatively illustrated by in­creasing signs of strength in our econ­omy since the passage of the bill. That bill, after all, in its original form was only a promise. We have seen strengthening in the economy in a number of areas-in a lower rate of unemployment, in continuing low in: flation, but most particularly in a dra­matic drop in interest rates. So the goal of reaching a balanced budget is

one which is shared by almost every Member, if not every Member, of this body.

On the other hand, that debate was lengthy, and the length and serious~ ness of that debate, the questions which were raised by particular kinds of Federal programs, hundreds of which are not normal or standard brand spending programs, or for that matter taxing programs, which involve appropriations or specific tax bills year after year, have led us to be very cautious about dealing simplistically with an extremely complex Federal Government organization. We eventu­ally decided in our wisdom that we would exempt certain programs from the strictures of Gramm-Rudman-Hol­lings. In some cases at least we have decided to determine that receipts and expenditures are not in fact receipts and expenditures by putting them off budget and by making the statement that until at least some time in the future, but before the earliest possible effective date of this constitutional amendment, we will ignore them en­tirely as we look at whether or not we have balanced the budget of the United States. Some of these decisions may have been unwise. Some of those decisions are ones which I personally would not have made had I written that proposal on my own.

The important point, however, Mr. President, is that they were made in the wisdom of the Congress of the United States that the Gramm­Rudman-Hollings amendments eventu­ally became a very complicated text, probably several hundred pages in length, dealing in quite different ways with different kinds of Federal pro­grams.

Perhaps even more significant than that, Mr. President, is the fact that Gramm-Rudman-Hollings, which is now widely denounced by individuals and groups throughout the United States-and I may say widely praised by many other groups-nonetheless seeks only to balance the budget of the United States by fiscal year 1991, a period of more than 4 years from the time of its original passage.

That is considered by many to be an extremely drastic prescription. Some hold the proposition that it will create a serious recession in the United States. I do not agree with that argu­ment, but it is nonetheless made.

This proposal, which hopes I guess to come after Gramm-Rudman-Hol­lings has in fact solved all the fiscal problems of the United States, none­theless requires the budget to be bal­anced within a couple of years after it becomes an effective part of the policy of the United States. Should Gramm­Rudman-Hollings fail and should we have budget deficits <of the size that we had last year when this amend­ment becomes a part of our Constitu-

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4035 tion) the pains of Gramm-Rudman­Hollings would pale to insignificance when compared with the drastic changes in policy which would be re­quired almost overnight.

On the other hand, should Gramm­Rudman-Hollings succeed, what is the point of a constitutional amendment? I submit that there is none. If it suc­ceeds in reaching that goal of a bal­anced budget by 1991, it can be ex­tended. It can be extended indefinite­ly. It can be extended until a combina­tion of a majority of Members of both Houses of Congress and the President of the United States determine that it is no longer valid public policy. I do not know when that date would be. It might be in 1995. It might be in the year 2000, or 2010. Nevertheless, it will be a decision under Gramm-Rudman­Hollings which the Congress of the people of the United States can make. Should this appear in the Constitution by definition, we are removing the right of the elected Members of Con­gress by their normal political proce­dures to make that decision.

Gramm-Rudman-Hollings is very, very complex. This constitutional amendment is exceedingly simple. We face a complex problem. It is very un­likely that a solution as simple as this is likely to work.

Reflect on the fact, Mr. President, that we might well have passed every word except for the effective date in this constitutional amendment as a statute last fall and entitled that Gramm-Rudman-Hollings. We know what the results would be today under those circumstances. In the first place, by putting a 2-year effective date on it, we would have made our task abso­lutely impossible, and we would have in effect turned over the proposition, the duty to see to it that its strictures were met to the courts of the United States and thus had unelected officials making decisions which elected offi­cials should in fact make.

I submit, Mr. President, that we now have the balance of this year most particularly and from now until 1991 to determine whether or not creating major incentives for fiscal responsibil­ity in the form of Gramm-Rudman­Hollings, first, will work and, second, is as good policy as those of us who voted for it-and I did, happily and firmly-think in fact that it is. This is the way with which to deal with these problems.

When we find, as we certainly will, that there are minor defects or major defects in Gramm-Rudman-Hollings, this Congress and the President of the United States may make such changes as are necessary for it to work more ef­fectively-an avenue of change which is not available when we have en­shrined a particular economic and fiscal doctrine in the Constitution of the United States.

Mr. President, that is a summary. I intend to speak at greater length and on a couple of other subjects related to this ·constitutional amendment before it comes to a vote. But because we have one of its leading proponents on the floor at the present time, my distinguished colleague from Illinois, I wonder if he would agree to answer a few questions as to the way in which it will work-factual questions. One re­lates to judicial review which he allud­ed to, at least in the remarks which immediately preceded my own. If he is willing to do so, I should like to ask him this, starting with the heart of the amendment:

Section 1 states that outlays of the United States for any fiscal year shall not exceed receipts to the United States for that period. I ask him whether or not those two terms, out­lays and receipts, are, in his view, crys­tal clear and include every kind of transfer of money to and from the Government of the United States, or even any Government-owned corpora­tion, or whether there are or should be some exceptions to that proposi­tion.

Mr. SIMON. I thank my colleague. I have great respect for both his ability and what he contributes to this body.

The answer is that the committee report outlines in some detail the answer and that is the congressional intent. The answer is that we intend both budget and off-budget items to be included here.

Mr. GORTON. As a consequence, the decision made by Congress late last year to take Social Security off budget sometime beginning about 1990, literally not to count receipts into Social Security as receipts or ex­penditures as outlays, would not be possible if this constitutional amend­ment were part of the fundamental proposal.

Mr. SIMON. In in.y opinion, we can take it off the budget. We cannot take it away from the provisions of this amendment. I think we ought to take it off the budget. I favor taking it off the budget. But what we are talking about is including all receipts, all out­lays.

Mr. GORTON. In other words, in the early 1990's, if we do not change the Social Security laws, receipts from the payroll tax will greatly exceed payments or benefits to Social Securi­ty beneficiaries, those receipts will be considered as receipts under section 1, and therefore could be spent against, even if those receipts were all put into a trust fund, so that other accounts could run over by the amount of the excess of those Social Security re­ceipts over Social Security expendi­tures.

Mr. SIMON. The Senator from Washington is correct, but it would be imprudent, and that is the reason why I think we should take Social Security

separately. I think we should look at the rest of the budget and ask are we paying for it or not paying for it, whether it is education or health re­search or to take care of an area in the State of Washington.

Mr. GORTON. I could not agree more with the Senator from Illinois, that to spend that money under this constitutional amendment would in fact be imprudent. It would be highly imprudent. But it is exactly that kind of imprudence over the past 40 or 50 years which has caused this constitu­tional amendment to be proposed in the first place.

Mr. SIMON. But our imprudence has been much greater than that. In the last 5 years, we have moved from a $1 trillion indebtedness to a $2 trillion indebtedness. From 1917, we have moved from a $3 billion total indebted­ness to $2 trillion. It is absolutely amazing.

Mr. GORTON. The Senator from Il­linois has certainly answered my ques­tion on that subject adequately.

On another subject, perhaps at the other extreme: If the United States were to borrow $10 billion from the International Monetary Fund, take that money and place it in the Treas­ury of the United States, would that $10 billion count as a receipt in the year in which it was received?

Mr. SIMON. No, that is conceptually what we do now. But I am not the chief sponsor of the amendment. I will be happy to consult with my col­leagues who are cosponsors.

Mr. GORTON. I hope the Senator from Illinois will do so because if that did constitute a receipt pursuant to this definition-and at least in the normal sense of the word "receipt" it would-you have created in your con­stitutional amendment a loophole which is as wide as the present budget deficit and present national indebted­ness.

Mr. SIMON. When you borrow money from any source, whether from John Q. Citizen or the International Monetary Fund, that is not a receipt. But I do not want to speak for my col­leagues.

Mr. GORTON. I thank the Senator for the candor of his response.

While he looks at that answer, per­haps he will look at one which seems to me to be a little more difficult. That is the ability of the Government of the United States, should this reso­lution become a part of our Constitu­tion, to create what all of us know is the normal practice not only of pri­vate corporations but of State and local governments, and to create a cap­ital budget with which to pay for cap­ital assets and, in effect, to charge the cost of those capital assets off as out­lays only over an extended period of time lasting perhaps as long as the useful life of the capital asset itself.

4036 CONGRESSIONAL RECORD-SENATE March 7, 1986 Would it be possible for the Congress of the United States to say that, for capital expenditures, we will count as outlays in a given year only the amount of money by which that cap­ital asset depreciates during the course of that year?

Mr. SIMON. I would oppose any such policy vigorously. It is something that has great appeal, because a family has to buy a car or a house and pay for it over a period of years. That is because a family earning $20,000 cannot pay for an $80,000 house in 1 year. If we buy something that we cannot pay for in 1 year, we impru­dently pile up debts. We should not create some accounting subterfuge and fool ourselves into thinking that we are really balancing the budget. I would vigorously oppose such a move.

Mr. GORTON. I thank the Senator. I assume that by that answer the Sen­ator, who is one of the authors of this proposal, means that it would not be permitted.

Mr. SIMON. In my view. Again, I do not want to speak for my colleagues. But in my view that would not be per­mitted.

Mr. GORTON. Would that view apply even to capital assets which were designed for the production of income?

Let us take the petroleum reserves, which this administration, perhaps un­wisely, wishes to sell this year in order to balance the budget.

If we were to invest in petroleum re­serves, for example, against their im­mediate use and their immediate sale, 10 percent per year of the original cost, the Senator's answer would still apply-that purchase price would have to be charged as an outlay in full in the year in which that was paid? It could not be charged off against re­ceipts during the course of the next 10 years?

Mr. SIMON. Absolutely. If you buy the petroleum reserve this year, it should be charged against outlays for this year.

Mr. GORTON. What about govern­mental or quasi-governmental corpora­tions? Would the sale of stamps by the U.S. Postal Service constitute receipts in the course of each year pursuant to this constitutional provision?

Mr. SIMON. Again, in my opinion, this would be net against the ex­penses. There may be some entities where Congress, at some future point, would make a different decision. The amendment does not provide a precise solution for every detail. What we are saying is that there must be a solution; we have to move this problem. We cannot delay and pretend it does not exist.

Mr. GORTON. I understand that, and I would still like an answer to the question. I will go beyond the Postal Service.

Would both the income and the outgo of a corporation, even a corpora­tion organized to engage in what we might normally consider to be a pri­vate enterprise, but wholly owned by the Federal Government, be consid­ered to be receipts and outlays of the Federal Government pursuant to the terms contained in this constitutional amendment?

Mr. SIMON. If an entity is wholly owned by the Federal Government, yes.

Mr. GORTON. To take and make a very parochial question on this from the perspective of the Senator from Washington, the receipts from the sale of electric power by the Bonneville Power Administration would be re­ceipts and even the Bonneville Power Administration's own maintenance of the dams which it owns and the powerlines which it owns, not to men­tion the construction of new ones, would be outlays of the United States.

Mr. SIMON. There are a number of areas where I think Congress will have to make decisions, and I think the Senator from Washington mentioned one. I think the REA's would be an­other.

But there is no question in general when the U.S. Government takes in money we have to count it as receipts; when we pay out money we have to count it as outlays. We cannot use ac­counting subterfuge to avoid a bal­anced budget. We cannot say: "Sorry. We have used a different accounting method now. We have a $200 billion deficit."

Mr. GORTON. I take it my answer to the question is, those receipts and outlays of Bonneville Power Adminis­tration would be receipts and outlays of the United States pursuant to the Constitution.

Mr. SIMON. I really think a future session of Congress probably has to answer that.

Mr. GORTON. If I may go on to an­other subject, and I note the presence in the Chamber of the distinguished Senator from Utah, if the Senator from Illinois will permit me, I must say that the debate and the exchange between myself and the distinguished Senator from Utah in 1982 from the point of view at least of intellectual stimulation to this Senator may well represent the high point of my career in the Senate to this point.

I disagreed rather profoundly with the Senator from Utah at that point, but his brilliance in expounding his point of view and his skill at debate and outlining what it was he was trying to do have rarely been matched, at least in the 51/2 years in which I have found myself here.

I did not mean to have the Senator from Illinois sit down because he can answer this question as can the Sena­tor from Utah. I wanted to go on to the centerpiece of this amendment.

Mr. HATCH. Mr. President, will the Senator yield?

Mr. GORTON. I yield. Mr. HATCH. Mr. President, I am

very humbled by the statement of the distinguished Senator. As I recall that debate I think the distinguished Sena­tor took me over the coals at that time. It was a stimulating debate and I appreciated it.

I wish and hope we can get the dis­tinguished Senator from Washington to help us with this amendment.

Mr. GORTON. That does bring me to the next subject which was the pri­mary subject of discussion between myself and the distinguished Senator from Utah almost 4 years ago, and that subject is the degree to which we are inviting into the field of fiscal policy the unelected Federal court system of the United States.

I do not wish to misstate a position taken 4 years ago by the Senator from Utah, so he can certainly interrupt me if I am in error.

But it is my understanding that his position in connection with the precise language of the 1982 constitutional amendment was that there was no right of review, that it was not neces­sary specifically by amendment to pro­hibit the right of review by the courts of the United States. At the same time, I am quite certain I heard the Senator from Illinois, in speaking to this amendment, indicate that the ap­propriateness of judicial review both to determine the definition of the words "outlays" and "receipts" and, for that matter, to make a determina­tion as to whether the constitutional amendment had been complied with could be decided by the Federal court system.

Mr. HATCH. Mr. President, if the Senator will yield, the distinguished Senator and I basically agree there might be certain circumstances where the courts can decide some narrow procedural questions pertaining to this amendment or which might arise if this amendment is ratified.

We cited in particularity one illus­tration where if Congress decided to authorize 5 years of unbalanced budg­ets by having one three-fifths vote, then every Member of Congress would have standing immediately to bring a suit before the courts and ultimately the Supreme Court, I presume, to knock out the 4 additional years, be­cause the amendment is pretty clear on its face that you have to specifical­ly authorize an excess of outlays over receipts for each fiscal year.

Article III limits the Federal courts to the adjudication of cases or contro­versies, as the distinguished Senator from Illinios knows, and the case-or­controversy requirement has several aspects which preclude judicial in­volvement in budget decisions.

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4037 I think we went into them fairly ex­

tensively in the prior debate. Mr. GORTON. Quite clearly, the

Congressman from Oklahoma brought himself within the case-or-controversy language of the court in his challenge to Gramm-Rudman-Hollings.

Mr. HATCH. That is true. The Gramm-Rudman bill specifically pro­vided a means for him to do that and the court accepted that particular means.

As the Senator knows, to obtain standing before a Federal court, you have to examine the cases that we dis­cussed back then. Even beyond stand­ing, however, a plaintiff's case must satisfy justiciability and political ques­tion requirements.

There is nothing in this constitu­tional amendment that gives standing as a general rule to any individuals who are Members of Congress except under certain circumstances which I think everyone will agree with.

The constitutional requisite of standing poses the question, does this party have a personal stake in the out­come beyond the generalized grievance common to other members of the public? Any alleged breach of the amendment can only allege violation of some budget aggregate, not that a single appropriation for some specific purpose was responsible for the excess of outlay over receipts in the entire budget.

Mr. GORTON. I would certainly agree with the Senator from Utah on that observation.

Mr. HATCH. Then I would suggest that no taxpayer or Congressman is likely to show that a particular pro­gram that he or she may be interested in or any single appropriation caused the aggregate deficit. And since his in­terest in the budget aggregates will be no different from the interest of any other citizen, he will not make a case for standing.

Mr. GORTON. I agree with the Sen­ator from Utah in that observation, but it is cold comfort to me, when the standing would not exist until in some aggregate the amount of an outlay ex­ceeded the amount of receipts without a three-fifths vote having taken place to authorize it, because it seems to me that very many judges, perhaps a great majority of the judges, when faced with the proof of that statement would themselves interpose in their own judgment as to how to bring the two into court and have the entire Federal budget with which to deal in making that decision.

I would like the comment of the Senator from Utah on at least one more question if I may. Is it safe to-­

Mr. HATCH. Will the Senator yield for one other comment about the Gramm-Rudman versus Synar case?

Mr. GORTON. I yield. Mr. HATCH. In the case of Synar

versus United States, Congressman

SYNAR contended that he had the right to vote on spending cuts. Under the law of the D.C. Circuit, he made the case that his personal interest in the exercise of his governmental powers, namely his constitutional duty of voting on appropriations was violat­ed by Gramm-Rudman, which, of course, provided for automatic cuts without votes.

If the Congressman was denied a right to vote to waive section 1 under the balanced-budget amendment, I think he, too, could assert a claim for standing in the District of Columbia, but political question and justiciability would still be hurdles, but I still have--

Mr. GORTON. If I may interrupt, Congressman SYNAR's plea on that ground was turned down. It was reject­ed. The court did not determine that he was deprived of his constitutional rights because he was deprived of voting on spending budget cuts.

Mr. SIMON. Mr. President, if my colleague will yield, in the case of Gramm-Rudman-Hollings, we are deal­ing with something we knew was fuzzy in the constitutional area. So we pro­vided that there could be on immedi­ate appeal. We knew we were in a very gray area.

Where the Constitution is clear, I do not recall ever experiencing any Member of the House of Representa­tives or Senate getting up and saying, "Let's violate the Constitution," not in so many words but even indirectly sug­gesting it.

My strong feeling is that there will be a moral imperative to uphold the Constitution. In addition, obviously, we have taken an oath to support the Constitution. It is going to be tough to comply, but we are going to do it.

I think the case of the courts enter­ing the situation will be rare, indeed.

<Mr. EVANS assumed the chair.) Mr. GORTON. Well, the Senator

from Illinois makes a very good point. Of course, we do not wish to violate the Constitution where the Constitu­tion is clear and Members do not at­tempt to violate the Constitution where it is unclear. They do as they properly should-make their own in­terpretations as to what the Constitu­tion means and they act accordingly and they are subject to review on those actions by the court.

But, in the course of the last 20 min­utes, the Senator from Illinois has been unclear on his answer to a hand­ful of specifics which I have asked him as to whether or not particular actions do or do not constitute receipts or out­lays. We certainly do not have a clar­ity in the 12 or 14 lines of this consti­tutional amendment which will settle in everybody's mind every question which will come before the Congress of the United States during the course of the next 200 years.

So that does lead me, without inter­ruption, to another question, perhaps my last question for the day, to my two distinguished colleagues, and that is, Is it not fair to say, to assert in the course of this debate, that we are caus­ing a certain shift in authority over the fiscal policy of the United States from the Congress to the Federal court system by the enactment of this constitutional amendment?

Each of you, if seems to me, has de­fined that as being narrow, in one sense, and the kind of litigation that would be brought rarely as the Sena­tor from Illinois states. But, nonethe­less, by putting the terms "receipts" and "outlays" into the Constitution of the United States, a concept that with which we deal everyday, we are, it seems to me, am I not correct, clearly transferring some of our authority, however large or small we may define it to be, to the courts of the United States?

Mr. HATCH. Well, as the distin­guished Senator from Washington knows, article I, sections 8 and 9, I be­lieve, provided the Congress has the decisionmaking power over the budg­etary matters themselves. There is no question that on procedural matters there may be, under certain circum­stances, and I cited one illustration, situations where the courts may have a role to play, but not on budgetary matters. And I do not believe a case can be made, constitutional or other­wise, for judicial review of budgetary priorities, even going back to the Synar case. Under that particular case, which is now before the Supreme Court, I think most constitutional au­thorities believe that standing may be more narrowly restricted as a final outcome and result of that particular case. That may be one outcome, and that will be one of the landmark deci­sions on standing. Now, I may be wrong, because it is a political hot potato and sometimes even the Su­preme Court has been known to do some very strange things with political hot potatoes.

But there is no question that there may be some instances that ingenious minds can think of that mainly involve procedural aspects of the amendment where the court may choose to exer­cise jurisdiction.

Mr. GORTON. Mr. President, I hope fervently that the distinguished Sena­tor from Utah is correct in his predic­tion of what might at least be the deci­sion of the Supreme Court in the case involving Gramm-Rudman-Hollings. I find it faintly unpleasant that we have so constantly, not just in this area, but in areas relating to foreign policy and many other domestic policy areas had Members of Congress, who are on ·the losing side of a particular vote, imme­diately run to the court system of the United States to get that vote over-

4038 CONGRESSIONAL RECORD-SENATE March 7, 1986 turned. I think that, to a very measur­able degree, demeans the position of a Member of Congress.

I have not engaged in that kind of activity myself when I have been on the losing side here and I do not intend to do so. Perhaps this illus­trates best of all that the two distin­guished floor leaders on this proposal and this Senator certainly agree on what ought to be the fiscal policy of the United States at the present time on the urgent desirability of moving promptly toward a balanced budget.

I regret to tell them that we do not agree that it is appropriate to include in the Constitution this kind of policy, no matter how dearly and how greatly we may prize it. In fact, here at 3:15 on a Friday afternoon, I would be tempted to take a vote. I notice there are just four of us here, and my col­league from the State of Washington is in the chair. I believe we could beat you right now on a 2-to-2 tie, but I sus­pect that this is an issue important enough that it should be discussed at greater length and with more Mem­bers present here.

With that, and thanking each of you for his contribution to this debate and promising, if I am at all able to do so, to return to it once again, perhaps with additional questions, certainly with additional comments, I yield the floor.

Mr. SIMON. If the Senator will yield for one additional comment. In re­sponse to the last question, I want to agree with my colleague from Utah that there is no additional power given to the courts here. The court interven­tion will be a rare thing, indeed. What we are really saying to the executive branch and Congress is, get ahold of this budget.

Mr. HATCH. If I might just also add to my colleague's comments, again, my appreciation and respect for the dis­tinguished Senator from Washington who, I believe, is one of the finest law­yers this body has ever had within it. He has raised important issues, there is no question about it. I think they are easily answered with regard to the substance of the amendment. With regard to the procedural side, I listed one illustration. I will list another.

Let us assume that a President, on his own, decides that this amendment gives him the right to exercise the line-item veto. I think that that would be an issue that would definitely be tested and I think there would be standing granted on that issue and I think it would be justiciable and I think courts would not fail to review that case under the political question doctrine.

So there is no question, as in all mat­ters, that there may be some ways that the courts may have a role to play. But, as to budgetary substance and decisions under Senate Joint Res­olution 225, r believe it is going to

have to be left up to Congress, as the Constitution provides.

I hope the distinguished Senator from Washington will consider helping us on this amendment, because we think, without something in the basic document, literally, deficit spending is going to continue on forever and ever because it is too easy to spend com­pared to the difficult burden of trying to conserve funds in this area. We get a lot more credit for spending than we do for conserving.

My colleague and I share the view that the Federal judiciary should not become involved in the day-to-day con­troversies involved in deciding the budget. Neither of us wants the Feder­al courts to begin writing the budgets or deciding legislative procedures as a result of Senate Joint Resolution 225.

This is an extremely important issue and one on which the authors have fo­cused in great detail. It is perhaps the most difficult issue involved in this constitutional amendment.

The committee has chosen to say nothing explicit about this issue in Senate Joint Resolution 225-not be­cause it is an insignificant issue but be­cause we believe this treatment to be appropriate. On the one hand, this treatment insures that the Federal courts will not involve themselves in fundamental budget decisions includ­ing "writing the budget," while not un­dermining their fundamental obliga­tion under our system of Government to "say what the law is," Marbury v. Madison <1 Cranch 137177 <1803). We have concluded that, to make any more explicit statement, is probably to upset this balance, as well as to upset the equally delicate political balance that has been achieved in this amend­ment.

The role of the judiciary in enf orc­ing the proposed constitutional amendment will be sharply limited under Senate Joint Resolution 225-by both the Constitution and by well-es­tablished judicial practices-for the following reasons.

First, it is highly questionable that the courts would find most of the issues arising under the amendment to be "justiciable" in the sense of pre­senting the kind of "case or controver­sy" to which the judicial power at­taches under article III of the Consti­tution.

Second, there would rarely, if ever, be standing on the part of any individ­ual or organization to challenge al­leged breaches of the amendment. Al­though standing cases have expanded and contracted, I know of no standing case that would allow a deleterious suit to be brought under the Senate Joint Resolution 225. I suppose it is always a possibility that the court could find some fictional standing device to justify any suit it wants to, but it is only a possibility, not a proba­bility, especially in light of the more

than extensive legislative history we are making on this matter.

Third, even if standing were con­ferred-the courts would normally treat issues raised under the amend­ment as "political questions" to be de­cided in the discretion of other branches of the National Government. It is explicit in the Constitution that these mattPrs lie within the hands of the Congress of the United States. Courts would normally treat issues raised under the amendment as "polit­ical questions" to be decided in the dis­cretion of other branches of the Na­tional Government.

Let me discuss these very briefly, and ref er my colleagues to the more elaborate discussion in the committee report. First, there is the question of the justiciability of actions arising under the proposed amendment. "Jus­ticiability" is a term that refers gener­ally to the propriety of judicial in­volvement in a dispute. It is a "term of art employed to give expression to the dual limitation placed upon Federal courts by the case or controversy doc­trine" f Flast v. Cohen, 329 U.S. 83, 94-5 <1968)), and arises out of the limita­tions of the role of the judiciary within our system of government.

I believe that it is extremely unlike­ly that the Federal courts would relish involvement in the kind of cases or controversies developing from the pro­posed amendment. In short, such cases or controversies would not normally be those appropriate for judicial deter­mination. Aetna Life Insurance v. Haworth, 300 U.S. 227, 240 0937). Rather, they would be cases or contro­versies arising out of an appropriation and taxation process that is expressly committed to the legislative and exec­utive branches under the Constitution. They would be cases or controversies arising from the allocation of public funds, matters that are clearly within the discretion of the elected represent­ative branches of government. They would be cases or controversies where judicial involvement would lead the courts into areas which are principally reserved to other branches of the Na­tional Government, and in which con­flict among the branches of govern­ment would invariably be created. They are cases or controversies in which the possibility of effective and sure remedies would, effectively, depend upon the determination of the judicial branch to maintain a continu­ing oversight role over the actions of the legislative and executive branches. I believe that it is clear that the Fed­eral courts would, properly, be ex­tremely reluctant to involve them­selves in cases or controversies arising under the present amendment.

The second barrier is the "standing" barrier limitation upon the judicial branch. The gist of the question of standing is whether the party seeking

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4039 relief has "alleged such a personal stake in the outcome of the controver­sy as to assure the concrete adversari­ness which sharpens the presentation of issues upon which the court so largely depends for illumination of dif­ficult issues." Baker v. Carr, 396 U.S. 186, 204 < 1962). The personal stake or personal injury must be a direct and specific one, not a "generalized griev­ance" whose impact would be "plainly undifferentiated and common to all members of the public." United States v. Richardson, 418 U.S. 166, 177, 179-80 0974). A plaintiff must allege some "particularized injury that sets him apart from the man on the street." Richardson at 194.

Since the gravamen of the proposed constitutional amendment is that Con­gress develop certain aggregate budget figures and abide by those figures, I believe that it would be exceptionally difficult for an individual or organiza­tion to claim "standing" under it. An alleged breach of the amendment would arise, not from the failure to ap­propriate funds for some individual program purpose, not from the wrong­ful appropriation for some individual program purpose, not from the wrong­ful appropriation for some individual program purpose, but from the viola­tion of aggregate budet figures. Under this circumstance, I believe that it would be highly unlikely that an indi­vidual could demonstrate the sort of individualized or particularized injury that would justify standing. His inter­est, in this circumstance, would be the same as any other individual or any other taxpayer, the same as the aver­age "man on the street" in the words of the Supreme Court in Richardson.

Even if the justifiability and stand­ing barriers are overcome to judicial involvement in this amendment, there is a third barrier-the "political ques­tion" barrier. "Political questions" are those in which the courts fore go their normal function of judicial review of constitutionality for a variety of rea­sons that make such review inappro­priate. The basic factors considered by the Supreme Court in determining "political questions" have been laid out as follows:

First, is there a textually demonstra­ble commitment of the issue to a co­ordinate political department?

Second, is there a lack of a judicially discoverable and manageable standard involved in the issue?

Third, can the issue be decided with­out a policy determination of a kind clearly for nonjudicial discretion?

Fourth, can the Court resolve the issue without expressing lack of re­spect for coordinate branches of gov­ernment?

Fifth, is there an unusual need to abide by political decisions already made?

Sixth, is there a potential for the embarrassment of Government arising

from differing responses by different departments to a single question.

It was the view of the full Judiciary Committee that the clear constitution­al commitment to Congress to control Federal spending under article I, sec­tions 8 and 9, is sufficient to ensure that the courts will exercise maximum caution in interfering with congres­sional determinations under the pro­posed amendment. The process of de­veloping a budget involves precisely the kinds of determinations for which legislatures are most capable and the courts least capable. The need to re­spond to public sediment, the need to negotiate the demands of various and competing spending interests, and the need to make difficult policy determi­nations about public spending and rev­enue priorities are clearly factors that · mitigate in behalf of legii;;lative branch rather than judicial branch determina­tions. Further, it is extremely ques­tionable that there are adequate standards for judicial manageability of the class of cases most likely to arise under the proposed amendment. Any examination of aggregate spending, taxing, and deficit figures produced by Congress would run up against the problem of uncovering differentiated injury to some party, while any deeper, more probing analysis, necessi­tating judicial inquiry into the process by which such numbers were pro­duced, almost certainly would involve the courts in matters beyond their ex­pertise-matters the determination for which are placed clearly and indispu­tably within a coordinate branch of government.

Mr. President, my point here then is that, whatever the intent of Congress, it is virtually certain that the judiciary would not be involved in writing the budget under this amendment. My second point-and one that is at least as important-is that the intent of Congress is utterly clear here. Con­gress does not want the courts to be invulved in writing the budget. We have made that clear in the committee report, and we are making that even clearer as we discuss this issue. What­ever the merits of committee predic­tions on how this issue is likely to be treated by the courts, the Judiciary Committee and this body, as well, have made it unambiguous that it is not the intent of this amendment to involve the judicial branch in writing the budget.

Apart then from its superfluous nature, let me briefly summarize why I believe this amendment should not be accepted. I do not believe that it is appropriate to exclude the judicial branch from its legitimate role in this amendment. It is not appropriate to set the precedent and preclude an in­dependent branch of the National Government from performing even its proper function. While there is no one in this body who has been more con-

cerned about so-called judicial activ­ism than myself, that is a far different thing from saying that the courts do not have an essential role within our constitutional system of government.

In fact, our Founding Fathers set up this Government on three coequal branches of Government and if this should pass we would have two co­equal branches and one not quite as equal as the others.

The proposed amendment would to­tally prohibit the Federal courts from exerc1smg their proper functions, except in two vaguely defined circum­stances.

Let me cite an example of how the involvement of the judiciary might be important. What if, at some distant future time, the leadership in Con­gress decide to ignore the Constitu­tion? What if they refuse to permit Congress to develop a statement of outlays and receipts? In that circum­stance Members of Congress may well have standing in the courts because they are being denied the opportunity to perform their constitutional duty. In a similar fashion, what if a future President, contrary to the language and intent of Senate Joint Resolution 225, decides to claim impoundment au­thority or line-item veto authority?

While the amendment is too broad in important constitutional respects in eliminating judicial review, it is-iron­ically-too narrow in other areas. The amendment would seem to establish the right to judicial review in all cases arising out of the implementation pro­visions of this amendment. In other words, the mere inclusion of an issue within the implementating legislation that Congress will have to pass serves to trigger the right of judicial review. Given the broad, expected scope of this legislation, it is unclear to me whether or not this provision would exclude many matters. To the extent that this amendment has to be fleshed out in its details by enacting legisla­tion, the proposed floor amendment would not really exclude many mat­ters from judicial review. It might, however, chill Congress from passing effective implementation legislation since the policy of this amendment seems to be: If the controversy arises from the Constitution, there is no ju­dicial review; if, however, it arises from statute, it is subject to such review.

What kind of policy is that-where the courts are implicitly granted ex­tensive authority over congressional enactment pursuant to a constitution­al amendment but no authority with respect to the amendment itself? In other words, an issue is immune from judicial review until it is incorporated into a statute by Congress? What is the coherent policy involved here? Is this even a narrowing of the scope of judicial review permitted under this

4040 CONGRESSIONAL RECORD-SENATE March 7, 1986 EXECUTIVE SESSION amendment? It is totally unclear to

me. Mr. President, I raise one other

equally serious concern. Under the Constitution, the Federal courts, in particular the Supreme Court, fre­quently review cases or controversies arising out of legislative appropria­tions. For example, the Court will review the constitutionality of a school busing rider, or it will review the constitutionality of a severance tax or a tuition tax credit. There are countless issues of this sort.

To the extent that these cases can be said to arise under this amendment, since they each involve the develop­ment of outlays and receipts under this amendment, a serious argument is raised as far as whether or not the courts will continue to possess judicial review authority. Suppose, for exam­ple, that Congress decided that it wanted to impose some form of sever­ance tax on the States. Suppose that the States wished to challenge this and were met with the response by Congress that their authority to set levels of taxes and outlays was unre­viewable. How would this be resolved? Suppose Congress said that its author­ity under the amendment made its leg­islative riders unreviewable, the Hyde amendment and school busing, and so forth. Can anyone say with absolute assurance that his amendment would not require such a result?

Mr. President, in summary, I oppose this amendment because this amend­ment would upset the carefully drawn balance developed by the Judiciary Committee on the difficult issue of ju­dicial review. No one to my knowledge wants the courts to intrude into the budget process, and "write the budget." Under the present language of Senate Joint Resolution 225 they will not. On the one hand, go far beyond that policy by prohibiting judi­cial review over even such matters as impoundment while, on the other hand, allow greater judicial review by permitting such review the moment an issue was contained in congressional enactment legislation. The proposed amendment also raises serious ques­tions about the continued ability of the Court to perform its proper func­tions in reviewing the constitutionality of issues arising in the context of con­troversies involving outlays or re­ceipts.

I think really, in conclusion, one of the biggest worries I have if this amendment passes is: Will it be the amendment that really kills the con­stitutional amendment that so many of us want?

It very well may be even though the thoughts behind it are sincere and well-intentioned. I believe it would be better to make the historical record, the intent of Congress, as solidly as it has been made than to take a chance of adding this amendment to Senate

Joint Resolution 225 with respect to the constitutional amendment. I also believe that is what the Court wanted too, it could go through this language and do whatever it wanted to do anyway. So why take a chance of risk­ing passage of Senate Joint Resolution 13 by insisting that this amendment come in with serious questions and issues it raised?

Senate Joint Resolution 225 strikes a fine balance. On the one hand judicial review is carefully limited to prevent courts from meddling with the budget process. Yet the courts are still avail­able to prevent gross circumvention of the amendment.

Mr. President, I suggest the absence of a quorum.

The PRESIDING OFFICER. The clerk will call the roll.

The legislative clerk proceeded to call the roll.

Mr. -DOLE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER. With­out objection, it is so ordered.

BILLS REFERRED SEQUENTIALLY

Mr. DOLE. Mr. President, I ask unanimous consent that when S. 1813, a bill to amend and .extend the Atlan­tic Striped Bass Conservation Act and for other purposes, is reported by the Committee on Environment and Public Works, it be sequentially re­ferred to the Committee on Com­merce, Science, and Transportation for a period not to extend beyond 14 calendar days and that, if S. 1813 is not reported by the Committee on Commerce, Science, and Transporta­tion within said time, the Committee on Commerce, Science and Transpor­tation shall immediately be discharged from further consideration of S. 1813 and the bill shall be placed on the cal­endar.

The PRESIDING OFFICER. With­out objection, it is so ordered.

Mr. DOLE. Mr. President, I ask unanimous consent that the bill intro­duced by Senator THURMOND today, entitled "A bill to amend the Trade Act of 1974, to provide alternative relief for industries adjusting to in­creased imports," be referred to the Committee on the Judiciary; that upon its being reported by the Com­mittee on the Judiciary it shall be re­f erred to the Committee on Finance for its consideration of the bill and any amendments proposed by the Committee on the Judiciary thereto; and that any amendments thereto re­ported by the Committee on Finance shall be in order.

The PRESIDING OFFICER. With­out objection, it is so ordered.

Mr. DOLE. Mr. President, I ask unanimous consent that the Senate go into executive session to consider cer­tain nominations on the ~xecutive Ca­landar.

There being no objection, the Senate proceeded to the consideration of ex­ecutive business.

The PRESIDING OFFICER. The nominations will be stated.

Mr. DOLE. Mr. President, I ask unanimous consent that the following items be considered en bloc: Calendar Nos. 681, 685, 686, 687, 688, 689, 690, and 691.

Mr. BYRD. Mr. President, those nominations have been cleared on this side of the aisle and we are ready to proceed.

Mr. DOLE. I thank the distin­guished minority leader.

I ask unanimous consent that the nominations just identified be consid­ered en bloc and confirmed en bloc.

The PRESIDING OFFICER. With­out objection, the nominations are considered and confirmed en bloc.

The nominations considered and confirmed en bloc are as follows:

U.S. INTERNATIONAL TRADE COMMISSION

David B. Rohr, of Maryland, to be a member of the U.S. International Trade Commission.

DEPARTMENT OF JUSTICE

Robert 0. Whitwell, of Mississippi, to be U.S. attorney for the northern district of Mississippi.

P.A. Mangini, of Connecticut, to be U.S. Marshal for the district of Connecticut.

J. Jerome Perkins, of Indiana, to be U.S. Marshal for the northern district of Indi­ana.

Lee Koury, of Missouri, to be U.S. Mar­shal for the western district of Missouri.

Ralph L. Boling, of Kentucky, to be U.S. Marshal for the western district of Ken­tucky.

Wayne D. Beaman, of Virginia, to be U.S. Marshal for the western district of Virginia.

William I. Berryhill, Jr. , of North Caroli­na, to be U.S. Marshal for the eastern dis­trict of North Carolina.

Mr. DOLE. Mr. President, I move to reconsider the vote by which the nominations were considered and con­firmed.

Mr. BYRD. I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. DOLE. Mr. President, I ask unanimous consent that the President be immediately notified that the Senate has given its consent to these nominations.

The PRESIDING OFFICER. With­out objection, it is so ordered.

LEGISLATIVE SESSION Mr. DOLE. Mr. President, I ask

unanimous consent that the Senate return to legislative session.

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4041 The PRESIDING OFFICER. With­

out objection, it is so ordered.

FOOD SECURITY IMPROVEMENTS ACT OF 1986

Mr. DOLE. Mr. President, it had been my hope that we could have passed a very simple resolution today to direct the Clerk of the House to make minor corrections in the enroll­ment of H.R. 1614, the Food Security Improvements Act of 1986. The changes make it clear that section 13 of the bill, expressing the sense of Congress regarding implementation by the Secretary of Agriculture of the ad­vanced resources loan program, is not mandatory. A sense-of-the-Congress provision is discretionary whether it is phrased in the term "shall" or "should." However a question has been raised, and therefore I believe we might as well make the intention of the Congress abundantly clear in the statutory language itself.

Mr. President, I had hoped we might be able to take care of this. I have just discussed this matter with Secretary of Agriculture Lyng, who was sworn in earlier today. We have had a number of lawyers looking over this proposi­tion, and as anyone might guess, when you get four or five lawyers together, you get four or five opinions. But those who are advising the Depart­ment and those who are advising the President say that unless we pass this amendment that in effect changes the word "shall" to "should" both times it appears, it will increase the outlays in the little farm correction bill we passed by billions of dollars and that the President will veto it.

I know the distinguished Senator from Iowa [Mr. HARKIN] does not want to make the change. He wants to send it down there. If they veto it, that is all right with him. It is my view-and I think the view of the Sen­ator from Iowa-that any reading of the RECORD would lead to a conclusion it is discretionary. Senators on both sides talked about not mandating this; it is discretionary. We urge the Secre­tary to use this authority. The vote was 65 to 18, a broad bipartisan vote.

I discussed this with the distin­guished Member of Congress from the State of Washington, Congressman FOLEY, who believes that if we could have passed this today, he might be able to take care of it in a pro f orma session of the House on Monday. If we do not pass it today, then it is going to be delayed until sometime next week.

We do not want to send the bill down to the President until we are cer­tain he is going to sign it. The longer we delay-and the signup period has already been delayed-the more ad­verse impact it has on farmers across the country.

I agree with the Senator from Iowa that a clear reading of the RECORD, in-

71--059 0-87-33 (Pt. 3)

eluding statements by the chairman of the Budget Committee, by the Senator from Iowa who offered the amend­ment, by the Senator from Kansas, and by other Senators, shows that ev­eryone was saying: "Well, we know we can't mandate the program, but we be­lieve this will send a strong message to the Secretary." So it was my belief, when all these lawyers were meeting this morning, that the answer was fairly obvious. It was also pointed out that, had it been a mandatory inter­pretation, it would have been subject to a point of order under Gramm­Rudman-Hollings. We made that argu­ment.

But the administration's lawyers in­sisted and, being a lawyer, I know how confusing we can be.

I said to Secretary Lyng. "Well, you can overrule your lawyers." He said, "Oh no, I can't do that."

So it seems to me we have sort of a tempest in a teapot here. The only ones who are really going to be hurt are not Members of the Senate or the lawyers or anybody in the White House or anybody in the House of Representatives; they are going to be the farmers.

I hope there is some way we can re­solve this. I intend to off er the resolu­tion so the RECORD will reflect that we attempted to make the change at the earliest possible time in the Senate. I hope the Senator from Iowa will not interpose an objection. I have talked to the Senator from Iowa. I have talked to a number of people trying to determine whether or not we could re­solve this. In my view, it does not amount to anything.

It is unnecessary. We should not have to do it. But we are not advising the President. If I were advising the President, if I were his counselor, I would say: "It's obviously in the dis­cretion of the Secretary whether or not he implements the advance loan program." But that is not my role. It is the role of the executive branch and those who counsel the President and those who counsel the Office of Man­agement and Budget.

It may be that this could be an excuse-that they are looking for some reason to veto the bill we passed. I do not make that allegation, but there are always some who may be­lieve that they have some other agenda, that this is an excuse to raise an objection to the bill and veto it. They may have some other reason for doing it.

In any event, it seems to me that it is nothing of any major consequence. I do not really believe it is in the inter­ests of the farmer to have to wait for the President to veto this bill and then make the word change.

We are talking about some time at the end of the next week. Farmers have already been delayed in the signup. By the time all this informa-

tion gets to the appropriate ASC office on the program changes, it is going to be very difficult. Plus, when the farmer goes in to sign up in the ASC office, he is not going to get any ad­vance payments because he will not know what the program is.

I hope we can stay in session a while this afternoon and clear up this minor matter. I share the same view as the Senator from Iowa, but that does not make any difference. We can say that we are going to play hard ball and make some lawyer down there change his mind, but he will not change his mind.

As I indicated earlier, if we can do it today, it would be available to the Hosue. They will not be in pro forma session very long on Monday. But the majority whip, Representative FOLEY, indicated that he would try to pass this on Monday, so that they can in­struct the enrolling clerk, make the necessary change, and send the bill to the President.

Before we leave today, if we cannot resolve it, I intend to send the resolu­tion to the desk and ask for its consid­eration. I will not do that now. If there is an objection, we will try to do it again on Monday.

APPOINTMENTS BY THE VICE PRESIDENT

The PRESIDING OFFICER. The Chair, on behalf of the Vice President, appoints the following Senators to the Board of Visitors of the U.S. Merchant Marine Academy: Mr. INOUYE <Com­mittee on Commerce, Science, and Transportation), Mr. MOYNIHAN <at large).

The Chair, on behalf of the Vice President, appoints the following Sen­ators to the Board of Visitors of the U.S. Miltiary Academy: Mr. JOHNSTON <Committee on Appropriations), Mr. LEVIN <Armed Services Committee).

The Chair, on behalf of the Vice President, appoints the following Sen­ators to the Board of Visitors of the U.S. Air Force Academy: Mr. DECON­CINI (at large), Mr. CHILES <Committee on Appropriations).

The Chair, on behalf of the Vice President, appoints the following Sen­ators to the Board of Visitors of the U.S. Coast Guard Academy: Mr HOL­LINGS <Committee on Commerce, Sci­ence, and Transportation), Mr. DODD <at large).

The Chair, on behalf of the Vice President, appoints the following Sen­ators to the Board of Visitors of the U.S. Naval Academy: Mr. HOLLINGS <Committee on Appropriations), Mr. SARBANES <at large).

ROUTINE MORNING BUSINESS Mr. DOLE. Mr. President, I ask

unanimous consent that there now be

4042 CONGRESSIONAL RECORD-SENATE March 7, 1986 a period for the transaction of routine morning business not to extend beyond the hour of 5 p.m.

The PRESIDING OFFICER. With­out objection, it is so ordered.

RECONCILIATION Mr. DOLE. Mr. President, let me

also indicate that we had a meeting today with the Office of Management and Budget with the Director, Jim Miller, on reconciliation.

The meeting was attended by Sena­tors DOMENIC!, PACKWOOD, McCLURE, myself, and Congressman CHENEY.

There is still hope that we can reach some agreement on the reconciliation package.

There will be some work done at the staff level over the weekend. Hopeful­ly there will be another meeting of Members and the Director of OMB on Monday to see if we might be able to work out some proposal to resubmit to the House of Representatives. There is no certainty that can be done.

To my understanding, the President would veto the package that the House of Representatives passed yes­terday morning by a lopsided margin because it contains a number of new spending programs and very little sav­ings, and the savings it does achieve are in the 1987 budget of the Presi­dent. It also contains about .$7 billion in revenues. So out of the s·avings of $18 billion to $21 billion, $6 billion to $7 billion is in revenues. Very little savings are achieved, and to get that small amount of savings you have to agree to go along with a lot of changes in programs that in effect take the lid off and increase spending in outyears.

The big hangup, I must say, is prob­ably the Outer Continental Shelf; how those payments should be divided be­tween a number of States and the Fed­eral Government. That seems to be the big bone of contention.

But in any event, it is still our hope we can resolve that. If not, we will make a judgment sometime this next week on whether to bring up the pend­ing bill, depending on what happens, send it to the President or send back an amended version to the House of Representatives and hopefully get the White House to agree that with cer­tain changes they would support the version the House of Representatives last passed, and if we could send that back with some agreement, then we might be able to get the President to sign it.

Mr. President, I suggest the absence of a quorum.

The PRESIDING OFFICER. The clerk will call the roll.

The bill clerk proceeded to call the roll.

Mr. ABDNOR. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER <Mr. WARNER). Without objection, it is so ordered.

FOOD SECURITY IMPROVEMENTS ACT OF 1986

Mr. ABDNOR. Mr. President, there are very few Senators who are still here this afternoon. I have been doing some other things away from the building. I returned just a few mo­ments ago and discovered that the ma­jority leader had no choice but to leave. He asked me to fill in for him.

We are on a subject that I am quite familiar with and am very, very con­cerned about.

Obviously, all this has come up on very short notice. It is important to all of us who have had any association whatsoever with this matter that it be cleared up, and· that we have the situa­tion stated properly. I am sure we are all in agreement.

The news that this legislation had passed the Senate and the House and would soon be in effect brought a grateful response from the farmers in South Dakota, and I say in most other States. It is very important and neces­sary that it go into effect just as soon as possible. I had hoped that it would go into effect today for farmers to take advantage of on Monday.

There is some difficulty now, appar­ently, with interpreting what we did with regard to the provision relating to advance recourse loans. If there is any problem, I do not know exactly what it is. If it will just take a slight, technical change, I hope for the sake of the farmers of this country we would have no problem in making that change.

I wonder if I can ask the minority leader or the Senator from Iowa if they would have any objection to taking up the clarification of this pro­vision on Monday morning. It is some­thing we would like to take up as early as 11 o'clock, so we can clear it in both the House and the Senate. We have reason to think that the people on the House side, especially Mr. FOLEY, would move to bring this up by 12 o'clock in the House when they return. Then we can get this moving to the President and there would be no question whatsoever. I still wonder why the problem, but if there is any question that must be cleared up to get this piece of legislation moving, I hope we can proceed with it on Monday.

Is there any objection to that, speak­ing of taking it up Monday morning at 11 o'clock?

Mr. HARKIN. Mr. President, will the distinguished Senator from South Dakota yield?

Mr. ABDNOR. I yield. Mr. HARKIN. Mr. President, it

became quite clear today that in no way was this going to be sent down to

the White House for the President's signature today. That· is not for any reason of any Senator who is here or anybody in the other body, but be­cause somebody in the executive branch of Government was blocking it.

I want to make it clear, Mr. Presi­dent, that if this legislation is so im­portant, it could be sent down to the President right now. It could be en­rolled and sent to the President right now.

It could be enrolled and sent to the President right now and he could sign it into law this afternoon. There is no one here stopping that. Yet it seems that some lawyers in OMB and maybe the Department of Agriculture have come up with some legalistic twist that they say they want changed before it can go to the White House. As I un­derstand it, the distinguished majority leader, with whom I have had numer­ous discussions today, indicated they might want to bring up a concurrent resolution that would modify the bill passed, H.R. 1614.

Even if the concurrent resolution came up and were passed here today, it could not be taken up in the House until, at the earliest, Monday at noon.

Mr. ABDNOR. That is correct. Mr. HARKIN. And this cannot be

acted on and sent to the President until late on Monday. Because there is a difference of opinion among the law­yers here and those who are down in OMB and the Department of Agricul­ture as to what is involved in the sense-of-the-Congress resolution re­garding the advance CCC loans, I think the lawyers ought to get togeth­er, if not this afternoon-it is Friday­but at least Monday morning, early on, and see if they cannot reach some consensus of agreement on this issue.

Mr. President, I can only speak as a lawyer myself, as one who has spent, now, 12 years in Congress, having worked on many pieces of legislation, including many sense-of -the-Congress resolutions. It is clear from the face of this that it is a sense-of-the-Congress resolution, regardless of what the lan­guage may say within the body of the resolution. The opening sentence of section 13 of said bill says it quite clearly:

It is the sense of Congress that the Secre­tray of Agriculture shall carry out a pro­gram authorized by section 424 of the Agri­culture Act of 1949.

I repeat: "It is the sense of Con­gress." That is nonbinding. Not only is it clear on the face of it, it is clear from the legislative history surround­ing the passage of the bill a couple of days ago. Remarks that I made, that the majority leader made, that others have made said it is a sense-of-the­Congress resolution. It is a strong sense-of -the-Congress resolution, strong in terms of the language that is in there and strong in terms of the

March 7, 1986 CONGRESSIONAL RECORD-SENA TE 4043 vote it got-I think the majority leader said it right, 65 to 15. And, of course, the House passed it over­whelmingly. So it is strong, I believe, in terms of the support it has on both sides of the aisle. I believe it has good strong, bipartisan support, that this President ought to advance some por­tion of the CCC loans to the farmers right now so they could have some low-interest money at this time.

The language in it is strong also. If they are objecting to strong language in a sense-of-the-Congress resolution, I do not think that is any reason to stall it as is being done right now-stalling it-and to threaten a Presidential veto simply because it has some strong lan­guage in it.

Again, I just make my point, Mr. President, that we are not holding up the bill. The bill could go to the Presi­dent this afternoon for his signature.

I also make the point that it is clear on the face of the resolution and from the legislative history surrounding it that it is a sense-of-Congress resolu­tion-strong in language, but nonethe­less a sense-of-Congress resolution. Therefore, the onus is not on this body or this Senator or anybody up here for not having it down for the President to sign today. Since it would take a concurrent resolution to modify it and the House could not act on it until Monday, then I think it is impor­tant that we have the lawyers look at it again on Monday morning. We could come in here-I guess the majority leader wanted to come in between 11 and 12 and work on this and see if we cannot do something about it Monday.

Mr. President, I thank the Senator from South Dakota for yielding. I just wanted to make those points and make it clear that no one here is blocking it from going to the President for his sig­nature this afternoon.

Mr. ABDNOR. Mr. President, let me say this: I do not happen to be one of the Philadelphia lawyers. I am not even a country lawyer. I took my degree in Agriculture school. I have been a farmer all my life, although I was a teacher for awhile. Things have to be kept pretty simple when it comes to legal things if you want most people to understand it. One thing that we all understand is that the advance re­course loan provision could not go in this legislation as any kind of manda­tory requirement.

I do not know who was putting this together, but I recall very well stand­ing around here for well over an hour while, apparently, this amendment was put together so that it would satis­fy all concerned. But it was, without question, as the Senator from Iowa just said-it was stated on numerous occasions during the discussion of the advance loan amendment, that this was simply a sense of Congress resolu­tion, not a compulsory requirement on the part of the Secretary. That would

have brought a veto of the bill. At least, it was questionable enough so that we certainly did not want to jeop­ardize or cause any harm to this bill or in any way delay it. I just assumed myself that the amendment was prob­ably satisfactory.

However, some attorney down in the Department of Agriculture obviously has serious questions about it. Maybe everything the Sentor says is correct; I do not know. Maybe it simply is a strong statement. Words mean great things in law, I guess.

When we say "should," to me, it is almost like we want you to: it is pretty strong language. But it is as we all un­derstood it to be that night, that it was just expressing the sense of the Congress that the Secretary of Agri­culture should carry out such a pro­gram. And if this question and these words stood in the way of getting the bill enrolled and signed into law, I cannot believe that any of us would jeopardize agriculture and not give the farmers the information that they so badly need when they go to sign up.

I think the Senator himself admit­ted the amendment was not a com­mand, that it was a strong statement and that is what we want. I think that is clear in all the dialogs and colloquys that took place on the floor the other night. Our intent-although we knew we were not making it mandatory, cer­tainly was to state the strong feeling of this Congress that the Secretary should do this. I do not know why somebody did not put the word "should" in in the first place. It cer­tainly should have been in.

I hope that, having said what the Senator from Iowa did say, it would mean that he will give us consent to turn to the concurrent resolution on Monday at 11 a.m. so we can get this settled once and for all. If he feels so strongly on it that the word "shall" should be in there, so be it. I guess we could not or should not change it. If that is how the majority would feel-I mean those who were present, those who had voted-if that is what they felt, fine.

I might say I would not like it, but I would have to say, so be it, the majori­ty has ruled.

I hate to think that instead of clari­fying this provision, we are going to let this thing hang fire, not even take it up on Monday, not even give it con­sideration.

Maybe the bill will be vetoed if the word is not changed. I do not know. But I hope we would at least have an opportunity to talk about it, bring it up for discussion, take a vote on it, and if we agree that for the good of the farmers of the country, we cannot take any more chances on delay, we should change the word from "shall" to "should." We can do it here and have it in the hands of the House by 12 o'clock. There is some question as

to how long the House will be around on Monday, and how long we will have the opportunity to change the bill.

I just want to say to the Senator from Iowa that-not on behalf of JIM

ABDNOR, the Senator from South Dakota, but on behalf of the farmers from my State and the many, many other farmers throughout the United States for which this means so much­I hope the Senator from Iowa will give us the opportunity to bring this reso­lution up and take it under consider­ation and that he will give us the con­sent that is required to do so.

I ask the Senator, would he allow us to have unanimous consent to bring the bill up at 11 o'clock on Monday?

Mr. HARKIN. Mr. President, if the distinguished Senator will yield for a response, I point out one more time that this Senator is not stopping the bill from going to the President to be signed today. As I pointed out before, even if they wanted to bring up the concurrent resolution today, it could not be acted on until Monday.

Now, if the overwhelming opinion of the lawyers by Monday is that in fact this is mandatory, is not a sense of the Congress, then this Senator does not want to stand in the way of it. I did not at any time intend to slip anything through. We did it with our eyes open. It was cleared with both sides. I think the language, as I said, is clear on the face of it. I do not know why they are making such a fuss of it downtown. I think there may be some other rea­sons, but I am not going to speculate on that right now.

I thank the distinguished Senator for yielding.

Mr. ABDNOR. May I ask the Sena­tor from Iowa at least one question for my benefit. The Senator agrees that in no way is this mandatory upon the Secretary of Agriculture?

Mr. HARKIN. Absolutely. I have so stated many times.

Mr. ABDNOR. But as far as the Sen­ator is concerned-he is the lawyer, I am not-the way in which the legisla­tion was put together in no way tells the Secretary, other than to communi­cate a strong feeling on the part of the U.S. Senate, that we would very much like him to take action to implement this discretionary provision that is in the law, which he has the right to do?

Mr. President, I guess that is as far as we can go on this tonight. Believe me, I have not made many pleas on this floor, but I am making one right now. We need to proceed with what­ever it takes to put this into law, to get the provisions that are so necessary for the farmers of South Dakota and all parts of the Nation for the Secre­tary to implement it if he so desires, and that we go ahead and complete action on Monday.

What a crime it would be to hold the farmers hostage to anything other

4044 CONGRESSIONAL RECORD-SENATE March 7, 1986 than what would have to come from politics. I hope that does not happen because we cannot afford to play poli­tics with the farmers of this Nation. All of us on both sides of the aisle have many times stated the economic plight of the farmer. Their existence is border line in many cases. This will make it possible for many to stay in business this year. It is a big item for them. Hopefully, when we come back on Monday, that is what we will have uppermost in our mind as we take up consideration of this resolution.

MESSAGES FROM THE HOUSE At 11:38 a.m., a message from the

House of Representatives, delivered by Ms. Goetz, one of its reading clerks, announced that the House agrees to the amendments of the Senate to the following bill:

H.R. 1614. An act to extend the time for conducting the referendum with respect to the national marketing quota for wheat for the marketing year beginning June 1, 1986.

REPORTS OF COMMITTEES The following reports of committees

were submitted. By Mr. ROTH. from the Committee on

Governmental Affairs, with amendments and an amendment to the title:

S. 209. A bill to amend chapter 37 of title 31, United States Code, to authorize con­tracts retaining private counsel to furnish collection services in the case of indebted­ness owed the United States <Rept. No. 99-256).

H.R. 1349. A bill to reduce the costs of op­erating Presidential libraries, and for other purposes <Rept. No. 99-257).

INTRODUCTION OF BILLS AND JOINT RESOLUTIONS

The foil owing bills and joint resolu­tions were introduced, read the first and second time by unanimous con­sent, and ref erred as indicated:

By Mr.GORE: S. 2154. A bill to establish the Food and

Drug Administration by law, and for other purposes; to the Committee on Labor and Human Resources.

By Mr. ARMSTRONG: S. 2155. A bill to modernize certain provi­

sions of subchapter M of the Internal Reve­nue Code of 1954; to the Committee on Fi­nance.

By Mr. MOYNIHAN: S. 2156. A bill to amend the Federal De­

posit Insurance Act to prohibit the acquisi­tion of insured banks by certain foreign na­tionals, and for other purposes; to the Com­mittee on Banking, Housing, and Urban Af­fairs.

By Mr. SIMON: S. 2157. A bill to prohibit the importation

into the United States of coal, steel, and fluorspar mined or produced in South Africa; to the Committee on Finance.

By Mr. HECHT <for himself and Mr. LAXALT):

S. 2158. A bill to withdraw and reserve for the Department of the Navy certain public lands within the Bravo-20 Bombing Range, Churchill County, NV, for use as a training

and weapons testing area, and for other pur­poses; to the Committee on Energy and Nat­ural Resources.

By Mr. WILSON <for himself and Mr. CRANSTON):

S. 2159. A bill to designate the Big Sur Na­tional Forest Scenic Area; to the Committee on Energy and Natural Resources.

By Mr. THURMOND (for himself, Mr. LAXALT, Mr. HATCH, Mr. EAST, Mr. McCONNELL, and Mr. MURKOWSKI) <by request>:

S. 2160. A bill to clarify and improve the analysis of mergers under the antitrust laws; to the Committee on the Judiciary.

S. 2161. A bill to provide alternative relief for industries adjusting to increased im­ports; to the Committee on the Judiciary, by unanimous consent with instructions that when reported, the bill be referred to the Committee on Finance for consideration of the bill and any amendments reported by the Committee on the Judiciary; ordered, that any amendments reported by the Com­mittee on Finance be in order.

S. 2162. A bill to promote and improve ef­ficient and effective enforcement of the antitrust laws; to the Committee on the Ju­diciary.

S. 2163. A bill to make necessary and ap­propriate amendments to the antitrust laws governing service as a director of competing · corporations; to the Committee on the Judi­ciary.

S. 2164. A bill to amend the Sherman and the Clayton Acts to improve and clarify the application of such acts to international commerce; to the Committee on the Judici-ary.

By Mr. GORTON: S. 2165. A bill to authorize States to deter­

mine the level of funds allotted to a State under the Low-Income Home Energy Assist­ance Act of 1981 to be available for low-cost residential weatherization and other energy. related home repair projects for low income households; to the Committee on Labor and Human Resources.

By Mr. DECONCINI: S.J. Res. 290. Joint resolution to designate

July 4, 1986, as "National Immigrants Day"; to the Committee on the Judiciary.

By Mr. HUMPHREY <for himself, Mr. HELMS and Mr. EAST):

S.J. Res. 291. Joint resolution proposing an amendment to the Constitution of the United States with respect to the right to life; to the Committee on the Judiciary.

S.J. Res. 292. Joint resolution proposing an amendment to the Constitution of the United States with respect to the right to life; to the Committee on the Judiciary.

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. GORE: S. 2154. A bill to establish the Food

and Drug Administration by law, and for other purposes; to the Committee on Labor and Human Resources. TO ESTABLISH FOOD AND DRUG ADMINISTRATION

BYLAW

Mr. GORE. Mr. President, for more than a century, the Food and Drug Administration has stood for solid pro­tection of our food supply and medi­cines. But in recent years, outside meddling and bureaucratic infighting have paralyzed the agency. Today I am introducing legislation to save the

FDA before the health of the Ameri­can people is needlessly endangered.

From the Pure Food and Drugs Act of 1906 to the Infant Formula Act of 1980, Congress has always turned to the FDA to ensure and enhance the public health. The agency developed a worldwide reputation for professional­ism and expertise.

Now that hard-earned reputation is in jeopardy. The current administra­tion has launched a quiet assault on one of the finest health protection or­ganizations in the world. High ranking bureaucrats in other agencies have re­versed prudent decisions made by FDA scientists. At the same time, the Office of Management and Budget wants to cripple the FDA by cutting funds for enforcement and research.

Morale among FDA professionals is at an all-time low. Worse still, special interests and partisan politics have re­placed sound scientific policy. The ad­ministration has hampered the FDA's ability to safeguard the public health.

Consider the case of Reyes' syn­drome, a rare but deadly childhood disease that has long been linked to aspirin. In 1982, the FDA proposed a label for aspirin bottles to warn par­ents to consult a doctor before admin­istering the drug to children with chickenpox or flu. But the office of Management and Budget blocked that proposal until just last month, not on the basis of any medical information or scientific studies, but simply on the basis of their concern that it might cost a few more dollars to the compa­nies that made aspirin. In the mean­time, several drug companies began to print the label voluntarily, and the number of deaths from Reyes' syn­drome dropped dramatically. But many others did not. Yet we will never know how many children's lives were lost in the bureaucratic shuffle.

Federal approval of over-the-counter drugs has also become bogged down in the bureaucracy. One of the FDA's principal responsibilities is to provide a prompt review of new drugs to make sure they are safe and effective. In an unsuccessful effort to accelerate ap­proval, the current administration has included the Office of Management and Budget and the Department of Human Services in the process-even though those agencies lack the exper­tise to make sound scientific judg­ments. Instead of getting drugs onto the market more quickly, the adminis­tration has actually slowed things down. Drug manufacturers and the American people both suffer when the administration plays politics instead of sticking to science.

In an effort to break this logjam, I am introducing legislation to protect the FDA from the taint of bureaucrat­ic infighting.

The legislation would give the FDA an independent commissioner, ap-

March 7, 1986 CONGRESSIONAL RECORD-SENA TE 4045 pointed by the President. An inde­pendent commissioner will answer to Congress and the American people, not to several other agencies in the ad­ministration. While the FDA would remain part of the Department of Health and Human Services, its head would no longer be subject to the po­litical pressure now exerted by HHS and OMB.

The bill would also clarify the FDA's place in the executive process, by re­storing most authority over FDA mat­ters to the commissioner. The Secre­tary of HHS would maintain the right to be notified on "significant issues."

We cannot afford to let redtape stand in the way of public safety. It is time to protect the FDA from petty politics, so that it can get back to the business of protecting the health of the American people.

I urge all of my colleagues to sup­port this legislation.

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.2154 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, SECTIO:\ I. FI:\DI:\GS.

The Congress finds that-< 1) the public health has been effectively

protected by the presence of the Food and Drug Administration during the last eighty years;

(2) the presence and importance of the Food and Drug Administration must be guaranteed; and

(3) the independence and integrity of the Food and Drug Administration need to be enhanced in order to ensure the continuing protection of the public health. SEC. 2. ESTABLISmJE:\T OF FOOD A:\D DRl'G AD­

:\11:\ISTRATIO:\. (a) ESTABLISHMENT.-There is established

in the Department of Health and Human Services the Food and Drug Administration <hereinafter in this subsection referred to as the "Administration"). The Administration shall be headed by a single Commissioner of Food and Drugs <hereinafter in this Act re­ferred to as the "Commissioner" ) who shall be appointed by the President by and with the advice and consent of the Senate and who shall serve at the pleasure of the Presi­dent. The Commissioner shall be compen­sated at the rate provided for in Level IV of the Executive Schedule under section 5315 of title 5, United States Code. The Adminis­tration shall be administered under the su­pervision and direction of the Commission­er. The Commissioner shall, in consultation with the Secretary of Health and Human Services <hereinafter in this Act referred to as the "Secretary") appoint a Deputy Com­missioner and such Associate Commission­ers and Directors of functional centers, bu­reaus, and other administrative units as shall be needed for the effective and effi­cient discharge of the authorities and func­tions administered by the Commissioner.

(b) AUTHORITIES AND FuNCTIONS.-0) Except as otherwise provided in this subsec­tion, there are transferred to, and vested in, the Commissioner all of the authorities and

functions delegated to the Commissioner or to the Assistant General Counsel of the Food and Drug Division by section 5.10 of title 21, Code of Federal Regulations, as of the date of enactment of this Act, without regard to any reservation prescribed by sec­tion 5.11 of title 21, Code of Federal Regula­tions. The Office of t he Assistant General Counsel of the Food and Drug Division of the Office of General Counsel within the Office of the Secretary is transferred to the Food and Drug Administration and redesig­nated the Office of Chief Counsel. The Sec­retary may delegate to the Commissioner such additional authorities and functions as the Secretary deems appropriate.

<2> The Secretary of Health and Human Services may require the Commissioner to notify the Secretary of any decisions of the Commissioner which-

<A> establish procedural rules applicable to a general class of foods, drugs, cosmetics, medical devices, or other subjects of regula­tion; or

<B> present highly significant public issues involving the quality, availability, market­ability, or cost of one or more foods, drugs, cosmetics, medical devices, or other subjects of regulations.

By Mr. ARMSTRONG: S. 2155. A bill to modernize certain

provisions of subchapter M of the In­ternal Revenue Code of 1954; to the Committee on Finance~

SUBCHAPTER M AMENDMENTS Mr. ARMSTRONG. Mr. President,

today I am introducing legislation that will modernize certain provisions of subchapter M of the Internal Revenue Code of 1954 dealing with the taxation of mutual funds, technically known as regulated investment companies or RIC's. The bill will provide clarity, consistency, and flexibility to the code sections that govern the mutual fund industry and the millions of investors it serves.

The need for change is obvious after reviewing the origins of the current law. Not changed in nearly 50 years, this section of the code was drafted at a time when it was difficult to envision the financial possibilities of today. The failure to review the law periodi­cally make it necessary for this body to enact this bill, the results of which will afford mutual fund managers the opportunity to make investment deci­sions that accommodate today's mar­ketplace to act in the best interest of the mutual fund shareholder, and to provide the shareholder, typically a middle-income American, the same in­vestment opportunities that are avail­able to the direct investor.

This bill is similar to H.R. 3997, which was introduced last September in the House by Representative RONNIE G. FLIPPO, of Alabama, and several cosponsors. There are a few minor changes in this version of the bill, which were made in order to comply with recommendations of the Treasury Department, which has given its support for the bill.

BACKGROUND-WHAT IS A MUTUAL FUND? A mutual fund is a company orga­

nized in corporate or trust form that receives money from shareholders, in­vests it, earns returns on it, attempts to make it grow, and agrees to pay the shareholders cash on demand for the current value of the investment.

The industry offers investors a broad array of mutual fund products, each of which is based on different in­vestment objectives. These products include such diverse types as stock, corporate and municipal bond funds, and money market funds. Sharehold­ers can often move within a family of funds and, thus, shift their investment goals in accordance with changes in economic or financial conditions. The mutual fund provides its shareholders the advantages of diversification and professional management.

The mutual fund industry has grown markedly since the enactment of the Investment Company Act of 1940. In 1940, there were 68 mutual funds with $448 million in assets and 296,000 shareholder accounts. At yearend 1985, there were over 1,500 funds with $495 billion in assets and more than 30 million shareholder accounts. This tre­mendous growth has demonstrated the industry's ability to adapt to changes in investors' needs and market conditions.

The growth in the industry has been fueled by a dramatic increase in the number of people investing in mutual funds. A Wall Street survey found that the stock market has recently added 5 million new shareholders, a number directly attributable to mutual fund investors.

The median income level of house­holds owning mutual fund shares is about $29,000. It is these investors of modest means, working Americans, who benefit the most from mutual funds, because they are afforded the opportunity to have professional in­vestment guidance, portfolio diversifi­cation, access to the investment com­munity, and other benefits typically available to direct and, generally, more sophisticated investors.

TAXATION OF MUTUAL FUNDS The Federal income tax provisions

applicable to mutual fund were first enacted in 1936. The basic structure and principle of these provisions, which are found in subchapter M of the Internal Revenue Code, have re­mained unchanged.

As long as the mutual fund complies with certain specified requirements under subchapter M of the code, it will be considered a regulated investment company for tax purposes. The tax treatment of mutual funds is based on the "conduit" theory. In other words, the fund serves as a pipeline through which its net income (dividends, inter­est, and capital gains) earned from the securities held in the fund's portfolio

4046 CONGRESSIONAL RECORD-SENA TE March 7, 1986 flows to the fund's shareholders. The distributed income is taxed at the shareholder level, not at the corporate level. Failure to satisfy the stringent "conduit" requirements subject a mutual fund to the full corporate tax imposed under subchapter C of the code.

This conduit treatment is premised on the notion that mutual funds can and should provide a mechanism by which investors of more modest means may obtain the same professional in­vestment management, the same di­versification of risk, and roughly the same tax treatment available to the direct investor who more typically can afford direct investment guidance.

NEED FOR CHANGE In spite of the recent explosive

growth in the mutual fund industry, the rules governing its regulation were drafted in 1936 and are so inflexible that they prevent the use of many modern finanCial techniques. And even though this bill addresses its problems which have a direct impact on how a mutual fund conducts its business, the ultimate beneficiary will be the typical middle-income investor who relies on his or her mutual fund account to gain the direct access to the stock or bond market which has traditionally domi­nated by only the more affluent. The sophisticated investor has another dis­tinct advantage-the ability to hedge against the risks of fluctuations in in­terest rates, stock values, and currency exchange rates. The outmoded provi­sions of the code prevent mutual funds from providing the same protections and services to its shareholders.

This bill not only clarifies those sec­tions of the code which are relevant to the use of new financial products, but it also addresses problems associated with foreign currency gains, a major source of revenue and investment in today's market.

PROPOSED LEGISLATION The bill proposes five changes in

subchapter M of the Internal Revenue Code. The first of these changes pro­posed by the bill is the repeal of the 3-month holding period requirement of section 851(b)(3), or the "short-short" rule, which currently denies conduit tax treatment to a mutual fund if 30 percent or more of its gross revenues are derived from the sale or other dis­position of stock or securities held for less than 3 months.

The existing short-short rule may force a fund manager to act in a manner which is contrary to prudent investment principles. For example, holding an investment for 3 months or more may not be in the best interest of fund shareholders. Similarly, a stock market surge, like the one we just experienced, might make certain security sales advisable, but if the se­curities have not been held for 3 months, section 85l<b)(3) might pre­clude such sales.

The short-short rule operates par­ticularly unfairly against newer funds, of which there are many. These funds do not have appreciated securities that can be sold at a long-term gain to pre­vent a violation of that rule.

Finally, compliance with the short­short rule presents a difficult, complex monitoring problem for fund manag­ers. In recent years, the increased use of financial instruments, such as op­tions, futures, and options on futures, has given rise to a number of complex questions regarding the circumstances under which the holding period of an investment may be suspended or ter­minated for purposes of the short­short rule. The burden of this moni­toring process imposes a substantial cost on mutual funds and their share­holders.

The second key provision of the bill expands the definition of permitted income under section 851 (b)(2) of the code to include "securities" gains from most options and futures contracts, and gains from investment in foreign currency. The latter has become espe­cially important with the advent of substantial investment in foreign stocks and securities.

With respect to gains from invest­ment in foreign currency, the Treas­ury Department recently commented:

We believe that investment in foreign-cur­rency denominated securities are the type of passive investments that should be per­missible for RIC's. Moreover, foreign cur­rency investments that are made to hedge investments in foreign-currency denominat­ed securities also appear to be an appropri­ate part of the passive investment activity of RIC's. Accordingly, we believe that for­eign currency gains from investments in for­eign-currency denominated securities and from hedging activities with respect to such securities should be treated as qualifying income under section 851 <b><2> ... Conse­quently, we suggest that foreign currency gains be added to the list of qualifying income under section 851 Cb)(2) ...

The third key provision of the legis­lation would make changes resulting in consistency in the tax treatment of series mutual funds. Current tax law treats most series funds organized as corporations as single corporations for Federal income tax purposes. The IRS, however, has recently issued a number of private letter rulings which allow a series fund to treat each of its separate portfolios as separate corpo­rations if organized as a separate busi­ness trust. By amending section 851 (g) of the code, this bill would codify recent IRS private letter rulings, thus providing clarity and consistency in the treatment of series mutual funds. In addition, the separate treatment of each portfolio in a series fund is a more prudent business practice.

This bill also recognizes, upon Treas­ury's recommendation, the need for a transition rule for existing series funds. This provision is not intended to disturb the tax treatment of a par-

ticular series fund prior to the eff ec­tive date of this provision.

Mr. President, I ask unanimous con­sent that the Treasury Department's letter concerning the bill and a sec­tion-by-section analysis be printed in the RECORD.

There being no objection, the mate­rial was ordered to be printed in the RECORD, as follows:

SECTION BY SECTION-SUBCHAPTER M AMENDMENTS OF 1986

SECTION 1

Clarification of intent. SECTION 2

Cl> Short-Short Test. Under current law, if a Registered Investment Company <RIC> re­ceives more than 30% of it's income from sale or disposition of stock or securities held for less than 3 months, then it loses the con­duit treatment and is taxed at the corporate level.

The bill would repeal this limitation. This test was placed in the law in 1942 to distin­guish between "active traders" and "passive traders" Clike RIC's). Little legislative histo­ry has been found to elaborate on this dis­tinction but the presumption is that it was meant to parallel Real Estate Investment Trusts <REIT's) to separate "active" from "passive" investors. It is Treasury's opinion that the volume of business in the above products does not cause a MMMF to be an "active" business and therefore they sup­port the repeal of this provision.

<2> Types of Income a MMMF can receive; 90% Test: Current law specifies that a RIC must receive 90% of it's gross income from, dividends, interest, payments with respect to securities loans and gains from the sale or disposition of stock or securities. As stock options, futures contracts and options on stock indices, options and futures on foreign currencies become more prevalent in the marketplace with income from the above source are included as income but must not exceed 10% of gross income.

The second amendment would allow earn­ings from the above new products to fall within the permissible category. The 90% test is otherwise preserved.

Treasury suggested one qualification in the area of foreign currency transactions. They believe earnings from foreign curren­cy transactions used as a hedge on securities is appropriate, but that MMMF should not be buying and selling futures on foreign cur­rencies. This recognizes that concern and gives to the Secretary of Treasury authority to establish limitations in this area.

SECTION 3

Tax Treatment of Series Funds: Series funds are several separate MMMF's that specialize in certain types of investments all under a common name. Under current law they are taxed as one corporation. For pur­poses of the Short-Short test and the 90% rules any one fund could fall out of compli­ance, but as a group they remain in compli­ance. This amendment would, for tax pur­poses, treat each separate series as a corpor­tion-th us each fund must remain in com­pliance with the above limitations.

Furthermore this amendment provides certainty of tax treatment. One MMMF or­ganized as a trust obtained a private letter ruling stating they would not be taxed as a single corporation but as a series of corpora­tions. This provision codifies that revenue ruling and a transition rule is provided in Section 7.

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4047 SECTION 4

Current law requires MMMF's to mail cer­tain dividend, income and capital gains in­formation to shareholders within 45 days after the close of the find 's taxable year.

This section would extend it to 60 days which would make it consistent with cur­rent Security and Exchange Commission re­porting rules.

SECTION 5

Current law protects attorney·s, account­ants, commercial banks thrifts and brokers from suits if they have provided informa­tion to the IRS after being summoned by the IRS to do so. This section extends those same protections to RIC's and their agents.

SECTION 6

Effective dates for each section. SECTION 7

This section establishes a transition rule for series funds that, prior to the effective date of Section 3 of the bill , had been treat­ed for tax purposes as a single corporation.

DEPARTMENT OF THE TREASURY, Washington, DC, February 5, 1986.

Hon. RONNIE G. FLIPPO, House of Representatives, Washington, DC.

DEAR MR. FLIPPO: Thank you for your September 25, 1985, letter to former Assist­ant Secretary Pearlman requesting the Treasury Department's views on H.R. 3397. I apologize for the delay in responding.

H.R. 3397 would amend the provisions of the Internal Revenue Code relating to regu­lated investment companies C"RICs"). The amendments would remove a limitation on the short-term trading activities of RICs, expand and clarify the types of income that may be earned by RIC's revise and clarify the treatment of RICs organized in series form, and make other minor changes. In general, the Treasury Department· supports H.R. 3397. We believe. however. that revi­sions are needed to narrow the amendment of the income source rules and to provide certain transition rules. Our comments on the specific provisions of H.R. 3397 are de­scribed below.

SHORT-TERM TRADING ACTIVITIES OF RIC'S H.R. 3397 would repeal section 851Cb)C3)

of the Internal Revenue Code, which re­quires that a RIC derive less than 30 per­cent of its gross income from the sale of stock or securities held for less than three months. This requirement is intended to re­strict the favorable RIC tax provisions to "passive" investment entities that are not engaged in an active business.

Some have questioned the need for any restriction on the activities of RICs. The principal difference between the tax treat­ment of RICs and other corporations is that a RIC is allowed a deduction for divdends paid to shareholders, and thereby avoids the corporate-level tax on any income distribut­ed to shareholders. As a theoretical matter, the single tax imposed on RICs and their shareholders may be preferable to the system of double taxation that applies gen­erally to corporations and their sharehold­ers. Nonetheless, in a system in which the double taxation of corporate earnings is standard, we believe it is important to re­strict the types of activities that can be car­ried on by a RIC without being subject to double taxation. For this reason, we believe that RIC treatment should be available only to entities that are not engaged in an active business. We do not believe, however, that the restriction imposed by section 85l<b)(3)

is essential to this policy or is justified on other grounds.

Our support for the repeal of section 851Cb)(3) is, in large part, based on the fact that the trading of portfolio securities is treated for federal income tax purposes as less "active" than other comparable busi­ness activities. This difference in treatment is evident in a number of areas.

First, the standard for determining whether property is held for investment <and will produce capital gain or loss upon sale) or is held for sale to customers in the ordinary course of business Cand will produce ordinary income or loss upon sale) differs depending on whether the property is stock or securities or other property. Among the most important factors that de­termine whether other property, such as real estate, is held for sale to customers in the ordinary course of business are the number, frequency, and continuity of sales of the property by the taxpayer. By con­trast, these factors are not relevant in deter­mining whether securities are held for sale to customers in the ordinary course of busi­ness. Instead, securities generally are treat­ed as held for investment unless the seller performs a merchandising function compa­rable to buying the securities in the whole­sale market and selling them in the retail market.

Second, among the requirements that must be satisfied in order for a distribution of securities of a controlled corporation to be tax-free under section 355 of the Code is that both the distributing and the con­trolled corporation be engaged in the active conduct of a trade or business. The trading by a corporation of stocks and securities held for its own account, regardless of the size of the portfolio or the amount of activi­ty involved in the management of the port­folio, is not treated as the active conduct of a trade or business for purposes of section 355. See Rev. Rul. 66-204, 1966-2 C.B. 113.

Third, certain "S corporation" Ci.e., corpo­rations taxed under Subchapter S of the Code) may be penalized, or lose their status as S corporations, if they have excessive amounts of "passive investment income." For this purpose, passive investment income is defined in section 1362Cd)(3)(D)(i) of the Code to include all gains from sales or ex­changes of stock or securities.

Finally, tax exempt organizations general­ly are subject to tax on any "unrelated busi­ness taxable income." Gains or losses from the sale or exchange of property Cother than property held for sale to customers in the ordinary course of business) are ex­cluded from the definition of unrelated business taxable income. One of the reasons for this exclusion was the view of Congress that such gains and losses are "passive" in character. H.R. Rep. No. 2319, 81st Cong. 2d Sess. 38 0950).

The distinctions drawn in these other areas of tax law are between sales of securi­ties and sales of other property and between sales of property held for investment and sales of property held for sale to customers in the ordinary course of business. These areas do not draw a distinction between sales of securities held for investment for a short period and sales of securities held for investment for a longer period. Likewise, we do not believe that such a distinction should be drawn for purposes of determining whether a RIC is engaged in active business.

We also note that an independent limita­tion on the permissible activities of a RIC is imposed by the requirement that a RIC reg­ister as an "investment company" .Cor qual-

ify as a common trust fund or similar fund exempt from registration) as defined in the Investment Company Act of 1940. This re­quirement did not exist when the predeces­sor of section 851Cb)(3) was first enacted. Registration with, and regulation by, the Securities and Exchange Commission under the Investment Company Act of 1940 both limits the ability of active business corpora­tions to qualify as RICs and makes applica­ble numerous rules designed to protect the shareholders of investment companies. Some have argued that section 851Cb)(3) also serves to protect shareholders of RICs by limiting speculative trading or portfolio "churning." We question whether section 851Cb)C3) provides any meaningful protec­tion to RIC shareholders. More important­ly, however, we believe that regulation of the relationship between corporations and their shareholders should be achieved through the securities laws, rather than the tax system.

While section 851Cb)(3) does not serve a pressing tax policy goal, it does impose sub­stantial costs on RICs and their sharehold­ers, both by requiring investment decisions to be made on nonecomomic grounds and by forcing RICs to monitor their compliance with the rule. In order to comply with sec­tion 851Cb)(3), RICs may be forced to forgo realizing gains on securities held for less than three months or to reduce such gains as a percentage of gross income by selling securities held for a long period. The costs of complying with section 851Cb)(3) have grown in recent years as the volatility of in­vestment markets has increased and the rules for determining the holding period of securities have become more complex. For example, it may be prudent for a RIC to hedge a portfolio of securities against price fluctuations. Hedging activities may, howev­er, produce less-than-three-month gains with respect to securities that have been held for more than three months if gain is realized on the hedging side of the transac­tion or if the holding period of the underly­ing securities is affected by rules <such as the short sale and straddle transaction rules) that suspend the running of, or create new, holding periods for securities. Addi­tional uncertainty concerning the applica­tion of section 851Cb)(3) has resulted from the rule requiring that unrealized gains and losses on regulated futures contracts be rec­ognized at the end of each taxable year.

In sum, because we believe that the cost of section 851Cb)(3) exceed the benefits of the section, we support the proposal in H.R. 3397 to repeal the section.

SOURCES OF INCOME OF RIC'S Section 851Cb)(2) of the Code requires a

RIC to derive at least 90 percent of its gross income from dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of stock or securities. This listing of qualifying income fails to include many types of invest­ment-related income commonly received by RI Cs.

The Internal Revenue Service has often gone beyond the literal terms of the statute in order to give a reasonable interpretation to section 851Cb)C2). For example, the IRS has ruled privately that certain investment products will be treated as securities, gains from the sale or disposition of which will be qualifying income under section 851Cb)(2). See G.C.M. 37233 <August 25, 1977) <options on securities); G.C.M. 38994 <January 21, 1983) <futures contracts on securities); and G.C.M. 39316 <July 31, 1984) <stock index

4048 CONGRESSIONAL RECORD-SENA TE March 7, 1986 futures, options on stock indexes, and op­tions on stock index futures). In addition, the IRS has ruled both publicly and private­ly that the receipt of certain other kinds of income, although not qualifying under sec­tion 851Cb)(2), will not result in loss of RIC status. See Rev. Rul. 64-247, 1964-2 C.B. 179 <recovery of excess management fees>; Rev. Rul. 74-248, 1974-1 C.B. 167 <recovery of damages from investment advisor for breach of fiduciary duty>; Ltr. Rul. 8530016 <April 24, 1985) <recovery of state taxes). Despite the flexibility that has been shown by the IRS, RICs often can be certain of the treat­ment of various income items only by ob­taining a private ruling from the IRS.

H.R. 3397 would amend section 851Cb)(2) to expand the list of qualifying income of a RIC to include gains from the disposition of "foreign currency, and other income <in­cluding but not limited to gains from op­tions or futures contracts) derived with re­spect to its· business of investing in such stock, securities, or currencies." If section 85l<b><3> is repealed, additional pressure is placed on section 851Cb)(2) to limit the types of activities in which RICs may engage. We believe it is essential that two limits on the activities of RICs be retained. First, income qualifying under section 851Cb><2> should be limited to income from property held for investment, as opposed to property held for sale to customers in the ordinary course of business. Second, income qualifying under section 851Cb)(2) should be limited to income from stocks and securities, as opposed to other property. <The reim­bursement or recovery of expenses and simi­lar items should be treated as falling within these limits since they generally represent amounts that were offset against such income in past years.) For example, under the second limit, we would generally not treat as qualifying income gains from trad­ing in commodities, even if the purpose of that trading is to hedge a related stock in­vestment.

H.R. 3397 would treat foreign currency gains as income qualifying under section 851CbH2). Foreign currency is a commodity and not a security. The purchase and sale of a stock or security denominated in a foreign currency cannot be accomplished, however, wit hout the purchase and sale of foreign currency. Hence, foreign currency gains and losses are an inherent part of any invest­ment in foreign-currency denominated secu­rities.

We believe that investments in foreign­currency denominated securities are the type of passive investments that should be permissible for RICs. Moreover, foreign cur­rency investments that are made to hedge investments in foreign-currency denominat­ed securities also appear to be an appropri­ate, part of the passive investment activity of RICs. Accordingly, we believe that for­eign currency gains from investments in for­eign-currency denominated securities and from hedging activities with respect to such securities should be treated as qualifying income under section 851(b)(2).

We question whether other foreign cur­rency gains should be treated as qualifying income under section 851Cb)(3). We recog­nize, however, that attempting to distin­guish between qualifying and nonqualifying foreign currency gains would be difficult. We are not prepared at this time to propose statutory rules that would draw the appro­priate distinction. Consequently, we suggest that foreign currency gains be added to the list of qualifying income under section 851Cb)(2), but that Treasury be provided

with regulatory authority to exclude from qualifying income any foreign currency gains that are not derived with respect to in­vestment in a foreign-currency denominated security or from hedging activity with re­spect to such a security.

SERIES FUNDS

Many RICs are organized as "series" funds. A series fund is a single legal entity (either a corporation or a business trust) that is made up of several investment funds, each of which issues a separate class of stock of the entity. The owners of each sep­arate class of stock have an interest only in the assets and income of the separate fund. In Union Trusteed Funds v. Commissioner, 8 T.C. 1133 <1947), acq., 1947-2 C.B. 4, the Tax Court held that a series fund organized as a corporation was a single corporation for federal income tax purposes. In Rev. Rul. 56-246, 1956-1 C.B. 316, the Internal Reve­nue Service reached the same conclusion. The IRS has consistently followed this case and ruling with respect to series funds orga­nized as corporations, but has issued a number of private rulings holding that each series of a series fund organized as a busi­ness trust would be taxed as a separate cor­poration. Recently, the IRS has been study­ing the issue of whether to continue to issue such rulings.

H.R. 3397 would treat each separate series of a series fund <regardless of whether orga­nized as a corporation or as a business trust) as a separate corporation. We support this provision. Treating each series as a separate corporation reflects the economic substance of the series fund form of organization. Moreover, a contrary rule may permit avoid­ance of many of the requirements that are imposed on RICs. For example, within a series RIC organized as a corporation it may be possible to have a series that does not meet the diversification requirement of sec­tion 851Cb)(4), a series that does not meet the income source requirement of section 851Cb)(2), or a series that does not meet the income distribution requirement of section 852Ca)(l), so long as, in the aggregate, all of the series meet these requirements. In addi­tion, treatment of a series fund as a single corporation creates several technical prob­lems. For example, the capital losses of one series offset the capital gains of another series, thereby providing an unintended shift of tax benefits between the sharehold­ers of the different series. Similarly, the straddle transaction and wash sale rules may prevent the deduction of losses by one series because of investments made by an­other series.

If H.R. 3397 is enacted, a transition rule will be needed for existing series funds. As discussed above, under current law, a series fund that is organized as a corporation is treated as a single corporation. H.R. 3397 should clarify the tax consequences of the "deemed reorganization" resulting from the bill's treatment of such a corporation as more than one corporation.

SHAREHOLDER NOTICE REQUIREMENTS

The current tax rules require RICs to send various notices to their shareholders within 45 days following the end of the RIC's taxable year. Usually, these notices are included as part of the RIC's annual report. The SEC has recently extended the time for mailing annual reports to share­holders from 45 days to 60 days after the end of the RIC's taxable year. H.R. 3397 would make a conforming change in the notice requirements for tax purposes to permit information contained in a timely

annual report to satisfy the notice require­ments. We do not object to this proposal.

THIRD-PARTY RECORDKEEPER SUMMONS

Section 7609 of the Code provides certain procedural rules applicable to summons served on " third-party recordkeepers." This term is defined to include various types of financial institutions such as banks, savings institutions, and brokers. H.R. 3397 would expand the definition of " third-party rec­ordkeepers" to include RICs. We do not object to .this proposal.

We appreciate the opportunity to com­ment on the provisions of H.R. 3397 and look forward to working with Congress toward legislative improvements in this area.

Sincerely, J. ROGER MENTZ,

Acting Assistant Secretary fTax Policy).

By Mr. MOYNIHAN: S. 2156. A bill to amend the Federal

Deposit Insurance Act to prohibit the acquisition of insured banks by certain foreign nations, and for other pur­poses; to the Committee on Banking, Housing, and Urban Affairs.

ACQUISITION OF INSURED BANKS BY CERTAIN FOREIGN NATIONALS

e Mr. MOYNIHAN. Mr. President, I rise today to introduce legislation ad­dressing an extremely troublesome problem: Efforts by the Soviet Union and other Eastern bloc countries to ac­quire U.S. banks.

We hear much about the problem of the Soviets trying to steal our high technology goods. Yet insufficient at­tention is given, I believe, to a more so­phisticated form of espionage: Obtain­ing access to such goods by owning the bank that finances the company that makes them. They do not have to steal blueprints if they own them.

Perhaps some of my colleagues read recent accounts of the Soviet effort to acquire three banks in northern Cali­fornia's silicon valley. These banks fi­nanced numerous companies making the same high technology goods that we will not permit to be exported to the Soviet Union.

For those that did not have the op­portunity, I ask unanimous consent that an article by Martin Tolchin in the February 16 New York Times be included in the RECORD at the conclu­sion of my remarks.

It took some fine investigative work and some luck in order for the true principal in the acquisition to come to light. That is troubling.

But perhaps even more disturbing, existing law does not per se proscribe Soviet ownership of U.S. banks. Feder­al banking authorities could stop such an acquisition, but they are not re­quired to.

How can this be? Under current law-essentially the

Change in Bank Control Act of 1978 <12 U.S.C. 1817 (j))-the acquisition of a controlling interest in practically all banks-with the exception of small un-

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4049 insured State banks-must be ap­proved by either the Comptroller of the Currency, the Federal Reserve Board, or the Federal Deposit Insur­ance Corporation. The appropriate Federal banking agency is determined by the type of bank; however, each agency applies the same statutory cri­teria for approving a proposed bank acquisition.

Information that must be submitted by the purchaser includes: The identi­ty, history, business experience, assets, and liabilities of the purchaser; terms and conditions of the proposed acquisi­tion; and the identity, source, and amount of funds or other consider­ation that will be used to acquire the bank. The Federal banking agency is also authorized to ask for any other relevant information it may require.

Those who willfully fail to provide this information are subject to a civil penalty of up to $10,000 per day.

The Federal banking agency may, but does not have to, disapprove a pro­posed acquisition in three basic situa­tions. First, if the acquisition would monopolize or substantially lessen competition. Second, if the purchaser is not fiscally sound. And third, if "the competence, experience or integrity" of the purchaser "indicates" that it would not be in the depositors' or the public interest to allow the acquisi­tion.

There are three problems with exist­ing law, Mr. President, and the bill I am introducing today would remedy them.

First, my bill would require informa­tion on the nationality of the purchas­er. Perhaps this is implicit in existing law; my bill would leave no doubt that we want to know.

Second, my bill would make it a criminal offense-subject to a fine of up to $100,000 and to a sentence of up to 10 years-for -failing to provide the information.

Finally, my bill would prohibit own­ership or control of a bank-the acqui­sition of which is subject to Federal review-by the Soviet Union or any other country to which we severely re­strict exports under the Export Ad­ministration Act; that is, those coun­tries which are listed by the Depart­ment of Commerce in country groups Q, S, W, Y, and Z. These countries are Romania, Libya, Hungary, Poland, Al­bania, Bulgaria, Czechoslovakia, Esto­nia, German Democratic Republic, Laos, Latvia, Lithuania, Mongolian People's Republic, Union of Soviet So­cialist Republics, Cuba, Kampuchea, North Korea, and Vietnam.

The bill would prohibit ownership by those countries as well as any na­tional, agency, or instrumentality or other person of such country.

Mr. President, by statute and regula­tion we have decided that these coun­tries should not have access to certain goods. We need to ensure that they do

•

not slip into our economy clandestine­ly.

Why do we care? According to the Department of De­

fense, the success of the U.S.S.R. in acquiring technology from the West is largely responsible for the recent Soviet progress in microelectronics, progress that has reduced the overall Western lead in this area from 10 to 12 years in the mid-1970's to 4 to 6 years today. Soviet efforts at gaining com­puter technology have been equally concerted, ranging from attempts to buy powerful United States computers through dummy firms and falsified li­censes, to much more brazen efforts to acquire useful technical data.

These efforts are intensifying. The Soviets are faced with the challenge posed by the strategic defense initia­tive, United States advances in elec­tronic warfare, and other programs at the cutting edge of microelectronics and computer technology. In response, the U.S.S.R. has stepped up its at­tempts to steal the components and know-how it finds so difficult to devel­op on its own. Our failure to block this effort would be tantamount to subsi­dizing the Soviet military buildup.

But increased export license scruti­ny, and greater efforts by Customs of­ficials in the field, will be useless if the Soviets and others are permitted to scrutinize that technology in a bank­er's guise.

Mr. President, I hope my colleagues will join me in supporting this legisla­tion and I ask unanimous consent that the text of the bill appear in the RECORD at this point.

There being no objection, the mate­rial was ordered to be . printed in the RECORD, as follows:

s. 2156 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, That sec­tion 7(j) of the Federal Deposit Insurance Act 02 U.S.C. 1817(j)) is amended-

Cl) in paragraph <6><A>. by inserting "na­tionality," after "personal history,";

<2> by inserting "CA>" after " (15)" at the beginning of paragraph < 15 >;

(3) by inserting at the end of paragraph < 15 > the following:

"CB> Any person who willfully violates any provision of this subsection, or any regula­tion or order issued by the appropriate Fed­eral banking agency pursuant to this subsec­tion, shall upon conviction be fined not more than $100,000, or imprisoned for not more than 10 years, or both."; and

<4> by adding at the end thereof the fol­lowing:

"Cl 7> The appropriate Federal banking agency shall disapprove any proposed acqui­sition under this subsection which would result in the ownership or control of an in­sured bank by a country listed in country group Q, S, W, Y, or Z under section 5 of the Export Administration Act of 1979 or a national, agency, or instrumentality of any such country." .

[From the New York Times, Feb. 16, 1986]

RUSSIANS SOUGHT U.S. BANKS TO GAIN HIGH­TECH SECRETS

[By Martin Tolchin) WASHINGTON, February 15.-The Soviet

Union secretly tried to acquire three banks in northern California and an interest in a fourth to gain access to advanced American technology, United States intelligence and military officials say.

The attempt, which was foiled by United States intelligence agents in the mid-1970's, was part of what American officials have de­scribed as a broad Soviet effort to acquire Western technology for military and com­mercial purposes.

United States officials and private lawyers familiar with the case said Soviet agents wove a pattern of international intrigue using disguised principals and large sums of money that traveled a circuitous route.

C.I.A. AGENT SAW PATTERN The scheme failed when an agent of the

Central Intelligence Agency noticed a pecu­liar lending pattern by the Singapore branch of a Soviet bank. The case att racted little attention in the United States, and of­ficials and lawyers familiar with it provided details that have not been previously dis­closed.

American intelligence, military and bank­ing officials, along with some members of Congress, said the scheme raised quest ions about whether banking statutes, even those that have been strengthened since then, are adequate to cope with a threat to national security.

If the Soviet Union had managed to take over a bank, the officials said, it could have learned about the confidential finances of American high-technology companies, per­haps enabling it to put pressure on execu­tives and companies or even take one over.

TAKEOVER PLAN WAS LEGAL The plan, which did not violate any laws,

was aborted after a $1.8 million down pay­ment was made on the banks: the Peninsula National Bank in Burlingame, the First Na­tional Bank of Fresno, and the Tahoe Na­tional Bank in South Lake Tahoe. In addi­tion, the Soviet Union sought partial inter­est in the Camino California bank in San Francisco. Peninsula National had made nu­merous loans to high-technology companies and, along with the other banks, counted employees and executives of high-technolo­gy companies among its clients.

" I always viewed it as a deliberate pene­tration by the K.G.B. of the American banking system," said Bartholomew Lee, a San Francisco lawyer involved in a civil case resolving the effort.

Senator Daniel Patrick Moynihan, Demo­crat of New York, an intelligence specialist, was one of the few on Capitol Hill in the late 1970's aware of the Soviet effort. " It's a new form of industrial espionage," he said. "It doesn't involve people stealing blue­prints; they own the blueprints."

M. Meinikuv, deputy trade representative at the Soviet Embassy here, said he was not familiar with the takeover attempt. " I never heard this story, and I don't know anyone who has," he said. "Our relations in the fi­nancial field in the United States are practi­cally nonexistent."

Similarly, officials of the Moscow Nor­odny Bank, which financed the attempt to buy interests in the banks, have insisted that its loans were strictly business transac­tions.

4050 CONGRESSIONAL RECORD-SENATE March 7, 1986 FOREIGN INVESTMENT PROBLEMS

To intelligence, military and banking offi­cials, and some members of Congress, the Soviet scheme underscored one of the prob­lems in a society that welcomes foreign in­vestment, in which the highest bidder can acquire institutions that have access to sen­sitive information. They said the incident also highlighted the difficulty of learning the true principals in some financial trans­actions and of tracking money whose source has been under layers of transactions.

"There is sometimes a real conflict be­tween free trade and national security," said Richard N. Perle, Assistant Secretary of De­fense for international security policy. " It seems to me in our national security inter­ests not to give the Soviets any leverage."

Mr. Perle also noted the problems of dis­guised ownership and said the laws should be strengthened to provide information on the true nature of t hese transactions. " It seems to me that at the very least we ought to have a continuing audit of what is being acquired and by whom," he said. "We ought to look behind the immediate purchaser. and satisfy ourselves that we know who we're really dealing with."

"NOT A PRIVATE AFFAIR"

Senator Moynihan said: "The ownership of banks is not a private affair. If you have to go two or three layers into the system to find out what 's happening, go two or three layers into the system."

Banks can be an important source of valu­able intelligence, said Representative Charles E. Schumer, a New York Democrat who is a member of the Banking Commit­tee. "If you wanted to find out about any aspect of American industry, one of the most effective and relatively cheap ways to do it is to get inside a bank," he said. "They give unfriendly foreign powers a window into things they ought not to see."

Frederick R. Dahl, associate director of the Federal Reserve Board's division of Banking Supervision and Regulation, said: "We're really in a public dilemma. We've always had a tradition in this country that anyone could start a bank, with the proviso that he had some money and was reputable. Then you come to the question of undesira­bles getting in. You try to keep them out, but it's easier said than done. "

The Soviet attempt may not be an isolated one. Amos Dawe. a Singapore businessman who served as the Russians' major interme­diary in the bank scheme, told Federal offi­cials that the Soviet Union had succeeded in carrying out similar acquisitions in other parts of the country, but he declined to specify where or when, his lawyers said.

Mr. Perle agreed. " If the Moscow Norodny bank attempted to acquire banks in Silicon Valley, you can be sure that they made other efforts elsewhere," he said.

PLAN TO BUY BANKS: HIDING MONEY' S SOURCE

A detailed account of the Soviet scheme was pieced together from interviews when intelligence and military officials, private lawyers familiar with the case, court records and a statement by Mr. Dawe.

According to court records, the Moscow Norodny bank's Singapore branch used Mr. Dawe to acquire the three California banks and used another intermediary, Y.T. Chou, a business associate of Mr. Dawe's, to ac­quire a half interest in the Camino Califor­nia bank in San Francisco.

The scheme was aborted by United States intelligence officials, who released the story to an Asian financial newsletter. Mr. Dawe has acknowledged through his lawyers his

role as an intermediary. Efforts to reach Mr. Chou, who is believed to be living in Southeast Asia, were unavailing.

Moscow N orodny selected the banks to be acquired, and supervised their acquisition, according to Mr. Dawe's statements.

Ephraim Margolin, one of Mr. Dawe's at­torneys in San Francisco, said of his client, "There is no doubt in my mind that he was working for the Russians."

Cliff Palefsky, another of Mr. Dawe's San Francisco attorneys, said his client hoped to make money on the deal. But he added: "There's no question that he was reporting to the Russians. It was Mr. Dawe's belief that the Soviets were interested in gaining some access to computer technology."

Mr. Dawe, now 51 years old, rose from postal clerk to become one of the richest men in Southeast Asia. He was the principal owner of the Mosbert Group, a holding company with interests in hotels, real estate, plantations, finance companies, and other properties. The Mosbert Group con­trolled some 200 companies with $160 mil­lion in assets in Southeast Asia.

SINGAPORE TO SAN FRANCISCO

According to papers filed in Federal Dis­trict Court in San Francisco, Mr. Dawe ob­tained a $50 million line of credit in late 1974 from the Moscow Norodny bank's Singapore branch for the purpose of pur­chasing several banks in northern Califor­nia.

The first installment of funds to Mr. Dawe, $3 million, traveled a circuitous route from Moscow N orodny in Singapore to the Pacific Atlantic Bank in Panama, to the Commerce Union Bank in Nashville, Tenn., and, finally, by letters of credit, to Mr. Dawe in San Francisco.

In a brief interview with the British Broadcasting Corporation in 1983, Mr. Dawe recalled that Moscow Norodny had sent him to San Francisco to study various banks.

Upon his return to Singapore, Mr. Dawe said in the interview, he was surprised by how much Moscow Norodny already knew about the American banks. " I have details, they have already more details," Mr. Dawe said. "They have more details than I could imagine. They have done their homework. They have all the details of all the banks in the big area."

Mr. Dawe negotiated the sale of the Fresno, Tahoe and Burlingame banks, which were owned by the Central Bank of California.

"We had no reason to suspect that he was not the principal," Robert L. Haggen, the bank's vice president and counsel, said in an interview. "He was a very wealthy man with operations all over the world."

Court records reveal that Mr. Dawe pur­chased the Burlingame bank in December 1974, for $3.05 million, placed $300,050 in an escrow account and financed the remainder through a letter of credit issued by the Commerce Union Bank of Nashville.

Mr. Dawe purchased the Fresno and Tahoe banks in June 1975, for $7.9 million. He placed $808,300 in escrow and paid an in­stallment of $685,266 in October 1975. He also put the stock in the Fresno and Tahoe banks up as collateral for the sale.

It is not clear how much Mr. Chou, who was also backed by Moscow N orodny, paid for the half interest in Camino California in October 1975. " ONE SMART C.I.A. GUY:" THE PLAN FALLS APART

United States officials said that an Ameri­can intelligence officer with a banking back­ground based in Singapore learned of the

transactions. "It was one smart C.I.A. guy who noticed a peculiar lending pattern," Mr. Perle said. "It didn't smell right."

American intelligence officers then dis­closed the purchases to Raymond Sacklyn, publisher of a Hong Kong financial newslet­ter, Target, according to United States offi. cials. Mr. Sacklyn refused to identify the source of the article.

The bank deal collapsed upon publication of the article. Moscow Norodny withdrew its funds, leaving Mr. Dawe financially vulnera­ble.

Mr. Haggen said Central bank foreclosed on its collateral and acquired the stock to the three banks.

In July 1977, Mr. Dawe was indicted by a Federal grand jury in San Francisco on charges of improper transfer of funds in connection with his purchase of the three banks as well as the use of collateral that was previously pledged to other creditors.

In addition, a tangle of lawsuits ensued as the Soviet bank tried to get back its money from Mr. Dawe after the bank purchases were scuttled.

"The Russians wanted him," Mr. Palefsky said: "Through the Moscow N orodny bank, they were able to get him indicted in Hong Kong."

HONG KONG EXTRADITION

Mr. Dawe, who was fighting extradition to Hong Kong on the fraud charges, returned to San Francisco from Taiwan to face the United States charges. "Amos came to the United States voluntarily, with certain promises by the Government," Mr. Margo­lin, another of his attorneys, said, "They promised that if he stood trial. he would be protected and not extradited. The promises were not kept."

Federal prosecutors denied that any such deal had been made, although Mr. Dawe had cooperated with the C.I.A. The United States charges were dismissed in February 1979, at the request of the Justice Depart­ment, and he was subsequently extradited to Hong Kong. Robert Mueller, an assistant United States attorney who prosecuted the case, would not comment on whether charges had been dismissed at the request of the C.I.A.

In Hong Kong, Mr. Dawe was ultimately convicted of fraud in connection with the bank scheme. He began serving a five-year prison sentence in 1984.

"A number of different people have told us that there is a basis for suspicion that Hong Kong is really doing the bidding of somebody else, perhaps knowingly, perhaps not, the bidding of the Soviet Union," Mr. Margolin told a Federal judge at Mr. Dawe's extradition hearing in 1979.

William Dorward, Commissioner for Hong Kong and its senior representative in the United States, responded through a spokes­man, "It is so bizarre that I could not even begin to comment."

Mr. Chou sold his interest in the Camino California bank to Jack Johansen, the presi­dent. Mr. Chou is now living in Southeast Asia, Mr. Johansen said.

FEDERAL BANKING LAWS: NEW MEASURES PROPOSED

Intelligence and military officials say the Soviet effort fit into a broader scheme re­ferred to last September by Defense Secre­tary Caspar W. Weinberger.

"By their own estimate," Mr. Weinberger said, "more than 5,000 Soviet military re­search projects each year are benefiting sig­nificantly from Western-acquired technolo­gy."

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4051 Athough the Federal banking laws were

toughened in 1978, as a result of several cases of domestic fraud, intelligence, mili­tary and banking officials contend that they remain inadequate to block the kind of take­over attempted by Moscow Norodny bank.

There is no law, for example, prohibiting the Russians from acquiring United States banks, and intelligence officials believe that there are inadequate efforts to discover the true principals of some bank transactions.

"As long as we have an adequate statutory base, we're going to be vulnerable," Mr. Perle said.

Steven J. Weiss, Deputy Comptroller of the Currency, said that under Federal laws, "it's tightened up a great deal, but there are still some problems .. ,

Mr. Weiss noted that his agency had 60 days to approve or reject a proposed bank sale. Such sales can be rejected on three grounds: if the purchaser fails to provide the necessary information, lacks financial capability or is judged to lack integrity or competence.

"That's where we get a lot of murky stuff," Mr. Weiss said. "We have a standard procedure of checking with the C.I.A., F.B.1., and Interpol. Those checks frequent­ly produce nothing." At best, he said, they produce gut reactions or information that cannot provide the basis for rejecting a sale.

"There have been cases where the propos­al .stinks, but we don't have the statutory grounds to turn them down," Mr. Weiss said.

BANKING TIMIDITY CHARGED

But a 1984 report by the House Commit­tee on Government Operations accused the banking agencies of timidity. "Even when confronted with evidence of prior miscon­duct or questionable integrity, the agencies rarely deny change of control applications," the report said.

Representative Fernand J. St Germain, the Rhode Island Democrat who is chair­man of the House Banking Committee, noted the problems of ascertaining the prin­cipals of some transactions. "There are many subterfuges used to disguise owner­ship," he said.

But he said that many of these problems could be solved by strict enforcement of ex­isting laws. "The controller's office is wear­ing blinders." Mr. St Germain said.

The problem of money laundering has led the Reagan Administration and members of Congress to introduce legislation to make the process a crime.

But some believe that there is no defense against a determined, well-financed effort. "If you're willing to spend enough time, money and effort, you can get away with anything," said Quentin Breen, another of Mr. Dawe's San Francisco lawyers.

"When you live in an open society, you have to accept the consequences," Mr. Breen continued. "The question is, can we afford to continue to be an open society?"•

By Mr. SIMON: S. 2157. A bill to prohibit the impor­

tation into the United States of coal, steel, and fluorspar mined or produced in South Africa; to the Committee on Finance.

BANNING IMPORTS OF SOUTH AFRICAN STEEL,

COAL, AND FLUORSPAR

Mr. SIMON. Mr. President, the bill that I am sending to the desk to pro­hibit the import of steel, coal, and fluorspar from South Africa into the

United States is designed to send a signal to the Government of South Africa that it should modify its racial policies or face further economic isola­tion. It is clear that South Africa's unjust and immoral system of apart­heid must end. The only question is whether it will end peacefully or with more and more violence. The United States should continue to make clear that we disapprove of that policy and push toward its peaceful termination. This bill can be part of that push.

Today in South Africa 4 V2 million whites maintain their rule over 21 mil­lion blacks by denying them the right to vote, denying them educational op­portunities, denying them economic and social opportunities, and by re­quiring them to live in separate segre­gated areas.

It is our to responsibility to speak out and act against the system of apartheid. Our historic values and in­stitutions place Americans squarely on the side of those who seek political freedom and civil liberties throughout the world. We have seen recently in the Philippines that it helps strength­en our national security interests when our relations with other coun­tries are based not on accommodating repressive regimes but rather on the enhancement of democratic values.

The issue of racial discrimination also poses a real and present danger for our country and the world. Unfor­tunately at the outset of the Nazi regime in Germany far too few spoke out to condemn Hitler's persecution of the Jews. History showed that the di­vision and violence bred by the insidi­ous policy of racial discrimination could not be contained within the boundaries of a single nation. It result­ed in a global war. We need to speak out against racial discrimination now so that it does not result in further bloodshed, bloodshed that if it contin­ued will not be contained within the borders of that one country.

Racial polarization in South Africa has reached dangerous proportions, and distrust among blacks is deep and now almost impossible to overcome. The situation is deteriorating, and the escalating level of violence in that so­ciety which in the past year has taken the lives of more than a thousand black people may now be reaching the point of no return. Last year the gen­eral secretary of the South African Council of Churches, Rev. Beyers Naude, predicted:

This year will bring more polarization be­tween the white ruling classes and the ma­jority of the people, more clashes between the police and striking students and work­ers, more injuries and deaths.

Sadly, his prediction has come true. The recent statements by the South

African Government, including the lifting of the state of emergency, do not fundamentally alter the systemat­ic discrimination, disenfranchisement,

and oppression practiced against blacks in South Africa. South African blacks are still barred from any signifi­cant role in the economic, political, and social life of the country for no reason other than the color of their skin; they still cannot vote; the system of migratory labor where black fami­lies are forced to live in the inhospita­ble, economically unproductive home­lands whil.e the male workers live for 49 weeks a year in single-sex, barracks­style hostels, is still in effect; forced resettlement is still taking place; the pass laws still operate and are en­forced notwithstanding President Botha'a recent speech; blacks are still constitutionally deprived of meaning­ful political participation; and black poverty under the apartheid system has grown worse in recent years ac­cording to the Carnegie Foundation's second inquiry into poverty in South Africa.

We must recognize that the United States cannot impose a solution to South Africa's problems from the out­side. The future of South Africa will be decided by black and white South Africans. But we should take steps to discourage the active complicity of Americans in the apartheid system. We must continue to distance our­selves from apartheid, align ourselves more clearly with the will of the ma­jority, and support pressure for peace­ful change. That is why I am introduc­ing this measure to ban the future im­ports of South African coal, steel, and fluorspar.

Contracts that exist now can be ful­filled, but no contract will be consid­ered valid if entered into after the date of enactment.

The need to increase and intensify the message to the people of South Africa is clear.

This bill is part of that message.

By Mr. HECHT <for himself and Mr. LAXALT):

S. 2158. A bill to withdraw and re­serve for the Department of the Navy certain public lands within the Bravo-20 Bombing Range, Churchill County, NV, for use as a training and weapons testing area, and for other purposes; to the Committee on Energy and Nat­ural Resources.

RESERVING CERTAIN PUBLIC LANDS FOR TRAINING AND WEAPONS TESTING

Mr. HECHT. Mr. President, today, along with my colleague, Senator LAXALT, I am introducing legislation for the purpose of withdrawing the public lands contained within the Bravo-20 Bombing Range at the Naval Air Station, Fallon, NV. For over 40 years, Bravo-20 has been utilized by the U.S. Navy for pilot training and weapons testing. Recently, however, questions have surfaced as to the Navy's authority to use the portion it does not own outright. Bravo-20 lies in

4052 CONGRESSIONAL RECORD-SENATE March 7, 1986 a very remote part of Nevada and it would seem these questions could be resolved easily. Unfortunately, this has not been the case, as I will explain in a moment. ·

The subject of Bravo-20 is not a new one, Mr. President, as well over 1 year ago, I had the opportunity to partici­pate in a meeting of the Senate Sub­committee on Public Lands and Re­served Water, of which I am a member. During that hearing, testimo­ny was given on various military land withdrawals throughout the United States, including Bravo-20. I am sorry to say that, as a result of the limited time available to Congress in 1984, we were unable to pass the Bravo-20 bill.

Mr. President, as I mentioned, the Navy has utilized Bravo-20 for training with live ammunition for over 40 years. It is permanently contaminated with live, unexploded ordnance. Frankly, it is unsafe and it is for this reason that Congress must act to with­draw it from public use. I would like to illustrate to the Members of the Senate, Mr. President, the seriousness of the problem.

In July of this past summer, citizens from Churchill County, NV, began camping on Bravo-20 in protest to an action by the Secretary of the Navy which implemented a supersonic oper­ating area-an action totally unrelated to Bravo-20. Mr. President, no one in this room, or in this country, would deny an individual the right to express his or her opinion, whether it be for or against an issue. I should point out, however, that these people were jeop­ardizing their very lives by walking, driving and camping within the target, surrounded by live, unexploded ord­nance. By doing this, they were sub­jecting themselves to the very real possibility of serious injury or even death should an unexploded bomb ac­cidentally detonate. Mr. President, Bravo-20 is so contaminated with old, unexploded munitions that even after exploding over 500 pieces of ordnance on Bravo-20 this past summer, the Navy estimates that they removed only 2 percent of the live ordnance in the target area. In light of this poten­tial threat to the public safety, the Navy has stopped using Bravo-20 com­pletely.

Mr. President, as the situation now stands, Nevadans have every right to be on the public land within Bravo-20. But, Mr. President, what of the Navy's right to be there? We, the Congress, have authorized them to buy the alter­nate parcels in the target area once owned by Southern Pacific Railroad. We have authorized the expenditure of funds for improvement projects di­rectly related to the bombing targets on both Navy and public lands. And, through the annual appropriation of funds, Congress continues to give tacit approval for the Navy to carry out

training at Fallon, which of course in­cludes the use of Bravo-20.

Bravo-20, Mr. President, is one of four bombing ranges used for aircraft training at NAS, Fallon. Along with the bombing ranges and an associated electronic warfare range, the air sta­tion serves as a training complex for naval air crews flying fighter and attack aircraft-the only such Navy training complex in the continental United States. NAS, Fallon, has been in use for this purpose since World War II, during which time aircraft and air operations have evolved toward the scenario of high-speed and low-level flight, with a commensurate increase in the use of target ranges and elec­tronic warfare training areas. Of these, Bravo-20, which is located in the Carson Sink, a dry lake bed, is the only one on which MK-84, 2,000-pound bombs, can be dropped and which can accommodate a major live ordnance strike while being attacked from all directions.

Mr. President, the issue before us here is not a matter of prohibiting citi­zens the right to use public land. The issue is protecting the people of Nevada from serious physical harm while allowing the Navy to carry on with its vital mission. Coexistence on this land, which is acknowledged by all parties to be unsafe for surface occu­pancy, is not an option. It never has been. But the confusion must be cleared up, Mr. President, before someone is seriously injured or worse yet, killed.

Mr. President, as a representative of the people of Nevada, I believe the present situation must not be allowed to continue. We must withdraw this land for the safety of the people of the State of Nevada and of this Nation, and for the continued use of the Navy in the vital training needed for defense of our Nation.

Mr. President, I ask unanimous con­sent that the bill be printed in the RECORD.

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

s. 2158 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled,

SECTION 1. (a) Subject to valid existing rights, approximately 21,576.40 acres of public land in Churchill County, Nevada, as generally depicted on a map entitled "Bravo-20 Bombing Range Withdrawal­Proposed" dated January 1985, and all other lands within the boundaries of the Bravo-20 Bombing Range, as depicted on such map, that are now or may hereafter become sub­ject to the operation of the public land laws are hereby withdrawn from all forms of ap­propriations under the public land laws, and are reserved for use of the Department of the Navy as a testing and training area for aerial bombing, missile firing, tactical ma­neuvering and air support, and for other de­fense-related uses consistent therewith.

Cb) This Act does not affect the withdraw­als of July 2, 1901, and August 4, 1904, under which the Bureau of Reclamation uti­lizes for flooding, overflow, and seepage pur­poses approximately 14,750 acres of the lands withdrawn reserved by this Act.

SEc. 2. <a> As soon as practicable after the date of enactment of this Act, the Secretary of the Interior shall:

< 1 > publish in the Federal Register a notice containing the legal description of the lands withdrawn and reserved by this Act; and

<2> file maps and the legal description of the lands withdrawn and reserved by this Act with the Committee on Energy and Nat­ural Resources of the United States Senate and with the Committee on Interior and In­sular Affairs of the United States House of Representatives.

Cb> Such maps and legal descriptions shall have the same force and effect as if they were included in this Act: Provided, That the Secretary of the Interior may correct clerical and typographical errors in such maps and legal descriptions.

<c> Copies of the maps and legal descrip­tions that are filed with the Committees shall be available for public inspection in the Office of the Director, Bureau of Land Management, Washington, D.C.; the Office of the Director, Nevada State Office of the Bureau of Land Management, Reno, Nevada; and in the Office of the Command­ing Officer, Naval Air Station, Fallon, Nevada.

SEc. 3. The responsibilities of the Secre­tary of the Interior for management of the lands withdrawn and reserved by this Act are established as follows:

Ca> The Secretary of the Interior shall manage the lands and their resources, to the extent possible in accordance with the provisions of the Federal Land Policy and Management Act of 1976 C90 Stat. 2743, as amended; 43 U.S.C. 1701 et seq.), and other applicable laws, for uses which may include, but are not limited to, grazing, management of wildlife habitat, control of predatory ani­mals, and the prevention and suppression of brush and range fires resulting from non­military activities. Except as set forth in section 4Ca> of this Act, the Secretary of the Interior shall also be responsible for the is­suance of all easements and rights-of-way over the lands withdrawn and reserved by this Act. All such uses, and the issuance of all easements and rights-of-way, shall be secondary to the military use of the lands and shall be authorized only with the con­currence of the Secretary of the Navy.

Cb> Within 5 years after the date of the enactment of this Act, the Secretary of the Interior and the Secretary of the Navy shall develop a land use plan and management program for the use and management of the lands withdrawn and reserved by this Act. All nonmilitary use and management shall be secondary to the military use of such lands for the purposes specified in section 1.

SEC. 4. The responsibilities of the Secre­tary of the Navy <hereinafter referred to as the Secretary) for management of the lands withdrawn and reserved by this Act are es­tablished as follows:

Ca) The Secretary shall have the authority to control the military use of the lands and may authorize use of the lands by other military departments and agencies of the Department of Defense and the Depart­ment of Energy, as appropriate.

Cb> When military operations, public safety or national security, as determined by the Secretary, require the closure of

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4053 roads, trails and areas commonly in public use, the Secretary is authorized to take such action: Provided, That such closures shall be limited to the minimum areas and peri­ods required for the purposes specified in this subsection. Appropriate warning no­tices shall be kept posted during closure.

<c> The Secretary shall take necessary precautions to prevent and suppress brush and range fires occurring within and outside the lands as a result of military activities and may seek assistance from the Bureau of Land Management in the suppression of such fires. The memorandum of under­standing required by Section 6 of this Act shall provide for Bureau of Land Manage­ment assistance in the suppression of such fires, and for a transfer of funds from the Department of the Navy to the Bureau of Land Management as compensation for such assistance.

SEC. 5. All hunting, fishing, and trapping on the lands withdrawn by this Act shall be conducted in accordance with the provisions of title 10, U.S.C. 2671.

SEC. 6. The Secretary of the Interior and the Secretary shall enter in a memorandum of understanding to implement the program developed in accordance with Section 3<b> of this Act. The term of the memorandum of understanding shall be the same as the term of the withdrawal and reservation estab­lished by this Act; however, the provisions of the memorandum of understanding may be amended upon mutual consent by the Secretaries.

SEC. 7. {a) Except as provided otherwise in this Section, the withdrawal and reservation established by this Act shall terminate 25 years from the effective date of this Act.

(b) At least 3 years prior to the termina­tion of the withdrawal and reservation es­tablished by this Act, the Secretary shall advise the Secretary of the Interior as to whether or not the Department of the Navy will have a continuing military need for any of the lands after the termination date.

<1) If the Secretary concludes that there will be a continuing military need for any of the lands after the termination date, he shall file an application for extension of the withdrawal and reservation of such lands in accordance with the regulations and proce­dures of the Department of the Interior ap­plicable to the extension of withdrawals. Upon the filing of an application for exten­sion, the withdrawal and reservation estab­lished by this Act shall remain in full force and effect pending processing of the appli­cation and a decision and action on the pro­posed withdrawal and reservation by the Secretary of the Interior, and , if the appli­cation for extension is subject to the re­quirement of Section 2 of the Act of Febru­ary 28, 1958 <72 Stat. 27; 43 U.S.C. 156), by the Congress.

(2) If the Secretary concludes that, after the termination date established by Subsec­tion <a> of this Section, there will be no mili­tary need for all or any of the lands with­drawn and reserved by this Act, or if, during the period of withdrawal and reservation, the Secretary decides to relinquish all or any of the lands withdrawn and reserved by this Act, the Secretary shall file a notice of intention to relinquish with the Secretary of the Interior.

(3) Prior to the filing of a notice of inten­tion to relinquish pursuant to Paragraph <2> of this Subsection, the Secretary shall pre­pare a written determination as to whether and to what extent the lands are contami­nated with explosive, toxic, or other hazard­ous materials. A copy of the determination

made by the Secretary shall be supplied with the notice of intention to relinquish.

Copies of both the notice of intention to relinquish and the determination concern­ing the contaminated state of the lands shall be published in the Federal Register by the Secretary of the Interior.

<A> If the lands are contaminated, and the Secretary, in coordination with the Secre­tary of Interior, determines that decontami­nation is practicable and economically feasi­ble, taking into consideration the potential future use and value of the lands, and that upon decontamination the lands could be opened to operation of the public land laws, including the mining laws, the Secretary shall decontaminate the lands, unless Con­gress declines to appropriate funds for the project.

(B) If the Secretary and the Secretary of the Interior conclude that decontamination of any or all of the lands proposed for relin­quishment is not practicable or economical­ly feasible, or that the lands cannot be de­contaminated sufficiently to allow them to be opened to operation of the public land laws, or if Congress declines to appropriate funds for the decontamination of the lands, the Secretary of the Interior shall not be re­quired to accept the lands proposed for re­linquishment.

<c> If, because of their contaminated state, the Secretary of the Interior declines to accept jurisdiction over the lands proposed for relinquishment, the withdrawal and res­ervation established by this Act shall con­tinue indefinitely and the lands shall be re­tained and managed in accordance with the provisions of this Act. In such case, begin­ning with the fifth anniversary of the termi­nation date of the withdrawal and reserva­tion established by this Act, and every 5 years thereafter, the Secretary, in coordina­tion with the Secretary of the Interior, shall determine whether decontamination of any or all of the lands is both practicable and If the Secretaries conclude that decontamina­tion is both practicable and economically feasible, taking into consideration the po­tential future use and value of the lands, and that upon decontamination the lands could be opened to operation of the public land laws, including the mining laws, the Secretary shall decontaminate the land, unless Congress declines to appropriate funds for the project. Following decontami­nation and upon certification by the Secre­tary that the lands are safe for all nonmili­tary uses, the Secretary of the Interior shall reconsider accepting jurisdiction over the lands.

Cd> Notwithstanding any other provisions of law, the Secretary of the Interior, upon­deciding that it is in the public interest to accept jursidcition over the lands proposed for relinquishment, is authorized to revoke the withdrawal and reservation established by this Act, as it applies to the lands pro­posed for relinquishment. Should the deci­sion be made to revoke the withdrawal, the Secretary of the Interior shall publish in the Federal Register an appropriate order which shall terminate the withdrawal and reservation; constitute official acceptance of full jurisdiction over the lands by the Secre­tary of the Interior; and state the date upon which the lands will be opened to the oper­ation of the public land laws, including the mining laws.

SEC. 8. (a) The functions of the Secretary under this Act may be delegated.

Cb> The functions of the Secretary of the Interior under this Act may be delegated, except that the order referred to in Section

7(d) of this Act, may be approved and signed only by the Secretary of the Interior, the Under Secretary of the Interior, or an as­sistant Secretary of the Department of the Interior.

By Mr. WILSON (for himself and Mr. CRANSTON):

S. 2159. A bill to designate the Big Sur National Forest Scenic Area; to the Committee on Energy and Natural Resources.

BIG SUR NATIONAL FOREST SCENIC AREA ACT

Mr. WILSON. Mr. President, I am today introducing a bill aimed at achieving preservation of one of Amer­ica's most important land treasures. This bill creates a new 140,000-acre National Forest Scenic Area and places under its protection one of the most breath-taking and awe-inspiring land forms of the entire United States-the Big Sur coast of Calif or­nia.

Enjoyed by over 3 million visitors a year, the Big Sur is certainly one of the most spectacular meetings of land and sea anywhere. Its majestic cliffs and pounding surf have been captured in thousands of photographs, most no­tably by the magical lens of the late Ansel Adams.

In fact, the protection and preserva­tion of Big Sur was one of Ansel Adams' most fervently held life-long goals. Although he is no longer with us, I am certain that he would heartily endorse the legislation I am introduc­ing today.

This bill centers upon and is geared to the action of local and State offi­cials-members of the Monterey County Board of Supervisors and the California Coastal Commission-who are charged by State law with respon­sibility for adoption of the plan gov­erning land use within the Big Sur area.

Responsible local stewardship of this precious and vulnerable national treas­ure is not new to Monterey County. Dating back to the 1930's, the county has a proud history of protecting Big Sur from inappropriate development. The land use plan adopted by the county board last November repre­sents the culmination of years of ex­tensive planning, exhaustive hearings and carefully crafted compromise.

It is a plan that has been widely praised as fairly permitting appropri­ate development compatible with es­sential protection of the scenic beauty of Big Sur. This plan-once approved by the State coastal commission as the Local Coastal Program for the county-is the legal blueprint govern­ing what can and cannot be done in Big Sur. The fairness, thoroughness and care exercised by these thoughtful and far-sighted Monterey County offi­cials has produced a document which provides the protection essential to safeguard Big Sur against California's

4054 CONGRESSIONAL RECORD-SENATE March 7, 1986 virtually certain future of continued, unrelenting population growth.

It is a plan reflecting God's plan, and local commitment to preserve the unique beauty which our Creator lav­ished on this special place. As pres­sures inevitably grow to develop Cali­fornia's coastal areas, their careful plan deserves more than cur thanks: it must be honored in its observance, rather than its breach.

I congratulate the county board for its high achievement and in grateful response propose that we confer upon the abutting Federal lands in Big Sur the protection which the county has so wisely given to the private lands.

Well over half of the 140,000 acres in Big Sur is part of the Los Padres Na­tional Forest. This bill withdraws these Federal lands from, mining­subject to valid existing claims-com­mercial timber harvest, oil and gas de­velopment, geothermal development, hydroelectric development of the area's rivers and streams, the opening of new grazing areas-although exist­ing grazing uses of the Federal lands will be allowed to continue-and au­thorizes the Forest Service to control off-road recreational vehicle use and access.

Additionally, this bill would prohibit oil and gas development in the Big Sur coastal waters 20 miles out to sea. This prohibition is intended to preserve the visual esthetics of the coast as well as to protect the area from the onshore impact of offshore oil and gas produc­tion. Permanent protection of the Big Sur coastal water is a necessary com­plement to permanent protection of this uniquely beautiful land area. This special need is explicitly recognized in Secretary Hodel's announced intention to exclude Big Sur waters from Outer Continental Shelf development.

Finally, the bill gives aid to the county in its implementation of the local coastal plan. It authorizes cre­ation of the Big Sur coast trust fund, a charitable nonprofit fund designed to encourage, accept, and administer gifts for the protection and preservation of Big Sur. The Secretary is authorized by this bill to expend moneys from the trust fund to acquire lands within the boundaries of the scenic area from the owners wishing to sell.

Acquisition of privately held proper­ties is contemplated where a landown­er would be entitled under State law to compensation or where a sale or ex­change is agreed upon by the Secre­tary and the owner. The Secretary is granted limited powers of eminent domain, to be exercised only to pre­vent development threatening viola­tion of the local coastal plan.

The language for this trigger mecha­nism was modeled after similar au­thority given the Secretary of Interior to administer the Cape Cod National Seashore and the Fire Island National Seashore. Any lands acquired by the

Secretary would be conveyed, with deed restrictions, to the county to be held and administered in accordance with the local coastal plan.

The bill creates a nine-member board to be appointed by the Secre­tary of Agriculture to assist him in raising moneys for the Big Sur Coast trust fund. This board is patterned after the success! ul Statue of Liberty I Ellis Island Foundation. In this time of severe Federal budget constraints, the bill authorizes only $500,000 of public funds as seed money to get the board started on a fund raising cam­paign for the Big Sur coast trust fund.

The purpose of this bill is to protect for future generations the unparal­leled scenic vistas of the Big Sur coast. By securing the provisions of the local coastal program, this legislation will accomplish this purpose. Scenic area status has been conferred only once before by Congress, 2 years ago, for another national treasure in Califor­nia-Mono Lake.

Big Sur deserves the same special recognition and protection. I urge my colleagues to join with me in moving this bill to a prompt enactment.

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. 2159 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled,

SECTION 1. This Act may be cited as the "Big Sur National Forest Scenic Area Act".

SEC. 2. The Congress finds and declares that-

< a> the Big Sur coast is a unique national treasure that represents the most spectacu­lar meeting of underveloped land and sea in the coterminous United States; and

Cb) over three million visitors annually travel California State Highway Route Numbered 1 along the Big Sur Coast to view the unparalleled scenic vistas available along the seventy mile stretch of coast; and

<c> the unique beauty of the Big Sur coast is enhanced by the unobstructed view of the Pacific Ocean and its horizon; and

Cd) the exif.ting character of the Big Sur Coast and the existing rural communities which have contributed to the maintenance of the natural environment should be pro­tected and preserved; and

Ce) the State of California and its local units of government have authority to pre­vent or minimize adverse uses of the Big Sur coast and adjacent inland areas and can, to a great extent, protect the health, safety, and general welfare by the use of such au­thority and have done so in the adoption of Big Sur Coast Land Use Plan (dated Novem­ber 5, 1985); and

(f) in addition to the land·use controls ref· erence in the preceding paragraph, effective protection of the existing character of the Big Sur coast and of the nationally signifi~ cant natural and scenic resources, and en­joyment of these resources, can be accom­plished by appropriate management of Fed­eral lands and interests in the Big Sur coast area.

SEc. 3. The purposes of this Act are-<a> to protect, preserve, and enhance the

unique and significant natural resources and scenic qualities of the Big Sur coast, in­cluding, but not limited to, sensitive habi­tats and habitat for rare and endangered species, redwood canyons, beaches, fresh and marine waters, and the view from Cali­fornia State Highway Route Numbered 1, the Old Coast Road, and other significant public vista points; and

Cb> to provide for and manage public use and enjoyment of the area in a manner con­sistent with natural resource protection and maintenance of the existing rural landscape; and

<c> to define the Federal role in the man­agement of the Big Sur coast in a manner which maximizes coordination with the State and local units of government and pri­vate landowners, utilizes existing levels of jurisdiction and establishes appropriate gov­ernmental coordination and authority where necessary to accomplish the purposes of this Act.

SEC. 4. The Big Sur coastal area within and adjacent to the Los Padres National Forest in the State of California is hereby designated as the Big Sur National Forest Scenic Area <hereafter in this Act referred to as the "Scenic Area") as depicted on a map entitled "'Big Sur National Forest Scenic Area" number --- and dated March --, 1986. Such map shall be on file and available for public inspection in the office of the Forest Supervisor, Los Padres National Forest and in the Office of the Chief of the Forest Service, Department of Agriculture. The Secretary of Agriculture <hereinafter in this Act referred to as the "Secretary" ) may make minor revisions in the boundary of the Scenic Area after publi­cation of notice to that effect in the Federal Register and submission of notice thereof to the Committee on Energy and Natural Re­sources of the United States Senate and the Committee on Interior and Insular Affairs of the United States House of Representa­tives. Such notice shall be published and submitted at least sixty days before the revi­sion is made.

SEc. 5. <a> The Secretary, acting through the Chief of the Forest Service, shall admin­ister all Federal lands located in the Scenic Area as a separate unit within the boundary of the Los Padres National Forest in accord­ance with the laws, rules, and regulations applicable to the National Forest System, except as hereinafter provided.

Cb) Subject to the provisions of subsection Ch> of this section, the Secretary shall pro­vide for recreational use of all Federal lands within the Scenic Area and shall provide recreational and interpretive facilities <in­cluding trails and campgrounds) for the use of the public which are compatible with the purposes of this Act, and may assist adja­cent affected local governmental agencies in the development of related interpretive pro­grams. The Secretary shall permit the full use of the Scenic Area for scientific study and research study and research in accord­ance with such rules and regulations as he may prescribe.

Cc> The Secretary shall promulgate such rules and regulations as necessary regarding the use of motorized equipment for recre­ational purposes for the protection of the motorized equipment for recreational pur­poses for the protection of the Scenic Area's natural and cultural resources, Provided; ex­isting motorized recreational uses, as of the date of enactment of this Act, shall be per-

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4055 mitted at the levels and locations customari­ly exercised.

(d) Except as specifically provided in this subsection, no commercial timber harvest­ing shall be permitted on Federal lands within the Scenic Area, but the Secretary shall permit the utilization of wood material such as firewood, posts, poles, and Christ­mas trees by individuals for their domestic purposes under such regulations as he may prescribe to protect the scenic, natural and cultural resources of the Scenic Area. The Secretary may take action including the use of commercial timber harvest to the mini­mum extent necessary to control fires , in­sects and diseases that might < 1) endanger irreplaceable features within the Scenic Area, or (2) cause substantial damage to sig­nificant resources adjacent to the Scenic Area.

<e> The Secretary shall permit grazing on Federal lands within the boundary of the Scenic Area on such lands as currently under permit, consistent with other applica­ble law.

(f)(l) Subject to valid existing rights, fed­erally owned lands and interests therein within the Scenic Area are withdrawn from entry or appropriation under the mining laws of the United States, from the oper­ation of the mineral leasing laws of the United States, and from operation of the Geothermal Steam Act of 1970.

<2> Subject to valid existing rights, all valid mining claims located on Federal lands within the Scenic Area shall be subject to such reasonable regulations as the Secre­tary may prescribe to assure that mining will, to the maximum extent practicable, be consistent with protection of the scenic, sci­entific, cultural and other resources of the Scenic Area, and any patent which may be issued after the date of enactment of this Act shall convey title only to the minerals together with the rights to use the surface of lands for mining purposes subject to such reasonable regulations.

(g) The Secretary shall permit hunting and fishing on federal lands and waters within the Scenic Area in accordance with applicable Federal and State law, except that the Secretary may designate zones within the Scenic Area where, and establish periods when, no hunting or fishing shall be permitted for reasons of public health and safety, the protection of resources, or public use and enjoyment.

Ch) The lands within the Scenic Area des­ignated as the Ventana Wilderness Area by Public Law 91-58 and Public Law 98-425 shall be administered in accordance with the provisions of the Wilderness Act <78 Stat. 890).

m Within three years after the date of en­actment of this Act, the Secretary shall submit to the committees referred to in sec­tion 4<b> a detailed and comprehensive man­agement plan for the Scenic Area. The plan shall include but not be limited to-

( 1) indications of types, locations, and gen­eral intensities of development and access routes associated with the public under­standing, use, and enjoyment of the Scenic Area; and

<2> identification of, and implementation plans for, visitor carrying capacities of the Scenic Area; and

(3) identification of, and implementation plans for protection of, natural, historic, and culture resources in the Scenic Area; and

(4) implementation plans for providing public information on and interpretation of the Scenic Area, including a program to

educate the public about the appropriate uses of the area; and

(5) implementation plans for protection of the historic agriculture uses of existing agri­culture lands.

SEC. 6. <a> There is hereby established the Scenic Area Advisory Board <hereinafter re­f erred to as the "Board" ). The Secretary shall consult with and seek the advice and recommendations of the Board with respect to-

< 1 > the administration of the Scenic Area with respect to policies, programs, and ac­tivities in accordance with this Act; and

(2) the preparation and implementation of the comprehensive management plan; and

<3> the acquisition of lands and interests therein pursuant to the provisions of this Act.

<b> The Board shall be composed of nine members appointed by the Secretary as fol­lows:

< 1 > one representative of the United States Forest Service;

<2> one representative from the California Resources Agency, appointed from among individuals recommended by the Governor of California;

<3> one representative from the California Coastal Commission appointed from among individuals recommended by the Chairman of the California Coastal Commission;

(4) three representatives appointed from among individuals recommended by the Monterey County Board of Supervisors;

<5> one representative appointed from among individuals recommended by the San Luis Obispo County Board of Supervisors;

<6> one representative who resides in the Scenic Area; and

<7> one representative at large from the State of California.

<c> The terms of the representatives serv­ing on the Board shall be for three years, except that the initial terms for the repre­sentatives shall be established by the nomi­nating authority in accordance with the fol­lowing:

< 1 > One of the representatives nominated by the Monterey County Board of Supervi­sors shall serve for a term of two years, and two of such representatives shall serve for terms of three years.

<2> The representative nominated by the San Luis Obispo County Board of Supervi­sors shall serve for a term of three years;

<3> One representative nominated by the Governor of the State of California shall serve for a term of two years and one shall serve for a term of three years;

<4> Two representatives nominated by the Secretary shall serve for a term of two years and one shall serve for a term of three years.

<d> The members of the Board shall be ap­pointed within ninety days of the date of enactment of this Act. The representative of the United States Forest Service shall serve as Chairman of the Board.

< e > The Secretary, or a designee, shall from time to time, but at least annually, meet and consult with the Board on matters relating to the administration of the Scenic Area. To the maximum extent practicable, all meetings of the Board shall take place within the Scenic Area.

(f) Members of the Board shall serve with­out compensation as such, but the Secretary is authorized to pay, upon vouchers signed by the Chairman, the expenses reasonably incurred by the Board and its members in carrying out their duties under this Act.

(g) Any vacancy in the Board shall be filled in the same manner in which the original appointment was made.

<h> A majority of those members appoint­ed shall constitute a quorum for the con­duct of all business of the Board.

SEc. 7. <a> The Secretary is hereby author­ized to acquire all lands and interests there­in within the boundary of the Scenic Area by donation, exchange, or purchase with do­nated funds obtained pursuant to the provi­sions of this Act, except that any lands or interests therein owned by the State of Cali­fornia or any political subdivision thereof may be acquired only by donation or ex­change.

(b) lands or interests therein within the boundary of the Scenic Area which are not owned by the State of California or any po­litical subdivision thereof may be acquired only with the consent of the owner thereof or by condemnation, subject to the provi­sions of subsection <c>.

<c><l> The Secretary's authority to acquire property by condemnation shall be suspend­ed with respect to all non-Federal property within the Scenic Area during all times when the State of California or any political subdivision thereof <including the County of Monterey) shall have in force and applica­ble to such property a duly adopted, valid land use plan which the Secretary deter­mines to be consistent with the purposes of this Act <hereinafter referred to in this Act as Plan>: Provided, That the Big Sur Coast Land Use Plan, as approved by the Califor­nia Coastal Commission on January 9, 1986, shall be considered to be such a Plan con­sistent with the purposes of this Act; Pro­vided however, That such suspension shall not apply-

<A> to any lands which become subject of a variance under, or become for any reason an exception to, such Plan; or

<B> any lands which are specifically identi­fied by the County of Monterey in writing to the Secretary requesting the Secretary to acquire such land; or

<C> in the event that a change in the Plan is determined by the Secretary to be incon­sistent with the Plan. In the event of such determination, lands or interests therein within the boundary of the Scenic Area which are not owned by the State of Cali­fornia or any political subdivision thereof may be acquired without the consent of the owner if the Secretary determines, after written notice to the owner and after oppor­tunity for comment, that the property is being developed, or proposed to be devel­oped, in a manner which is inconsistent with the Plan.

<2> In order to carry out the provisions of this subsection, the Secretary shall issue regulations, which may be amended from time to time, specifying standards by which the Secretary shall determine what changes in the Plan will be considered to be incon­sistent with the purposes of this Act. The standards specified in such regulations shall have the object of preserving the scenic, natural and cultural resources of the Scenic Area, including the critical viewshed as de­fined in the Plan.

<d> The owner of any property on the date of its acquisition, as a condition of such ac­quisition, may retain for herself or himself, her or his heirs and assigns, a right of use and occupancy of the improved property for noncommercial residential or agriculture purposes, as the case may be, for a definite term of note more than twenty-five years, or, in lieu thereof, for a term ending at the death of the owner or the death of her or his spouse, whichever is later. The owner shall elect the term to be reserved. Unless the property is wholly or partially donated,

4056 CONGRESSIONAL RECORD-SENATE March 7, 1986 the Secretary shall pay to the owner the fair market value of the property on the date of acquisition, less the fair market value on that date of the right retained by the owner. A right retained by the owner pursuant to this section shall be subject to termination by the Secretary upon his de­termination that it is being exercised in a manner inconsistent with the purposes of this section, and it shall terminate by oper­ation of law upon notification by the Secre­tary to the holder of the right of such deter­mination and tendering to him the amount equal to the fair market value of that por­tion which remains unexpired.

(e) In exercising his authority to acquire property by exchange, the Secretary may accept title to any non-Federal property, or any interest therein, located within the Scenic Area, and in exchange for such prop­erty or interest, may convey to the grantor any federally owned property under the ju­risdiction of the Secretary within the State of California which the Secretary classifies as suitable for exchange or disposal. The values of the properties so exchanged shall be equal, or, if not equal, shall be equalized by the payment of cash to the grantor or to the United States, as the circumstances re­quire. In the exercise of the authority to ex­change property, the Secretary may utilize authorities and procedures generally avail­able to him in connection with the ex­change of lands.

(f) The Secretary shall give priority to the acquisition of lands and interests therein within the boundary of the Scenic Area on the basis of-

< 1) Any offer made by an individual owning property within the Scenic Area to sell such property, if such property is locat­ed within the critical viewshed as defined in the Plan; and

(2) Any offer made by an individual owning property within the Scenic Area to sell such property, if such individual noti­fies the Secretary that the continued owner­ship of such property is causing, or would result in, undue hardship.

SEc. 8. During all times that a Plan is in effect, the Secretary shall convey without consideration all lands acquired within the boundaries of the Scenic Area, but outside of the Los Padres National Forest boundary, to the County of Monterey unless the Secre­tary determines that these lands can more efficiently be managed by the Los Padres National Forest. Any such conveyances shall remain in public ownership and shall be subject to such terms and restrictions as the Secretary deems necessary to be consist­ent with the purposes of this Act, and shall retain an appropriate reversionary interest in the event that the property, in the judg­ment of the Secretary, is threatened with development, or is being developed, in a manner inconsistent with the Plan.

SEc. 9. (a) There is established the Big Sur Coast Trust <hereinafter in this Act referred to as the "Trust" ). The Trust is a charitable and nonprofit corporation and is not an agency or establishment of the United States.

(b) The purposes of the Trust are to en­courage, accept, and administer private gifts of real and personal property or any income therefrom or other interest therein for the purpose of acquiring lands or interests therein within the boundaries of the Big Sur National Forest Scenic Area pursuant to the provisions of this Act.

(c) The Trust shall have a governing Board of Directors <hereinafter referred to in this Act as the "Board" ) which shall con-

sist of nine Directors, each of whom shall be a United States citizen. The Chief of the Forest Service shall be an ex officio nonvot­ing member of the Board. Appointment to the Board shall not constitute employment for the purposes of any Federal law.

(d) Within one year of enactment of this Act, the Secretary shall appoint the Direc­tors of the Board. The Directors shall be ap­pointed for terms of six years; except that the Secretary, in making the initial appoint­ments to the Board, shall appoint three Di­rectors to a term of two years, three Direc­tors to a term of four years, and three Di­rectors to a term of six years. A vacancy on the Board shall be filled within sixty days of said vacancy in the manner in which the original appointment was made.

(e) The Chairman shall be elected by the Board from its members for a two year term.

(f) A majority of the current membership of the Board shall constitute a quorum for the transaction of business.

(g) The Board shall meet at the call of the Chairman at least once a year. If a Director misses three consecutive regularly sched­uled meetings, that individual may be re­moved from the Board and that vacancy filled in accordance with subsection (d).

<h) Members of the Board shall serve without pay, but may be reimbursed from the resources of the Trust for the actual and necessary traveling and subsistence ex­penses incurred by them in the performance of the duties of the Trust.

<D The Board may complete the organiza­tion of the Trust by-

< 1) appointing officers and employees; <2) adopting by-laws, rules and regulations

consistent with the purposes of the Trust and the provisions of this Act;

(3) undertaking of other such acts as may be necessary to carry out the provisions of this Act.

(j) Officers and employees may not be ap­pointed until the Trust has sufficient funds to pay them for their service. Officers and employees of the Trust shall be appointed without regard to the provisions of title 5, United States Code, governing appoint­ments in the competitive service, and may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates, except that no individuals so appointed may receive pay in excess of the annual rate of basic pay in effect for grade GS-18 of the General Schedule.

<k) The Secretary may provide personnel, facilities, and other administrative services to the Trust, including reimbursement of expenses under subsection (h), not to exceed then current Federal Government per diem rates, for a period of up to five years from the date of enactment of this Act, and may accept reimbursement there­for, to be deposited in the Treasury to the credit of the appropriations then current and chargeable for the cost of providing such services.

(1) The Secretary may accept, without regard to the civil service classification laws, rules, or regulations, the services of the Trust, the Board, and the officers and em­ployees of the Board, without compensation from the Department of Agriculture, as vol­unteers in the performance of the functions authorized herein.

(m) The rights and responsibilities of the Trust shall be as follows-

(!) The Trust shall have perpetual succes­sion.

(2) The Trust may conduct business throughout the several States, territories, and possessions of the United States.

(3) The Trust shall have, in addition to the powers otherwise given it under this Act, the usual powers of a corporation acting as a trustee, including the power-

(A) to accept, receive, solicit, hold, admin­ister and use any gift, devise, or bequest, either absolutely or in trust, of real or per­sonal property or any income therefrom or other interest therein;

(B) to acquire by purchase or exchange any real or personal property or interest therein;

<C) unless otherwise required by the in­strument of transfer, to sell, donate, lease, invest, reinvest, retain or otherwise dispose of any property or income therefrom;

<D) to borrow money and issue bonds, de­bentures, or other debt instruments;

(E) to sue and be sued, and complain and defend itself in any court of competent ju­risdiction, except that the Directors of the Board shall not be personally liable, except for gross negligence;

(F) to enter into contracts or other ar­rangements with public agencies and private organizations and persons and to make such payments as may be necessary to carry out its function.

(n) The Trust shall, as soon as practicable after the end of each fiscal year, transmit to Congress an annual report of its proceed­ings and activities, including a full and com­plete statement of its receipts, expenditures, and investments.

< o) As soon as may be practicable after the enactment of this Act, the Secretary shall enter into a Memorandum of Agreement with the Trust <hereinafter in this Act re­ferred to as the "MOA" ). The MOA shall serve to define the relationship between the Trust and the Secretary, and shall include the following provisions-

< 1) Subject to requirements for the daily operation of the Trust, the Trust shall convey to the Secretary all funds, materials and services for land acquisition by the Sec­retary in the Big Sur National Forest Scenic Area pursuant to provisions of this Act. The Secretary, or his designee, shall have sole and exclusive authority over the expendi­ture of all funds raised and made available to him by the Trust, Provided, that in the Secretary's discretion to use funds from the Trust, any encurnberances on any donation to the Trust shall be recognized by the Sec­retary.

(2) The Trust shall convey title to the Sec­retary upon receipt of all donations of land and interests therein received by the Trust.

(p) The Trust and any income or property or interest therein received or owned by it, and all transactions relating to such income or property, shall be exempt from all Feder­al, State, and local taxation with respect thereto. Contributions, gifts, and other transfers made to or for the use of the Trust shall be regarded as contributions, gifts, or transfers to or for the use of the United States.

(q) The United States shall not be liable for any debts, defaults, acts, or omissions of the Trust.

<r) There is hereby authorized to be ap­propriated to the Secretary not more than $500,000 for the establishment of the Trust.

SEC. 10. <a) Submerged lands of the Cali­fornia Outer Continental Shelf described in subsection (b) are hereby withdrawn from oil and gas leasing and development.

(b) Lands to which this section shall apply are within an area of the Department of the

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4057 Interior Central California Planning Area bounded by the following line on the Cali­fornia <Lambert> Plane Coordinate System: From the point of intersection of the line between the row of blocks numbered N 825 and N 826 and the seaward boundary of the California State Tidelands west along said line to the point of intersection with the line between the row of blocks numbered E 122 and E 123; thence northwest to the point of intersection with the line between N 837 and N 838 and the line between the row of blocks numbered E 112 and E 113; thence north to the point of intersection with the line between the row of blocks numbered N 845 and N 846 and the line be­tween the row of blocks numbered E 111 and E 112; thence east along the line be­tween the row of blocks numberd N 845 and N 846 to the point of intersection with the seaward boundary of the California State Tidelands; thence southerly along the sea­ward boundary of the California State Tide­lands to the point of beginning.

By Mr. THURMOND <for him­self, Mr. LAXALT, Mr. HATCH, Mr. EAST, Mr. McCONNELL, and Mr. MURKOWSKI) (by request):

S. 2160. A bill to clarify and improve the analysis of mergers under the anti­trust laws; to the Committee on the Judiciary.

S. 2161. A bill to provide alternative relief for industries adjusting to in­creased imports; referred to the Com­mittee on the Judiciary, upon being re­ported by the Committee on the Judi­ciary, to the Committee on Finance for consideration of the bill and any amendments proposed by the Commit­tee on the Judiciary; and that any amendments thereto reported by the Committee on Finance shall be in order.

S. 2162. A bill to promote and im­prove efficient and effective enforce­ment of the antitrust; to the Commit­tee on the Judiciary.

S. 2163. A bill to make necessary and appropriate amendments to the anti­trust laws governing service as a direc­tor of competing corporations; to the Committee on the Judiciary.

S. 2164. A bill to amend the Sher­man and Clayton Acts to improve and clarify the application of such Acts to international commerce; to the Com­mittee on the Judiciary.

REFORM OF ANTITRUST LAWS AND PROCEDURES Mr. THURMOND. Mr. President,

from time to time in the evolution of our commerce and economy, it be­comes appropriate to adjust our laws and policies governing competition so that competition is enhanced, not im­peded. In my view, this is one of those periods in which certain adjustments are warranted. For some time, for ex­ample, I have favored a sensible and equitable reform of the system of pri­vate antitrust remedies.

Mr. President, today I am pleased to introduce, at the request of the admin­istration, five bills constituting a thoughtful and comprehensive propos­al for reforming various antitrust laws and procedures. I am joined in intro-

ducing these bills by Senators LAxALT, HATCH, EAST, McCONNELL, and MUR­KOWSKI. I understand that there may be a number of Senators who will want to sponsor and support some, if not all, of the bills in this package.

Mr. President, these proposals are the products of a long-year review of the current state of this Nation's com­petition policy and of the effects of several antitrust laws on the competi­tive position of American industries in the world marketplace. That review has been accomplished through a working group formed by the Domes­tic Policy Council and the Economic Policy Council of the Cabinet. After considering and debating a large number of problems and developments in antitrust enforcement, the Cabinet councils selected the provisions con­tained in these five bills for legislative action. These proposals were adopted by the Cabinet councils, approved by the President and offered on behalf of the President by the Attorney General and the Secretary of Commerce.

Mr. President, I would like to de­scribe these bills very briefly. These bills propose revisions in five areas of antitrust enforcement and trade regu­lation: antitrust remedies; merger law standards; foreign trade and import competition; extraterritoral applica­tion of U.S. antitrust law; and inter­locking directorates. With each bill, the administration has provided ana­lytical comments that explain the pur­poses and effects of the proposals, and because of the importance of this initi­ative I ask unanimous consent that those comments be printed in the RECORD with the bills I am introduc­ing.

Because these bills affect the anti­trust laws, Mr. President, they will be considered by the Judiciary Commit­tee. Under an agreement between the chairman of the Finance Committee and myself, one of the bills will be re­f erred sequentially to the Judiciary and Finance Committees since it would amend the Trade Act of 1974 as well as antitrust law. As chairman of the Judiciary Committee, I will begin hearings on these significant proposals very soon, and I look forward to work­ing with the administration to achieve antitrust reform that will benefit con­sumers.

There being no objection, the bill and amendments were ordered to be printed in the RECORD, as follows:

s. 2160 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Merger Moderniza­tion Act of 1986".

SEc. 2. Section 7 of the Clayton Act ( 15 U.S.C. 18> is amended by-

(a) in the first paragraph-(!) striking out "the effect of" and insert­

ing in lieu thereof " there is a significant probability that";

(2) striking out "may be" and inserting in lieu thereof "will"; and

(3) striking out " to lessen competition, or to tend to create a monopoly" and inserting in lieu thereof "increase the ability to exer­cise market power";

Cb> in the second paragraph-(!) striking out " the effect of" and insert­

ing in lieu thereof "there is a significant probability that";

(2) striking out "may be" and inserting in lieu thereof "will"; and

(3) striking out " to lessen competition, or to tend to create a monopoly" and inserting in lieu thereof "increase the ability to exer­cise market power"; and

Cc> in the third paragraph-(!> striking out " the substantial lessening

of competition" in the first sentence and in­serting in lieu thereof "a substantial in­crease in the ability to exercise market power"; and

(2) striking ouit " lessen competition" in the second sentence and inserting in lieu thereof " increase the ability to exercise market power"; and

(d) inserting immediately after the third paragraph the following new paragraph:

"For purposes of this section, the ability to exercise market power is defined as the ability of one or more firms profitably to maintain prices above competitive levels for a significant period of time. In determining whether there is a significant probability that any acquisition will substantially in­crease the ability to exercise market power, the court shall duly consider all economic factors relevant to the effect of the acquisi­tion in the affected markets, including (i) the number and size distribution of firms and the effect of the acquisition thereon; (ii) ease or difficulty of entry by foreign or domestic firms; (iii) the ability of smaller firms in the market to increase production in response to an attempt to exercise market power; <iv> the nature of the prod­uct and terms of sale; <v> conduct of firms in the market; <vD efficiencies deriving from the acquisition; and <vii> any other evidence indicating whether the acquisition will or will not substantially increase the ability, unilaterally or collectively, to exercise market power.".

MERGER MODERNIZATION ACT OF 1986-ANALYSIS

It is widely recognized that mergers, in general, have important procompetitive and efficiency-enhancing effects. On occasion, however, particular mergers can be anticom­petitive. While such mergers should be pre­vented before they occur, it is extremely im­portant that the effort to interdict anticom­petitive mergers not interfere with the abili­ty of American firms freely to reorganize through mergers and acquisitions that en­hance productivity, innovation, and world­wide competitiveness. Inappropriate re­straints on ~fficiency-enhancing mergers impose heavy costs on society. Businesses and consumers suffer alike when companies are unable to combine to better meet com­petitive challenges, both foreign and domes­tic.

Today, United States industries face in­creasing competition from their foreign counterparts. If American firms are to com­pete vigorously in world markets, they must be free to restructure their operations to take advantage of opportunities to increase their efficiency and respond to changing market conditions and technology. Thus, it is vital that merger law today be as clear as

4058 CONGRESSIONAL RECORD-SENATE March 7, 1986 possible in distinguishing procompetitive from anticompetitive mergers.

As our understanding of the economics of free markets grows, it sometimes becomes necessary to fine-tune the antitrust laws to ensure that they remain properly focused on enhancing competition. Thus, for exam­ple, the Foreign Trade Antitrust Improve­ments Act of 1982 clarified the application of the antitrust laws to export commerce and the National Cooperative Research Act of 1984 guaranteed the application of the antitrust rule-of-reason standard to the analysis of competition-enhancing research and development joint ventures.

In the more than 70 years since section 7 of the Clayton Act was enacted in 1914, the body of economic learning upon which anti­trust enforcement policy and judicial doc­trine regarding mergers is based has changed substantially. The uncertainty sur­rounding merger analysis in 1914, and even in 1950 when section 7 was last revised sub­stantially, can be seen in the vague wording of section 7 itself, which prohibits mergers the effect of which "may be substantially to lessen competition, or to tend to create a monopoly." Up through the late 1960s, courts lacked a sophisticated analytical framework for merger analysis. They there­fore relied primarily on the size of merging firms and crude measures of concentration in the affected markets to gauge the com­petitive effects of mergers, giving little, if any, consideration to equally relevant fac­tors.

Modern merger analysis, exemplified by the 1984 Department of Justice Merger Guidelines, is more refined and takes into full consideration foreign competition, entry conditions, and efficiencies. This more re­fined analysis is increasingly being adopted by the federal courts in Clayton Act § 7 cases.

Unfortunately, refining and modernizing outdated merger standards and analysis through the issuance of enforcement guide­lines and case-by-case adjudication is slow and can result in an inconsistent body of case law. Efforts to establish a modern and consistent merger standard are complicated by the fact that the current language of sec­tion 7 carries the baggage of decades of in­consistent and economically unsophisticated merger analysis. Both Congress and the Su­preme Court have construed this language to mean that before a merger may be con­demned, a reasonable probability or reason­able likelihood that it will substantially lessen competition must be shown. Notwith­standing this construction, however, and ex­plicit acknowledgment that section 7 is not concerned with ephemeral possibilities, sec­tion 7 has been applied in the past in an overly restrictive manner that is patently inconsistent with proper merger enforce­ment policy. In consequence, the confusion surrounding the existing language in section 7 is slowing the pace at which the modern­ization of merger analysis under the anti­trust laws can proceed.

In an economy facing ever-increasing com­petitive pressures from foreign firms, unnec­essary delay in the modernization of merger analysis should not be countenanced. Revis­ing the language of section 7 to incorporate the advances in merger learning that have been made during the last 20 years will pro­vide a new, state-of-the-art foundation upon which future refinement and improvements can be built, while at the same time finally laying to rest outmoded economic and legal analysis of mergers that can be found in older court decisions. This is the purpose of the Merger Modernization Act of 1986.

The Merger Modernization Act ("the Act") achieves its goals in three basic ways. First, the Act amends the first two para­graphs of section 7 to state more precisely the degree of certainty regarding anticom­petitive effects that is legally required to prohibit a merger. The Act replaces the "may be" and "tend to" language in section 7 with the requirement that there be a "sig­nificant probability" that a merger will be harmful before it will be prohibited. This new standard more accurately reflects cur­rent case law and enforcement policy inter­preting section 7. In particular, it makes clear that section 7 is not intended to pro­hibit mergers on the mere possibility, rather than the significant probability, that anti­competitive effects will follow.

Second, the Act makes clear that section 7 is directed against mergers that threaten to increase consumer prices. Specifically, it re­places the existing "lessen competition" or "create a monopoly" language with a more precisely defined standard that is in keeping with modern economic analysis, namely, that anticompetitive mergers are those that "substantially increase the ability to exer­cise market power." Market power is de­fined in the Act as "the ability of one or more firms profitably to maintain prices above competitive levels for a significant period of time." The Act thus affirms that section 7 is intended to preserve competi­tion, rather than competitors per se. It does so by focusing merger analysis on the in­creased ability of firms to raise prices to consumers as a consequence of a merger and away from the mere fact that one or more firms will be eliminated from the market by acquisition. While this principle is increas­ingly accepted by courts interpreting section 7, the new language is clearer and less likely to be misapplied.

Third, the Act establishes a sound frame­work for determining the likely effects of mergers by clearly directing courts to con­sider the important economic factors that bear on that analysis. It thus assures that no one factor will be determinative of a merger's legality, to the exclusion of other probative economic evidence.

Whether a proposed merger will give rise to an increased ability to exercise market power within clearly defined product and geographic markets is the central issue under section 7. Section 7 has always re­quired and will continue to require that the anticompetitive effects of a merger of acqui­sition be evaluated " in any line of commerce ... in any section of the country." Thus, the first step in any merger analysis is to de­termine relevant product and geographic markets, because it is only within the con­fines of meaningful economic markets that the competitive effects of a proposed merger can be accurately evaluated.

In order to define relevant markets, it is necessary to evaluate the probable future responses of both purchasers and foreign and domestic producers to an attempt to ex­ercise market power. Market power is the ability profitably to institute and sustain a price increase above the competitive level. The availability of close substitutes for the product in question and the ability of other firms to enter into or expand production are the major constraints on market power. Thus a market can be defined as a product or group of products and a geographic area such that a profit-maximizing firm that was the only seller of those products in the area would impose a significant and nontransi­tory price increase above prevailing or likely future levels. Relevant markets can only be

determined in the context of specific merg­ers, but accuracy in their definition is cru­cial.

Once the relevant market <or markets) has been correctly defined, it is possible to evaluate the probable effect of a merger on the ability of one or more firms in the market profitably to maintain prices above competitive levels. The Act identifies six specific factors that courts should consider in assessing that effect. It also directs the courts to consider any other relevant evi­dence.

The first of the six factors is "the number and size distribution of firms and the effect of the acquisition thereon." The more con­centrated the market, the greater is the likelihood that one dominant firm, or two or more firms acting collectively, could exer­cise market power. The greater the percent­age of the market supplied by a dominant firm, the easier it would be for that firm profitably to restrict output sufficiently to effect a price increase. Where collective action is needed to restrict output and raise prices, the costs of achieving and maintain­ing such action will be less, and the chances for success greater, the smaller the number of firms that must cooperate to do so. Of course, it is not the number of firms in the market alone that must be considered. The relative size of the firms in the market is also relevant to the likelihood that collusion would be successful. For this reason, a con­centration measure such as the Herfindahl­Hirschman Index C"HHI" ), which takes into account both the number and size distribu­tion of firms in the market, is generally the starting point for merger analysis. Factors indicating that future concentration in the relevant market is not accurately reflected by current circumstances-for example, changing market conditions or the weakness of particular firms-also must be taken into account in the analysis.

Second, the Act requires courts to consid­er the "ease or difficulty of entry by foreign or domestic firms" into the market. If firms not presently in the market could profitably enter in response to a price increase, it is less likely that firms presently in the market could profitably maintain prices above competitive levels for a significant period of time. Conversely, if entry into the market is unlikely, significant market con­centration more accurately reflects the risk of a price increase following a merger.

The third factor to be considered is "the ability of smaller firms in the market to in­crease production in response to an attempt to exercise market power." The effect of this factor is similar to ease of entry. An at­tempt by larger firms acting alone or in con­cert to exercise market power would be un­dercut if smaller firms in the market had the ability to increase their output signifi­cantly in response to a price increase.

Fourth, the Act requires courts to consid­er "the nature of the product and terms of sale." First, the homogeneity /heterogeneity of the product is relevant in assessing the likelihood of collusion. When the product in the market being analyzed is relatively un­differentiated, agreements among producers to raise prices should generally be easier to reach than they are with respect to prod­ucts that are more complex, heterogeneous, and subject to options. Also relevant is the degree of difference between the products and sellers considered to be in the market and the next-best substitutes. The larger the gap at the edge of the product and geo­graphic markets, the more likely are effects that can be predicted on the basis of market

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4059 concentration data. Finally, some sellers may be more effective rivals of particular firms than other sellers, as a result of prox­imity or the public perception that they produce a superior product, or for some other reason. If such rivals merge, there is a greater chance for the exercise of market power.

The fifth factor identified in the Act as relevant to the analysis of a merger is the "conduct of firms in the market." If the firms in the market have a history of violat­ing the antitrust laws, and market charac­teristics basically have not changed, increas­ing the degree of concentration in the market will be of greater concern than it would be if the firms had no such history. If the relevant market has not been operating competitively in recent years, increased con­centration resulting from a merger could further strengthen any existing potential for the exercise of market power.

Sixth, the Act directs courts to consider "efficiencies deriving from the acquisition." In cases where the factors discussed above indicate that the merger would result in a significant risk of market power, the courts should consider probative evidence of effi­ciencies achievable by the merger. Such effi­ciencies might derive from economies of scale, better integration of production facili­ties, plant specialization, lower transporta­tion costs, and similar savings relating to specific manufacturing, servicing, or distri­bution operations of the merging firms. Other efficiencies also can be considered where they can be sufficiently demonstrat­ed to be achievable.

It should not be the burden of firms to es­tablish an affirmative case for the existence of efficiencies when the analysis does not in­dicate that the merger otherwise would result in a significant probability that market power could be exercised. Where it is necessary to consider efficiencies, howev­er, the courts should also consider whether similar efficiencies could be achieved by the firms without merging.

Finally, the Act requires the consideration of "any other evidence indicating whether the acquisition will or will not substantially increase the ability, unilaterally or collec­tively, to exercise market power." This "catch-all" provision ensures that the courts will not ignore any significant economic evi­dence regarding the likely effects of a merger. This provision also builds into sec­tion 7 additional flexibility to take proper account of further advances in economic learning with respect to the effects of merg­ers and acquisitions in a market economy.

s. 2161 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Promoting Compe­tition in Distressed Industries Act".

SEc. 2. <a> Section 202 of the Trade Act of 1974 09 U.S.C. 2252> is amended by-

O> inserting immediately after "period)" in subsection <b> the following: "or 30 days after receiving information or advice sub­mitted under subsection <e>";

<2> striking out "and" at the end of sub­section <c><B>;

<3> striking out the period at the end of subsection <c><9> and inserting in lieu there­of"; and";

<4> inserting immediately after subsection <c><9> the following new paragraph:

"OO> the probable effectiveness of anti­trust relief as a means to enhance the com­petitiveness of firms in the industry."; and

<5> adding at the end thereof the follow­ing:

" Ce> The President may, within 15 days after the date on which he receives an af­firmative finding of the Commission, re­quest information and advice from the Sec­retary of Commerce, the Attorney General, and such other government officials as he deems appropriate on the probable effec­tiveness of antitrust relief as a means to en­hance the competitiveness of firms in the industry. Such information and advice shall be submitted as soon as practicable, but in no event more than 30 days after the date on which the request is received.".

Cb> Section 203 of the Trade Act of 1974 09 U.S.C. 2253> is amended by-

(1) striking out "or .. at the end of subsec­tion <aH4>;

<2> striking out "such actions." in subsec­tion <a><5> and inserting in lieu thereof "the actions listed in paragraphs (1) through (4) of this subsection; or";

<3> inserting immediately after subsection <a><5> the following:

"(6) as an alternative to, and in lieu of, any of the actions listed in paragraphs < 1 > through <5> of this subsection, issue an order providing for antitrust relief pursuant to section 204 of this Act; provided, that no relief under paragraphs Cl> through <5> of this subsection shall be provided to an industry that has received antitrust relief under paragraph <6) of this subsection in any other proceeding under this chapter for a period of ten years after expiration of the order providing such anti­trust relief."; and

<4> striking out "this section" the first place it appears in subsection <h><l> and each place it appears in subsections <e><l>. <h><2> and Ch)(3) and inserting in lieu there­of in each instance "paragraphs < 1 > through <5> of subsection <a>".

SEc. 3. Chapter 1 of Title II of the Trade Act of 1974 09 U.S.C. 2251 et seq.) is amended by adding immediately after sec­tion 203 the following new section: "SEC. 20-1 . ..\'.liTITRl"ST RELIEF.

"Ca> DEFINITIONS.-For purposes of this section-

"(!) The term antitrust laws has the meaning given it in subsection <a> of the first section of the Clayton Act 05 U.S.C. 12<a», except that the term includes Sec­tion 5 of the Federal Trade Commission Act to the extent that Section 5 applies to unfair methods of competition;

"(2) The term industry means any domes­tic industry as to which the International Trade Commission has made an affirmative finding pursuant to section 20Hb>O> of this Act and as to which the President has issued an order pursuant to section 203<a><6> of this Act; and

"(3) The term merger or acquisition means the acquisition of the whole or any part of the assets, stock, or other share cap­ital of one or more firms in the industry by another firm in the industry.

"(b) CERTIFICATES OF EXEMPTION FOR MERGERS AND AcQUISITIONS.-

"0) If the President issues an order under section 203<a><6> of this Act granting anti­trust relief, members of the industry may, during the time period designated in the President's order, apply for a certificate of exemption for a proposed merger or acquisi­tion.

"C2> To apply for a certificate of exemp­tion under this subsection, the parties to a proposed merger or acquisition shall file a notification describing their proposed merger or acquisition, identifying all parties

thereto, and containing information suffi­cient to identify the parties as members of the industry, to the Attorney General and the Secretary of Commerce.

"(3) Information and documentary materi­al filed pursuant to this subsection shall be exempt from disclosure under section 552 of title 5 of the United States Code, and no such information or documentary material may be made public except as may be rele­vant to any administrative or judicial pro­ceeding. Nothing in this paragraph is in­tended to prevent disclosure to either body of Congress or to any duly authorized com­mittee or subcommittee of Congress.

"(4) Within thirty days of receipt of an application under this subsection, the Attor­ney General, with the concurrence of the Secretary of Commerce, shall determine whether the proposed merger or acquisition is limited to members of the industry. If the Attorney General determines that the pro­posed merger or acquisition is so limited, the Attorney General shall issue a certifi­cate of exemption. The certificate shall specify:

"CA> the firms to which it is issued, and "<B> the merger or acquisition to which it

applies. If the Attorney General determines that the proposed merger or acquisition is not so limited, the Attorney General shall notify the applicant of that determination and the reasons for it.

"(5) An application may, within thirty days of the issuance of a notification of denial, request the Attorney General to re­consider the determination. The Attorney General, with the concurrence of the Secre­tary of Commerce, shall notify the appli­cant of the determination upon reconsider­ation within thirty days of receipt of the re­quest.

" <6) No action of the Attorney General or the Secretary of Commerce under this sec­tion shall be subject to judicial review.

"(7) A certificate of exemption issued under this subsection shall be effective as of the date of its issuance. The certificate shall convey the antitrust exemption set forth in subsection <c> permanently only if the cer­tificated merger or acquisition is consum­mated during the period in which the Presi­dent's order under section 203<a><6> is in effect.

" (C) ANTITRUST EXEMPTION.-" (!) No criminal or civil action may be

brought under any of the antitrust laws against any merger or acquisition which is the subject of a certificate of exemption under this section on the ground that such merger or acquisition would adversely affect competition in any relevant market includ­ing or included within the industry unless there is a significant probability that such merger or acquisition would substantially increase the ability of the resulting firm profitably to maintain prices above competi­tive levels in such market for a significant period of time.

"(2) No person shall have standing under section 4 or section 16 of the Clayton Act 05 U.S.C. 15, 26) to challenge any merger or acquisition which is the subject of a certifi­cate of exemption under this section on the ground that such merger or acquisition would adversely affect competition in any relevant market including or included within the industry.

" (d) Nothing in this section shall in any way alter the requirements, application, or operation of Section 7 A of the Clayton Act or any regulations under that section.".

4060 CONGRESSIONAL RECORD-SENATE March 7, 1986 PROMOTING COMPETITION IN DISTRESSED

INDUSTRIES ACT-ANALYSIS

The Promoting Competition in Distressed Industries Act ("the Act" ) amends the Trade Act of 1974 <19 U.S.C. 2201 et seq.) to provide a new form of relief for domestic in­dustries injured by increased imports. The Trade Act currently authorizes the Presi­dent to provide certain types of import relief to a domestic industry when the Inter­national Trade Commission ("Commission") finds that an increase in imports is t he sub­stantial cause of actual or threatened seri­ous injury to that domestic industry. The Promoting Competition in Distressed Indus­tries Act would give the President authority to grant limited antitrust exemption to mergers and acquisitions among members of the injured industry. The exemption would be available only as an alternative to other import relief, which could not be obtained concurrently or for a period of ten years thereafter. Specific transactions would qual­ify for the exemption through application to the Attorney General.

Sections 201-203 of the Trade Act of 1974 currently authorize the provision of restric­tive measures-duties, tariff-rate quotas, quantitative restrictions, and orderly mar­keting agreements. Duties increase the cost of imported goods to domestic consumers and industrial users. Quantitative restric­tions increase the prices which must be paid for domestic replacements. These measures may invite retaliation by trading partners and may close foreign markets to American goods, imposing additional costs on the American economy.

Existing restrictive remedies provide no means to adjust to import competition. They merely afford the industry time in which to adjust. A limited antitrust exemp­tion, on the other hand, will create a means for a distressed industry to regain competi­tive strength and its appropriate share of domestic markets. Economists now recog­nize that mergers and acquisitions can create economies of scale and efficiencies. Business may, in turn, translate resulting cost savings into lower prices or better qual­ity products or services in order to regain market share or profitability lost to im­ports.

Limited antitrust exemption avoids the costs of existing competitive measures. At the same time, it does not increase the risk of illegal collusive price increases by mem­bers of the distressed industry. Merger en­forcement under section 7 of the Clayton Act is based, in part, on the theory that a substantial increase in concentration in an industry may, in some circumstances, lead to collusion, that is, cooperative efforts to keep prices higher than competitive levels. For a distressed industry, however, the Commission's finding of serious injury indi­cates that import competition has become sufficiently strong that the domestic indus­try cannot maintain price levels without losing market share. Such successful import competition sharply reduces, and may elimi­nate, the risks of harm from collusion in a distressed industry.

The new alternative antitrust relief that will be available under the Act to facilitate mergers and acquisitions that enhance U.S. competitiveness should greatly assist U.S. firms ' adjustment to import competition that has injured them. Mergers and acquisi­tion are not the only possible responses to such competition, however. Collaboration among the members of injured industries in joint ventures short of complete consolida­tion may be attractive in many circum-

stances, and offers the opportunity to achieve research, production, or other effi­ciencies without eliminating firms that wish to remain independent. Consideration of any possible antitrust issues joint ventures raise-by the antitrust enforcement agen­cies and the courts-will take appropriate account of the significant extent to which import competition reduces any possible antitrust risk and of the fact that the indus­try has been granted a limited exemption from the antitrust laws.

Joint ventures among the members of an injured industry might take many forms: building and operating new facilities, shar­ing the operation and output of existing fa­cilities, asset swaps, tolling or other long­term supply arrangements, and others that may be peculiarly attractive to particular in­dustries. In analyzing such ventures the courts should continue their trend toward turning away from simplistic per se charac­terizations. They will examine the true com­petitive picture, including the efficiency ra­tionales underlying various collaborative ac­tivities. Recent important precedents in this regard include the landmark GTE-Sylvania case, in which the Supreme Court empha­sized that any departure from the rule of reason standard must be based on demon­strable economic effects rather than upon formalistic line drawing; Broadcast Music, in which the Court stressed that a joint sell­ing arrangement may be efficient and pro­competitive to the extent that it increases output or provides a new product, and NCAA, where the court recognized the need for certain horizontal restraints if the prod­uct was to be made available at all. Thus, the actual effects of joint ventures, short of naked horizontal restraints whose real pur­pose is to restrain output and raise price, will determine their legitimacy under the antitrust laws. And while in general, the procompetitive efficiency-enhancing effects of joint ventures are comparable to those that can be achieved by mergers, it is impor­tant to recognize that joint ventures repre­sent only a partial integration of productive facilities, and thus present even fewer anti­trust risks.

The strength of international competition should play a significant role in the anti­trust analysis of collaborative activity among the members of any industry that has been seriously injured by import compe­tition. In the face of such competition, the risk that a domestic joint venture will ad­versely affect consumers by creating or fa­cilitating the exercise of market power di­minishes significantly. Evaluating such joint ventures in the context of the real structure of the affected industry, including import competition, is mandated by the antitrust rule of reason, as well as the sound econom­ics that underlie it. Emphasized by Congress in its recent passage of the National Cooper­ative Research Act, the rule of reason pro­tects not only procompetitive R&D joint ventures, but also other production or distri­bution ventures that may be particularly important to U.S. firms in their crucial ef­forts to compete in markets increasingly being penetrated by their overseas rivals.

The first <unnumbered) section of the Act provides that it may be cited as the "Pro­moting Competition in Distressed Industries Act".

Section 2 of the Act amends sections 202 and 203 of the Trade Act of 1974 to add a limited antitrust merger exemption as an al­ternative to the import relief measures al­ready provided in those sections.

Section 2<a> amends section 202 of the Trade Act, which concerns the President's

review of the Commission's findings regard­ing an injured industry. As amended by this legislation, the factors for the President's consideration would include the likelihood that a limited antitrust merger exemption would be effective to enhance the competi­tiveness of the domestic industry. To aid in the assessment of the likelihood, section 2<a> gives the President time to request and consider information and advice from the Secretary of Commerce and the Attorney General as well as other appropriate govern­ment officials.

Section 2<b> amends section 203 of the Trade Act to authorize the President to select an antitrust relief alternative when he has determined that some form of import relief is warranted. The President may choose antitrust relief even though the Commission has recommended another form of relief. The Act does not authorize the Commission to recommend antitrust relief. Such a judgment is better left to Presidential discretion.

Section 203<a> of the Trade Act presently gives the President five options. Four impose various restrictions on imports­du ties, tariff-rate quotas, quantitative import restrictions, and orderly marketing agreements; the fifth is any combination of those actions. Section 2<b> adds antitrust relief as a sixth option pursuant to new sec­tion 204 of the Trade Act <as added by sec­tion 3 of this legislation>. By the terms of section 203(a) of the Trade Act, an order for antitrust relief would have a maximum du­ration of five years.

Section 2(b) provides that antitrust relief is in lieu of, and not in addition to, restric­tive measures, and also that such restrictive measures may not be imposed for a period of ten years after the antitrust relief alter­native expires. This is a necessary feature of the legislation. The exclusivity of the anti­trust relief alternative ensures that as the industry is restructured to enhance the competitiveness of domestic firms, the gen­eral level of competition in the market re­mains strong. Additional relief in the form of duties, quotas, quantitative restrictions, or marketing agreements, or voluntary re­straint agreements that sometimes resolve section 201 proceedings, would distort the market and prevent the kind of permanent adjustment that will allow U.S. firms to hold their own against foreign imports in the long run. The artificial support supplied by these restrictive measures could permit firms to misdirect their efforts to match the competition. In addition, since the antitrust exemption is predicated on strong import competition, restrictions on imports in con­junction with antitrust relief could reduce overall competition in the industry to the detriment of consumers. The additional ten year prohibition on import restrictions rec­ognizes the long term effects of mergers, and the need to preserve the import compe­tition that has led to special antitrust treat­ment of mergers in a distressed industry during that time.

Section 2(b) also makes conforming amendments to sections 203 <e> and Ch) to eliminate possible confusion with respect to the effective dates of relief and termination of relief. While restrictive measures may re­quire some period of implementation, the antitrust relief alternative becomes effective as specified in the order signed by the Presi­dent.

Section 3 of the Act adds a new section 204 to the Trade Act of 1974. New section 204 contains the basic provisions of the new, limited antitrust merger exemption and the

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4061 procedures for obtaining it. New section 204<a> defines terms for purposes of the antitrust relief provisions. "Antitrust laws" is given the same meaning as that contained in section 1 of the Clayton Act, with the ad­dition of section 5 of the Federal Trade Commission Act to the extent that such sec­tion applies to unfair methods of competi­tion. This definition includes all federal pro­visions under which antitrust challenges to mergers may be brought. "' Industry" is de­fined to mean any domestic industry which the International Trade Commission has designated as entitled to relief under the criteria of section 20I<b> of the Trade Act and as to which the President has issued an order under the Trade Act granting anti­trust relief. "Merger or acquisition" is de­fined to cover the same scope of transac­tions within the industry as are covered by section 7 of the Clayton Act, the primary federal merger law.

Subsection <b> of new section 204 sets out the procedures under which the parties to a proposed merger or acquisition may obtain a limited antitrust merger exemption. Par­ties with a present intention to consummate a merger or acquisition may apply for a cer­tificate of exemption. The application shall consist of a notification filed with the Attor­ney General and the Secretary of Com­merce which identifies each party to the transaction. describes the proposed merger or acquisition, and provides information suf­ficient to identify the parties as members of the indust ry.

Except as may be relevant to any adminis­trative or judicial proceeding, the informa­tion and documentary material supplied in connection with an application for a deter­mination under new section 204 shall not be made public and shall be exempt from dis­closure under the Freedom of Information Act <5 U.S.C. 552). The confidentiality provi­sion does not, however, act to prevent disclo­sure to Congress.

A determination regarding the application shall be made within thirty days. If the At­torney General, with the concurrence of the Secretary of Commerce, determines that the proposec. merger or acquisition is limit­ed to members of the industry, a certificate of exemption identifying the firms and the transaction to which it applies shall be issued. The certificate shall be effective as of the date it is issued and the exemption shall be permanent with respect to mergers consummated while the President's order is in effect. When it is determined that the merger or acquisition is not limited to mem­bers of the industry, the Attorney General shall give the applicants the reasons for that decision. In such circumstances, the ap­plicants may request the Attorney General to reconsider the determination.

New Section 204<b><6> provides that the Attorney General's grant or denial of a cer­tificate will not be subject to judicial review. The Attorney General administers the President's decision to grant relief by deter­mining eligibility. Only mergers and acquisi­tions within the distressed industry, as the industry is described by the Commission, will be eligible. The applicant's right to re­quest reconsideration of the denial of a cer­tificate, pursuant to new Section 204<b><5>. will provide adequate protection regarding these relatively straightforward criteria. Ju­dicial review is not necessary and would only delay relief.

New section 204<c> sets out the limited antitrust exemption to which certificate-of­exemption holders are entitled. With such a certificate, the transaction may not be chal-

lenged under any provision of the antitrust laws on the ground that it adversely affects competition in any relevant market includ­ing or included within the injured industry unless there is a significant probability that the transaction would substantially increase the ability of the resulting firm profitably to maintain prices above competitive levels for a significant period of time.

Section 204<c> further prohibits all anti­trust suits by private parties against certifi­cated mergers and acquisitions in the indus­try. Importers in particular may have anti­competitive incentives to bring spurious antitrust challenges to domestic mergers that would promote U.S. competitiveness.

New section 204<d> provides that the new certification procedure has no effect on pre­merger notification obligations under the Hart-Scott-Rodino Act <section 7A of the Clayton Act>. In view of the possible urgen­cy of mergers and acquisitions in distressed industries, however, the antitrust enforce­ment agencies should expedite their review of such transactions.

S.2162 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Antitrust Reme­dies Improvements Act of 1986". TITLE II-TREBLE DAMAGE REFORM SEC. 201. Subsection <a> of section 4 of the

Clayton Act 05 U.S.C. 15<a» is amended to read as follows:

"(a) Any person who shall be injured in his business or property by reason of any­thing forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover actual dam­ages by him sustained, interest calculated at the rate specified in section 1961 of title 28, United States Code, or at such other rate as the court finds to be fair to fully compen­sate such person for the injury sustained, on such actual damages for the period be­ginning on the earliest date for which injury can be established and ending on the date of judgment, unless the court finds that the award of all or part of such interest is unjust in the circumstances, and the cost of suit, including a reasonable attorney's fee: Provided, That except as provided in subsection (b), damages sustained by reason of such person having been overcharged or underpaid by any person subject to liability under the antitrust laws for such damages shall be trebled: And provided further, That prejudgment interest under this section on actual damages that are trebled shall be re­covered only if, pursuant to a motion by the injured person promptly made, the court finds that the award of all or part of such interest is just in the circumstances, taking into consideration only-

< 1) whether such person or the opposing party, or either party's representative, made motions or asserted claims or defenses so lacking in merit as to show that such party or representative acted intentionally for delay, or otherwise acted in bad faith;

<2> whether, in the course of the action in­volved, such person or the opposing party, or either party's representative, violated any applicable rule, statute, or court order providing for sanctions for dilatory behavior or otherwise providing for expeditious pro­ceedings; and

<3> whether such person or the opposing party, or either party's representative, en-

gaged in conduct primarily for the purpose of delaying the litigation or increasing the cost thereof.".

SEc. 202. Section 4A of the Clayton Act 05 U.S.C. 15a> is amended to read as fol­lows:

"SEC. 4A. Whenever the United States is injured in its business or property by reason of anything forbidden in the antitrust laws it may sue therefor in the United States dis­trict court for the district in which the de­fendant resides or is found or has an agent, without respect to the amount in controver­sy, and shall recover actual damages by it sustained, interest calculated at the rate specified in section 1961 of title 28, United States Code, or at such other rate as the court finds to be fair to fully compensate the United States for the injury sustained, on such actual damages for the period be­ginning on the earliest date for which injury can be established and ending on the date of judgment, unless the court finds that the award of all or part of such interest is unjust in the circumstances, and the cost of suit; provided, that damages sustained by reason of the United States having been overcharged or underpaid by any person subject to liability under the antitrust laws for such damages shall be trebled; and pro­vided further, that prejudgment interest under this section on actual damages that are trebled shall be recovered only if, pursu­ant to a motion by the United States promptly made, the court finds that the award of all or part of such interest is just in the circumstances, taking into consider­ation only-

< 1 > whether the United States or the op­posing party, or either party's representa­tive, made motions or asserted claims or de­fenses so lacking in merit as to show that such party or representative acted inten­tionally for delay, or otherwise acted in bad faith;

<2> whether, in the course of the action in­volved, the United States or the opposing party, or either party's representative, vio­lated any applicable rule, statute, or court order providing for sanctions for dilatory behavior or otherwise providing for expedi­tious proceedings; and

<3> whether the United States or the op­posing party, or either party's representa­tive, engaged in conduct primarily for the purpose of delaying the litigation or increas­ing the cost thereof.".

SEC. 203. Paragraph <a><2> of section 4C of the Clayton Act 05 U.S.C. 15c<a><2» is amended by striking the second sentence and inserting in lieu thereof the following:

"The court may award under this para­graph, pursuant to a motion by such State promptly made, interest calculated at the rate specified in section 1961 of title 28, United States Code, or at such other rate as the court finds to be fair to compensate nat­ural persons in such State for the injury sustained, on such total damage for the period beginning on the earliest date for which injury can be established and ending on the date of judgment, if the court finds that the award of all or part of such interest is just in the circumstances.". TITLE III-DEFENDANTS' ATTORNEYS'

FEES SEc. 301. Section 4 of the Clayton Act 05

U.S.C. 15) is amended by adding after sub­section <c> the following new subsection:

"<d> In any action under this section, the court shall award the cost of suit, including a reasonable attorney's fee, to a substantial­ly prevailing defendant upon a finding that

4062 CONGRESSIONAL RECORD-SENA TE March 7, 1986 the plaintiff's conduct was frivolous, unrea­sonable, without foundation, or in bad faith. ".

SEC. 302. Section 16 of the Clayton Act 05 U.S.C. 26) is amended by adding at the end thereof the following:

"In any action under this section in which the defendant substantially prevails, the court shall award to such defendant the cost of suit, including a reasonable attor­ney's fee, upon a finding that the plaintiff's conduct was frivolous, unreasonable, with­out foundation, or in bad faith. ".

TITLE IV-CLAIM REDUCTION SEc. 401. The Clayton Act 05 U.S.C. 12 et

seq.> is amended by inserting immediately after section 4H the following new section:

"SEC. 41. <a> The court shall reduce the claim under section 4, 4A, or 4C of this Act of any claimant releasing any person from liability or potential liability for such claim by the greatest of: < 1 > any amount stipulat­ed for this purpose; <2> the consideration paid for the release; or <3> the actual dam­ages fairly allocable to the person being re­leased from· liability or potential liability <or treble such actual damages to the extent such claim is for treble damages> and any interest on such actual damages under sec­tion 4, 4A, or 4C of this Act.

Cb> For purposes of subsection (a): < 1 > Where the claim is based upon a con­

t ract, combination, or conspiracy among competitors and damages are sustained by reason of overcharges or underpayments re­sulting from such contract, combination, or conspiracy, damages shall be allocated on the basis of each such competitor's propor­tionate share of the total of all such com­petitors' overcharges or underpayments in the market affected, unless the court deter­mines that a more equitable result would be achieved by allocating damages according to paragraph (b)(2).

(2) With respect to all other claims, dam­ages shall be allocated on the basis of rela­tive responsibility for the origination or per­petration of the violation for which dam­ages are being awarded and the benefits de­rived therefrom, unless the court deter­mines that a more equitable result would be achieved by allocatjng damages according to paragraph (b)(1>.

<c> Nothing in this section shall affect the joint and several liability of any person for any claim under the antitrust laws.".

TITLE V-EFECTIVE DATE SEC. 501. The provisions of this Act shall

apply to all actions commenced after the date of enactment of this Act.

ANTITRUST REMEDIES IMPROVEMENTS ACT OF 1986-ANALYSIS

The first <unnumbered> section of the bill provides that the Act may be cited as the "Antitrust Remedies Improvements Act of 1986."

Title II-Treble Damage Reform Title II amends sections 4, 4A and 4C of

the Clayton Act to make timely and impor­tant reforms in the recovery of antitrust damages by private parties, the United States, and state attorneys general as parens patria. Congress has recently ad­dressed treble damages and other remedies issues in connection with particular activi­ties in the Export Trading Company Act of 1982 and the National Cooperative Research Act of 1984. Title II recognizes and endorses the rationale of such reforms by making necessary changes in antitrust remedies as they apply across-the-board.

Section 201 amends section 4 of the Clay­ton Act, which governs recoveries by private parties, to provide for the recovery of treble damages only for those injuries sustained by reason of the plaintiff "'having been over­charged or underpaid by any person subject to liability under the antitrust laws for such damages." Actual damages would be recov­erable in all other cases.

With few exceptions plaintiffs' recoveries in all private antitrust damage actions are currently trebled automatically. Trebling is intended to provide potential plaintiffs with additional incentives to complement public enforcement with private actions, and to help deter anticompetitive conduct. Where clearly harmful conduct such as unlawful horizontal price fixing or bid rigging is in­volved, trebling is entirely appropriate. Such conduct is unquestionably deterimen­tal to the economy and cannot be overde­terred. Suits to challenge price fixing or bid rigging are usually brought by the victims of overcharges or underpayments caused by these practices.

Where potentially procompetitive prac­tices such as aggressive low pricing or inno­vative distributional practices are involved, however, trebling can have serious anticom­petitive side effects. Overdeterrence is a major concern here-trebling can cause firms to shy away from such conduct, even through it may have significant economic benefits. Moreover, competitively beneficial practices often are challenged by competi­tors or potential competitors with perverse motivations to sue. Competitors may use the threat of treble damages to coerce a suc­cessful rival into abandoning or restricting conduct or arrangements that enhance effi­ciency and lower prices to consumers.

An optimal antitrust penalty would take into account the likely harm to society from the conduct and the probability that the conduct will be detected, prosecuted, and punished. Where such harm is obvious, and the chance of its discovery relatively low, the penalty must be high to deter viola­tions. Conversely, where harm is uncertain, and the conduct is open and notorious, the penalty must be high to deter violations. conversely, where harm is uncertain, and the conduct is open and notorious, the pen­alty should be low. The risks of mistakenly classifying beneficial conduct as anticom­petitive must also be recognized in con­structing an optimal penalty system. Unfor­tunately, the current universal treble­damage rule in antitrust cases bears little resemblance to such a system.

Increasingly recognized by courts, Con­gress, and legal and economic scholars in recent years, these problems now warrant a general modification of the automatic tre­bling rule in antitrust cases. Section 201 re­sponds to these concerns by modifying the treble-damage rule in private antitrust damage actions under section 4 of the Clay­ton Act to obtain a closer approximation of an optimal penalty. It first establishes a fully compensatory, actual-damages remedy, and then provides for the trebling of dam­ages sustained "by reason of Cthe plaintiff] having been overcharged or underpaid by any person subject to liability under the antitrust laws for such damages." As thus amended, section 4 would continue strongly to deter anticompetitive conduct, while avoiding overdeterrence of conduct that may actually benefit consumers and the economy.

Practices like price fixing or bid rigging that result in overcharges to customers or underpayments to suppliers are unequivo-

cally anticompetitive and are likely to be concealed. Section 201 continues to award treble damages to persons who have been injured by reason of such overcharges or underpayments, and thus properly focuses the full deterrent force of private treble­damage enforcement on unambiguously anticompetitive practices. Under section 201 , victims of these practices, often con­sumers or small businesses, will retain the needed incentive to discover and challenge clearly harmful behavior.

Under section 201, however, antitrust claims brought by competitors or would-be competitors of the defendants usually will be limited to full compensation-actual damages plus prejudgment interest (dis­cussed infra>. costs, and attorneys ' fees. These plaintiffs generally seek lost profits rather than recoupment of overcharges. Limiting such recoveries to full compensa­tion <including attorneys' fees> is appropri­ate for several reasons. First, such damages are less clearly related to the social cost of a violation and may actually overstate the harm. Second, business competitors are likely to be in a position to observe the con­duct that is the basis for such claims. Third, and perhaps most importantly, claims brought by competitors are precisely those that often challenge potentially procompeti­tive behavior. These cases frequently are brought to frustrate hard competition rather than promote it. Limiting recovery to full compensation addresses the overdeter­rence problem created by such cases, but does not deprive a plaintiff with a just cause of a complete recovery. Thus, section 201 would continue strongly to deter covert cartel behavior, while avoiding deterrence, i.e. inhibition, of business conduct that ben­efits consumers and the economy generally.

In order to establish a fully compensatory, actual-damages remedy, section 201 provides for automatic prejudgment interest in actual damage cases under section 4 of the Clayton Act. The rationale for awarding prejudgment interest to a plaintiff is that the plaintiff's injury is suffered long before the damages are recovered. In addition to receiving its damages, the plaintiff should be paid interest for the lost use of its money during the period from commencement of the injury to entry of judgment.

Prejudgment interest on antitrust dam­ages is available under existing law, but omly in very limited circumstances. In 1980, Congress authorized limited prejudgment interest in response to concerns that the court's inability to award such interest cre­ated incentives for defendants to delay reso­lution of antitrust cases. The 1980 legisla­tion provided that, in general, prejudgment interest is to be awarded in antitrust cases only where the opposing party has litigated in bad faith, has violated a rule or order providing for sanctions for dilatory behav­ior, or has engaged in conduct intended to delay the litigation or increase its cost.

Whatever the justification for the limita­tions on the award of prejudgment interest in present law, where antitrust recoveries have been limited recently to actual dam­ages, as in the National Cooperative Re­search Act of 1984 <NCRA>. it has been deemed necessary to award prejudgment in­terest on such damages as a matter of course if the plaintiff is to be made whole. Thus, amendments to 'detreble" antitrust damages should also provide automatic pre­judgment interest on actual damages to plaintiffs.

Under section 201, prejudgment interest on actual damages is to be calculated at the

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4063 rate specified in section 1961 of title 28 of the United States Code, or at such other rate as the court finds to be fair to compen­sate injured persons for the injury they have sustained, and covers the period from the earliest date for which injury can be es­tablished through the date of judgment. This rate of interest and the period for which interest is to be granted are similar to those provided in the NCRA.

Recovery of interest from the date of injury will provide full compensation for victims of antitrust violations. In connection with passage of the NCRA, it was recog­nized that it may be difficult or inequitable in certain circumstances to provide interest in accordance with this rule. Where the date of the onset of injury cannot be pre­cisely determined, the plaintiff may prove that the injury began prior to a date certain and receive interest from the date. Where prejudgment interest would result in dupli­cative damages <e.g., where loss of use of lost profits has already been factored into the damage award) or where litigation has been unreasonably delayed by the plaintiff, section 201, like the NCRA, gives the court flexibility to limit or without prejudgment interest. The ability of the court to vary the rate of interest from that set forth in 28 U.S.C. § 1961 <the coupon yield equivalent of the average accepted auction price for the last auction of fifty-two week United States Treasury bills settled immediately prior to the date of judgment) is a new fea­ture of this legislation, and reflects the fact that, in antitrust cases, damages may be re­covered for injuries sustained many years prior to the date of judgment, during which interest rates may have been substantially lower <or higher> than current Treasury bill yields.

Section 201 does not change the circum­stances in which prejudgment interest may be awarded in cases in which damages are trebled, as established by Congress in 1980. Where such interest is awarded, however, it will be calculated as set forth above.

Section 201 's reform of the treble-damage remedy does not affect the current rules for determining standing, injury, or liability in private antitrust damage actions under sec­tion 4 of the Clayton Act. The phrase "dam­ages sustained by reason of" added to sec­tion 4 by section 201 uses key language al­ready contained in section 4 to clearly signal this intent.

Section 202 of the bill amends section 4A of the Clayton Act to permit the United States to recover treble damages when it is injured by reason of having been over­charged or underpaid by an antitrust viola­tor. Under existing law, the United States can never recover more than actual damages under the antitrust laws. Section 202 would provide the United States, as an over­charged purchaser, with a treble-damage remedy against price fixers and bid riggers. This change would result in increased deter­rence of particularly onerous violations that constitute theft from taxpayers and would put the United States in the same position as private plaintiffs with respect to dam­ages. Section 202 also provides for prejudg­ment interest on actual damages in actions by the United States under section 4A, under the same terms as such interest may be awarded to private plaintiffs under sec­tion 4 as it would be amended by section 201.

Section 203 amends section 4C of the Clayton Act, under which state attorneys general as parens patriae may recover treble damages for antitrust injuries sustained by

natural persons residing within their states. Section 203 does not change the current rule under which all such recoveries are tre­bled, because damages sought on behalf of consumers in parens cases are always the kind of damages that would be trebled under section 4 of the Clayton Act as it would be amended by section 201. Thus, sec­tion 203 only conforms the provisions gov­erning prejudgment interest awards in parens cases under section 4C of the Clay­ton Act to the provisions governing such awards under sections 4 and 4A as those sec­tions would be amended by sections 201 and 202. Title III-Defendants' Attorneys' Fees

Title III addresses concerns that the cur­rent imbalance in antitrust law regarding the award of attorneys' fees facilitates the potential abuse of antitrust remedies. Sec­tion 301 adds a new paragraph Cd) to section 4 of the Clayton Act to provide for the award of costs, including a reasonable attor­ney's fee, to a substantially prevailing anti­trust defendant upon a finding that the plaintiff's conduct was "frivolous, unreason­able, without foundation, or in bad faith." Section 302 provides the same relief for de­fendants in injunction actions under section 16 of the Clayton Act.

Currently, sections 4 and 16 of the Clay­ton Act entitle only prevailing plaintiffs to reasonable attorneys' fees. With certain ex­ceptions, including cases governed by two recent antitrust-related statutes, the NCRA and the Export Trading Company Act of 1982, the general rule is to deny attorneys' fees to prevailing defendants.

Private enforcement of the antitrust laws is an important supplement to government prosecution. Some plaintiffs may abuse the process, however. This abuse may take the form of "strike suits" filed primarily to ex­tract a settlement from a defendant for something less than the defendant's antici­pated litigation costs. It may also arise where a competitor, fearing innovative pro­competitive conduct by a rival, flies a poten­tially lengthy injunctive action to convince the defendant to abandon its plans rather than bear high litigation costs. This type of conduct undermines the purposes of private enforcement and increases the costs that litigation imposes on society generally.

Title III recognizes the possibility of such abuse by awarding costs, including attor­neys' fees, to substantially prevailing de­fendants if the plaintiff's conduct has been "frivolous, unreasonable, without founda­tion or in bad faith. " This standard, used as the model for the defendants' attorneys' fees provision in the NCRA, derives from the Supreme Court's decision in Christians­burg Garment v. EEOC, 434 U.S. 412 <1978), a case involving prevailing parties' attor­neys' fees under § 706<k> of Title VII of the Civil Rights Act of 1964.

As was recognized during consideration of the NCRA, each element of this standard has an independent meaning and is to be analyzed and applied separately. The deter­mination of whether a plaintiff's conduct has been "unreasonable" must be based upon an evaluation of the factual and legal merits of the case. Conduct may be judged to be unreasonable even though it might not be considered frivolous, without founda­tion, or in bad faith. Also, the standards are to be applied to conduct throughout the liti­gation of a case. While the initial filing of an action may be warranted, discovery can bring to light information that makes con­tinued prosecution of that action unreason­able. Attorneys' fees incurred by a prevail-

ing defendant subsequent to such discovery should be recovered.

The defendants' attorneys' fees provisions of Title III complement other provisions of federal law that seek to prevent abuse of the judicial system. But because there is a strong public interest in preventing ground­less antitrust actions that may harm the economy by deterring procompetitive con­duct, these provisions for defendants' attor­neys' fees are to be given broader interpre­tation than comparable provisions applied to civil actions in general <e.g., Rule 11, Fed­eral Rules of Civil Procedure>.

It may be noted that the standard under which defendants may seek attorneys' fees in parens patriae cases under section 4C of the Clayton Act-that the state attorney general has acted "in bad faith, vexatiously, wantonly, or for oppressive reasons"-dif­fers somewhat from the Christiansburg Garment standard to be incorporated in sec­tion 4. Because the incentives of state attor­neys general differ from those of purely pri­vate plaintiffs, however, Title III does not modify the defendants' attorneys' fees pro­vision in section 4C. Nor does it modify the attorneys' fees rules in antitrust damage cases brought by the United States under section 4A. The United States is not entitled to attorneys' fees as plaintiff in such cases, but may be liable for defendants' attorneys' fees under the standards of the recently re­enacted Equal Access to Justice Act and under rules of general application in civil cases. These provisions appropriately ad­dress the conduct of actions by the United States and should continue to govern in gov­ernment antitrust cases.

Title VI-Claim Reduction Section 401 creates a new section of the

Clayton Act-section 41. New section 4I pro­vides that when a plaintiff settles with one or more defendants in an action under sec­tion 4, 4A or 4C of the Clayton Act, or re­leases in any way a potential defendant from liability without filing a suit, that plaintiff's claim against the remaining de­fendants shall be appropriately reduced.

Under current law, all defendants found liable for damages in antitrust cases are jointly and severally responsible for the plaintiff's entire, trebled recovery. Under the joint and several liability system, de­fendants typically expect to share that li­ability among themselves, perhaps through formal agreements, perhaps through seria­tim or universal settlements with plaintiffs. Should the plaintiff settle with any liable or potentially liable party, however, the plain­tiff's remaining claim is reduced only by the amount the plaintiff receives for the settle­ment. Thus, a nonsettling defendant facing what is already very substantial real liabil­ity can see that liability magnified if the plaintiff settles with other liable persons for nominal or relatively small amounts, par­ticularly if such settlements are with those responsible for a major portion of the plain­tif's damages. This "whipsaw" effect may force a defendant to abandon its factual claims and legal defenses, whatever their merits.

New section 4I addresses this problem di­rectly. Paragraph <a> reduces the plaintiff's claim <chich, under other proposed amend­ments, will include all damages and interest on actual damages from the date of injury to the date of judgment> by at least the pro­portionate share of that claim fairly alloca­ble to any person being released from liabil­ity. Such proportionate share would include a fair share of the plaintiff's actual <or,

4064 CONGRESSIONAL RECORD-SENATE March 7, 1986 where appropriate, trebled) damages plus interest on such actual damages form the date of injury to the date of judgment, as will be provided in amended sections 4, 4A, and 4C. Thus the effect of claim reduction will be to relieve nonsettling defendants from all liability arising from the conduct of persons receiving releases.

Paragraph (b) provides the method for de­termining fair shares of damages for the purpose of claim reduction. Where pro­scribed concerted conduct has resulted in overcharges or underpayments. the amount of damages allocable to a person receiving a release from liability is that person's pro­portionate share of all the participants' overcharges or underpayments in the market affected. For all other claims, the damages allocable to the settling person shall be determined by its relative responsi­bility for the violation and by the benefits it derived from the violation. Appropriate dis­cretion is reserved to courts to adjust these rules where necessary to achieve a more eq­uitable result. For example, in a bid/rigging case, market shares may not be an appropri­ate measure of either culpability or the ben­efits derived from the conspiracy. In the manner of claim reduction legislation previ­ously reported by the Senate Judiciary Committee CS. 995, 97th Cong., 2nd Sess.), paragraph <c> of new section 41 makes clear that claim reduction for settlements does not affect the joint and several liability of the remaining defendants.

Under new section 41, whipsaw settlement tactics will no longer be possible since no de­fendant will see its potential real liability in­creased by another person's settlement. Therefore, defendants are not likely to be denied the opportunity to test their liability in court. Furthermore, plaintiffs will no longer have any incentive to release the most culpable persons for nominal amounts. Since the amounts the plaintiff can recover from the remaining defendants will be re­duced by the share of the plaintiff's claim attributable to settling persons' conduct, the amount a plaintiff would accept from a person being released from liability will be correlated to that person's culpability. Larger, more culpable persons will be less likely to receive early and attractive settle­ments with claim reduction than under the current system. In sum, claim reduction should preserve incentives for plaintiffs to challenge anticompetitive conduct and thus will maintain deterrence while providing a more equitable system for the settlement of claims.

Title V-Effective Date Section 501 makes the provisions of Title

II through Title IV effective in all actions commenced after the date of enactment of the Act.

S.2163 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Interlocking Direc­torate Act of 19B6".

SEC. 2 The fourth paragraph of section B of the Clayton Act <15 U.S.C. 19) is amended by-

( a) striking out "any one" and inserting in lieu thereof "each";

<b> striking out "$1,000,000" and inserting in lieu thereof "$10,000,000";

(c) striking out the period after "laws" and inserting in lieu thereof the following: " ;provided, that service as a director in two or more corporations shall not be prohibited by this section if the sales, determined on

the basis of annual average gross revenues over the preceding two completed calendar or fiscal years, as may be appropriate in the circumstances, of each such corporation of each product or service sold by such corpo­rations in competition with one anot her < 1) are less th1n 5 percent of such corporation's total sales, unless the sales of all such prod­ucts or services by such corporation exceed 25 percent of such corporation's total sales; (2) together with such corporation's sales of all other such products or services are less than $1,000,000; or (3) are less than 3 per­cent of the total sales in each line of com­merce in each section of the country in which such corporations compete."; and

Cd) adding at the end the following: "For each fiscal year commencing after Septem­ber 30, 19B6, the $10,000,000 and $1,000,000 thresholds in this paragraph shall be in­creased as of October 1 each year by an amount equal to the percentage increase in the Gross National Product, as published by the Department of Commerce or its succes­sor, for the year then ended over the level so established for the year ending Septem­ber 30, 19B5. ".

INTERLOCKING DIRECTORATE ACT OF 19B6-ANALYSIS

The Interlocking Directorate Act of 19B6 (" the Act") makes several important and timely changes in section B of the Clayton Act, which generally prohibits service by any person as a director of two or more com­peting corporations engaged in interstate commerce if any one of those corporations has capital, surplus, and undivided profits of more than $1,000,000. The Act provides ex­ceptions to section B's prohibition where competition between two or more firms is de minimis, and thus where their sharing of a common director poses no threat to compe­tition generally. The Act also amends and updates section B's jurisdictional threshold to confine its coverage to larger firms.

Section 2 of the Act makes four amend­ments to section B. First, section 2 requires each corporation sharing a common director to exceed section B's capital, surplus, and undivided profits jurisdictional threshold in order for the prohibition of that section to be applicable. This requirement will confine section B's application to interlocks among large firms, thus freeing smaller businesses of federal antitrust oversight of the make­up of their boards. Competitive concerns raised by interlocks involving smaller busi­nesses are not significant, and do not war­rant such oversight.

Second, section 2 of the Act raises the $1,000,000 capital, surplus, and undivided profits threshold in section B to $10,000,000. This dollar threshold, established in 1914 and never changed, is badly out of date.

Third, section 2 of the Act establishes ex­plicit de minimis exceptions to section B's prohibition of interlocks among competing corporations. Courts interpreting section B strictly have declined to recognize any im­plicit de minimis exception. Thus, minor competitive overlaps that raise no signifi­cant competitive concerns are hindering the selection of the best-qualified directors, es­pecially by diversified firms.

There is little competitive risk presented by an interlocking directorate where compe­tition between the affected firms is no more than de minimis. Where the competitive overlap is a very small part of each firm's business, active consideration of the details of the overlapping business by the boards of directors is most unlikely. Where the com­petitive overlap affects no more than a very

small part of any relevant market, it is no cause for concern about harm to competi­tion. In these situations, and where the competitive overlap involves commercial ac­tivities very small in absolute dollar amounts, the prophylactic rule of section B clearly is overly restrictive.

Section 2 addresses this problem by defin­ing three "safe harbors" that would exempt certain interlocks between competitors from the coverage of section B. The first safe harbor generally protects interlocks be­tween firms each of whose sales of any com­peting product are less than 5 percent of its total sales- a fact within the certain knowl­edge of the firms themselves. The second safe harbor protects interlocks where the total competitive overlap amounts to less than $1,000,000 of each firm 's business­again a simple fact known to the firms. The third safe harbor protects interlocks be­tween firms each of whose sales of any com­peting product are less than 3 percent of any relevant market in which they compete. These safe harbors will make it much easier for corporations to select qualified directors with no real possibility of competitive harm and no uncertainty regarding the lawfulness of their decisions.

Finally, section 2 indexes the new $10,000,000 jurisdictional threshold and the new $1,000,000 de minimis "safe harbor· · to the Gross National Product, in order to pre­vent distortion of their effects by the pas­sage of time.

s. 2164 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Foreign Trade Antitrust Improvements Act of 19B6" .

SEC. 2. Section 7 of the Sherman Act < 15 U.S.C. 6a) is amended by-

(1) inserting " Ca)" before "This Act" ; and (2) adding at the end thereof the follow­

ing new subsection: "Cb) Whenever a motion to dismiss for

lack of subject matter jurisdiction under this section shall be made, the court shall, except for good cause shown, hear and de­termine such motion, after such discovery or other proceedings directly related to the motion as the court deems appropriate, before conducting or permitting the parties to conduct any further proceedings in the action.".

SEc. 3. The Clayton Act <15 U.S.C. 12 et seq.) is amended by adding after section 20 the following new section:

"SEc. 21. <a> Notwithstanding any other provision .of the antitrust laws of any provi­sion of any State laws similar to the anti­trust laws, in any action brought by any person or State under the antitrust laws or similar State laws which involves trade or commerce with a foreign nation, the court shall enter a judgment dismissing the action as to all parties whenever it determines that the exercise of jurisdiction would be unrea­sonable in light of the following factors, which shall be exclusive:

< 1) the relative significance, to the viola­tion alleged, of conduct within the United States as compared to conduct abroad;

(2) the nationality of the parties and the principal place of business of corporations;

< 3) the presence or absence of a purpose to affect United States consumers or competi­tors;

(4) the relative significance and foreseea­bility of the effects of the conduct on the United States as compared with the effects abroad;

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4065 (5) the existence of reasonable expecta­

tions that would be furthered or defeated by the action; and

(6) the degree of conflict with foreign law. Cb) Whenever a motion to dismiss on the

ground that the exercise of jurisdiction would be unreasonable under this section shall be made, the court shall, except for good cause shown, hear and determine such motion, after such discovery or other pro­ceedings directly related to the motion as the court deems appropriate, before con­ducting or permitting the parties to conduct any further proceedings in the action.".

SEc. 4. Section 12 of the Clayton Act < 15 U.S.C. 22) is amended by-

(1) inserting "(a)" before "That suit"; and <2) adding at the end thereof the follow­

ing new subsection: "(b) The doctrine of forum non conven­

iens shall be applicable in any suit, action, or proceeding under the antitrust laws that involves trade or commerce with a foreign nation, and nothing contained in this sec­tion or any other venue provision applicable to such suits, actions, or proceedings shall be construed to prevent dismissal of such a suit, action, or proceeding on the ground of forum non conveniens. ".

FOREIGN TRADE ANTITRUST IMPROVEMENTS ACT OF 1986-ANALYSIS

The "Foreign Trade Antitrust Improve­ments Act of 1986" (" the Act" ) improves and clarifies the application of the antitrust laws in cases involving trade or commerce wit h foreign nations. The Act amends the Sherman and Clayton Acts generally to direct courts to hear and determine jurisdic­tional motions in such cases prior to con­ducting proceedings on the merits , to clarify the factors courts should consider in decid­ing whether the exercise of U.S. antit rust jurisdiction in such cases would be reasona­ble, and to affirm the applicability of the doctrine of forum non conveniens in such cases. The Act carries the same name and is in substantial part a refinement of similar legislation introduced in the 1st session of the 99th Congress.

Section 2 of the Act amends section 7 of the Sherman Act, which provides that the substantive provisions of that Act apply to conduct involving trade or commerce Cother than import trade or commerce) with for­eign nations only if such conduct has a "direct, substantial, or reasonably foreseea­ble effect" on trade or commerce that is not trade or commerce with foreign nations, on import trade or commerce, or on export trade or commerce with foreign nations of a person engaged in such trade or commerce in the United States. Section 2 adds a new subsection Cb) to section 7, generally requir­ing the court to hear and determine the merits of a motion to dismiss an action under section 7 prior to conducting or per­mitting the parties to conduct any further proceedings in the action. Notwithstanding its general rule, new section 7Cb) permits discovery on the merits or other proceedings "for good cause shown" while motions under subsection Ca) are under consider­ation. While early decisions on jurisdiction­al issues generally should help minimize international conflicts in such cases, discov­ery on the merits may nonetheless be appro­priate in some situations. Indeed, in some cases facts relating to jurisdiction may be intertwined with those relating to the merits.

Section 3 of the Act adds a new section 21 to the Clayton Act, clarifying the factors courts are to consider in deciding whether

the exercise of U.S. antitrust jurisdiction in private antitrust cases involving trade or commerce with foreign nations is reasona­ble. Designed to lessen uncertainty over ju­risdiction in private antitrust cases involving foreign commerce, new section 2Ha> in­structs the courts to dismiss such a case when the exercise of jurisdiction would be unreasonable, taking into account six speci­fied, exclusive factors. By designating the specified factors as the exclusive factors to be considered in determining the reason­ableness of U.S. jurisdiction, new section 2l<a) makes clear that courts are not to base their judgments on an open-ended interest balancing test or make the foreign policy determinations that are properly within the sphere of the Executive Branch. On the other hand, by instructing courts to take into account the extent of the challenged conduct's connections with the United States as compared with its connections with foreign jurisdictions, the new provision lessens the likelihood of unnecessary con­flict with foreign governments arising from private antitrust challenges.

The first factor specified by new section 21<a) is " the relative significance, to the vio­lation alleged, of conduct within the United States as compared to conduct abroad." This criterion, in conjunction with the other specified factors, will assist the courts in determining the relative strength of the alleged violation's connection with the United States. In the antitrust context, the conduct that is relevant to this determina­tion includes not only meetings and agree­ments, but also the whole range of economic activity that is involved in an alleged viola­tion. For example, an agreement to fix U.S. prices that was reached in a meeting held abroad and implemented by charging the agreed-upon prices in the United States would constitute substantial conduct within the United States. Inclusion of this factor is not intended to give individuals or firms an opportunity to evade U.S. antitrust laws simply by moving some or all of their activi­ties offshore.

The second factor the courts are to con­sider is "the nationality of the parties and the principal place of business of corpora­tions" involved in and affected by the chal­lenged conduct. This criterion is not intend­ed as a departure from the general principle that United States antitrust laws are ap­plied in a nationality-blind way that neither favors nor discriminates against parties of foreign nationality. But in some cases con­sideration of the parties' nationality may assist the courts in determining the relative strength of the United States' interest in regulating the challenged conduct and, ac­cordingly, the reasonableness of an asser­tion of U.S. jurisdiction. In particular, this factor may be significant in a merger case in which the merging parties and the relevant productive facilities are located abroad.

The third factor specified in new section 21<a) is " the presence or absence of a pur­pose to affect United States consumers or · competitors." In considering this factor, courts should apply their usual construction of purpose-that people intend the ordinary consequences of their acts. Thus, courts should consider not only whether there were overt declarations of intention to affect United States markets, but also whether the facts make it apparent that an effect on United States markets was expect­ed.

The fourth factor courts are to consider is " the relative significance and foreseeability of the effects of the conduct on the United

States as compared with the effects abroad." The United States' antitrust laws are basically designed to protect U.S. mar­kets against anticompetitive restraints. They are not designed to interfere with the prerogative of foreign governments to shape their own economies. There are, however, circumstances in an economically interde­pendent world in which the effects of con­duct will be felt both in the U.S. and in other nations' economies. Consideration by the courts of this factor and the previous factor will assist in identifying circum­stances in which U.S. jurisdiction is appro­priately asserted because of the significance of actual or intended effects in our econo­my. At the same time, it will weigh against the exercise of jurisdiction where the actual or intended domestic effects are insignifi­cant as compared with those abroad and where regulation of the conduct may be more appropriately exercised by other gov­ernments.

The fifth factor specified in new section 21(a) is " the existence of reasonable expec­tations that would be furthered or defeated by the action." This factor recognizes the desirability of predictability regarding the rules applicable to international business transactions.

The final factor courts are to consider under new section 2Ha> in deciding whether the exercise of jurisdiction in antitrust cases would be reasonable is "the degree of con­flict with foreign law." Under this criterion, the courts will consider the extent to which application of U.S. antitrust law to the chal­lenger conduct would require action or inac­tion inconsistent with relevant foreign laws, or would otherwise clearly frustrate the im­plementation of the laws of other countries. If the challenged conduct were also unlaw­ful under foreign law, or if foreign law were neutral or merely permissive with respect to the conduct, there likely would be little or no conflict between U.S. and foreign law of a kind that would weigh heavily against the assertion of jurisdiction. On the other hand, if the challenged conduct were affirmatively mandated by foreign law, or if the applica­tion of U.S. antitrust law would frustrate the enforcement or implementation of the laws of a foreign sovereign, those facts would weigh against the exercise of U.S. ju­risdiction. The presence of such a conflict would not necessarily mean that United States law would always have to yield to for­eign law, but consideration of such a con­flict should help courts to determine the reasonableness of the exercise of U.S. anti­trust jurisdiction.

In most cases, no single factor among the six the courts are directed to consider by new section 21<a) is likely to be dispositive, nor is it possible to instruct the courts in ad­vance on how to weigh the factors to deter­mine the reasonableness of asserting juris­diction. Nonetheless, considered in conjunc­tion with one another, these factors will provide a basis for accommodating the United States' interests in applying its anti­trust laws to protect against harm from anticompetitive restraints with the legiti­mate interests of foreign governments in regulating their own economic affairs.

New section 21(b) generally requires the court to hear and determine the merits of a motion to dismiss an action under new sec­tion 21<a) prior to other proceedings in the action, in the manner of new section 7Cb) of the Sherman Act, as added by section 2 above. As is the case with new Sherman Act section 7(b), exceptions to this general rule may be made "for good cause shown."

4066 CONGRESSIONAL RECORD-SENATE March 7, 1986 Section 4 of the Act adds a new subsection

<b> to section 12 of the Clayton Act, which provides venue in antitrust cases in any dis­trict which a corporate defendant inhabits, or in which it may be found or transacts business. New section 12<b> clarifies the ap­plicability of the doctrine of forum non con­veniens in antitrust cases involving trade or commerce with foreign nations. This provi­sion makes clear to the courts that they are not foreclosed from concluding, in appropri­ate cases, that a foreign court would be a preferable forum for litigating the claims asserted in a U.S. antitrust case, consistent with applicable legal standards as set out in the Supreme Court's 1981 decision in Piper Aircraft Co. v Reyno, 454 U.S. 235. e Mr. MURKOWSKI. Mr. President, I am pleased to join Senator THURMOND in introducing legislation to modernize our antitrust laws. This legislation holds out promise for the strengthen­ing of American firms, by improving their competitiveness while protecting the consumer.

American antitrust laws were en­acted when America's foreign trade was miniscule, and when the major threat to consumers came from trusts and corporations in the domestic mar­ketplace. Conditions now in the U.S. economy are much different. Nearly 75 percent of American products face foreign competition, and in recent years a surge of imports has flooded the American market. We are a debtor nation for the first time in memory, and the 1985 trade deficit of $148.50 billion was the largest in our history.

These changed economic circum­stances necessitate a change in our laws affecting business competition. Particularly, they make necessary changes in American antitrust law. I strongly endorse the five proposed changes in antitrust law developed by the administration's Working Group on Antitrust Review, because I believe these changes would enhance U.S. competitiveness in trade without af­fecting adversely consumers' rights at home.

The first proposal amends section 7 of the Clayton Act and permits merg­ers of firms unless there is a "signifi­cant probability" that higher prices would result. Currently, our laws bar mergers that would be legal if they oc­curred in Japan, Korea, Germany, or England. As a result, American firms are at a disadvantage globally when compared to such giants as Toyota, Hyundai, Hoechst, and Unilever. Amendment of the Clayton Act would remove this impediment.

The second proposal amends sec­tions 201-203 of the Trade Act of 1974. It would exempt mergers and acquisi­tions in industries seriously injured by foreign imports. Application of such a remedy will permit merger of firms that have lost market shares to im­ports, thus putting them in a more competitive posture with respect to foreign firms. For example, small tex­tile or semiconductor firms that have lost sales to foreign competitors could

merge to form economies of scale and gain other cost savings.

The third proposal reforms the anti­trust litigation process. The effect of current law is to penalize business be­havior that is aggressive and enhances competition, because successful pri­vate litigants receive treble damages plus attorney's fees for injuries. A de­trebling of damages in certain cases would avoid penalizing vigorous com­petitive conduct, without loss of pro­tection to consumers from price fixing.

The fourth proposal changes rules on interlocking directorates by raising the level of exemption from $1 million to $10 million. The original limit was established in 1914 and obviously should be raised, given the inflation over intervening years. The benefit of this proposal is that it will ease the search of diversified companies and small firms for well-qualified persons to serve on their boards of directors.

The final proposal limits the appli­cation of U.S. antitrust laws in inter­national commerce cases. Our major trading partners and allies frequently have expressed concern about interna­tional extension of U.S. antitrust liti­gation, especially private treble damage suits. Application of our anti­trust laws abroad interferes with the domestic policies of trading partners and allies; it is an unwarranted intru­sion on their national sovereignty. Changes in law that would make the application of antitrust law subject to a test of reasonableness would correct this problem. .

Today's business competition is no longer in the American market alone. It is global, and it requires a response that is in tune with global realities. Modernization of antitrust law as is proposed in these five amendments will stimulate the competitiveness of U.S. firms, and it will do so without sacrificing protection for American consumers.•

By Mr. GORTON: S. 2165. A bill to authorize States to

determine the level of funds allotted to a State under the Low-Income Home Energy Assistance Act of 1981 to be available for low-cost residential weatherization and other energy-relat­ed home repair projects for low­income households; to the Committee on Labor and Human Resources.

LOW-INCOME HOME ENERGY ASSISTANCE ACT AMENDMENTS

e Mr. GORTON. Mr. President, the bill I am introducing today amends the Low-Income Home Energy Assist­ance Act CLIHEAP] to provide State governments with the flexibility needed to make the best use of Feder­al energy assistance dollars. This bill would lift the existing 15-percent cap on State expenditures for residential weatherization and other energy-relat­ed home repair projects.

The bill simply gives the States the ability to respond to current energy and economic conditions. There can be no doubt that this Nation's energy sit­uation is going through a period of dramatic change. We have seen the price of oil plummet in the last few months. The $27 a barrel paid by re­finers in December for their average barrel of oil has fallen to somewhere between $15 and $16 a barrel. Spot prices approaching $12 a barrel sug­gest that we have not seen the last of the rollback in prices. This price change will mean lower home heating bills in many parts of the country.

The drop in energy prices presents States with a unique opportunity to make weatherization improvements to the low-income housing stock without reducing the number of people served under LIHEAP. Weathering low­income homes would enable future as­sistance grants to provide more assist­ance to a client, coverage of more cli­ents, or a combination of both. Unf or­tunately, States' flexibility presently is limited by the 15-percent cap on weatherization projects contained in LIHEAP.

Mr. President, the optimum mix be­tween direct assistance payments and weatherization will vary from year to year because of factors other than the amount of Federal assistance received under LIHEAP. Accordingly, States should not be proscribed in most eff ec­tively meeting low-income needs by an arbitrary lid. I urge my colleagues to join me in providing States with the flexibility they need to meet the home energy needs of low-income Ameri­cans.

Mr. President, I ask unanimous con­sent that a copy 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. 2165 Be it enacted by the Senate and House of

Representatives of the United States of America in Congress assembled, That sec­tion 2605(k) of the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8624(k)) is amended to read as follows:

"(k) A State may use so much of the funds allotted to a State under this subchapter for any fiscal year as the State determines to be necessary for low-cost residential weather­ization or other energy-related home repair for low-income households.".•

By Mr. DECONCINI: S.J. Res. 290. Joint resolution to des­

ignate July 4, 1986, as "National Immi­grants Day"; to the Committee on the Judiciary.

NATIONAL IMMIGRANTS DAY

Mr. DECONCINI. Mr. President, I am pleased to introduce today a joint resolution that authorizes and re­quests the President of the United States to designate July 4, 1986, as "National Immigrants Day."

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4067 Honoring 100 years of American in­

dependence, the people of France dedicated to the people of America the Statue of Liberty. From the base of her pedestal to the tip of her flame, the Lady of Liberty has represented freedom, hope, and opportunity to millions entering New York harbor and to millions throughout the world. She has personally welcomed many of our ancestors and is a lasting memori­al to the immigrants who have made this country great.

Through the efforts of the citizens of our great Nation, the Statue of Lib­erty is being restored. The values she represents are precious to us. She be­longs to each of us. She, herself, is an immigrant who came to us in the name of liberty. It is only fitting that July 4, 1986, when her torch is relit, also be a time to honor the immi­grants she welcomed to our shores.

Mr. President, I ask unanimous con­sent that the text of the joint resolu­tion be printed in the RECORD.

There being no objection, the joint resolution was ordered to be printed in the RECORD, as follows:

S.J. RES. 290 Whereas on July 4, 1986, the restored

Statue of Liberty will be unveiled at the centennial celebration of the erection and dedication of the Statue;

Whereas the Statue of Liberty has been the symbol of freedom, hope, and opportu­nity for millions of immigrants over the past 100 years;

Whereas the Statue of Liberty serves as a reminder to all that the United States is a Nation of immigrants, a Nation of nations;

Whereas the Statue of Liberty is a lasting memorial to the immigrants who have made America great;

Whereas millions of immigrants settled throughout the vast territory of the United States, and supported the ideals of inde­pendence and liberty;

Whereas the torch held by the Statue of Liberty serves as a beacon of freedom that lives in the soul of every American; and

Whereas it is only fitting that when the torch is relit also be a time to honor the im­migrants welcomed by the burning torch of the Lady of Liberty to a land of freedom where any dream was and is achievable: Now, therefore, be it

Resolved by the Senate and House of Rep­resentatives of the United States of America in Congress assembled, That July 4, 1986, the centennial celebration of the Statue of Liberty, is designated as "National Immi­grants Day", and the President is author­ized and requested to issue a proclamation encouraging the people of the United States to join the President and the Congress in observance of National Immigrants Day with appropriate programs, ceremonies, and activities.

By Mr. HUMPHREY <for him­self, Mr. HELMS, and Mr. EAST):

S.J. Res. 291. Joint resolution pro­posing an amendment to the Constitu­tion of the United States with respect to the right to life; to the Committee on the Judiciary.

S.J. Res. 292. Joint resolution pro­posing an amendment to the Constitu-

tion of the United States with respect to the right to life; to the Committee on the Judiciary.

CONSTITUTIONAL AMENDMENTS WITH RESPECT TO THE RIGHTS TO LIFE

e Mr. HUMPHREY. Mr. President, today, I am introducing two of the better-known bills proposing constitu­tional amendments that will protect all human life at all stages of develop­ment, especially preborn human life. My distinguished colleagues from North Carolina, Mr. HELMS and Mr. EAST, have joined me to cosponsor the unity human life amendment; and my distinguished colleague from North Carolina, Mr. HELMS, has also joined me to cosponsor the paramount human life amendment.

For over 13 years, the unconscion­able and abominable "law of the land" in these United States has granted li­cense to abortion on demand-the le­galized destruction of 18 million unborn American children. For 13 years many of us have mourned the loss of these children, many of us have worked tirelessly and ceaselessly to correct the injustice of legalized abor­tion on demand. And each and every one of us has been profoundly, if un­consciously, affected by this policy.

We are all intimately connected to the very young, unborn human beings being aborted at the rate of 4,500 every day. There is no question that the offspring of human beings are human beings. Commonsense verifies this. And science has demonstrated time and again that the tiny human being in the mother's womb is very much alive. A young fetus moves, hic­cups, sucks its thumb, and responds to sound, touch, and variations in the sweetness of the amniotic fluid.

Abortion, then, is the deliberate kill­ing of a living human being without regard for the right to life all human beings enjoy. Abortion is the greatest human rights issue of our time, and perhaps all time.

As I have suggested, none of us remain unaffected when human rights, the fundamental rights of humans, are violated. I believe this is particularly true in the case of the unborn children who lose their very lives. A wise author admonished a good number of years ago: ask not for whom the bell tolls • • • it tolls for thee. How true this is for us who have lived under the abortion reich that has dominated the American political and ethical scene for these last 13 years. With each violation of the right to life of the unborn, with each abor­tion, with each killing of a preborn child, we are all diminished to some extent, not only because another member of the human race has died, but because that individual was denied life by the very mother who nature in­tended would nurture and cherish the child.

But beyond this each and every one of us is diminished by the death of an unborn baby, because each death rep­resents the increasingly diminished value our society places on life. With each death, society's esteem for the sanctity of life fades, and it becomes easier and easier for our society to per­petrate additional human rights viola­tions on other human beings whose lives seem relatively less worthy, less wanted, less important, less necessary, less economical. I assure each of my colleagues: When the killing of a small, dependent, defenseless human being becomes relatively painless-to us only, of course; to the unborn child it is far from painless-when the kill­ing becomes easy to execute, then those who are the next most vulnera­ble and the next most burdensome must fear greatly for their own lives and human rights.

Today unwanted children are consid­ered society's greatest problem. The almost gross popularity of population control programs, and the sickening million and a half abortions a year in this country alone, testify to this. Handicapped newborns are increasing­ly looked on as burdens, as more and more defective children are given con­servative treatment options and are left to dehydrate and waste away. And I fear the elderly are next in line. The frightening push for living wills, leni­ency for mercy killers, legalized sui­cide, and euthanasia are evidence here.

It is this slippery slide toward almost total disregard for the dignity and sanctity of human life that originally prompted the writing of these consti­tutional amendments, and now in­spires me to offer these proposals.

The first resolution, the unity human life amendment, grants para­mount status to the right to life rela­tive to all other rights found in the Constitution. The amendment declares that all persons, regardless of their condition or stage of development, are protected under the 5th and 14th amendments of the Constitution. Fur­thermore, the amendment provides that no unborn child can be deprived of life by any person, unless it can be shown that a medical procedure is nec­essary to prevent the death of the mother-in which case efforts are re­quired to protect both the life of the mother and the life of the child.

The second, the paramount human life amendment, is a single-sentence amendment granting paramount status to the right to life. It simply states, "the paramount right to life is vested in each human being at the moment of fertilization, without regard to age, health, or condition of dependency.''

Mr. President, these amendments are familiar to all who have followed with any interest at all the abortion

4068 CONGRESSIONAL RECORD-SENATE March 7, 1986 debate and the constitutional remedies that have been proposed. There is no question that a grave injustice was thrust on the preborn when the Su­preme Court in its 1973 Roe versus Wade and Doe versus Bolton abortion decisions determined that a woman has the right to an abortion through­out the 9 months of her pregnancy. It is these decisions, and the resulting flood of antilif e court opinions that we hope to combat with the two human life amendments I have introduced today.

We continue to see and experience the effects Roe and Doe have on our lives today. We see that Roe and Doe set the bell tolling for preborn chil­dren, and we see that as the peals have reached ear-shattering levels, the bells have begun to toll for others too­newborn children, the handicapped, the elderly. Unless one of these amendments is enacted soon, the bell may well toll for thee.e

ADDITIONAL COSPONSORS s. 419

At the request of Mr. GRASSLEY, the name of the Senator from Indiana [Mr. LUGAR] was added as a cosponsor of S. 419, a bill to amend the Internal Revenue Code of 1954 to allow a de­duction for one-half of the expenses paid by a self-employed taxpayer for individual health insurance premiums.

s. 524

At the request of Mr. ARMSTRONG, the name of the Senator from Georgia [Mr. NUNN] was added as a cosponsor of S. 524, a bill to recognize the organi­zation known as the Retired Enlisted Association, Inc.

s. 1793

At the request of Mr. D'AMATO, his name was added as a cosponsor of S. 1793, a bill to amend the Public Health Service Act to establish a grant program to develop improved systems for caring for medical technology de­pendent children in the home, and for other purposes.

s. 1801

At the request of Mr. EAST, the names of the Senator from Georgia [Mr. MATTINGLY] and the Senator from Michigan [Mr. RIEGEL] were added as cosponsors of S. 1801, a bill to amend the Trade Act of 1974 to pro­mote expansion of international trade in furniture with Canada, and for other purposes.

s. 1848.

At the request of Mr. D'AMATO, his name was added as a cosponsor of S. 1848, a bill to amend the Federal Food, Drug, and Cosmetic Act to establish conditions for the export of drugs.

At the request of Mr. HATCH, the name of the Senator from Illinois [Mr. SIMON] was withdrawn as a cosponsor of S. 1848, supra.

s. 1888

At the request of Mr. BUMPERS, the name of the Senator from Washington [Mr. EVANS] was added as a cosponsor of S. 1888, a bill to provide for a pro­gram of cleanup and maintenance on Federal public lands, national parks, recreation areas, and for other pur­poses.

s. 1906

At the request of Mr. BOSCHWITZ, the name of the Senator from North Dakota [Mr. BURDICK] was added as a cosponsor of S. 1906, a bill to provide an opportunity for agricultural bor­rowers to restructure loans from com­mercial lenders and Farm Credit System institutions in order to main­tain the viability of their farming op­erations and thus preserve the family farm system as the backbone of Amer­ican agriculture.

s. 1979

At the request of Mrs. KASSEBAUM, the name of the Senator from Wiscon­sin [Mr. KASTEN] was added as a co­sponsor of S. 1979, a bill to fulfill the purposes of the Airport and Airway Improvement Act of 1982, promote air passenger safety, and provide equity to airway users.

s. 2037

At the request of Mr. DURENBERGER, the name of the Senator from Illinois [Mr. SIMON] was added as a cosponsor of S. 2037, a bill to create a fiscal safety net program for needy commu­nities.

s. 2041

At the request of Mr. MOYNIHAN, the name of the Senator from Hawaii [Mr. MATSUNAGA] was added as a cosponsor of S. 2041, a bill to repeal the Bal­anced Budget and Emergency Deficit Control Act of 1985.

s. 2052

At the request of Mr. CRANSTON, the name of the Senator from Vermont [Mr. LEAHY] was added as a cosponsor of S. 2052, a bill to establish, for the purpose of implementing any order issued by the President for fiscal year 1986 under any law providing for se­questration of new loan guarantee commitments, a guaranteed loan limi­tation amount applicable to chapter 37 of title 38, United States Code, for fiscal year 1986.

s. 2070

At the request of Mr. THURMOND, the name of the Senator from Georgia [Mr. MATTINGLY] was added as a co­sponsor of S. 2070, a bill to require U.S. representatives to international financial institutions to oppose assist­ance by such institutions for the pro­duction for export to the United States of any fiber, textile, or article of apparel, and for other purposes.

s. 2090

At the request of Mr. WALLOP, the name of the Senator from South Dakota [Mr. PRESSLER] was added as a cosponsor of S. 2090, a bill to provide

that the Internal Revenue Service may not before July 1, 1987, enforce its regulations relating to the tax treatment of the personal use of vehi­cles, and for other purposes.

s. 2144

At the request of Mr. NICKLES, the name of the Senator from Idaho [Mr. SYMMS] was added as a cosponsor of S. 2144, a bill to amend the Farm Credit Act of 1971 to provide credit assistance to certain borrowers of loans by insti­tutions of the Farm Credit System, and for other purposes.

SENATE JOINT RESOLUTION 199

At the request of Mr. MURKOWSKI, the name of the Senator from Virginia [Mr. WARNER] was added as a cospon­sor of Senate Joint Resolution 199, a joint resolution to designate the month of November 1985 as "National Elks Veterans Rememberance Month."

SENATE JOINT RESOLUTION 267

At the request of Mr. HEINZ, the names of the Senator from California [Mr. CRANSTON], the Senator from Alabama [Mr. DENTON], and the Sena­tor from Vermont [Mr. LEAHY] were added as cosponsors of Senate Joint Resolution 267, a joint resolution des­ignating the week of May 26, 1986, through June 1, 1986, as "Older Amer­icans Melanoma/Skin Cancer Detec­tion and Prevention Week."

SENATE JOINT RESOLUTION 273

At the request of Mr. HATCH, the name of the Senator from Ohio [Mr. GLENN] was added as a cosponsor of Senate Joint Resolution 273, a joint resolution to designate the week of March 9, 1986, as "National Develop­mental Disabilities Awareness Week."

SENATE JOINT RESOLUTION 275

At the request of Mr. D'AMATO, the name of the Senator from Oregon [Mr. PACKWOOD] was added as a co­sponsor of Senate Joint Resolution 275, a joint resolution designating May 11 through May 17, 1986, as "Jewish Heritage Week."

SENATE CONCURRENT RESOLUTION 97

At the request of Mr. BAucus, the name of the Senator from Arkansas [Mr. BUMPERS] was added as a cospon­sor of Senate Concurrent Resolution 97, a concurrent resolution to request the President to negotiate a North American Treaty on Air Pollution.

SENATE CONCURRENT RESOLUTION 103

At the request of Mr. HART, the name of the Senator from New Jersey [Mr. BRADLEY] was added as a cospon­sor of Senate Concurrent Resolution 103, a concurrent resolution to com­mend Bishop Desmond Tutu for his courageous work for peace and equali­ty in South Africa.

SENATE CONCURRENT RESOLUTION 106

At the request of Mr. SPECTER, the name of the Senator from Nebraska [Mr. ExoN] was added as a cosponsor

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4069 of Senate Concurrent Resolution 106, a concurrent resolution expressing the sense of the Congress with respect to certain amounts proposed by the President to be rescinded.

SENATE CONCURRENT RESOLUTION 109

At the request of Mr. BUMPERS, the names of the Senator from South Carolina [Mr. THURMOND], the Sena­tor from Illinois [Mr. SIMON], and the Senator from Maryland [Mr. MA­THIAS] were added as cosponsors of Senate Concurrent Resolution 109, a resolution expressing the sense of the Congress that February 28, 1986, should be designated "National Trio Day."

SENATE RESOLUTION 82

At the request of Mr. D'AMATO, the name of the Senator from Connecticut [Mr. DODD] was added as a cosponsor of Senate Resolution 82, a resolution to preserve the deduction for State and local taxes.

SENATE RESOLUTION 105

At the request of Mr. MATTINGLY, the names of the Senator from South Carolina [Mr. THURMOND] and the Senator from Maryland [Mr. MA­THIAS] were added as cosponsors of Senate Resolution 105, a resolution to designate March 21, 1986 as "Henry Ossian Flipper Day."

SENATE RESOLUTION 335

At the request of Mr. PELL, the name of the Senator from Vermont [Mr. LEAHY] was added as a cosponsor of Senate Resolution 335, a resolution ex­pressing the Senate's opposition to the imposition of a fee on imported oil and refined petroleum products.

SENATE RESOLUTION 339

At the request of Mr. BYRD, the names of the Senator from Michigan [Mr. LEVIN] and the Senator from Montana [Mr. BAucusl were added as cosponsors of Senate Resolution 339, a resolution to express the sense of the Senate with respect to proposals cur­rently before the Congress to tax cer­tain employer-paid benefits and other life-support benefits.

AUTHORITY FOR COMMITTEES TO MEET

SUBCOMMITTEE ON IMMIGRATION AND REFUGEE POLICY

Mr. DOLE. Mr. President, I ask unanimous consent that the Subcom­mittee on Immigration and Refugee Policy of the Committee on the Judici­ary be authorized to meet during the session of the Senate on Friday, March 7 in order to hear testimony regarding the case of Mirslav Medvid.

The PRESIDING OFFICER. With­out objection, it is so ordered.

SUBCOMMITTEE ON MILITARY CONSTRUCTION

Mr. DOLE. Mr. President, I ask unanimous consent that the Subcom­mittee on Military Construction, of the Committee on Armed Services be authorized to meet during the session

of the Senate on Friday, March 7, 1986, in order to conduct a hearing on S. 2132, the fiscal year 1987 military construction authorization bill.

The PRESIDING OFFICER. With­out objection, it is so ordered.

ADDITIONAL STATEMENTS

WHITE HOUSE CONFERENCE RECOMMENDATIONS ON THE SMALL BUSINESS ADMINISTRA­TION

e Mr. WEICKER. Mr. President, the White House Conference on Small Business, scheduled to conclude in Washington, DC, on August 23-27, 1986 is currently conducting its requi­site ~onferences across the country in each of our 50 States. Participants in 32 of those meetings that have already been held called for the preservation and continuation of SBA as an inde­pendent agency, in light of the admin­istration's recent attempts to elimi­nate it. Small business owners have proposed creative ideas for strengthen­ing, streamlining and improving SBA's programs and services, while unani­mously proclaiming the need to pre­serve the only agency in the executive branch whose sole mission is to coun­sel and assist the 14 million small busi­nesses driving America's economy.

Mr. President, I would like to insert, for the record, the following specific list of recommendations formulated by the key small business participants from each State which clearly reflect their strong desire and need for the lending, management assistance and disaster loan services provided for over 30 years by the SBA. WHITE HOUSE CONFERENCE ON SMALL BUSI­

NESS-FINAL RECOMMENDATIONS ON THE SMALL BUSINESS ADMINISTRATION

WISCONSIN: SEPTEMBER 5, 1985

1. Retain the SBA and it's Office of Advo­cacy as an independent agency in the Feder­al Government to continue the important small business services, including, but not limited to: guaranteed loans <with a shorter approval process>, management assistance, data compilation and distribution.

2. Create a communication letter through the SBA to small business owners to provide two-way communication on topics of small business interest.

3. Future reductions in the SBA budget should be proportionally matched by reduc­tions in the budgets of other Federal agen-cies.

ILLINOIS/SPRINGFIELD: SEPTEMBER 13, 1985

1. Continue the Small Business Adminis­tration as an independent agency.

2. Cooperative agreements between banks and the SBA with banks assuming responsi­bility should be developed. The SBA should assess the need for a business and its eco­nomic impact before loans are approved. The Preferred Lending Program should be expanded with banks taking 25 percent ?f the risk. Special efforts to educate and tram banks and their employees on SBA financial programs should be made.

i

3. A redefinition of small business should be made by broadening the scope to include businesses within geographic areas. Guaran­tor of a small business obligation should be classified as an owner and classification of a small business should include both the number of employees and the amount of assets.

MINNESOTA: SEPTEMBER 1 7, 19 8 5

1. The existing guaranteed loan program to fund small businesses and new business start-ups should be continued.

2. A new cabinet position should be cre­ated especially for the SBA.

3. Existing resources should be allocated and emphasized by placing more emphasis on management and counseling tools versus the financial resources and allocations, re­sulting in improved quality of SBA pro­grams.

MICHIGAN: SEPTEMBER 20, 1985

1. The SBA should be retained as an inde­pendent agency.

2. At least a 90-percent guarantee should be retained on guaranteed loans.

3. Funding for the MESBIC and SBIC programs should be increased.

WYOMING: OCTOBER 1, 1985

1. The SBA should be continued with a sunset provision and an improved communi­cation network to let the public know of programs and services, and the agency should be placed on a self-funding basis.

2. The SBA should be more responsive after the business start-up by providing an account manager; future working capital needs and lender participation should be in­creased.

3. The SBA should consider new standards for labor-intensive financing in addition to fixed-asset financing.

UTAH: OCTOBER 4, 198 5

1. The SBA should establish simplified procedures and reallocate resources to busi­nesses with fewer than 50 employees.

2. The SBA should become an advocate for small businesses at the educational level, at the IRS and at the Department of Labor.

3. The SBA should be expanded to include a short-term guarantee program and a re­volving line of credit for domestic originated accounts receivable.

COLORADO: OCTOBER 8, 1985

1. The role of the SBA should be rede­fined by examining its mission, including local input, emphasizing education, reexa­minating priorities, and reducing the bu­reaucracy.

2. SBA direct loans should be eliminated. 3. The SBA Office of Advocacy should be

continued, its role strengthened, utilized as an information source on the effect of legis­lation on small business and to examine the relationship between large and small busi­ness.

CONNECTICUT: OCTOBER 11, 1985

1. The SBA should be maintained as an in­dependent agency.

2. SBA spending should be increased to take a more aggressive marketing stance and to improve the training of new business people.

3. There should be mandatory training in the areas of finance and business operations for all new persons receiving SBA loans.

RHODE ISLAND: OCTOBER 16, 1985

1. The SBA should be retained with a di­rection and philosophy established by a committee of small business people. Small business criteria should be redefined.

4070 CONGRESSIONAL RECORD-SENATE March 7, 1986 2. A line of credit should be made avail­

able through an SBA program to accommo­date smaller business loans.

3. Resources available through the Small Business Development Centers <SBDC> should be expanded.

ILLINOIS/CHICAGO: OCTOBER 24 , 1985

1. The Small Business Administration should be continued.

2. The SBA should be maintained and strengthened at the Federal level by creat­ing a cabinet level position for small busi­ness.

3. Small businesses should be redefined into a multi-tiered system.

NEBRASKA: OCTOBER 28, 1985

1. Congress, the SBA, universities and local development groups should develop a small business training package to assist small business start-ups.

2. There should be a partnership of the public and private sector with the SBA to increase the entrepreneurial knowledge flowing from other states into start-ups in Nebraska.

3. Congress and the SBA should continue the Women, Minority and Advocacy pro­grams.

NORTH DAKOTA: NOVEMBER 1 , 1985

1. The Administration and Congress should act on the future of an agency for small business. The agency should have a strong advocacy role rather than financial. The agency should be continued as is, and be accountable to cost effectiveness and the agency's worth.

SOUTH DAKOTA: NOVEMBER 6 , 1985

1. An advocacy committee should be cre­ated which can represent small business and control increases in line items costs which should be held to no more than 2 percent over the rate of inflation.

VERMONT: NOVEMBER 15, 1985

1. The SBA should be maintained as an in­dependent agency with greater emphasis on the use of private sector services and avoid­ance of duplication of services provided by state and local governments and non-profit organizations.

MAINE: NOVEMBER 19, 1985

1. The SBA should be continued as an in­dependent agency. In particular, the SBDC program should be expanded with an em­phasis on micro businesses 000 or less em­ployees). The SBIC minimum size should be increased to $3,000,000 and the debt to net worth ratio should be adjusted to reflect true investment. The guaranteed loan pro­gram should also be continued.

NEW HAMPSHIRE: NOVEMBER 22 , 1985

1. The continuation of an independent SBA to serve all businesses from sole propri­etorships up to 150 persons is supported. The agency should represent small business at all decision-making levels of government.

2. The charter of the SBA should empha­size the training needs of small business, particularly the information and market re­search needs of very small businesses.

3. The SBA should focus its marketing, communications and resources on its largest constituency: very small businesses, self-em­ployed people, women and minorities.

MASSACHUSETTS: NOVEMBER 26, 1985

1. Congress should strengthen and pre­serve the SBA as an independent agency.

2. The SBA should become a cabinet-level agency.

3. The SBA should have a board of direc­tors comprised of and chosen from the pri­vate sector to develop policy for the SBA.

OHIO: DECEMBER 5, 1985

1. The SBA should be continued as an in­dependent agency.

2. The SBA size standards should be re­vised so the agency can focus its resources on smaller businesses. Resource delivery should be segmented so assistance is avail­able to small businesses.

3. Approval of SBA loans should be local, wherever possible, so the agency has flexi­bility in dealing with the problems of its cli­ents.

PENNSYLVANIA: DECEMBER 11 , 1985

1. There should be an agency that acts as the voice of small business in the Federal es­tablishment.

2. The SBA should serve as a clearing­house for ideas from the small business community <i.e. toll-free telephone number, and a computerized data base that can be accessed by modem>. This would reinforce the need to change the programs and chain of command to more effectively work for small business <i.e. creative uses of equity, identify sources of skill and talent within an agency to help business).

3. More marketing of small business pro­grams and services should be conducted, es­pecially advocacy and management assist­ance (particularly for those businesses with loans>. SCORE is a good program but many businesses need more continuous help.

WEST VIRGINIA: DECEMBER 17, 1985

1. The SBA should be retained as an inde­pendent agency of the Federal Government to continue servicing small business by in­creasing the availability of guaranteed loans and expanding management services.

MARYLAND: DECEMBER 19, 1985

1. The role of the SBA should be rede­fined to recognize two classes of small busi­ness; micro businesses and small businesses. The agency's functions should be divided ac­cordingly.

2. The SBA should be retained and its services expanded.

3. The Office of Chief Counsel for Advoca­cy should be placed solely under Congress.

CALIFORNIA/ ANAHEIM: JANUARY 7, 1986

1. The SBA and the Office of Advocacy should be maintained as an independent agency, reporting to the President and re­sponsible to small businesses of America.

2. The SBA 7(a) guaranteed loan program limit should be increased to $1 million.

3. An annual SBA national conference for small business should be established. CALIFORNIA/SAN FRANCISCO: JANUARY 10, 1986

1. The President and Congress should es­tablish the SBA as a cabinet-level position.

2. The SBA should undertake a program to educate the American people regarding the value and role of small business using effective modern techniques.

3. The SBA should establish subcategories and programs for businesses with incomes of <a> $1 million or less, and Cb> $100,000 or less, and <c> subcategories and programs based upon the number of employees, with special emphasis on smaller small business­es.

HAWAII: JANUARY 14, 1986

1. Reductions in the following SBA pro­grams should be avoided: guaranteed loans, management assistance programs, SBICs, procurement assistance, disaster. loans, SBDCs, and surety bond guarantees. Also, the SBA should advocate private sector con­tracting of government provides services.

WASHINGTON: JANUARY 1 7, 19 8 6

1. Congress should enact laws to lower size qualifications for SBA aid to 150 employees or less.

2. Local community organizations should be created to advise and train the SBA on the local direction of the agency.

3. The SBA should be retained in a modi­fied form.

PUERTO RICO: JANUARY 24, 1986

1. The SBA should stay as it is and its pro­grams and services should be expanded.

NORTH CAROLINA: JANUARY 28, 1986

1. The SBA should be retained, in particu­lar, the loan and bond guarantee programs, the advocacy role, and education and train­ing programs.

2. The paperwork and certification proce­dures of the B<a> program and other pro­grams, where appropriate, should be streamlined.

3. The size standards in the SBA's small business definition should be reduced to 20 full-time equivalent employees or less.

SOUTH CAROLINA: JANUARY 31 , 1986

1. The current purposes and programs of the SBA should be periodically evaluated in order to restructure the SBA for the needs of small business people. A commission of small business people should be formed to oversee this restructuring from the elected board of delegates.

2. Due to a non-responsive SBA, an annual state conference of, and for, small business people should be established.

3. Small business in relationship to size standards should be redefined. Specifically. 500 employees is too large.

FLORIDA/ORLANDO: FEBRUARY 5, 1986

1. The SBA should be maintained as an in­dependent agency with special emphasis on the data base and advocacy programs.

2. The Surety Bond program should be re­tained.

3. Small business programs should be tai­lored to sizes of businesses.

NEW YORK/RYE: FEBRUARY 10 , 1986

1. Congress should retain and expand the SBA with more direct involvement with local organizations. The current roles of ad­vocacy, procurement, counseling and lend­ing should be enhanced. The SBA should be elevated to cabinet-level status, and Con­gress should create a commission to study SBA lending practices.

2. Small businesses should be redefined to 100 or fewer employees.

3. The SBA should be charged with lobby­ing and implementing the White House Conference on Small Business recommenda­tions.

FLORIDA/ MIAMI: FEBRUARY 14, 1986

1. Federal funding for the SBA should be continued. However, conference delegates must establish a list of priorities of the SBA and eliminate non-essentials to lower and administrative costs of the agency.

2. The definition of a "small business" should be modified by lowering the number of employees and sales revenues allowed so that more funds and progr1;1.ms are available for the truly "small business."

3. The Federal Government should in­crease the budgets for the financial assist­ance programs sponsored by the SBA.

MISSISSIPPI: FEBRUARY 19 , 1986

1. A cabinet-level position should be estab­lished for small business, separate from the SBA.

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4071 2. In terms of the future of the SBA, all

direct loans should be eliminated, the sec­ondary loan market should be continued, Minority Small Business and Capital Own­ership Development programs should be continued and Government set-aside should be strictly enforced.e

THE EFFECT OF BUDGET CUTS ON THE LIBRARY OF CONGRESS

e Mr. SARBANES. Mr. President, few Americans would disagree with the recent observation of Daniel J. Boorstin, the Librarian of Congress, that "free government is based on free, copious and current access to knowledge." We must all therefore share Librarian Boorstin's concern over the situation currently confront­ing the Library, for that situation-an $18.3 million reduction in funds for the current fiscal year-means an im­minent, drastic curtailment of the whole range of services provided by the Library.

Beginning next week, the hours of the Library's reading rooms will be re­duced by one-third, from 77 .5 to 54.5 hours weekly. The reading rooms will no longer be open to the public in the evenings or on Sundays. Services for the blind and handicapped will be cut back dramatically. Acquisitions will be reduced. Preservation activities will be sharply restricted. Library staff will be reduced by several hundred.

Mr. President, these changes do not constitute marginal adjustments in­volving minor inconvenience to Li­brary users; on the contrary, they rep­resent a major shift, undertaken with extreme reluctance, in Library policy. It is now almost 90 years since the de­cision was carefully taken to extend Library of Congress hours into the evening. In 1897 the Joint Committee on the Library raised the possibility of "such further appropriations as may be necessary for the employment of an additional force in order that the Li­brary may be opened at night for the general public," a proposal vigorously endorsed by the Librarian of Congress at that time, John Russell Young. Evening hours began October 1, 1897, and within the month the Library could formally report that "the results affirm the wisdom of its <Congress') decree." The congressional action, he declared, "throws open to the people the opportunity of a university educa­tion." The commitment to Library services for the blind was actually un­dertaken more than a century ago, in 1879, and quickly served as a model for similar libraries in cities around the Nation.

Anyone who has worked in the Li­brary of Congress, or benefited from any of the extraordinary services it offers, or come to that magnificent ed­ifice simply as a visitor or a citizen of this free Nation, understands at once that the Library is more than Con­gress' Library. It is the Nation's Li-

brary: more precisely, it is the people's Library. With essential services about to be so drastically and unhappily re­duced, we should reflect soberly on the dubious values and priorities which such a step reflects.

Mr. President, the restrictions about to be imposed on the Library of Con­gress' services to the public have pro­voked widespread comment and criti­cism. I ask that articles reporting the public reaction to the new policy be printed in the RECORD.

The articles follow: [From the Baltimore Sun, Feb. 28, 1986]

DRYING UP AN OASIS <By Paul Dickson>

WASHINGTON.-On October 1, 1898, the Li­brary of Congress began to keep its doors open in the evenings in a move to make the place more useful to the general public. With its own electric plant powering a table lamp for each reader <no small thing in those days) it became an immediate public oasis. As the Librarian of Congress at the time saw it, the library was now on its way to becoming "a bureau of information con­sulted by people from all sections".

Through two world wars and the Great Depression the Library of Congress stayed open until at least 9:30 at night and was open every Sunday. Over time a large off­hour clientele grew up. A recent tally showed that some 650 patrons used the place on a typical evening and that 1,000 were likely to show up on a Sunday.

On Sunday, March 9, though, the Library of Congress will be closed and from then on will be closed ·every Sunday, holiday and evening, except for Wednesday. In other words, the hours during which the Nation's, and perhaps the world's, most important li­brary will be open will be slashed by a third, from 77 'h a week down to 54 'h.

In effect, the democratic era at the Li­brary of Congress is about to draw to a close, for the simple reason that most people are not free during working hours and they have now been cut off from our great El Dorado of information.

Anyone who has not used the majestic main reading room of the Library of Con­gress during the evening or on the weekends has missed seeing the thirst for knowledge being slaked in a most vivid manner.

There are still professional scholars and Congressional staffers here after the sun goes down, but they join a motlier crew of students, bibliophiles, amateur genealogists, and plain working stiffs of all types who have come to this place because there is something here that they need which cannot be found in a municipal library.

They come here for everything: recipes, obscure biographies, poetry, laws and almost anything else one can imagine, in­cluding the right bit of historic or artistic insight to inspire the great American novel.

A few years back, while doing some re­search on the violent uprisings of railroad workers in 1877, I became fascinated with a man in a blue blazer seated next to me who was diligently transcribing the inning-by­inning box scores of baseball games that had been played when Woodrow Wilson was in the White House. I spotted him again a year so later and he was still at work re-re­cording all those hits, runs and errors. Was he replaying the games in his mind? Was he trying to unlock some long-lost statistical secret? Who knows? But whatever his mis­sion, it is somehow representative of the

fact that this is where the public can come to do what is privately important.

You will still be able to see this ever­changing odd lot of people, but only on Wednesday nights and Saturdays. The reason for this is the budget cut which is trimming some $18.3 million out of the li­brary's budget.

Besides reducing hours, the library is, among other things, being forced to cut its staff by 300, buy many fewer books, and cut $1.2 million from the funds spent on the Na­tional Library Service for the Blind and Physically Handicapped.

Lest there be any question, the people who run the library see all this in disastrous terms and are, if anything, more burned up about the curtailed hours than the people who are about to be shut out. Their only hope is that somehow by the beginning of the next fiscal year which comes on October 1-88 years to the day from the first day of extended hours-Congress will come around to finding a way of reinstating funds, a very difficult trick in the Gramm-Rudman era. Odds are, however, that the ball game is over for the man in the blue blazer, at least until that time when some idealist revives the idea that the public should have access to this great national treasure.

<Paul Dickson is a freelance writer and the author of 15 books, of which the most recent is "On Our Own: A Declaration of In­dependence for the Self-Employed." He is presently compiling an anthology about li­braries.>

[From the Washington Post, Mar. 3, 1986] LIBRARY OF CONGRESS USERS ARE UNHAPPY

ABOUT CURTAILED HOURS <By Barbara Carton>

Pamela Montez is 16, a student at Ban­neker High School. Often, she goes to the Library of Congress to do research. Yester­day, she worked on a science paper on dreams. She sat in the soft yellow light of a desk lamp, amid the marble columns and stained glass of the Main Reading Room, upset about federal budget cuts that will end her Sunday library hours.

To meet the requirement of Gramm­Rudman-Hollings, the deficit reduction law, the library has announced that it will reduce its 5,200-member work force by 300 and slash expenses for acquisitions and preservation. But the library is also drasti­cally cutting the hours its general reading rooms are open to the public. Yesterday was the last Sunday that the library's 20 reading rooms will be available to visitors such as Montez.

"I'm pretty disturbed about that fact, be­cause the library has been very instrumen­tal in helping me with my research papers," said Montez, of Washington, who has a strong interest in chemistry Cher next paper is on the reduction cycle of carbon dioxide and photosynthesis), but who hopes to become an architect. "Our teachers often assign us reports and studies where I can only find the information in the Library of Congress, because the Martin Luther King Library [the District's main library] is not that extensive."

Seated next to Montez was her mother Frances, a 44-year-old elementary school teacher in the District. Frances Montez takes night graduate courses in early child­hood education at the University of the Dis­trict of Columbia, and weekends are the only times she has to study.

She spent all of Saturday in the library, across the street from the U.S. Capitol, and

4072 CONGRESSIONAL RECORD-SENATE March 7, 1986 was back yesterday, working on school lesson plans and awaiting a science book on mammals from the reading room's collec­tion of 45,000 reference books. "I'll just have to squeeze the time in on Saturday," she said.

"I am upset," said Andrei Brezianu, 51, a Romanian citizen who works for the Voice of America and who spent his last Sunday among the mosaics and murals, researching the poems of Robert Penn Warren for an upcoming broadcast.

"I'm going to try to come here weekdays after work, and I'm not sure it's going to be very functional because one is tired then. It's not the best time to be fresh for a new round of work."

Cindy Read, a 27-year-old student at Gal­laudet College in Northeast Washington, went to the Library of Congress for the first time yesterday. She had read about the budget cuts and wanted to visit the reading room, with its 212 desks, on the final Sunday. Also, she hoped to find a place of great silence to study her book on the Daniel Ling method of teaching speech to hearing-impaired children.

"I wasn't sure whether this was going to be a good study place or not, but it has been great so far," said Read. "Just looking around, I've been thinking a lot about it. There have been a lot of people in and out. There has been a lot of traffic, and I am dis­appointed it's going to close on Sundays.

Robert Popper was there, too. He is 26, a lobbyist for the National Tax Limitation Committee. Yesterday, Popper sat under the room's 160-foot domed ceiling, examin­ing the outlines of congressional districts for a study on gerrymandering. He found some jagged map lines that looked suspect, including one in Illinois. But he said the new library hours will not bother him much. Popper visits only about once every two months.

"Also, you should know that I'm personal­ly and professionally in favor of Gramm­Rudman," he said.

[From the Washington Post, Feb. 12. 19861 [Letters to the Editor]

THE LIBRARY OF CONGRESS: KEEP IT OPEN If Gramm-Rudman forces the Library of

Congress to shorten its hours, why not cut morning hours rather than evening?

Surely the working person is entitled to as much access to this library as are those who can afford time during the day-Thomas H. Wolf, Gaithersburg.

The budget cutting at the Library of Con­gress is a false economy that will result in major cost escalation throughout govern­ment and industry for years to come.

By closing the Library of Congress on eve­nings and Sundays, researchers will be obliged to go to the library during ordinary office hours. The staff cuts at the library will also make any effort to get library ma­terials much more time-consuming. The result will be that everyone using the li­brary will almost certainly have to leave their regular jobs in order to use the li­brary.

In many instances this will result in ab­senteeism, and in other instances it will impair ordinary working schedules. Current­ly, people from across the country visit Washington on weekends to use the library on Saturdays and Sundays: without Sunday operations these people will be obliged to spend more money to visit the library during the week or to stay in the city an extra day to complete their projects.

In every instance the cut in library service will raise the costs of research, and that in­crease will be passed on to the consumers over and over again. In the end, it will cost the taxpayers more than if the library had been allowed to keep its services at their op­timum level.-Bernard J. Sussman, Wash­ington.

On Feb. 4 The Post published in the Style section a story about cuts at the Library of Congress. This is not a matter of "style." The gutting of the nation's library should be front-page news. It is not "a la mode" or "chic" to whittle away at the foundations of traditional and unique American institu­tions, such as the Library of Congress, which have given our country's citizens access to freedom of information and learn­ing and have kept us the strong democracy that we are.-Martha Grosse, Washington.

[From the Washington Post, Mar. 2, 19861 [Letters to the Editor] MY HOME Is DESK 131

Last Wednesday, while I waited for a cab at the entrance of the Library of Congress, my eyes caught a bronze plaque mounted on the archway: "Library of Congress/Hours of Public Service/Main Reading Room: Monday thru Friday 8:30 a.m. to 9:30 p.m.; Saturday 8:30 to 5 p.m.; Sunday 1 to 5 p.m.

Despite two decades of using the library, I had never really noticed that plaque. But this night, the words "hours of public serv­ice" took on a sad irony. Beginning March 9, the library will close its reading rooms on Sundays and after 5:30 p.m. every week except Wednesdays.

I grew up in my father's professional li­brary of history, law and political science books. My idea of amusement was to sneak old copies of Life magazine out of the attic, curl up in his big armchair and read for hours by the fire. When these were exhaust­ed, there were biographies, histories, diaries, encyclopedias and stacks of newspapers to be explored, to say nothing of back issues of The New Republic, Atlantic Monthly and The Nation.

When I grew up and returned to this area after college, the Library of Congress became my place, my hearth away from home. Regardless of the turns my career has taken-in politics and out, on the Hill and off-something always brings me back to Desk 131 in the Main Reading Room.

Research is now my first love. I spent seven years gathering material for Cather­ine Marshall's novel "Julie," set in Johns­town after the flood of 1889. What ques­tions the author would throw at me! "When did Bethlehem Steel take over the Johns­town plant?" "Find a Penn Railroad timeta­ble showing the schedules between Johns­town and Pittsburgh." "Where would Cali­fornia red wine have been bottled on the East Coast in the '30s?" And, zaniest of all, how to capture the noises of angry chickens! Solving that ultimately led me to an experi­ment by a prize-winning poultry geneticist at Virginia Polytechnic Institute.

Over the years I have met an amazing col­lection of people at the library. We come as seekers. Who were my compatriots last Wednesday?

A Cardozo High girl writing an English paper on careers. Her choice? Pediatrics.

A third-year law student from the Univer­sity of Virginia. Her subject: the status of women in 17th-century England.

A Canadian professor of music, research­ing a book on Felix Mendelssohn.

A young woman finishing her master's thesis on the "evolution of the sculptural

ceramic menorah form." Taking 11 credits at two universities, she has no time to re­search it during the day.

A former Cuban refugee, now a secretary at the World Bank, working toward a degree in English. Evenings are all she has.

What will happen to that plaque now? How many years has it been there, the "hours of public service" taken for granted? Will it be taped over? Taken down? What will happen when the doors close at night and on Sundays?

No, people won't die, nations won't fall, fortunes won't be lost. But it will be a great loss, a silent tragedy.-Margaret Shannon.

DOWN TO BASICS Soon after I got out of college, I went to

work for a magazine in New York, which was my home. I worked a 9-to-5 day as a fact-checker and editorial assistant. and I soon learned that I wanted to write articles. Well, the only time I had to use the li­brary-the New York Public Library-was 6 to 10 at night and Saturdays and Sundays. If there had been no library available week­day nights and weekends, I'm not sure I could have become a writer.

If the Library of Congress closes nights as of March 9, someone getting out of college now might never have the chance that I had.

The Library of Congress is a basic place, and it does what it does on a modest budget-about $200 million. It's not lavishly furnished. You sit on a wooden chair and file a slip for a book, and you get the book in 50 minutes. That's incredible service.

I've been going there since 1968. There's no waste that I've seen. You don't see people hanging around chatting on the phones; there seems to be the right number of people in the stacks, the right number of reference librarians. There's very little to trim.

If you care about preserving knowledge, you can't stop acquiring books, you can't give up your preservation service, you can't want to trim the hours back. It's a national treasure, and we're going to restrict its use?

I now work for The New Yorker magazine, but I don't have an office in Washington. The Library of Congress has become my office. I use the resources that only the Li­brary of Congress has-the rare book room, the manuscripts collection, the newspaper reading room, the map section. I just fin­ished a book I could only have written at the Library of Congress, about an incident in New Guinea during World War II. The li­brary had everything I needed.

I've become friendly with scholars there, and there's a far greater diversity than I would have guessed. I've been privileged to have a desk there, just a plain desk, but it's mine. I can keep a typewriter there, I can keep books there. The library is my commu­nity-the scholars, the reference librarians and the police officers who inspect the bags every night.

The Library of Congress is incomparable. It should stay the way it is.-Susan Shee­han.

THE WOMAN IN PLAID While I was sitting in the Social Science

Reading Room the other night, a young woman in a green plaid skirt and a dark blue sweater and running shoes came over to my desk. She needed a volume I had. We chatted. She is a graduate student at a uni­versity in West Virginia and she's doing re­search at night for her master's thesis in

March 7, 1986 CONGRESSIONAL RECORD-SENA TE 4073 social science. She has an internship in the city during the day. The library provides a shelf for her books-a service lacking at most other local university libraries. "This shelf has been a tremendous help," she said. And it's so inspirational to be here. What am I going to do after they close the library at night?"

I remember what it was like to be a stu­dent at the Library of Congress at night. I, too, was working on my master's degree, in English. I was an "editorial assistant"-a typist, really-by day. I looked forward to my nights in the Main Reading Room.

Entering that room was like being trans­ported. I felt warm and alive. The columns stretched tens of feet high. The magnificent dome soared overhead. Adorning the upper reaches of the alcoves were statues of poets and philosophers. A huge clock, overhung with a figure of Father Time with his scyhe, checked off the minutes for the visitors at their desks below.

I always had a sense that the riches of scholarship were at my fingertips. Unlimit­ed numbers of books could be ordered, and the service was fast. Time flew on those magical weekday nights. It always shocked me to see the clock pointed to 15 minutes before closing. When I finally got my mater's degree, I qualified for a good rating in the federal government.

I didn't abandon the library. Later on, I began to write free-lance articles in my spare time, and the library was invaluable. I was never alone. I saw elderly people, young people, black and white people. Most of the men wore business suits, and I imagined they had come directly from the office.

But it was the women who interested me most. They reminded me of myself two dec­ades before, stuck in an entry-level, low­paying job. Were they also using the library to find opportunity?

I feel sorry for that young woman in the plaid skirt and blue sweater and running shoes. What will happen to her when the doors close at night?-Carol Lee Morgan.

A "PARADISE"

One might expect to find a music histori­an in a music library, poring over scores and blissfully listening to recordings. Well, yes­but that's not the whole picture. The study of music requires a great deal of research outside the music collections, and conse­quently, I find myself about half the time using materials in the general collection at the Library of Congress.

As a scholar lucky enough to have a study desk at LC, many of my hours are spent above, rather than in, the Main Reading Room-that magnificent, domed, ornate 1890s space that is one of the most beautiful in all of Washington. The gallery isn't a silent study area, but it is serene. The sound in the huge open room below is rather like that of a cathedral: an ever-present back­ground hum of low murmurings, punctuated by the scraping of a chair, the major third ring-aling of the telephone, and the percus­sive click that reverberates through the room each time a librarian at the main desk shoves a call slip into the time clock.

There are lots of "regulars" at the library: academics, governments officials, think-tank types, writers. We regulars tend to develop a kinship. Scholars begin to look familiar; we stop to chat and compare progress reports and take coffee breaks together. We get to know the reference librarians and they us. We know where to look for what we need, which alcoves hold which reference books, which books are in the general stacks and

71-059 0-87-34 (Pt. 3)

which in the special reading rooms or spe­cial collections, when to use the computer and when to use the card catalogue, when to concede defeat and enlist the help of a li­brarian. We also learn how to find some­thing when the library doesn't have it. Con­trary to folk wisdom, the Library of Con­gress doesn't have everything.

Ah, but it does have a lot, and in many ways it is a scholar's paradise. If I'm reading a book on the 19th century and find a refer­ence to a memoir published in New York in 1842, chances are good that I can put my hands on that very memoir without leaving the building. If I come across a mention of a letter written by a major historical figure in 1795, I might find the original in the manu­script division.

I rarely stay until closing, but when I do, I sense a change in the library's patrons. They may not be more dedicated, but they seem to be burning the midnight oil.

I've always been amazed that in New York scholars manage to do their research given the limited hours of the New York Public Library. Now I reckon scholars in Washing­ton will have to learn to manage too.-Kath­erine K. Preston.

[From the Washington Post, Feb. 5, 1986) GRAMM-RUDMAN: AN EARLY CASUALTY

One of the saddest casualties of the Gramm-Rudman-Hollings law, I'm afraid, is going to be the Library of Congress. The li­brary annnounced its decision to curtail evening hours in the Main Reading Room and exhibit halls from five nights a week to only Wednesday nights. The library budget­cutters consider the new hours necessary to meet requirements of the Gramm-Rudman­Hollings law. The new hours are expected to go into effect in March.

Over the years, the library has been cut­ting back in various ways. No longer is it open on such holidays as Martin Luther King Day and Washington's Birthday. But the loss of most of the evening service will work even greater greater hardship on resi­dents of this area. Although I can point only to my own situation as an example, I'm certain that others will be similarly affect­ed. I could not have obtained my master's degree in English without working at a job during the day and going to class and the li­brary at night. The library has exhaustive holdings in subjects of literary interest.

Also, I could not have enjoyed a second income from free-lance writing for several years unless I had visited the library at night to do research. Library hours one night a week and on weekends would never have sufficed.-Carol Lee Morgan, Washing­ton.

[From the Washington Post, Feb. 25, 1986) FISCAL BOOK-BURNING

<By Richard Cohen> The first time I went to Britain I was

shocked. I had been reading stories about high estate taxes, about how the wealthy had gone the way of the colonies, about a society so bereft of luxury that, aside from the quaint way of speaking, you would have thought, ducky, you were in bloody Russia itself. I was, I soon found, misinformed.

And so someone would be if he came here after reading about our fiscal crisis. This person would have been reading about defi­cits and about government programs being curtailed for lack of money. But just as I en­countered Jaguars galore on the streets of London and crowds three deep at the gaming tables, you would find little evidence

that the United States is in the midst of an economic crisis-one so profound that it cannot fund necessary programs. Now, though, it is the Library of Congress that is being put on Depression rations.

If there is a hierarchy of government serv­ices and programs, then it's hard to argue that a library should be at the top. We are, after all, not talking milk for babies, cancer research, a lawyer for a poor person or any­thing about life and death. Instead, we're talking about a curtailment of existing serv­ices. The hours in which the reading rooms will be opened to the public will be reduced by one third. Services to the blind and the handicapped will be cut back; 300 of the li­brary's 5,200 staff will be eliminated, and aquisitions and preservation of books and other materials will be reduced.

But why? On the streets near the library there is prosperity. All around are the signs of it. Inside, though, books that should be bought will not be. Blind people will be turned away. Scholars will be told to come back in the morning. A rich, prosperous nation has decided that some things are more important than learning, than schol­arship and-maybe even more disturbing­more important than respect for them. What ought to be untouchable, what repre­sents the corpus of knowledge, is being mauled as if it were a boondoggle of a water project.

There is a question here of values-like the family that would rather buy a new car than pay for college tuition. In the case of the Reagan administration, it is not just that its priority is the military and that, for the sake of more guns, everything else must suffer. It's more than that. The reduction in the library's budget is a rebuff to the notion of community, to the idea that we owe one another and that knowledge is jointly held-both a heritage from the past and a resource for the future. Now the emphasis is on the individual and the present. The lonesome entrepreneur riding a horse of conservative claptrap is somehow supposed to invent a whole new future. He owes noth­ing and is owed nothing.

Pure politics is not the issue here. No one says that the library, like public radio, should be of no concern to the government. No one is arguing that the government should not provide the poor with lawyers, support ballet or teach suburbanites how to clip rose bushes. No. The Library of Con­gress is as old as the nation itself. Its seeds came from Jefferson's own library at Monti­cello. What is being said, instead, is that we won't support it. We simply choose not to. We prefer to keep the money for ourselves.

That is the stark truth of it. This is a fiscal crisis of our own concoction. Libraries may have closed in the Great Depression, but there is no depression-great or other­wise-now. Other governments may be forced, because of debt or plummeting oil prices, to abolish programs, but this one does it because it chooses to. After all, no one accused the Library of Congress of doing too much, of wasting its money-of serving too many blind people, of purchas­ing too many books. We are simply saying we choose not to support it.

Now, like me on my first trip to Britain, a visitor here would see immediately that something is out of joint. The country is prosperous, its public institutions not. The stock market booms, the streets are full of Mercedeses and Cadillacs, but the Library of Congress is going to be closed when it used to be open. What started when it used to be open. What started as a fiscal crisis is

4074 CONGRESSIONAL RECORD-SENATE March 7, 1986 now one of values. We are poorer than we think.

[From the Philadelphia Inquirer, Feb. 15, 1986]

LIBRARY SUFFERS: BUDGET CUTS HINDER QUEST FOR KNOWLEDGE <By Colman McCarthy)

WASHINGTON.-Some were lost in thought and books, others in time. In the main read­ing room of the Library of Congress, the afternoon's collection of scholars, research­ers and amateur wisdom-seekers sat at the circular desks that are part of the world's largest library.

More than 80 million items are here on 535 miles of shelves. At a rate of one minute per item, eight hours a day for five days a week, 648 years would be needed to examine all that the library holds.

The citizens in the reading room were trying to reach "the instant of knowing," a phrase that Josephine Jacobsen, a former consultant in poetry to the library, used in her farewell lecture in 1973.

The citizens had better hurry. Effective March 9, reading rooms in the library will close at 5:30 p.m. every day except Wednes­days. Previously the hours for closing were 9:30 p.m. Reading-room hours will drop from 77 112 hours to 54 V2 hours a week. All buildings and services will be closed on Sun­days.

No assault like this has happened since the library's first day in 1897 when gas lights brightened the reading room.

The coming year's budget cuts-from the new Gramm-Rudman-Hollings law and ear­lier reductions imposed by Congress-total $18.3 million. All sanctuaries within this temple of knowledge are to be profaned: Funds to buy books, periodicals, microfilms, maps and recordings are to be reduced by 13 percent. About 300 staff members are being dropped from a work force of 5,200.

Next to book-burning, no worse desecra­tion to the Library of Congress can be imag­ined. Going dark at 5:30 symbolizes a dim­ming of the nation's intellectual lights. Col­lege students who need evening hours are shut out. Working people with 9-to-5 jobs are barred.

For the fifth year, the Reagan administra­tion is recommending elimination of the federal library-grant programs. Last year they totaled $125 million. In their 1984 plat­form, Republicans pledged to "wipe out" il­literacy. Instead they are wiping out librar­ies.

The foolishness and fiscal waste of the as­sault emerges graphically in the story of Christopher Murphy of the Library of Con­gress. He is one of 70 staff workers losing jobs in the research-services department. With a salary of $37 ,000. Murphy has had sole responsibility for the last eight months for more than 40,000 books in the Turkish, Turkic and Armenian collections.

A year ago, the library thought the job was important enough to recruit nationally. Murphy, 35, married with one child, was a Near East specialist at the library of the University of Washington in Seattle. His po­sition was tenured.

Twenty-eight applied for the Library of Congress job with four selected as qualified finalists, Murphy, a former Fulbright schol­ar who studied at the University of Istanbul and earned a doctorate in Turkic languages and literature from the University of Wash­ington, was selected.

After transplanting himself and his family from Seattle-and with the federal govern­ment paying the Mayflower moving compa-

ny approximately $15,000 to transport his belongings cross-country-Murphy went to work at the library in June 1985. Six months later, after being awarded a positive evaluation, he was recommended for reten­tion as a permanent employee. Two weeks ago, his superiors told him that no money was available for his job.

Murphy, who understands budgets, is not upset at anyone at the library. He has ques­tions for those outside the library who, either in ignorance or lack of interest. de­value the kind of work to which he has com­mitted his professional life.

"' I'm happy that I came here; · Murphy says. "' I enjoyed the work and I performed well. The Turkish collection began with a gift from the Ottoman government in the late 1800s. It has been built up from those several hundred books into a major collec­tion, one of the three largest in the United States. Millions of dollars have been invest­ed in the program. Collections must be closely maintained, otherwise they run the risk of physical deterioration. Qualitatively, larger and larger gaps will appear in the col­lection."

A library official, as disheartened as Murphy, says that the collection will be added to the duties of another employee.

It won't be the same. The books and serv­ices to which Murphy devotes full-time at­tention will receive at best only part-time attention. In addition, no one on the current library staff has Murphy's knowledge or qualifications.

The loss of this specialist will be severe. Every other employee to be dropped and every visitor and user denied access have similar stories of deprivation. A government can trifle with many national assets, but the undermining of knowledge and the search for it violates a nation's only enduring strength, access to ideas.

Close the doors of a library and you close the eyes of the public. Instead of flying high, we fly blind.

[From the Washington Post, Feb. 23 , 1986] THREAT TO THE LIBRARY

<By Mary McGrory> Are books essential? Are they even impor­

tant in the age of the videocassette, the news in pictures and the Gramm-Rudman Amendment?

We will presently know at least Congress's answer to these grave questions, because the Library of Congress is up against the wall. Eighteen million dollars has been cut from its budget.

Books don't bleed when you cut them, but librarians do. Librarian of Congress Daniel J. Boorstin made a most powerful lament before the House subcommittee on legisla­tion about the cutbacks from his previous year's budget of $238.6 million: $8.4 million by Congress and $9.9 million by the mind­less Gramm-Rudman process.

The Library's plight, Boorstin said, "could become tragic for our nation, the Congress and the whole world of learning. . . . It would be a historic irony-the only analogy I can think of is the burning of the ancient Library of Alexandria in Egypt-if the Con­gress should choose . . . to direct and pro­mote the disintegration of this great institu­tion."

He had always told the truth about the li­brary's needs, Boorstin said, and Congress had believed him. They can't afford not to believe him now, he said.

"These are the times that try men's minds, that tax our consciousness, our re­sources of wisdom, knowledge and informa-

tion. Threats from without and problems within demand every shred of the most an­cient wisdom and the most recent informa­tion .... We, the greatest library on earth, serving the greatest republic, are needed as never before by an imprisoned humanity."

To Boorstin, it is obviously unthinkable that members of Congress, under what one of them called " the automatic buzz-saw of Gramm-Rudman", would wilfully tamper with the great treasure under his watch. He is a scholar of the American scene, a prolific author on the American character, and it is plain that he cannot credit a triumph for know-nothingism or a confession that Con­gress cannot decide for itself what is impor­tant.

The cuts will curb the library's collecting, curtail its services to the blind and shorten its hours.

"Historians will not fail to note that a people who could spend $300 billion on their defense would not spend $18 million on their knowledge-and could not even keep their libraries open in the evening."

"These,'' said Boorstin, "are not the prior­ities of civilization and freedom. . . Dare we say, simply, that our nation, perhaps the first nation on earth explicitly founded on knowledge, is now ready to disintegrate and destroy its own foundations?"

Chairman Vic Fazio CD-Calif.) said he shared the librarian's alarm but could not "dilute the reality of the atmosphere in the Congress."

" I am glad to hear you be so aggressive" was the most comfort he could offer.

And Rep. Lindy Boggs <D-La.) told Boor­stin she was "very very pleased that you have given such an impassioned plea."

No one had any idea of what to do. Per­haps private contributions? As a matter of fact, one anguished reader wrote a letter to The Washington Post expressing a willing­ness to pay a dollar to enter the library, if only its doors could be kept open in the evening, the only time she was free to use its splendid reading-room.

Boorstin said he thinks it is "dangerous" to rely on private contributions because " this is a national library and can continue to provide its services only if the nation sup­ports its activities.

Nor would it do for him to roam the coun­try rattling a tin cup for the jewel in the crown of the country's public library system. Local libraries need money, too.

Fazio asked if we could acquire the books we "need" with the deep cuts.

"It is a most interesting question," said Boorstin. " It is a problem to decide what knowledge may be useful. Who would have thought that a book about the rainfall in Burma would be important? But we had it and during World War II we were the only place which had information which was a matter of life and death."

The cuts in the programs for the blind do not mean life or death, merely a narrower access to the joys of reading. Last year the library circulated 21 million books and mag­azines to its 646,300 talking-book patrons and 18,300 Braille readers. They will be de­prived of 80,000 new books by Gramm­Rudman, or rather by a Congress which has abdicated its powers.

Congress doesn't see the Library of Con­gress as a symbol of our nation. The last time it intervened in the library's affairs was when it banned Playboy magazine from the reading material supplied the blind.

It's a little hard to see a body with that mentality throwing off the shackles of Gramm-Rudman to strike a blow for knowl-

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4075 ege. Congress seems to think that the less it knows, the better off it is. It's obviously up to the rest of us to tell them that the coun· try will be no stronger than its information.

[From the Wall Street Journal, Feb. 21, 1986]

LIBRARY OF CONGRESS BACKERS SAY REDUCED BUDGET MAY CLOSE THE BOOKS ON SOME NATIONAL TREASURES

<By David Shribman) WASHINGTON.-The chamber was much

like a seminar room, a tiny, out-of-the-way recess on the third floor of the Capitol. There, far from the din of congressional debate, a small man in a gray suit and a crimson bow tie made his somber presenta­tion. Twice he used the word "beg."

"The greatest of republics has been served by the greatest of the world's libraries," said Daniel Boorstin, the Librarian of Congress. "But this will not continue to be possible, unless the Congress t akes measures to repair the damage done and to be done by the vast and unprecedented cuts in the li­brary's budget."

A block away scores of scholars walked out of the midmorning drizzle, passing two 15th-century testaments of learning, the Giant Bible of Mainz and the Gutenberg Bible, on the way to the slightly musty reading room of the Library of Congress. In the reading room they sat amid statues of Beethoven, Newton, Herodotus and Gibbon.

In the chamber of the House legislative appropriations subcommittee, however, the talk was of Phil Gramm and Warren Rudman-and of the verdict of historians yet unborn.

"They will recall the last epoch of the Roman Empire," said Mr. Boorstin, "when Romans were so fearful of the barbarians that they imitated the barbarians."

" INTELLECTUAL PAUL REVERE" Mr. Boorstin had come to appeal for

help-"an intellectual Paul Revere," in the words of Rep. Vic Fazio CD., Calif.), who presided at the appropriations hearing-for what he described as nothing less than the survival of the Library of Congress. The budget of the library, with 81 million ob­jects the largest in the world, was cut by $8.4 million this year, and the automatic re­ductions required by the Gramm-Rudman deficit-reduction law added another $10 mil­lion in cuts, shrinking the budget total to $220.3 million.

"Dare we say, simply, that our nation, per­haps the first nation on earth explicitly founded on knowledge, is now ready to dis­integrate and destroy its own foundations?" Mr. Boorstin asked. " It is my sworn duty under the Constitution," he added, " to alert the Congress to what it is doing, and use all my efforts to save the Congress and all of us from a historic disaster."

To accommodate the cuts, the library is trimming its budget for the purchase of books and materials by 13%, reducing its book preservation work by 16%, closing the library's reading room on Sundays, holidays and all evenings but Wednesdays, and cut­ting its preservation work so drastically that 80,000 fine prints, hundreds of priceless photographs and thousands of books will be in danger of becoming brittle and, eventual­ly, turning to dust.

Moreover, the library, the principal source of Braille and audio-cassette books for the blind and handicapped, will cut back its pro­duction substantially.

Mr. Boorstin says the budget cuts, which he is seeking to have reversed, "promote the

disintegration" of the library and are caus­ing " irreparable" damage to the library and its collections. "It has taken two centuries to build this institution," he says. "It can be disintegrated in a decade and destroyed in two decades."

CRIES OF OUTRAGE The prospect of substantial changes in the

operation of the library has prompted cries of outrage from scholars and writers. "The whole quality of life in America is being low­ered by these cuts," says William L. Shirer, who spent many stretches of hours in the li­brary while working on his chronicle of life under Germany's Third Reich. "We're going to end up like Sparta. We're going to have a big military machine and nothing else. We're cutting the cultural foundation that means so much to this country."

Barbara Tuchman, the Pulitzer-winning historian, used the library to examine dozens of medieval books in the course of preparing "A Distant Mirror." Robert Dono­van, who has written 10 books, discovered in the library's collections a two-volume tran­script of the trial of Charles Guiteau, the assassin of President James Garfield, and an account of how Richard Lawrence, a house painter, nearly killed President Andrew Jackson on the Capitol steps more than a century ago.

"Security is really based on the willing­ness of people to uphold their country, and the library is part of that sense of national security," says Mrs. Tuchman. "Not valuing these aspects of civilized life erodes our freedom."

Mr. Boorstin knows the library is a pecu­liar sort of Washington "special interest, one that serves and chronicles the activities of-myriad special interests. He hopes that the deep reserves of affection that members of Congress have for their own library es­tablished in large measure by a gift from Thomas Jefferson will help him avoid sub­stantial damage to the library's collections and activities.

MOMENTS OF CONTEMPLATION The library is valued highly on Capitol

Hill, not only for its resources but for the moments of contemplation and the sparkles of perspective it offers the nation's lawmak­ers. It is an immensely civilized corner of the capital where, far from the battles of the day, one can sit and read a poem by Czeslaw Milosz, the Pole who won the 1980 Nobel Prize for literature, or better yet, hear him read his work aloud.

The other day, one scholar was lingering on the history of the architecture of the modern opera house, another was exploring the styles of the Americans who painted in Brittany and a third was dipping into an ac­count of a conspiracy of Confederate sol­diers to capture the U.S. steamship Michi­gan on Lake Erie in 1864 and to release pris­oners of war in Sandusky Bay.

But these scholars are learning another lesson, too, that even in the deepest recesses of the library, amid the paintings of Audu­bon and the scraps of papyrus and rows of microfiches, the realities of the budget crisis-and the burden of the automatic, across-the-board budget cuts designed to eliminate the deficit by 1991-intrude. "President Kennedy used to say that to govern was to choose," says Sen. Daniel Moynihan CD., N.Y.). "We are abdicating the principle of choice. The Library of Con­gress is a very good symbol for us."

CFrom the Washington Post, Feb. 21, 1986]

BOORSTIN PLEADS FOR LIBRARY-PANEL URGED TO VOTE 18% BUDGET INCREASE

<By Phil Mccombs> Attacking what he called "antidemocratic

and antiknowledge" budget reductions, Li­brarian of Congress Daniel J. Boorstin yes­terday proposed a 1987 budget that would restore most funding cuts that the library suffered this year.

" It has taken two centuries to build this institution. It can be disintegrated in a decade and destroyed in two decades," Boor­s tin testified before the House appropria­tions subcommittee on the legislative branch. He asked for $248.6 million for fiscal 1987, an 18 percent increase.

Boorstin spoke of "a nation in terror and decline, " of "an incompletely informed Con­gress," and he said: "The disaster which I describe Cat the library], the shame which will come on this nation if the Congress pur­sues a policy of disintegrating its library, can be averted only if this committee re­stores" the budget cuts.

To meet this year's cuts, which total $18.3 million, library officials have slashed the hours that its general reading rooms are open to the pubic by one third, have begun reducing the 5,200-member staff by 300, and have sharply curtailed expenses for acquisi­tions, preservation, services for the blind and handicapped, and other activities.

" I share your alarm," said the subcommit­tee chairman, Rep. Vic Fazio CD-Calif.) "You're playing the role of intellectual Paul Revere this morning."

Fazio said this subcommittee will "try to reach a figure that will allow the library to continue to flourish," but he added that the Gramm-Rudman-Hollings budget reduction act is a "buzz saw," and "I cannot in any way dilute . . . what the reality is in the Congress."

The ranking minority member of the sub­committee, Rep. Jerry Lewis CR.-Calif.), said the nation faces "an exploding deficit," and he challenged Boorstin "to help us to look again and again" for ways to save money.

"Frankly, you're on the table CandJ we're going to need your help," Lewis said to the scholarly Boorstin, who, wearing a red bow tie, sat listening with knotted brows.

Boorstin responded, "I cannot believe that the Congress of the United States cannot establish priorities." He said defense is a pri­ority and "I don't know why knowledge can't be."

Continuing to press, Lewis said he was re­cently near San Diego where he saw "holes in the mountains there and people are living there ... Their not starving to death is a very high priority of mine."

Rep. Lindy Boggs CD-La.) praised Boorstin for his " impassioned plea" and added, "We share your distress because it's our dis­tress." A key function of the library is to serve members of Congress.

In this regard, Fazio said congressional staffers were upset because sometimes no one answered the special " quick reference" phone number at the library's Congression­al Research Service. Joseph E. Ross, acting director of CRS, testified he would move some personnel around to solve this prob­lem.

Frank Kurt Cylke, director of the library's services for the blind and physically handi­capped, testified that he has not been able to provide magazines for many blind people who have requested them-another result of the budget cutting.

4076 CONGRESSIONAL RECORD-SENATE March 7, 1986 "We're facing a very serious, severe, detri­

mental cut ... We are at rock bottom," he said.

Deputy Librarian of Congress William J. Welsh testified that as of yesterday, the staff had been reduced by 111, most through the reduction-in-force procedure. Associate Librarian Donald C. Curran testi­fied that 70 persons have been riffed, but that "probably 55 or 60" of them will "retain" positions at the library.

Fazio said the riffing process may have an adverse effect on recent minority hires, and he asked for a report on the impact, Library officials said they would provide it.

In other testimony yesterday, Peter G. Sparks, the library's director of preserva­tion, disclosed that a fire and an explosion took place last Friday at Goddard Space Flight Center, where the library's scientists are experimenting on a book preservation process.

A building was damaged, but no books were lost and no one was injured, Sparks testified. But the incident and an earlier fire have cast a shadow over plans to construct a multimillion-dollar preservation facility near Frederick, Md.

This "mass book deacidification facility" would use a new gas process, patented by the Library of Congress, to remove acid from most of the library's 13 million books, which could extend the life of a book from 25 to 600 years.

Sparks testified that bids for the plant construction were to be opened in six weeks, but that this may be delayed as the library's scientists seek to discover what caused the fires and explosion.

[From the New York Times, Feb. 21 , 19861 LIBRARY OF CONGRESS CHIEF WARNS OF A

"DISASTER" FROM BUDGET CUTS WASHINGTON, February 20.-The head of

the Library of Congress told Congress today that cuts in the library's budget were having "disastrous consequences for the Congress, the nation and the world of learn­ing."

Daniel J. Boorstin, the Librarian of Con­gress, told the House Appropriations Sub­committee on the Legislative Branch that cuts had already been made in the hours the library was open and that it would face other rigors never encountered in peace­time: forced reductions in collecting of needed current material, materials already acquired remaining uncatalogued and there­fore inaccessible, and deterioration of collec­tions because of lack of preservative treat­ment.

The library is not only a source of infor­mation for members of Congress but also one of the nation's leading repositories of material for scholars.

Dr. Boorstin said future historians would wonder why a nation that was spending $300 billion for the military had decided to cut $18 million from the library's current budget of $238 million. The cuts are a conse­quence of the recent law calling for deficit reduction and a balanced budget by 1991.

WARNING OF "HISTORIC DISASTER" "Historians," he said, "will look with

amazement and incredulity at a nation that could once afford to build grand structures bearing the names of Thomas Jefferson, John Adams and James Madison-all lovers and champions of knowledge-yet decided it could no longer afford to acquire as effec­tively and abundantly as possible the cur­rent sources of knowledge." The three Presi­dents' names are on the main library build­ing.

Dr. Boorstin said that he was not an alarmist but that it was his duty to warn Congress away from "a historic disaster." He said, "The only analogy I can think of is the burning of the Ancient library in Alex­andria in Egypt" in the third century A.D.

Representative Vic Fazio, Democrat of California, the subcommittee chairman, told Dr. Boorstin he was acting as "an intellectu­al Paul Revere" in "alarming the country­side as to what might happen to the na­t ion's library," and that his "strong, pas­sionate statement" was especially effective because it was not of character for the soft­spoken scholar.

The chairman said he supported the li­brarian but, asked where money could be found to restore cuts in the current year, Mr. Fazio replied, "I don't know."e

MACHINE TOOL 232 PETITION'S 2-YEAR "ANNIVERSARY"

e Mr. GRASSLEY. Mr. President, last week marked the passing of an anni­versary that I took no pleasure in ob­serving. Two years ago, Commerce Secretary Malcolm Baldrige, in re­sponse to the U.S. machine tool indus­try's request for import relief under the national security clause, submitted a recommendation to the White House which reportedly called for temporary import restraints. His recommendation stemmed from a finding that then-cur­rent levels of high-technology, de­fense-sensitive machine tool imports threatened to impair the national se­curity of the United States. Yet de­spite the gravity of that finding and the urgent need for remedial action, despite the fact that those Govern­ment agencies responsible for ensuring mobilization readiness concur with the finding that import adjustments are necessary, despite overwhelming bi­partisan support from the Congress, despite the perceptible-and potential­ly irreversible-erosion of U.S. manu­facturing capability, despite the fact that machine tool imports have in­creased to the point where they now account for more than 44 percent of domestic consumption, the White House still has not acted on Secretary Baldrige's recommendation.

A decision is, at long last however, reportedly imminent. Mr. President, I ask that a copy of a Washington Post article dated March 5, 1986, be printed at this point in the RECORD.

The article follows: REAGAN MAY AsK JAPAN To RESTRICT MA­

cHINE-TooL SHIPMENTS TO U.S.-PRESIDENT SAID WEIGHING USE OF QUOTAS BASED ON NATIONAL SECURITY

(By Stuart Auerbach> President Reagan is considering asking

Japan to voluntarily cut its sales of machine tools in the United States, threatening to set quotas otherwise under national-security provisions of U.S. trade laws that haven't been used before, administration officials said yesterday.

The import limits could last for as long as five years to preserve the ability of the import-battered domestic tool industry to produce machines needed to make weapons, the sources said.

"The decision is going to be made by President Reagan within the next couple of weeks," said one administration official, who has been pushing for action on a three­year-old petition by American machine-tool makers to win trade protection on national­security grounds.

Although several countries supply ma­chine tools to the American market, any import restraints are likely to fall on Japan, which is the largest supplier of general-use machine tools to the United States.

European machine tools, which come largely from West Germany and Switzer­land, are such specialized products that they do not compete directly with U.S. prod­ucts. Japanese newspapers are speculating that the Ministry of International Trade and Industry is preparing for the restraints by seeking estimates from major machine­tool makers in that country of their export projections for this year.

U.S. machine-tool makers and their con­gressional allies have argued that foreign manufacturers produce about t hree-fourths of the state-of-the-art, computer-controlled lathes and machinery centers, necessary for manufacturing weapons ranging from mis­siles to rifles.

"The very foundation of our national se­curity and economic well-being depend upon the skill and capacity of the machine-tool indust ry," 27 House Republicans, including Minority Leader Robert H. Michel (Ill.) , said in a January letter to President Reagan. There is a "serious threat to the national security posed by our growing de­pendence on imports for high-technology defense-sensitive machinery," t hey added.

Commerce Secretary Malcolm Baldrige, who two years ago this week recommended that sharp limits be placed on imports of machine tools on national-security grounds, is pressing for the voluntary restraints on Japanese imports.

His original proposal, which never went to the full cabinet, was far stronger. It called for banning 90 percent of all imports, and effectively would have eliminated Japanese products from the United States.

That recommendation ran into sharp op­position from free-trade advocates within the administration, who sought to bury the issue by keeping it from a presidential deci­sion.

"You had stalling because people thought it was a bad issue that could be stalled away," said an official who favors the import curbs.

The machine-tool industry's petition was brought forcefully to the attention of White House Chief of Staff Donald T. Regan in December, when he was seeking support for tax overhaul from House Republicians.

They quickly reminded him of the buried recommendation to help U.S. machine-tool makers, and he promised to resurrect the issue.

Since then, it has moved toward the front burner of administration trade issues.

Secretary of State George P. Shultz met last week with three Republican House members-Nancy Johnson <Conn.), Henry Hyde <Ill.) and Lynn Martin WU- on the issue, and U.S. Trade Representat ive Clay­ton Yeutter publicly criticized the National Security Council for delaying a resolution of the industry petition.

Under questioning by Rep. Barbara B. Kennelly CD-Conn.) at a House Ways and Means Committee hearing last month, Yeutter said, "True to form, the National Security Council has not yet given me a

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4077 date [for a meeting on machine tools], and I cannot defend that at all.

"But I can be a little more optimistic than that because I really think we will do this within the next two to three weeks. I think we are finally nearing the conclusion of this process, which has been indefensively pro­crastinated."

He was scheduled to meet last week with the president's national security adviser, Rear Adm. John M. Poindexter, but the meeting was postponed because of develop­ments in the Philippines.

The idea of so-called voluntary restraints on the part of the Japanese is considered more palatable to the free-trade ideology of the Reagan administration than Baldrige's original recommendation of sharp limits on imports through quotas and tariffs.

Rep. Johnson said Defense Secretary Caspar Weinberger told her he opposed import limits, but appeared more sympa­thetic to voluntary restraints, even if they are agreed to under the threat of imposed quotas.

Nose-counters within the administration and on Capitol Hill are unsure what the NSC will recommend to the president. "It's still up in the air," said one administration official.

In the three years since the National Ma­chine Tool Builders Association filed its pe­tition for import restraints, sales of foreign machine tools have increased steadily, going from 26.4 percent of the U.S. market in 1982 to about 43 percent last year.

The value of Japanese imports tripled in the same period, jumping from $535 million in 1982 to about $1.5 billion last year.

Mr. President, the very foundation of our national security and economic well-being depend upon the skill and capacity of the machine tool industry. Having supported the "Houdaille peti­tion" in 1981, and the current section 232 petition, as well as having intro­duced legislation <S. 1679), it would be my fond hope that the President pro­vide some much needed relief to this industry.

Recently Soviet leader Mikhail Gor­bachev indicated that, in connection with his proposed reform of the Soviet economy, he intends to invest $270 bil­lion into the machine-building indus­try from now until 1990. Clearly the Soviets recognize the strategic impor­tance of maintaining a vital machine tool industry. Why can't we?e

CONGRESSIONAL PAY e Mr. BINGAMAN. Mr. President, the New Mexico State Legislature took sig­nificant action on February 14, 1986, when it passed "A Joint Resolution Ratifying a Proposed Amendment to the Constitution of the United States Relating to the Compensation of Members of the United States Con­gress and the Time When Any In­crease Shall Take Effect."

At the request of the legislature, I ask that the text of New Mexico Senate Joint Resolution 10, as well as the secretary of state's notice of certi­fication of this resolution, appear in the RECORD in full.

The material follows:

OFFICE OF THE SECRETARY OF STATE

CERTIFICATE

I , Clara Jones, Secretary of State of the State of New Mexico, do hereby certify that the attached document is a true and exact reproduction of Senate Joint Resolution 10, approved by the 37th Legislature, Second Regular Session, State of New Mexico, on February 14, 1986, entitled .. A Joint Resolu­tion Ratifying a Proposed Amendment to the Constitution of the United States Relat­ing to the Compensation of Members of the United States Congress and the Time When Any Increase Shall Take Effect."

Given under my hand and the Great Seal of the State of New Mexico, in the City of Santa Fe, the Capital on this 17th day of February, A.D. 1986.

CLARA JONES, Secretary of State.

Senate Joint Resolution 10 Whereas, the First Congress of the United

States, on September 25, 1789, at a session held in New York, New York, duly adopted a resolution proposing an amendment to the constitution of the United States; and

Whereas, the legislature of the state of New Mexico acknowledges that the article of amendment to the constitution of the United States proposed by resolution of the First Congress on September 25, 1789 may still be ratified by states' legislatures as a result of the ruling by the United States su­preme court in the landmark case of Cole­man v. Miller, 307 U.S. 433 (1939>; and

Whereas, the amendment proposed by the First Congress on September 25, 1789 has already been ratified by the legislatures of the following states on the dates indicated, to wit: Maryland on December 19, 1789; North Carolina on December 22, 1789; South Carolina on January 19, 1790; Dela­ware on January 28, 1790; Vermont on No­vember 3, 1791; Virginia on December 15, 1791; Ohio on May 6, 1873 <70 Ohio Laws 409-10>; Wyoming on March 3, 1978 024 Cong. Rec. 7910); Maine on April 27, 1983; 030 Cong. Rec. H9097, S11017>; Colorado on April 18, 1984; South Dakota on February 21, 1985 031 Cong. Rec. H971, S3306>; New Hampshire on March 7, 1985 031 Cong. Rec. H1378, S3597>; Arizona on April 3, 1985 031 Cong. Rec. H2060, S4750); Tennessee on May 23, 1985 031 Cong. Rec. H6672, Sl0797, S13504>; and Oklahoma on July 10, 1985 031 Cong. Rec. H7263, S13504>; as well as by the Senate of the State of Georgia on February 2, 1984 and on January 21, 1985 and by the House of Representatives of the State of Indiana on February 4, 1985; and

Whereas, the proposal that has been sub­mitted to the several states for ratification reads:

"Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, two-thirds of both Houses concurring, that the follow­ing [Article] be proposed to the Legislatures of the several States .... which [Article], when ratified by three-fourths of the said Legislatures, to be valid to all intents and purposes, as part of the said Constitution, viz.:

"[An ARTICLE] in addition to and Amendment of the Constitution of the United States of America, proposed by Con­gress, and ratified by the Legislatures of the several States, pursuant to the fifth Article of the original Constitution.

"Article the second ... No law, verying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.";

Now, therefore, be it resolved by the Leg­islature of the State of New Mexico that, pursuant to Article V of the Constitution of the United States, the amendment proposed by the First Congress on September 25, 1789 is hereby ratified by the State of New Mexico; and

Be it further resolved that a certified copy of this resolution, under the great seal of the State of New Mexico, be immediately forwarded to the administrator of general services, Washington, D.C., to each member of the New Mexico delegation to the Con­gress of the United Staes and to the Presi­dent Pro Tempore of the Senate and the Speaker of the House of Representatives of the Congress of the United States with the request that this resolution be printed in full in the Congressional Record.•

TAX REFORM AND AGRICULTURE

e Mr. BAUCUS. Mr. President, the Senate Finance Committee is about to begin debating comprehensive tax reform. During this debate, we must pay particular attention to the impact tax reform may have on agriculture.

Tax reform presents an opportunity to make some significant positive changes in the way the tax system af­fects agriculture. But we must proceed carefully. As everyone in this Cham­ber knows, American agriculture is ter­ribly depressed: My own State of Mon­tana suffered the sharpest decline in wheat production of any State last year, and our cattle production is at an all-time low level.

Given this situation, we must pro­ceed carefully.

Agricultural tax reform must have two basic objectives. The first is to reduce abusive tax shelters that dis­tort the agricultural economy and enable high-income outside investors to avoid paying their fair share of taxes. The second is to simplify the tax system for ordinary agricultural producers, and make it more fair.

To achieve these goals, we must make several changes in the Tax Code, some of which were included in the House-passed tax bill, H.R. 3838.

LAND-CLEARING, FERTILIZATION, AND CONSERVATION

Under current law, taxpayers can take immediate deductions for ex­penses incurred to break land and oth­erwise prepare it for farming. When the land is sold, the proceeds can be taxed at favorable capital gains rates. These provisions, as the Montana State University Cooperative Exten­sion Service has found, "provide a major economic incentive for investors who do not plan to retain ownership of converted land to convert rangeland to cropland." As a result, fragile range­land can be converted to farmland, then quickly sold, with little consider­ation of the underlying economics of the conversion. Such "sodbusting" contradicts our national farm policies and environmental policies. As the

4078 CONGRESSIONAL RECORD-SENATE March 7, 1986 Center for Rural Affairs has conclud­ed:

While the government pays farmers to reduce production and take erodible land out of production, the tax code subsidizes development of ... highly erodible land for more production of surplus crops. The re­sults include higher farm program costs, lower farm income due to over production . . . [and] high erosion rates which reduce food security for future generations.

To address this problem, we should make two major changes to current law. First, we should repeal the section 182 expensing of land-clearing expend­itures. Second, we should deny section 1231 capital gains treatment to pro­ceeds from the disposition of "highly erodible cropland" -as defined under the provisions of the new farm bill. Similar provisions are included in sec­tions 921 and 922 of the House bill. However, unlike the House bill, we should not repeal the section 180 pro­vision permitting fertilizer expenses to be deducted immediately: these ex­penses are common, recurring ones distinguishable from major land clear­ing.

The same goes for soil and water conservation expenditures. Under cur­rent law, they can be deducted as cur­rent expenses. This treatment, unlike the expensing of land-clearing ex­penses, is fully justified. Expenditures for soil and water conservation-for example, constructing soil-saving ter­races-generate long-term social bene­fits for which farmers and ranchers are not fully compensated. In other areas, such as research and develop­ment, we have recognized that the ex­istence of such "externalities" justifies the provision of tax incentives to achieve the optimal level of expendi­tures. Similar reasoning justifies re­taining soil and water conservation ex­pensing.

TREATMENT OF PREPRODUCTIVE EXPENSES FOR BREEDING STOCK

Under current law, ranchers can im­mediately deduct the preproductive expenses of managing their breeding herd, then receive favorable capital gains treatment of the proceeds when the breeding stock is sold. In some cases, this creates a substantial deferr­ral/conversion that attracts outside tax-shelter investors, thereby stimu­lating overproduction and distorting the agricultural economy. For this reason, some agricultural groups have proposed revising the tax treatment of preproductive expenses. For example, the American Farm Bureau Federa­tion has proposed that "all gains on the sale of breeding, draft, and sport­ing livestock and dairy animals • • • be treated as ordinary income, not capital gains."

The President's tax reform proposal attempted to address this problem both by requiring that preproductive period expenses be capitalized rather than deducted immediate-if the pre-

productive period exceeds 2 years-and by denying capital gains treatment to proceeds from the sale of breeding stock and all other "section 1231 assets." The House tax bill addresses the problem somewhat differently. It gives ranchers an election: they can either capitalize their preproductive period expenses or instead deduct them immediately but be limited to straight-line-rather than acceler­ated-depreciation and full recapture or previous depreciation deductions as ordinary income rather than capital gain. As a result, this House proposal would introduce major new complex­ities for ranchers, in the form of the separate depreciation schedule-which also discriminates against diversified operations-and in the recapture or previously expensed amounts, which would impose major new recordkeep­ing burdens.

The House bill could be improved upon by replacing the recapture provi­sion with a simple requirement that ranchers electing to expense prepro­ductive expenses recapture a set amount per unit: either a flat percent­age or an amount regulatorily deter­mined to approximate preproductive costs. In addition, the calculation of the breeding period should be revised to make clear that the preproductive period of breeding stock begins-in the case of cattle-when a cow is born and ends when it is placed in the breeding' herd.

DEPRECIATION OF SINGLE-PURPOSE AGRICULTURAL STRUCTURES

Under current law, single-purpose. agricultural structures-like chicken coops and hog confinement pens-are treated as equipment, which is depre­ciable over 5 years, rather than as structures, which are depreciable over 19. Some agriculture experts argue that this short depreciation period makes an investment in single-purpose agricultural structures much more at­tractive than economics warrants, thereby stimulating overproduction by large, tax-motivated chicken, hog, and dairy producers. Responding to this argument, in 1984 the Senate adopted an amendment, offered by Senator GRASSLEY, increasing the depreciation period for single-purpose agricultural structures from 5 to 18 years-and using the revenue thus generated for a new soil and water conservation credit; however, the amendment was deleted in conference. We should include a provision lengthening the depreciation period for single-purpose agriculture structures in our bill.

LIMITATION ON ARTIFICAL AGRICULTURAL LOSSES

The above provisions, along with rate reduction and general base-broad­ening measures, should eliminate most agricultural tax shelter abuses. How­ever, there may continue to be situa­tions in which clever promoters design elaborate agricultural tax shelters

that are not economically motivated and that distort the agricultural econ­omy.

To address this problem, we should impose a minimum tax "backstop," which limits the extent to which agri­cultural losses can be used to offset nonagricultural income. One approach would be to include "excess farm losses" -losses exceeding twice the taxpayer's cash basis-from tax shel­ter farming activities as a preference item under the individual and corpo­rate minimum taxes. This provision is similar to section 58 of the House tax bill.

CASH METHOD OF ACCOUNTING

Under current law, various methods of accounting are allowed, including the "cash receipts and disbursements method," which recognizes income when actually or constructively re­ceived and recognizes items of expense when actually paid. Because of its sim­plicity, most farmers and ranchers cur­rently use the cash method.

The House bill requires many tax­payers that now use the cash method to shift to the accrual method. Howev­er, the committee report acknowledges that "farming businesses-other than certain corporate farming businesses required to use the accrual method under present law-should be able to continue to use the cash method in order to avoid the complexities re­quired to account for growing crops and livestock under any other accepta­ble method of accounting." Similarly, our bill should permit farmers and ranchers who currently are permitted to use cash accounting to continue to do so.

INCOME AVERAGING

Given the vagaries of weather, crop prices, and other factors beyond their control, farmers' and ranchers' in­comes can fluctuate wildly. Under a strict annual income-reporting system, these fluctuations can unfairly exag­gerate tax liability because, during good years, agricultural taxpayers will be forced into higher tax brackets than their long-term earning power warrants; for example, the Center for Rural Affairs estimates that a family of four with income alternating be­tween zero and $60,000 would pay 76 percent more tax over a 6-year period than a family of four earning precisely the same total income in six $30,000 increments. In recognition of this, cur­rent law permits taxpayers to average their income over a 4-year period.

The House tax bill repeals income averaging, on the ground that it is complex and is rendered unnecessary by replacing the current system of 11 narrow tax brackets with 4 wider ones.

This proposal is unfair and is bad tax policy. Tax bracket changes may reduce the need for averaging, but they certainly do not eliminate it. A strict annual income-reporting system

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4079 will push farmers and ranchers into higher tax brackets during good years, without fully offsetting this effect during bad; as a result, their income tax liability will be exaggerated unless they remain able to income average.

While we should retain income aver­aging, we also can tighten the averag­ing rules, to target taxpayers whose income fluctuates rather than "up­wardly mobile" taxpayers whose in­comes are steadily rising. This could be done by denying income averaging to former full-time students-as under section 781 of the Senate reconcilia­tion bill. In addition, we could cap the amount by which income averaging can reduce tax liability in any 1 year to $10,000 or institute a system of "two bracket averaging" whereby tax­payers could get relief if income fluc­tuations shifted them across two brackets, but not one.

CAPITAL EXPENSING Under current law, taxpayers receive

a 10-percent investment tax credit when they purchase most farm equip­ment and can deduct the cost of that equipment's depreciation on an accel­erated basis. To make these capital cost recovery provisions simpler for farmers, ranchers, and other small businesses, taxpayers can elect to deduct up to $5,000 in capital costs im­mediately rather than under the ITC/ depreciation system-the amount is scheduled to increase to $10,000 by 1989.

The House bill repeals the ITC and lengthens the depreciation period for most equipment, primarily because "individuals and corporations who have considerable amounts of econom­ic income are permitted to pay little or no tax by using the credit and ACRS, while others with equal or lesser in­comes are left fully exposed to high tax rates."

The House bill aslo doubles the amount of immediately deductible cap­ital costs from $5,000 to $10,000 for taxpayers whose annual capital costs do not exceed $200,000. However, this provision does not adequately offset the effect of the House bill's ITC/de­preciation prov1s1ons on farmers, ranchers, and other small businesses who must make substantial equipment purchases in order to modernize their operations-for example, a new com­bine can easily cost $80,000. Conse­quently, we should retain some form of targetted capital incentive for farm­ers and ranchers, perhaps by raising the section 179 expensing amount higher than the House bill.

MEDICAL INSURANCE Under current law, employees whose

employers provide them with medical insurance can exclude the cost of that insurance from their gross income, but self-employed farmers and ranchers who purchase their own insurance cannot deduct it. As the American Farm Bureau points out, "the inequity

that exists for self-employed farmers who are paying several thousand dol­lars per year for health insurance adds significantly to our cost of doing busi­ness."

To conform the treatment of farm­ers, ranchers, and other self-employed persons to that of taxpayers receiving employer-provided health insurance, we should permit self-employed tax­payers to deduct one-half the cost of their health insurance premiums as a business expense, as Senator GRASSLEY has proposed in legislation.

Mr. President, I ask that a letter from representatives of the National Cattlemen's Association and the Na­tional Association of Wheat Growers, about the effect of tax reform on agri­culture, be included in the RECORD.

The letter follows: DEAR SENATOR BAUCUS: The Agricultural

Tax Study Group met this week to further discuss specific provisions of tax reform that affect agriculture. As we noted in an earlier letter to you and members of the Committee, we are extremely interested in working with you as your staff prepares a draft for mark-up.

Listed below are some areas we would like you to address in a staff proposal:

1. Cash Accounting-We support retaining the availability for farmers and ranchers as found in H.R. 3838.

2. Preproductive Expensing-There are two technical problems that need to be ad­dressed in this area:

First, the preproductive period should begin at birth and end when the animal is placed in the breeding herd. A producer makes a managerial decision to treat this animal differently when it is placed with a breeding herd and therefore that should end the preproductive period. The House bill begins the period at conception and doesn't clearly define when it ends.

Secondly, if a farmer/rancher is produc­ing an animal/plant whose preproductive period exceeds two years, the House bill pro­vides an election of straight-line on all farm assets if he wants to continue deducting. We would prefer that taxpayers who are pro­ducing capital gains property <such as breeding livestock) be given the option of electing either straight-line depreciation on farm assets or electing to treat 20% of the income received when the animal is sold as ordinary income and the remaining 80% as capital gains income.

3. Alternative Minimum Tax-The House bill establishes a 2:1 minimum tax for term losses incurred by passive investors. As you know. H.R. 3838 also establishes an across the board 1:1 minimum tax. We do not feel a separate minimum tax should be included specifically for agriculture. In addition, the definition of a passive investor needs to be clarified. The House bill defines it in terms of Section 464 farm syndicates and taxpay­ers who do not materially participate in the business. It uses the material participation test in 2032A which is too restrictive. The test should be active participation. Further­more, the definition of cash invested for de­termining losses should include cash person­ally committed by the taxpayer and all full recourse personal loans. Whereas H.R. 3838 does not include such capital if the loans dur secured by livestock, crops,or land used in the farm/ranch business.

4. Relief for Insolvent Producers-We sup­port H.R. 3838 language allowing these in-

solvent producers to escape minimum taxes when selling capital gains property. Howev­er, we feel the 90% sale rule in one tax year is too restrictive and should be broadened to increase the intended benefits in this sec­tion.

5. Sodbuster Provisions-The House bill eliminates capital gains on land that is put into production if it is marginal and not fit for crop production. We support this con­cept, but feel that land currently under crop production that fits into this category should be grandfathered.

6. Conservation Expensing-H.R. 3838 allows producers to deduct expenses only if the conservation work is done under an ap­proved Soil Conservation Service <SCS> plan. Due to budget cutbacks and other re­straints, it is not always possible to get SCS approval in order to perform conservation work in a timely manner. We would prefer that SCS approval be required only if the deductibility of a project is questioned by IRS and then in an arbitrator capacity.

7. Fertilizer Expensing-The House bill re­moves Section 180. This section was placed in the I.R.C. to ensure that producers could annually expense fertilizer. We urge you to retain this section as found in current law.

8. Capital Expensing-The removal of in­vestment tax credit leaves farmer / ranchers with only capital expensing to offset the impact. We support the House bill which raises the level to $10,000 for farmers and small businessmen. The group supports in­creasing this amount to $25,000, which equals an investment tax credit between $5,000 and $8,000, depending on the tax bracket.

9. Depreciation of Single-Purpose Facili­ties-The House bill places nsingle purpose structures in the thirteen 03) year catego­ry. We strongly urge you to shorten this period to a time frame that more accurately reflects useful economic life.

There are two additional areas that were not included in H.R. 3838, but we feel need to be addressed.

1. Deductibility of Health Insurance Pre­miums-This is basically a fairness issue. Self employed people <farmers/ ranchers) are treated unfairly. Current law allows em­ployees in most cases to receive health in­surance benefits paid for by employers with before-tax dollars, while self employed people must pay for health insurance with after-tax dollars. It should be all or none. If this tax reform is truly an attempt to make the code simple and fair, then you should address this issue. We recognize the revenue considerations, but feel this should be looked at in the whole context of fringe benefits and revenue balancing.

2. Income Averaging-Agriculture is a business that is subject to changes in weath­er, prices, production cycles and a host of other variables which contribute to large fluctuation in levels of income. The group encourages the Committee to seriously con­sider a form of income averaging that is pos­sibly scaled down from current law, but still reduces tax burden where necessary and fair. Two approaches which seem worth consideration include a requirement of jumping two income brackets to qualify or capping the level of taxes one can offset at $10,000/year.

We recognize some of the difficulties you face in addressing the many interests. The group has committed its efforts to work with you in a positive manner. The next few weeks will certainly be a busy time and we look forward to being a part of the process.

4080 CONGRESSIONAL RECORD-SENATE March 7, 1986 We trust these suggestions warrant consid­eration and will be viewed carefully.

Very truly yours, ALAN SOBBA,

National Cattlemen's Association. MARJORIE WILLIAMS,

National Wheat Growers Association.•

THE PLIGHT OF NAUM AND INNA MEIMAN

• Mr. SIMON. Mr. President, I want to call the attention of my colleagues to the case of Naum and Inna Meiman, a Soviet couple who has ap­plied to emigrate and has been in re­fusal for over 10 years. I intend to speak about the Meimans every day until the Soviets grant them permis­sion to leave the Soviet Union.

The Meimans have done nothing which is illegal under Soviet law, yet they are treated like criminals. Inna, a woman in her fifties, has had four op­erations to remove cancerous tumors. Another tumor has appeared. The doc­tors say it would be too dangerous to remove. They tell her that there is nothing more that can be done for her. Medical authorities in the West, however, have offered to treat her with updated technology not available to most Soviets. What do the Soviets gain by keeping her inside the Soviet Union, in pain, to die?

I urge the Soviets to let the Mie­mans, and all of the others in refusal, emigrate.e

WILLIAM BENNETT: GOD, MAN, AND SCHOOL

e Mr. ARMSTRONG. Mr. President, in less than 1 year on the job, Secre­tary of Education William Bennett has made a remarkable impact upon public policy. He has advanced ideas rather than programs and has stressed values as the basis for successful schooling. His emphasis upon what he calls the three C's-character, content, and choice-has established a new reform agenda for parents, teachers, adminis­trators, and public officials who deal with education.

Secretary Bennett was the subject of a remarkable interview by John Lofton in the Washington Times of January 2, 1986. Their widely ranging discussion was not the customary banter of such occasions. It rang with the clash of ideas. Like the best teach­ing, their discussion forces readers to stop and think. It is provocative and challenging, and it directs our atten­tion to some of the major issues facing all of us who care about the future of education and of our children.

I ask that the Bennett-Lofton inter­view be printed in the RECORD and rec­ommend it to the careful consider­ation of my colleagues.

The material follows:

[From the Washington Times, Jan. 2, 1986)

WILLIAM BENNETT: Gon, MAN' AND SCHOOL

<Editor's note: Columnist John Lofton of the Washington Times recently interviewed Secretary of Education William Bennett on life, liberty and the pursuit of learning.)

Q: What is a nice man like you doing in a job like this, a job and a department Ronald Reagan promised repeatedly he would abol­ish? But, instead, the president has in­creased your department's budget by over 50 percent since 1983, from $10 billion to $15.5 billion in 1986. Why isn't this joint abolished?

A: Can't be. Politically, it can't be. The president came in in the 1980 election, ev­erybody with him. Big Reagan election. Votes on the Hill for the abolition of the de­partment, in the Senate, numbered some­thing like eight to 10. There'd be fewer votes today.

It's good question whether we need a De­partment of Education. In fact, this depart­ment is not necessary. But it's here. And there doesn't seem any likely prospect of getting rid of it. As long as it's here, let's make the best use of it.

Q: Would you urge the president to try again to abolish your department?

A: Yes, if it looked like that was a political possibility. If not, I wouldn't waste my time on it. I would rather suggest that the de­partment be used to further the president's goals and aims, as we're trying to do.

Q: Would you urge the president to go all out to abolish your department?

A: I don't think so because it wouldn't be worth it in terms of priorities, time and energy. There are some things that we are doing that are reasonably effective in fur­thering the president's goals. And balancing that against the likelihood of abolition, I think we shouldn't waste energy on that right now.

Q: What should the purpose of education be?

A: Education, not this department? Educa­tion generally?

Q: That's an interesting distinction. But, yes, education generally.

A: I think it is pretty much as Thomas Jefferson said, and others, to nurture and enhance the wit and character of the young.

Q: In his book "Heretics," G.K. Chester­ton said the most practical and important thing about a man is his view of the uni­verse. What is your view of the universe?

A: Which part? Can I disaggregate that question a little bit?

Q: Far be it from me to limit your answer. A: If we reframe it as [former Supreme

Court Justice Benjamin] Cardozo's point, he said the most important thing about a judge is his philosophy. I don't think much about the universe. It's just not something that occupies me so much. If you reframe the question to what about life, or what is your philosophy of life, I'd be more comfortable with it.

Q: You don't understand what Chesterton was saying?

A: Oh, I think I do. Q: Then why not take a swing at it? A: Give it to me again. The question is repeated. A: [After five-second pause.] I can't get

my arms around it [the question]. I guess the part of the universe I tend to focus most attention on is human beings and their aspi­rations. And I think, with Aristotle and Thomas Aquinas, that life has a purpose. And one of the purposes for human beings, as I've said, is the development of their in-

tellectual and moral capacities. And society should further that as best as it can.

Q: In a recent talk at the Library of Con­gress about adult literacy you noted that we are a people of the word and that we cher­ish a heritage that includes the book of books which, I assume, was an allusion to the Bible.

A: Yes. Q: But, in fact, in our public schools we

don't cherish this heritage at all. Unlike what was done throughout most of our edu­cational history, the Bible is no longer taught as the truth, the source of all wisdom, ethics, right and wrong. And woe unto the public school teacher who uses the Lord's name in a context other than in vain. Question: Can a child really be considered educated if he doesn't know God or God's word? What, in your judgment, has been the impact of removing God and His word as the center of education in this country? And what can, indeed must, be done about this, if anything, in your judgment?

A: I don't think we can say a child has been well-educated unless a child has been presented-usually be parents but it can be by others-with religious ideas and ideals.

Q: But I'm not talking about 'religion' or 'religious ideas.' I'm talking about God, the God of the Bible, His word.

A: Can a student be educated without knowing God? What do you mean by know­ing God? That he must declare himself a be­liever? He must say: I do believe in God?

Q:Yes. A: I guess I think, because of my own

views, my own religious beliefs, that evi­dence of the universe, to use Chesterton's word, the experience of mankind makes a very strong case for God. I don't think that's the final way a human being comes to religious commitment. I think it's a matter of the heart, the will. A person can be edu­cated without so acknowledging God as the center of the universe. But a person who is not at least introduced-either through the ideas of philosophers, theologicans or through the simple faith of others-has been denied an important educational op­portunity.

Q: What in your judgment, has been the impact of removing God as the center of public education in America?

A: Well, in many cases it is not true that God has been removed as the center of edu­cation in public schools. There is the kind of official view that there shall be no mention of God, that things having to with God or particular religious beliefs will not be talked about in the classroom. But as you visit classrooms, you find that this isn't the case.

I visited schools this year, taught a lot of classes. In one of the first schools we visited, in Shreveport [La.J , we went into the public high school. I was welcomed. And then the superintendent called on a member of the community for a prayer. And just about ev­eryone prayed. The press was there. No one stood up and screamed and objected. This was obviously something that was done fairly frequently. I don't think this school is unusual. I think this takes place in lots of community gatherings, including school gatherings .... Arguably, what some of these people are doing is in violation of the holdings of the Supreme Court, but it goes on anyway. I just can't take the conclusion that there is no acknowledgment of God in the public school classrooms, because there is.

Q: But there is no God-centered educa­tion. You're not telling me you know the name of a public school in America where

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4081 education is God-centered, where it is taught that God is the beginning of all wisdom and knowledge, are you?

A: No, I don't. But on the other hand, there are many classrooms in America where teachers and principals talk unabash­edly about their belief in God and how this belief sustains them. And they bear witness to that for all the children to see.

Q: But you're not contesting, are you, that for a majority of our history, public educa­tion in America-although it was different in the past-was God-centered and biblically based and this is no longer the case?

A: That's right. Q: So, what in your judgment has been

the impact on removing this godly founda­tion from American public education? Has there been an impact?

A: Yes. Let me put it this way. I think the undue squeamishness about things reli­gious-what I have called the fastidious dis­dain for religion-has hurt the public schools and teaching in the public schools. And where I t hink the impact is centered is in the whole question of values.

The American people do expect their chil­dren to become better, in a moral sense, as a result of education. When a school decides that it will not, or should not, foster doctri­nal adherence, and moves from that to saying that all questions of values having to do with personal behavior are related to re­ligion and therefore, must be avoided, it shoots itself in the foot. And what it does is encourage parents to take their children elsewhere.

I've said a number of times that consistent with a concern for religious freedom, the schools do not have to be so squeamish and fastidious about avoiding things religious.

Q: Can you list one or two things you think have happended a a result of God being removed from the center of education, as I described it earlier?

A: There's no such thing as a moral vacuum in this sense: If you do not present children with notions of right or wrong that are either religiously based or based on tra­dition derived from religion, you're going to have a notion of values that comes from somewhere else. So, instead of a theory and practice of morality-which informs peda­gogy and curriculum-that is derived from the traditions of this society, what you have in a lot of cases is moral relativism and ethi­cal relativism which is a disaster.

Q: Don't we really have an established re­ligion in the public schools, and isn't it athe­ism?

A: No, I don't think it is. Again, I have trouble saying 'in the public schools.' If you take the pronuncements of some groups like American United and generalize from what they say is a description of the public schools, that would be right. But you can't generalize.

Q: Well, you either teach God or no God, don't you?

A:No. Q: You have a kid who, on the average, is

in a public school for about 15,000 hours. And if he's hearing not one word about God being true, real and the center of all knowl­edge, how does this differ from atheism? The atheists don't want God or Christ taught as the center of education. And they aren't, in the public schools. Isn't this the de facto atheist position?

A: Well, the question is: Is it simply one way or the other? Look, I think there are people in the schools who are hostile to reli­gious belief. But I think, again, in most of the schools I know-although there have

been serious intellectual mistakes made about what we can and cannot teach and what the First Amendment allows-no, I can't say this is atheism in the schools.

Q: Then what is it? How does it differ from atheism?

A: It's a kind of-I'd have to know the sit­uation. I see very different situations in dif­ferent schools.

Q: Really? I thought we already agreed that you know of no public school in Amer­ica where God or Christ is taught as the center of truth.

A: Right. I don't see that. But after that, I see ...

Q: But, from a Christian perspective, this is atheism.

A: No, I think atheism is to deny God, to deny His existence.

Q: But isn't it a denial of God when you don't teach Him as the source of all truth during 15,000 hours of class time?

A: I don't think it is. It may be a backing off, a certain agnosticism which is unneces­sary, but I don't think it's astheism.

Q: Well, yes, I would say that not men­tioning God for 15,000 hours would be a cer­tain backing off.

A: I would say that in most schools, for 15,000 hours, you would not find very many where God is not mentioned.

Q: But I'm not talking about not mention­ing God. I'm talking about His not being taught as the center of all wisdom and knowledge, which is what the Scripture says He is.

A: Well, that is not done in the public schools.

Q: One occasionally hears, although less so, the question: Can the private school sur­vive? But Dr. R.J. Rushdoony asks in his book "Intellectual Schizophrenia: Culture, Crisis and Education" what he calls the more basic question: Has the statist school any right to survive? And if so, why? Be­cause, as he points out, the statist school gives no image of man which gives function and structure to society. And since the stat­ist school depends on taxes, it is dedicated for the most part, to self-advantage rather than function?

A: It [the statist school] has a right to survive if it is good, if it does its job to nur­ture and enhance the wit and character of the Young. Some do, some don't. · Q: But under the present system the stat­ist school is not subject to any sort of sur­vival market mechanism.

A: Oh yes it is. Q: Baloney! The statist school if support­

ed by tax dollars that continue to flow. Do you know of any public school that went out of business because it was a lousy school? I don't.

A: Yeah, yeah. There are some. That magnet school in Shreveport.

Q: But it was an exception rather than the rule, wasn't it?

A: Well, probably, sure. Q: But my question is not about the right

of individual statist schools to survive, but the right of statist school, per se, to survive?

A: A right? It's not a Constitutional right. An absolute right? I can't see any constitu­tional protection here, Should it survive is the question, and my answer is: It should survive if it does the job.

Q: But my question is: Do statist schools have a right to exist at all?

A: Rights, rights, rights. Where's the right laid down anywhere? I don't think it gets you anywhere to say it doesn't have a right. The question is: Is this an efficient and sound way to educate people? When the

common school was set up, it wasn't set up as something following from the Constitu­tion.

Q: It sure as hell wasn't. And common schools weren't set up as statist schools either.

A: Right. Q: And this is the point. As Sam Blumen­

feld, author of "N.E.A.: The Trojan Horse in American Education," has noted, public education, as we know it today, did not begin until the mid-part of the last century. And the idea of state-owned and controlled educational systems did not originate in the United States but was imported from Prus­sia, where an authoritarian monarchy used centralized statist schools for its own politi­cal and social purposes. This being the case, why do statist schools have any right to sur­vive?

A: Right to exist, again, doesn't get us anywhere. Should it exist? Is it an efficient way of educating young people?

Q: But we know the answer to these ques-tions and it is: No, it isn't.

A: Some of them are, some of them aren't. Q: But, on balance, it isn't. A: We aren't doing as good a job as we

should. But do I think we should have public schools? Yes.

Q: Why? A: Because I believe in the public school

and most Americans believe ... Q: But why? Obviously, you believe in it.

But why? A: Because it's a way for us to do a

number of things. First, it should be an ef­fective and efficient way to educate the young. Second, we believe in the old idea of the common school, where all our children go from various communities and families and we have an education in common princi­ples, common beliefs.

Q: But you say "we." Speak for yourself. I don't believe in this. And millions of other Americans also don't believe in this, which is why they are getting out of the public schools.

A: About 90 percent of Americans do. And the 12 percent who send their children to private schools-many will tell you they would prefer to send their children to a public school, but they're not happy with the public schools. I think that if the public schools come back in the way they should, you will see the number of people who send their kids to private schools going down, not up.

Q: In his book "Compelling Belief: The Culture of American Schooling," Stephen Arons, director of the Department of Legal Studies at the University of Massachusetts, writes that "the present structure of educa­tion in America is broadly inconsistent with First Amendment principles" because gov­ernment is imposing the content of school­ing, and this is "the same threatening agent of repression for which the framers of the Constitution sought to free themselves." He suggests that the only solution to the grow­ing conflict in the public schools about values and beliefs is "a complete separation of school and state." Why don't you favor this?

A: I don't think it's possible. Q: But we once had it! A: I know, but we don't have it now. It's a different world. And you can't take

something that's been around for a long time now, which is believed in by most Americans very strongly, and simply say throw it out. That's why I'm not part of that movement. I'm part of that movement that says restore our public schools to the

4082 CONGRESSIONAL RECORD-SENATE March 7, 1986 position they once held. And to do that means many of them will have to do things a little differently.

And one of the reasons you can't separate state and schooling is that local communi­ties have to be involved in the governance and running of the school. And local com­munities often manifest their will through governmental channels such as school boards and other things.

Q: But we did this before without having statist schools.

A: That's fine. Q: But why are you so defeatist as regards

the idea of restoring and reconstructing the kind of educational system we had for the majority of the history of our country?

A: I'm not defeatist. I think you can re­construct and restore a lot of it. But, we cannot do it with the goal of saying let's separate state power <from schooling). We can't do it that way. What we're saying ...

Q: But why not, if we once did it that way?

A: Well, you know, I just don't think it's feasible.

Q: I know. But why don 't you think it's feasible?

A: Because people now have expectations that the local community, local government, will be involved, and state government. People do set up their own schools, and when they're happy with them, that's fine. But I think the general disposition of the American people is not to get rid of state in­volvement and local communities, but to use those as a way of reforming.

Q: Well, that certainly seems to be your general disposition, and I'm sorry it is. Let me ask you about Christian schools and home schools. What right do you think the state has to regulate these schools?

A: I think in either of those cases the state does have a minimal interest in assur­ing that Ca) the institution is an educational institution, that something that calls itself educational really is-and that cuts a lot of ways, putting a great burden on all sorts of schools-and Cb) that the so-called school is not being used as something else-that is, that you draw a distinction between the home schooler and the parent who wants to keep a kid out of school to do something that doesn't have anything to do with the child's education.

Q: But we know that what the state calls a "minimal interest" has a way of growing into a larger interest. Are you saying the state has a right to test those who go to Christian and home schools, and if the kids don 't meet the state's testing qualifications, then the state can shut these schools down?

A: The reading test and the math test, yes. If enough of the kids are doing fine­reading at a level that is at least as good as the average in the rest of the state, however it is set up-that's fine. Then you leave them alone.

Q: But you support the right of the state to set these testing standards?

A: Yeah. Q: And if the Christian or home school

falls beneath the state's testing standards, then the state has the right to close these schools down?

A: I would say if you have a private school, in the home or under the auspices of a church, and your failure rate for students falls below the average in the state, I think the state could close them down, yeah. It's not educating. Close it down.

Q: Does the state also have a right to pick the books to be used in and the subjects to be taught in these private srhools?

A: Nope. Q: Where does the state acquire this

"minimal interest" you assert? Education is not mentioned in our Constitution.

A: I can't cite you the cases, but I remem­ber studying it. The courts are involved and common law, too. Our own Supreme Court and some states. And it also comes from human experience. Most parents have the interest of their children foremost in mind. Some parents do not. Some parents abuse their children. The state has a right to pro­tect those children from those parents.

Q: Who do you think the children belong to?

A: They don't belong to anybody but themselves, really. But, in terms of the in­terest of the child, parents must be heeded unless it can be demonstrated that parents are acting in such ways that they are harm­ing their children.

Q: But why would you defend the right of the state to set testing standards when one reason a lot of parents want to send their kids to private school is because they reject the state's standards?

A: For the same reason that I send in the cops when I find out a kid has been locked in the closet for three months.

Q: But that's a criminal act. Why do you liken home schools or Christian schools that are not state-tested to a criminal act?

A: No, educational abuse of children-if you're not teaching your children what they need to know to survive in this world ...

Q: Oh, you mean like in the public schools? Isn't it child abuse when the public schools don't educate our kids?

A: Well, that's when it cuts both ways. That's right.

Q: Do you want to send the cops into the public schools?

A: Sometimes I do. Q: Have you done it since you've been sec­

retary of education? A: No, I don't have the authority to do

that. But, if a governor or state commission­er of education sees that a school is system­atically disserving its students, the place should be closed down.

Q: But the threshold question is: Who is to judge? Why do you want to put Caesar over the right of parents to choose their own form of education?

A: No, no. I didn't say that. Parents should choose the form of education they want for their children.

Q: But the state should ultimately set the standards.

A: Minimal standards-such as you can read and you can count. And that's it.

Q: Have you ever tried to tell the state that's it?

A: Some states are more self-restrained than others. You can say: Give the state a little bit of power and it will want more ...

Q: Yes, I would definitely say that. A: But, this is one of the difficulties we

have living in a democratic society. If you say the state can set no standards, then you've got worse problems.

Q: But we see what has happened to edu­cation when the state is setting all the standards, and it has been a disaster. But, obviously, you still have a great deal of faith in the state.

A: No, no. I don't agree with the premise. The general story of public education in the United States is a success. It is, if you look at the whole story, not the last 20 years.

Q: In a talk to Phyllis Schlafly's Eagle Forum this past September, you called for a restoration of "a coherent moral vision" to our public schools, but you said our schools

"should not attempt to ... support any one religion over another." But, this view, in fact, lacks coherence. Morals and ethics are, ultimately, based on religious views. Thus, to attempt to restore a coherent moral vision to anything means, inescapably, to teach that some morals and ethics are right, some wrong, some are true, some are false, and therefore one religion must be support­ed over another. No?

A: No. You've got to make some distinc­tions here. That the values, beliefs and morals we hold as a people are derived from one religious tradition is a fact. We can say that without embarrassment and we should.

Q: This used to be the case. but not any longer.

A: No, it's still true. Don't exaggerate the impact of the moral relativists.

Q: We still have the same morals and ethics of those who came over on the May­flower?

A: Essentially, not so different, if you look at the American people.

Q: Oh, I do. I do. I go to a lot of shopping malls. And I don't see a lot of Puritans there.

A: Don't pay attention to the elites. And don't pay attention to everything you read about the Puritans and the Pilgrims. They were sinners, too. We all are.

Q: True, but they didn't make a career out of sin.

A: I bet a few did .... But don't say the American people are in crisis about this. Some of the elites are. But, for the most part, the American people aren't.

Q: But what about my point. If morals and ethics come from religion-and right and wrong ought to be taught, as you say­then it must be taught that one religion is right and what conflicts with it, is wrong. So, you have to support one religion over another.

A: What do you teach in the public school? Methodism? Presbyterianism? Which do you teach?

Q: You teach what's true. And I'd like to know what you think that is?

A: I don't think you advocate Methodism. Presbyterianism, Catholicism, or Judaism to students in public school. What you do ad­vocate. however, is a theory and practice of values that is based on the Judaeo-Christian ethic and tradition. Sure.

Q: Well, good luck in trying that in a public school. Do you have a school in mind where you might want to try this out?

A: It's done in a lot of places in lots of public schools, even though people say it's not allowed.

Q: I don't think it is. And I think the problem we face was summed up in a recent headline in the New York Times which read: "Ethics Classes Avoid Teaching Right and Wrong."

A: But some do. I've been in classes where teachers teach right and wrong in ways I think you would find very compatible. I talked to several groups of students about the Declaration of Independence, and those children believe it. These public school stu­dents believe that we are endowed by our Creator with certain inalienable rights.

Q: But, unfortunately, you can't tell them anything about our Creator in a public school.

A: I saw a couple of teachers do it. Q: But I'm not denying that, at great peril

to their careers, some public school teachers still defend the faith. My point is that this is the rule rather than the exception howev­er. Do you believe that something that's not true should be taught as truth?

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4083 A:No. Q: Do you believe evolution is true, that

everything just happened, that life came from no-life, that we evolved from lower forms of animals?

A: I believe there is good scientific evi­dence for evolution.

Q: You do? So, you have no trouble with evolution being taught as truth in the public schools?

A: I have no trouble with it being taught as a scientific hypothesis which ...

Q: But I'm talking about it being t aught as being true.

A: Well , scientific truth is all hypot hesis and experiment. There are no capital T 's here in science. There is strong evidence and claims for it. It should be taught based on what evidence there is for it. And it should also be taught with a view toward what it doesn't explain.

Q: I t hought you are a Christian. A: I'm a Catholic, yes, a Christian. Q: But how is the evolutionary view com­

patible with the Christian faith? A: The church doesn't have any problem

with evolution as long as you don 't make any theological claims for it.

Q: But it can't be said that something is God-created and also just happened. You can't have purpose and meaninglessness.

A: That's right, provided your claims are at the same level. That is, you cannot both claim, at the same time, that creation­sorry, begged the question-that the world went up in a big bang or th&.t God created it. But, you have different modes of inquiry here. I don't have any problem with it, with biologists.

Q: But you either believe that God cre­ated man, or that he evolved from some lower form of life. Which is it?

A: I believe both. Q: But it can't be both. Either God cre­

ated man whole and mature, from durt, and breathed life into him, or he evolved from a lower form of life.

A: Nope. Even your theology isn't very good here.

Q: You're saying Darwin is compatible with the Bible?

A: Oh sure, I think so. Sure, I do. You bet. The Catholic Church hasn't had any prob­lem with this. What order of claim are you making? Are you making theological claims? See, I think people who teach evolution in school should be cautioned not to make metaphysical claims. That's the problem.

Q: But either life was created by God, or it came from no life through randomness and happenstance. These are not the same thing.

A: Those are not mutually exclusive. Q: The idea of God-created life and the

evolutionary view that life came about through randomness and happenstance are the same thing? They are synonymous?

A: No, it depends on what order of claim you are making.

Q: What does this mean? Either God cre­ated life, or it just happened.

A: Is it true that human beings, homo sapiens, are a collection of fluids and chemi­cals and molecules? Sure, it is. Is that all there is? No, that's not all there is.

Q: But we're talking about origins. Either things happened originally, ex nihilo,-out of nothing-because God created them. Or, a bunch of glop swirled around and things just happened. But both of these things can't be true.

A: Sorry, but your theology is deficient. What do we mean by creation?

Q: But you've read the Genesis account, haven't you?

A: Yes, but I don't know what a day is in Genesis.

Q: But whatever we know about Genesis, we know that what happened wasn 't ran­domness or happenstance or chaos or mean­inglessness, was it? God did it, right? That's the Genesis account. And the Darwin acoount is that it all just happened.

A: We didn't get all the blueprints. all the specifications. We didn't get how all the mechanisms .. .

Q: But you're ignoring the threshold ques­tion.

A: I don 't think I am. Q: And I'm trying to get you out what are

wild assertions that the God-created, bibical Genesis account, is the same as saying that it all just happened. How could they be the same? They are not the same thing.

A: That's right. They're not the same thing.

Q: Well, which do you believe? A: I believe in God. Q : Did He do anything? A: Yes, yes. How He did it, I'm not sure. I

don 't know and you don 't either. Q: Well, you speak for yourself. A: No, you don 't know, John. You may tell

me what you believe, but you don't really know.

Q: So, you can't know through believing? A: You can know some things through be-

lieving. Q: Do you believe in the Holy Spirit? A: Yes, I do. Q: Do you believe people can know things

through the Holy Spirit? A: Yes. Q: Why do you think the 10th point of

Karl Marx's "Communist Manifesto" was a demand for state schools, for "free educa­tion for all children in public schools?"

A: Is that the 10th point of the "Commu­nist Manifesto?"

Q: Yes, it is. A: If it was, clearly for Marx and his

fellow travelers, the greatest degree of con­trol possible to the state of not only modes of production, but also modes of dissemina­tion of information.

Q: I agree. But doesn't this idea scare you? A: Sure, There's always a worry about

state power. However. we 've managed to deal with it much more effectively than have those who followed Marx.

Q: But, in principle, our public schools are exactly like Soviet public schools, aren't they?

A: Don't ever confuse our public schools with their public schools.

Q: But, in principle, they are identical: no God . . .

A: That just shows you the bluntness and insufficiency of your categories, if you equate our schools with their schools.

Q: In principle, I said. Don't take it out of context.

A: This is the last, best hope of earth, John. And even our public schools are part of that.

Q: I remember when the Polish commu­nist government tried to ban all crucifixes from being displayed in their public schools. And I thought: This is identical to what's happened in our public schools!

A: But we have not extirpated religion from the life of this community.

Q: I'm talking about from our public schools only.

A: That's right . . .. But don't confuse the United States with Poland.

Q: In principle, we have all too much in common.

A: We've got the First Amendment. We re­spect and honor it. And we are a religious

people. We are a religious people and we manifest our religious beliefs.

Q: Ah, and so were the Romans and the Greeks! And that's what St. Paul said on Mars Hill [after touring Athens]. He told his audience that they were a religious people. The only problem was they didn't know the real God. Don't forget, this is a nation where it is now legal to murder mil­lions of unborn babies. So, don 't ever think that our country can do no wrong.

A: I didn't say we don't do any wrong. Q: Then don 't give me this moral relativ­

ism bit about how we are better compared to Russia.

A: We are better! Q: But how are we compared to God? A: The heck, that's moral relativism.

That's objectively demonstrable. If your cat­egories are such that you can't see that dis­tinction any more-between us and the Soviet Union-you 've got to spend less time in theology ...

Q: But what scares me are our similarities, the growing similarities! Literacy is some­thing you are interested in. In reading, are you for the "look-say" method or phonics?

A: I'm no expert, but the research tells us pretty persuasively that phonics has to be used early on, that it 's the most effective way.

Q: Would you recommend, as Sam Blu­menfeld has, the mandating of the teaching of intensive phonics in the public schools?

A: We're going to have our report out soon and ...

Q: A report? You mean we don't know enough about phonics now?

A: Reports are very important for the sec­retary of education. They give me a micro­phone, a megaphone.

Q: Why in the world would you call the formation of Accuracy in Academia a bad idea, particularly since Howard Phillips, head of the Conservative Caucus, says that in a conversation with him and Reed Irvine [head of AIAJ you were critical of those in academia who have criticized AIA, noting that those who express support for free in­quiry and expression ought to tolerate criti­cal evaluations of their own ideas?

A: Critical evaluations of their own ideas is fine. And that should be the ongoing life of the university. But hiring students as stoolies is silly, a bad idea.

Q: So, you think these academics will reform themselves?

A: No. no, they need to be reformed by

Q: But who's going to watch them, to pick them up on their lies and distortions?

A: Presidents, deans. provosts. Q: How will they know? A:. Well, they should know. That's their

job. Q: But what's wrong with students moni­

toring professors and checking out their facts? And why do you call them stoolies?

A: Because it's a silly idea. And I'm not the only conservative who thinks this. Midge Deeter and Bob Tyrrell agree. The main reason it is silly is that it's the sort of thing that I hear from liberals when they try to caricature conservatives. This is the kind of thing that discredits responsible conservatives.

Q: Well, I hope that one of the things con­servatives do is to try and find out if their professors lie and distort history. Certainly you agree there are professors who do this?

A: Absolutely. And I spent a good part of my academic career doing intellectual battle with these people, but I didn't hire students

4084 CONGRESSIONAL RECORD-SENATE March 7, 1986 Q: What do you mean "hire?" Some of

these monitors will already be in the class­rooms.

A: I didn't hire them. I didn't set up an outside group. What I did was to teach many of the same students who were in a class taught by a radical professor. We argued the ideas. And then I would argue with the professor .. .. The rise of conserva­tive intellectuals in and around the academy has had a great effect on American thought.

Q: In a recent talk in New York you la­mented the fact that a student can get a bachelor's degree from 86 percent of our colleges without having studied the civiliza­tions of classical Greece and Rome. And you included this area among the most impor­tant things a student should study in col­lege. But why? What's so great about these so-called civilizat ions? In his book, "The An­cient City: A Study on Religion, Laws and Institutions of Greece and Rome," Fustel de Coulanges said of these so-called civiliza­tions:

"The citizen was subordinate in every­thing, without any reserve, to the city. He belonged to it body and soul. The religion, pagan, which produced the state, ·and the state which supported the religion, sus­tained each other. There two powers formed a power almost superhuman to which the body and soul were equally enslaved. There was nothing independent in man. His body belonged to the state and was devoted to its defense." Why are you so high on these so­called civilizations? They were terrible!

A: In some ways they were. But. neverthe­less, many of the ideas which came out of Greece and Rome are the ideas which sus­tained through the Middle Ages and the Renaissance and are seminal to our own po­litical institutions. I can read Aristotle and have my students read Aristotle without condoning slavery. In fact, I don't know anybody who teaches Aristotle who con­dones slavery. He did. But ...

Q: Well, we all make mistakes. A: Yes, we do make mistakes. And he

made a big one on that one. Nevertheless, these are the ideas which-if you want to understand the United States, our principles of government and what our founders are talking about, you've got to read the Greeks.

Q: But about this statistic: 100 percent of our students can get a bachelor's degree without studying Christianity, much less having to believe in Christ. Does this bother you?

A: Oh, I don't think you should require a course in Christianity. But if you study the humanities, you'll study Christianity.

Q: But you're bothered that students can get a bachelor's degree without knowing about the Greeks and the Romans.

A: The fact that they don't have to know about Christianity bothers me. And that they don't have to know about Judasim bothers me. You bet, it bothers me. But, should they have a course that requires the acknowledgement of Christ to graduate? No, they shouldn't have that.

Q: In this same talk in New York you re­f erred to the need for college students to grapple with what you called life's relentless questions: What should be loved and de­fended, what should be noble and base? What is your answer? What is the standard by which you arrive at your answer to these questions?

A: By thought, reflection, experience and faith. My own experience and the experi­ence of others who are fellow travelers on this planet with me, and those who have gone before.

Q: Truth is determined by your own expe­rience?

A: No, but that's the vehicle we have to sort it out. All we have are our own minds and hearts when it comes to weighing and assessing and deciding. We have the experi­ence of the entire human race to assess.

Q: But we have millions of experiences. How do you know which ones are right? For example, what does your experience tell you about the Resurrection? And the answer is: nothing.

A: That's right, except it is a matter of faith in my church and personal beleif on my part.

Q: Do you have one truth standard? A: When it's pertinent, sure. Q: What is it? A: In areas such as religious belief and

mathematics, there are single truths. In other areas there can be scientific truths, other kinds of truths and so on. What is man? He's a lot of things. The biologist tells us one kind of thing . . .

Q: But you say you are a Christian. There is a Christian answer to the question: What is man, and it's the answer.

A: Yes. For purposes of religious belief, yes indeed, that's right. And action and be­havior, sure. But that doesn't mean I can't read a good book in biology to find out how cells work. That's interesting and worth knowing.

Q: A question-and-answer fact sheet about your department's TEACH voucher pro­grams says that parents have the option to attend private schools that are "eligible." What does this mean? Who decides this eli­gibility? And what are the restrictions put on private schools?

A: In this case, since this is a federal pro­gram, we can have a fair amount to say about it. And we say that any private school that wants to welcome these Chapter I stu­dents may, but they may not discriminate on the basis of race. [At this point, a Ben­nett aide notes that eligible private schools are ones currently recognized as such by the Internal Revenue Service.]

Q: In other words, the state <in this case the IRS, the federal government> sets the eligibility requirements for private schools. But why? Even the bill establishing your Department of Education says parents will have the primary responsibility for their kids. So, why can't they determine which private schools are eligible?

A: They can. Q: Baloney! The state, the IRS, sets the

eligibility requirement! Why? A: It's another check. Q: But you say you value parental choice.

Then you give them the list of schools they have to choose from.

A: Hey, I talked to a lady the other day who told me she was keeping her kids home to play cards with her. And she was calling it a school, a poker school. That's not right. You can't have our money to do that.

Q: Look, you can ridicule, if you like, the idea of parental choice, but ...

A: I'm not ridiculing parental choice. Q: But when I mention it, you mention

some stupid example of this woman . . . A: That's because people err in those ways

that ... Q: That you have to have the state decid­

ing for them, right? But if you believe in pa­rental choice, why aren't you letting parents decide which schools are eligible?

A: We are, but it's not absolute. Q: A recent article in the Texas Law

Review suggested holding public schools le-

gally accountable for failure to educate kids in reading, writing and arithmetic. How does that sound to you?

A: I need to think about that. They cer­tainly should be held responsible. But legal­ly responsible? I'd like to pause on that be­cause I don't know that we need more litiga­tion. Schools that fail to do the job should be closed and boarded up. Those that do the job should be rewarded.

Q: Then why didn't you write this into your voucher plan? Why didn't you say that public schools that don't meet certain re­quirements cannot get the vouchers? You didn't do this, did you?

A: No. What we've done, in effect, is say that the parent can make that decision.

Q: But you've already set some eligibility ~by letting the IRS determine which schools are eligible schools). Why not say that schools that don't meet certain testing re­quirements don't get your vouchers?

A: Why do you want to give more power to the state on that?

Q: But you're the one who defends the right of the state to define which schools are eligible schools.

A: States, I suppose, could do that. Q: But why haven't you said it-that any

school that doesn't pass a certain test level will not get our vouchers?

A: I don't think I should be setting that sort of rule. It's redundant. Because when you give parents the choice, as we're doing, and the school fails, the parent will pull the kid out.

Q: Then do you think it would be a good idea for the states to set a test level which, if a school falls below it, it cannot get your voucher?

A: It's an idea worth considering. You've got to take into account all the differing factors. You're dealing with some schools where you can't expect the kids' scores to be as high as in other areas. But it's not a bad idea ....

Q: But part of the voucher idea is to en­courage competition and incentives.

A: Right. Q: So, why not-since you didn't shrink

from proposing the voucher idea from Washington-set standards which, if state schools fall below them, they don't get your voucher?

A: The states can do that. Q: But why didn't you propose it? A: I don't have any schools. Q: Last year, I learned that the National

Education Association's Professional Li­brary in Westhaven, Conn., was distributing a booklet for use in the classroom titled "Homophobia in Education: How to Deal With Name Calling." The point of this booklet, which I am happy to say was with­drawn after I wrote a column about it, was that the real sin is homophobia-that is the intolerance toward homosexuals-not homo­sexuality, which was likened to being left­handed or black or white or a man or a woman. Do you think this is a proper docu­ment to use in the classroom?

A: If I were on a school board or a curricu­lum committee, I wouldn't advocate it for use in the classroom, no.

Q: Do you think being a homosexual is like being lefthanded?

A: Is this a riddle? No, it's different. Q: Should homosexuals be allowed to

teach in public schools? A: Yeah, some should. I was taught by

some. It shouldn't be prohibited. Q: So, being a homosexual shouldn't be

grounds for dismissal? A: If they proselytize, sure.

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4085 Q: Do you think being a homosexual says

anything about a person's character? A: Sometimes. Q: I thought you are a Christian, a Catho­

lic. A: I am. Q: What is Catholic teaching on homosex­

uality? A: It's a sin. Q: So, it doesn't bother you if homosex­

uals teach our kids? A: Should sinners be allowed to teach?

Yeah. Q: I'm talking about practicing sinners. A: Well, most of us are practicing sinners,

too. Q: No, no, no, no. You can't be a practic­

ing sinner and be a Christian. A: Oh yes you can.

TRIBUTE TO THE LA TE GEORGIA O'KEEFFE

e Mr. BINGAMAN. Mr. President, I rise to pay tribute to one of-the pre­eminent American artists of the 20th century, Georgia O'Keeffe. New Mexico was fortunate to have her as a citizen and as a resident. It was a com­pliment to her artistic sense and to New Mexico that she chose our State to live and work for almost her entire career.

Besides being remembered as one of America's first great women artists, Georgia O'Keeffe and her photogra­pher husband, Alfred Stieglitz, fos­tered the development and dissemina­tion of American modernism.

New Mexico and the Nation will miss Georgia O'Keeffe. Fortunately she has left us the fruit of a lifetime to help us remember and celebrate her genius.

Mr. President, I ask that a copy of the article that appeared in today's New York Times on Ms. O'Keeffe appear in the RECORD.

The article follows: [From the New York Times, Mar. 7, 1986] GEORGIA O'KEEFFE DEAD AT 98; SHAPER OF

MODERN ART IN U.S.

<By Edith Evans Asbury) Georgia O'Keeffe, the undisputed

doyenne of American painting and a leader, with her husband, Alfred Stieglitz, of a cru­cial phase in the development and dissemi­nation of American modernism, died yester­day at St. Vincent Hospital in Santa Fe, NM. She was 98 years old, and had lived in Santa Fe since 1984, when she moved from her longtime home and studio in Abiquiu, NM.

As an artist, as a reclusive but overwhelm­ing personality and as a woman in what was for a long time a man's world, Georgia O'Keeffe was a key figure in the American 20th century. As much as anyone since Mary Cassatt, she raised the awareness of the American public to the fact that a woman could be the equal to any man in her chosen field.

As an interpreter and manipulator of nat­ural forms, as a strong and individual color­ist and as the lyric poet of her beloved New Mexico landscape, she left her mark on the history of American art and made it possible for other women to explore a new gamut of symbolic and ambiguous imagery.

Miss O'Keeffe was strong-willed, hard­working and whimsical. She would wrap herself in a blanket and wait, shivering, in the cold dark for a sunrise to paint; would climb a ladder to see the stars from a roof, and hop around in her stockings on an enor­mous canvas to add final touches before all the paint dried.

Miss O'Keeffe burst upon the art world in 1916, under auspices most likely to attract attention at the time in a one-woman show of her paintings at the famous "291" gallery of Alfred Stieglitz, the world-renowned pio­neer in photography and sponsor of newly emerging modern art.

From then on, Miss O'Keeffe was in the spotlight, shifting from one audacious way of presenting a subject to another, and usu­ally succeeding with each new experiment. Her colors dazzled, her erotic implications provoked and stimulated, her subjects as­tonished and amused.

She painted the skull of a horse with a bright pink Mexican artificial flower stuck in the eye socket. She painted other animal skulls, horns, pelvises and leg bones that gleamed white against brilliant skies, spanned valleys and touched mountain tops, all with serene disdain for conventional no­tions of perspective. She also painted New York skyscrapers, Canadian barns and crosses and oversized flowers and rocks.

The artist painted as she pleased, and sold virtually as often as she liked, for very good prices. She joined the elite, avant-garde, inner circle of modern American artists around Stieglitz, whom she married in 1924. Stieglitz took more than 500 photographs of her.

"He photographed me until I was crazy," Miss O'Keeffe said in later years. Others have called the pictures Stieglitz took of her the greatest love poem in the history of photography.

Her beauty aged well to another kind­weather-beaten, leathery skin wrinkled over high cheekbones and around a firm mouth that spoke fearlessly and tolerated no bores. And long after Stieglitz had died, in 1946, after Miss O'Keeffe forsook New York for the mountains and deserts of New Mexico, she was discovered all over again and pro­claimed a pioneering artist of great individ­uality, power and historic significance.

Miss O'Keeffe had never stopped paint­ing, never stopped winning critical acclaim, never stopped being written about as an in­teresting "character." But her paintings were so diverse, so uniquely her own and so unrelated to trends or schools that they had not attracted much close attention from New York critics.

RETROSPECTIVE AT AGE 83

Then, in 1970, when she was 83 years old, a retrospective exhibition of her work was held at the Whitney Museum of American Art. The New York critics and collectors and a new generation of students, artists and aficionados made an astonishing discov­ery. The artist who had been joyously paint­ing as she pleased had been a step ahead of everyone, all the time.

Strolling through the Whitney show one could think Miss O'Keeffe had made some "very neat adaptations of various successful styles of the 1950's and 1960's in her own highly refined and slightly removed manner," wrote John Canaday, art critic of The New York Times. He described appar­ent similarities to Clyfford Still, Helen Frankenthaler, Barnett Newman, Ad Rein­hardt and Andrew Wyeth.

But the paintings that seemed to reflect those styles were done by Miss O'Keeffe in

1920 or earlier, Mr. Canaday pointed out, "when her seeming models were either not yet born or were delighting their mothers with their first childish scrawls."

With no thought of resting on her laurels, the indomitable octogenarian went right on working. She painted new pictures, wrote an autobiography illustrated with her paint­ings that sold out immediately at $75 a copy and cooperated in the production of a film about herself and her work that won an award from the Directors Guild of America for Perry Miller Adato, who produced it for WNET-TV in 1977.

LITTLE EUROPEAN INFLUENCE

Despite the affinity of Miss O'Keeffe's work to paintings of other modern Ameri­can artists, her paintings show surprisingly little evidence of the European influence seen in other American art. "She escaped the fate of remaining thrall to a European model by taking possession of her American experience and making that the core of her artistic vision," Hilton Kramer wrote in The Times in 1976 in his review of her book. Nevertheless, he declared, "her painting, though filled with vivid images of the places where she has lived, was anything but a product of the provinces."

Miss O'Keeffe's career, Mr. Kramer wrote, "is unlike almost any other in the history of modern art in America." It embraced virtu­ally the whole history of modern art, from the early years of the century when Stieg­litz exhibited the new art to a shocked New York, to its eventual acceptance as part of our culture, according to Mr. Kramer. At the age of 89, when her book was published, Miss O'Keeffe remained "a vital figure first of all as a painter or remarkable originality and power but also as a precious link with the first generation of American modern­ists," he wrote.

BORN ON WISCONSIN FARM

Georgia O'Keeffe was born on a wheat farm near Sun Prairie, Wis., on Nov. 15, 1887. Her father, Francis Calixtus O"Keeffe, was Irish; her mother was the former Ida Totto. Georgia was named for her maternal grandfather, Giorgio Totto, who came to the United States from Hungary, where he had gone from Italy.

When Miss O'Keeffe was 14 years old, the family moved to Williamsburg, Va. Three years later whe graduated from Chatham Protestant Episcopal Institute in Virginia. She went immediately to Chicago, where she studied for a year at the Art Institute with John Vanderpoel. Both of her grand­mothers had dabbled at painting, two of her four sisters painted and one taught art. The elder of her two brothers was an architect.

Miss O'Keeffe had decided in Sun Prairie that she was going to be an artist when she grew up although, she wrote in her book, "I hadn't a desire to make anything like the pictures I had seen" and she did not have a very clear idea of what an artist would be.

For 10 discouraging years, she studied and painted, supporting herself by doing com­mercial art for advertising agencies and by teaching. She attended art classes at the Art Students League in New York in 1907-08, the University of Virginia Summer School in 1912 and Teachers College of Columbia University in 1916.

She was supervisor of art in the public schools of Amarillo, Tex., from 1912 to 1916, and taught summer classes at Columbia Col­lege in South Carolina and the University of Virginia. In 1916 she became head of the art department of West Texas Normal College.

4086 CONGRESSIONAL RECORD-SENATE March 7, 1986 Miss O'Keeffe 's early pictures were imita­

tive, but as she developed her technique, a ruggedly individual style began to assert itself. The results were out of step with the popular taste and accepted style of the early 1900's, but they encouraged her to concen­trate boldly on expressing her own ideas.

"One day," Miss O'Keeffe recalled in later years, " I found myself saying to myself, 'I can't live where I want to. I can't even say what I want to.' I decided I was a very stupid fool not to at least paint as I wanted to.''

A friend Anit a Pollitzer, showed a group of Miss O 'Keeffe 's drawings and watercolors to Stieglitz in 1916. Miss Pollitzer, later to become a champion of equal rights for women and chairman of the National Woman's Party, had been a classmate of Miss O'Keeffe's at Columbia.

"At last, a woman on paper!" Stieglitz ex­claimed when he saw the pictures. He hung them in his gallery, and the unknown Miss O'Keeffe created an immediate stir in the art world.

Mabel Dodge Luhan brought strings of psychiatrists t o look at them," Stieglitz re­called later. "The critics came. There was talk, talk, talk.'' Some of the talk hinted at erotic symbolism.

Miss O'Keeffe stormed up from Texas and upbraided Stieglitz for showing her work without her permission. His answer was to persuade her to move to New York, abandon her teaching and devote herself to painting. He presented one-woman shows of her work almost annually thereafter until 1946, the year of his death. He and Miss O'Keeffe had been married 21 years.

After moving to New York, Miss O'Keeffe divided her time between New York City and Lake George, N.Y. After 1929, she also spent a great deal of time in New Mexico. She made her permanent residence at Abi­quiu after the death of her husband.

Stieglitz's vigilant and canny management was a major factor in her rise to fame and fortune. Miss O'Keeffe continued to wear the clothes she pleased and to paint as she pleased.

Spare and dark-skinned, she had dark hair drawn severly back and knotted into a bun in those years. No makeup softened the an­gularity of her face with its high cheek­bones, but here large, luminous eyes be­trayed inner fires. Her clothes were usually black, loose-fitting and shapeless, functional rather than fashionable.

Miss O'Keeffe's paintings hang in muse­ums all over the United States-including, in New York, the Metropolitan, the Whit­ney and the Museum of Modern Art-and in most major private collections. But she re­tained a great deal of her prolific produc­tion.

Miss O'Keeffe was elected to membership in the National Institute of Arts and Let­ters, the American Academy of Arts and Letters and the American Academy of Arts and Sciences. She was awarded honorary de­grees by several colleges and universities, in­cluding Mount Holyoke and Columbia in 1971 and Harvard in 1973.

Miss O'Keeffe interrupted the cherished tranquility of her life in Abiquiu to come East to receive the honors from Mount Hol­yoke, Columbia and Harvard. She donned the required cap and gown, marched with the faculty members and sat with them on the platform hearing herself extolled as a kind of artistic monument.

Back in Abiquiu, the "monument" re­sumed a daily routine of work, now with the help of a young protege, Juan Hamilton, a

potter. He had knocked at her kitchen door asking for work and made his way up from man Friday to secretary. He supervised pro­duction of her book, and assisted with and appeared in the television film about her in 1977. He traveled with her to New York and California and managed her business af­fairs. There companionship was so close there were rumors of marriage.

In 1978 Mr. Hamilton, then 33 years old, came to New York alone on two missions. One was to put the finishing touches on the Metropolitan's exhibition of Stieglitz photo­graphs of Miss O'Keeffe. Mr. Hamilton had helped her select the pictures and had as­sisted in the preparation of the book con­taining reproductions published by the museum in conjunction with Viking Press.

INTERRUPTED BY PROCESS SERVER

Mr. Hamilton's other mission was to mount his own exhibition of the sensuously sculptured pots, evocative of the desert, that Miss O'Keeffe had prodded him into producing. A gala party celebrating the opening of the show, at the Fifth Avenue Gallery of Robert Miller, was interrupted by a process server with notice that Mr. Hamilton was going to be sued for "mali­cious interference" with the business rela­tionships of Doris Bry.

Miss Bry, the longtime New York repre­sentative of Miss O'Keeffe, had been dis­missed about the time Mr. Hamilton had come on the scene, and Miss Bry tried to fight that dismissal with a Federal Court suit for $13.25 million against Mr. Hamilton charging that he induced Miss O'Keeffe to oust her.

"I don't know why she is suing him," Miss O'Keeffe snapped when she learned of it. " I don't know of anything wrong he has done!" The suit was later settled out of court.

She traveled to New York to visit friends and see art exhibitions until recent years, when poor eyesight and failing health kept her at home.

Miss O'Keeffe won numerous awards, in­cluding the Medal of Freedom, the nation's highest civilian award, in 1977, an award from Radcliffe College for lifetime achieve­ments by women, in 1983, and the National Medal of Arts in 1985.

She is survived by a sister, Catherine Klenert.e

DRUG EXPORTATION •Mr. D'AMATO. Mr. President, I rise today in support of S. 1848, legislation to permit the export of pharmaceuti­cal products manufactured in the United States which currently cannot be exported because they have not been approved by the Secretary of Health and Human Services or the Secretary of Agriculture.

S. 1848, introduced by my colleagues Mr. HATCH and Mr. KENNEDY, address­es a serious issue which affects the health and economy of many nations around the world. Currently, the United States is the only country in the world to impose an approval relat­ed ban on pharmaceutical exports. The effect of this regulation is simple and straightforward: Either other na­tions are denied needed medications or U.S. pharmaceutical companies take their business overseas. In the latter instance, U.S. businesses, jobs, and dol­lars march into other economies. The

pharmaceutical industry becomes like so many other industries that we have seen disappear from the United States.

I do not want to see this happen to the pharmaceutical industry or to the economy of the United States. The pharmaceutical companies of this Nation provide research, innovation, and jobs that are invaluable to the health and well-being of this Nation. We should offer incentives for innova­tion and production, not disincentives.

Losing the U.S. hold on pharmaceu­tical manufacturing also means losing the U.S. leadership position in biotech­nology, particularly in the research to product-development stage. Currently, the process for approving pharmaceu­ticals- in most foreign countries is sig­nificantly faster than that of the FDA. Therefore, drugs often are ap­proved overseas long before they are approved in this country.

Small biotechnological companies which have entered into foreign licens­ing are usually required to, first, supply the foreign partner with com­mercial quantities of the drug from the U.S. production facility, or second, transfer the technology of the U.S. firm to the foreign partner, enabling the foreign partner to produce the drug in commercial quantities. Under current law, biotechnological compa­nies in the United States are unable to ship commercial quantities of the un­approved drugs to foreign partners and are faced with the risks of export­ing valuable technology. This is not a positive direction for the United States to be taking.

S. 1848 also provides for important new safeguards to assure that drugs are properly manufactured and la­beled when sold abroad. It is my belief that the sponsors of this legislation have addressed seriously the problems that could arise from poor or improper labeling. In addition, a number of Third World service organizations sup­port this legislation, with the primary belief that S. 1848 will promote in­creased access to health care in the Third World.

I commend Senators HATCH and KENNEDY for introducing this worthy legislation. I ask my colleagues to join this effort to promote productive and safe drug exportation.•

FRAUD HOTLINE •Mr. SASSER. Mr. President, the General Accounting Office has issued a review of its fraud hotline operations covering the 7 years since the incep­tion of this service. As one who was in­strumental in setting up the GAO hot­line, I take great pride in reading this impressive record.

The report reveals that the free hot­line receives more than 10,000 tele­phone complaints every year-74,000 in the past 7 years. Of this number,

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4087 some 11,828 were calls warranting fur­ther review by other affected agencies.

Some 9,000 of the reviewed cases have now been closed, and 1,349 of them were substantiated. Nearly 400 cases were ref erred for criminal pros­ecution, leading to 41 convictions and civil remedies in 279 cases.

I note from the data that my own State of Tennessee is a relatively heavy user of the GAO hotline, con­firming my view that Tennesseans are extraordinarily careful with the Gov­ernment's money.

The largest category of complaints concerns allegations of improper re­ceipt of Federal financial assistance, usually welfare, disability, or Social Security. Interestingly, the GAO re­ceived as many complaints about abuse of Federal work hours as about improper expenditures to contractors.

Mr. President, the General Account­ing Office reports that its hotline staff works closely with inspectors general in those agencies having such an offi­cial. Through highlighting problems of fraud and waste, the GAO has brought about changes in systems and procedures not directly quantifiable. Thus, it is difficult to provide a precise dollar amount of saving through fraud reporting. However, the GAO, known for its careful numbers, is confident that millions of dollars in waste, fraud, abuse, and mismanagement have been identified through its hotline. I call that a victory of the first order.

Mr. President, I believe my col­leagues would benefit greatly from knowing how the GAO hotline is help­ing us win the war against waste, fraud, abuse, and mismanagement. Therefore, I ask that the GAO fraud hotline report be printed in the RECORD.

The report follows: FRAUD HOTLINE-7-YEAR GAO FRAUD

HOTLINE SUMMARY U.S. GENERAL ACCOUNTING OFFICE,

ACCOUNTING AND FINANCIAL MAN· AGEMENT DIVISION

Washington, DC, February 20, 1986. Hon. JIM SASSER, U.S. Senate.

DEAR SENATOR SASSER: In response to your request to be kept apprised of the GAO Fraud Hotline progress, we are providing a fact sheet summarizing our 7 years of oper­ation. This updates information provided to you in our last formal report on the Hotline dated September 25, 1984. This fact sheet is a brief overview which concentrates on Hot­line statistics and examples of substantiated cases.

This formally transmits the data we pro­vided to you on February 14, 1986. We hope this will be helpful to you in your efforts to assist the Congress and the public in com­bating fraud, waste, and mismanagement in the federal government.

As you requested, unless you publicly an­nounce its contents earlier, we will not dis­tribute this document until 10 days from its date. After 10 days, we will make copies available to interested parties. If you have any questions on this report or on the oper-

ation of the GAO Hotline, please contact Gary Carbone of my staff on <202) 275-9342.

Sincerely yours, JOHN J. ADAIR, Associate Director.

7-YEAR GAO FRAUD HOTLINE SUMMARY <January 18, 1979-January 17, 1986) I. CONTINUING OBJECTIVES, GOALS, AND

PROCEDURES Since our last formal report <GAO/

AFMD-84-70, September 25, 1984) on the General Accounting Office <GAO) Fraud Hotline operation, the Hotline structure as well as the interviewing, screening, referral and follow-up procedures have not changed. Likewise, our objectives and goals have not changed significantly during the past 7 years. These are to:

Maintain a nationwide, toll-free hotline for receiving information on fraud, waste, and mismanagement in the federal govern­ment and refer cases to the federal agencies involved for their own audits or investiga­tions;

Conduct investigations of alleged fraud, waste, and abuse involving agencies that do not have an inspector general <IG) or agen­cies with which GAO has not established re­ferral procedures;

Respond to congressional requests and in­quiries involving fraud, waste. and misman­agement of federal funds;

Follow up on certain allegations referred to offices of inspectors general <OIQs) to ensure all issues are investigated and correc­tive actions are taken;

Provide advisement letters <audit leads) to GAO divisions and the OIGs based on our review of allegations and agency responses; and

Provide information and assistance to fed­eral, state, and local organizations establish­ing their own hotlines.

II. STATISTICAL OVERVIEW In the 7-year period, over 74,000 calls have

been received on the toll free hotlines, re­sulting in 11,828 cases warranting further review. The nationwide hotline phone number is 800-424-5454 and in the Washing­ton, D.C., area, the number is 633-6987. Of the calls warranting further review, 71 per­cent were received from anonymous sources. Part of these anonymous calls were from federal employees. Altogether, calls from federal employees totaled 26 percent of those warranting further review.

Calls not written up were for reasons such as the caller lacked specific information or the allegations did not involve a federal pro­gram. Those callers who had information on nonfederal matters were directed to the ap­propriate state or local agency.

Geographic breakdown The 11,828 cases were reported to have

taken place in the following geographic areas: Washington. DC.................................... 840 Alabama .................................................. 202 Alaska...................................................... 40 Arizona.................................................... 136 Arkansas.................................................. 134 California................................................ 1,508 Colorado.................................................. 177 Connecticut............................................ 61 Delaware................................................. 15 Florida..................................................... 504 Georgia.................................................... 486 Hawaii...................................................... 44 Idaho........................................................ 46 Illinois...................................................... 320 Indiana.................................................... 101 Iowa.......................................................... 137

./

Kansas .................................................... . Kentucky ............................................... . Louisiana ................................................ . Maine ...................................................... . Maryland ................................................ . Massachusetts ....................................... . Michigan ................................................ . Minnesota .............................................. .

~!~~~s~~~:..~::::::::::::::::::::::::::::::::::::::::::::::: Montana ................................................. . Nebraska ................................................ . Nevada .................................................... . New Hampshire .................................... . New Jersey ............................................. . New Mexico ........................................... . New York ............................................... . North Carolina ...................................... . North Dakota ........................................ . Ohio ........................................................ . Oklahoma .............................................. . Oregon .................................................... . Pennsylvania ......................................... . Rhode Island ......................................... . South Carolina ...................................... . South Dakota ........................................ . Tennessee ............................................... . Texas ...................................................... . Utah ........................................................ . Vermont ................................................. . Virginia ................................................... . Washington ........................................... . West Virginia ......................................... . Wisconsin ............................................... . Wyoming ................................................ . Overseas ................................................. . Missing codes ......................................... .

Referral to agencies

89 221 137 44

348 172 353 86

120 267

56 52 52 29

202 103 525 228 45

559 129 96

493 28

118 40

434 662

50 16

522 280 95

102 16

104 204

These 11,828 cases were subsequently re­ferred to the following agencies for further review: Department of Health and

Human Services .......................... . Department of Defense ................ . Internal Revenue Service ............. . Department of Housing and

Urban Development ................... . Department of Labor .................... . Department of Agriculture .......... . Veterans Administration .............. . General Accounting Office .......... . General Services Administration. Department of Justice .................. . Postal Service ................................. . Department of the Interior ......... . Department of Transportation ... . Department of Education ............ . Department of the Treasury ....... . Environmental Protection

Agency .......................................... . Department of Energy .................. . Department of Commerce ............ . Office of Personnel Management Small Business Administration .... Community Services Administra-

tion ............................................... .. Federal Emergency Management

Agency .......................................... . National Aeronautics and Space

Administration ............................ . Tennessee Valley Authority ........ . Agency for International Devel-

opment .......................................... . Department of State ..................... . Other agencies ................................ .

Total referrals .......................... .

3,344 1,954 1,207

774 662 644 582 376 374 343 279 274 250 196 183

130 124 123 104

99

90

49

44 39

19 19 62

I 12,344 1 Total cases referred is greater than the number

of cases warranting further review because some cases were referred to more than one agency.

Participants Allegations referred for further review

have also been categorized according to the

4088 CONGRESSIONAL RECORD-SENATE March 7, 1986 participant in the alleged improper activity. We have established five such categories: Cl> federal employees only, (2) federal employ­ees in conjunction with others, (3) federal contractors or grantees, (4) individual recipi­ents of federal financial assistance, and (5) other individuals or corporations. Of the 11,828 cases of wrongdoing and/or misman­agement, the highest proportion, 36. 7 per­cent, was in the category "federal employees only."

The following chart shows the percentage for each participant category of the 11,828 cases referred for further review.

Not reproducible in the RECORD. In the largest category, "federal employ­

ees only," we found 741 reports of employee work-hour abuse, 518 allegations of private use of government property, 486 reports of improper financial transactions, 303 allega­tions of theft, 270 allegations of noncompli­ance with established agency procedures or policies, 143 reports of purchasing unneces­sary equipment, 128 allegations of awarding unneeded contracts, and 1,749 other allega­tions of fraud and mismanagement.

In the second largest category, "individual recipients of federal financial assistance," we found 1,031 allegations of improper re­ceipt of welfare benefits and 733 of improp­er receipt of disability benefits. There were also 559 cases of improper receipt of social security benefits, 218 instances of improper receipt of food stamps, 161 reports of hous­ing subsidy abuse, 151 instances of improper receipt of veterans benefits, and 465 miscel­laneous allegations.

The "federal contractors or grantee orga­nizations" category was responsible for 759 allegations of improper expenditure of gov­ernment funds, 318 reports of non- or par­tial performance of contractor/grantee serv­ices, 192 allegations of medical personnel overbilling medicare/medicaid, 123 reports of the theft of government funds or proper­ty, 119 allegations of noncompliance with established procedures, and 787 other alle­gations of fraud and mismanagement.

In the category "other individuals or cor­porate entities," there were 945 allegations of income tax cheating and 403 other allega­tions of improper activities.

In the final category, "federal employees in conjunction with others," there were 224 allegations involving bribery or kickbacks, 119 allegations of conflict of interest, and 183 miscellaneous allegations.

Action taken on referrals Of the 11,828 cases referred for further

review, 9,199 have been closed. Of these closed cases, 1,349 were substantiated and in another 493, the reported allegations were not substantiated, but the agencies acted to prevent or minimize the possibility of an im­proper activity from occurring in the future.

The following chart shows the percentage for each participant category of the 1,842 cases in which allegations were substantiat­ed or preventive action was taken.

Not reproducible in the RECORD. The most common substantiated cases

were private use of government property, work-hour abuse by federal employees, fraud by recipients of such benefits as wel­fare, social security, disability and housing, and lack of compliance with agency proce­dures.

Legal and administrative action If an investigation discloses a violation of

criminal law, the allegation is forwarded to the Justice Department or state prosecutor by the agency involved for review and possi­ble prosecution. In the 7 years, 396 hotline

cases were referred in this manner. The agencies told us that 117 of these cases had been prosecuted. Defendants were convicted in 41 cases. Civil remedies or other legal ac­tions were pursued in 76 cases. The remain­ing 279 cases were declined for prosecution for such reasons as insufficient evidence, in­significant loss of federal money or the case would be more appropriately handled ad­ministratively by the agency.

In numerous instances, the agency took administrative action against federal em­ployees, contractors, and other individuals. These actions included employee dismissals, suspensions, demotions, or transfers. In ad­dition, contractors and grantees were sus­pended or debarred, had contracts or grants canceled, or were issued warnings about their work.

The Hotline has also provided numerous advisement letters identifying potential audit leads to GAO operating divisions and, on occasion, to appropriate agency officials. These leads have benefited GAO by provid­ing the basis to initiate audits of agency programs or supporting ongoing audits with additional information.

Misspent funds/savings In our September 1984 report, we identi­

fied approximately $20 million in misspent funds and estimated an additional $24 mil­lion in projected savings. However, this was done using only 20 percent of our substanti­ated cases.

Due to the nature of some of our hotline allegations and the fact that inspector gen­eral offices do not always have records of dollar savings in their hotline case files, we have found it very difficult to estimate dollar savings attributable to the Hotline. A number of these substantiated allegations do not lend themselves to estimating dollars saved, but do provide another type of sav­ings. This involves actions taken by the agencies to prevent or deter activities in which .the possibility for waste, abuse, and mismanagement exists. Based on the few substantiated cases that follow, we believe it is reasonable to conclude that millions of dollars in waste, fraud, abuse, and misman­agement have been identified as a result of calls to the GAO Hotline.

Examples of substantiated hotline cases closed in the last year are:

An anonymous caller alleged that a gov­ernment contractor substituted plastic con­tainers for the metal ones specified in the contract. General Services Administration <GSA) investigators substantiated the alle­gation that plastic containers were being used. However, the investigation also dis­closed that the contract specifications writer inadvertently omitted the word "metal" in describing the containers. GSA submitted a claim to the contractor for $91,697 representing an estimate of the sav­ings which were not passed on to the gov­ernment by the contractor's substitution.

A caller to the hotline alleged that Metal Service Center of Georgia, Inc., was selling substandard metal to several government contractors including some with Depart­ment of Defense <DOD) contracts. The caller said that when the company lacked the type of metal needed to satisfy orders within a specified time frame, it substituted substandard metal which was readily avail­able. To cover this substitution, quality cer­tifications and test results were being falsi­fied. Based on GAO's referral to the DOD IG, a joint investigation by the Naval Inves­tigative Service and the FBI found the alle­gation to be substantiated. During the in­vestigation, it was discovered that some of

the defective metal had been intended for use in the U.S. Space Shuttle Program and for armor plating in the battleship New Jersey. As a result, the operations manager, the sales manager, and the salesman in charge of DOD contracts for the company were prosecuted and found guilty of fraud. The operations manager was sentenced to 3 years in prison. The other two individuals were each sentenced to 10 years in prison to be followed by 5 years probation. The DOD inspector general also conducted a separate investigation of a second company, Certified Products, Inc., which was operated by one of the individuals involved in the above case. This investigation disclosed violations similar to those in the Metal Service Center case. The two investigations were combined as part of the above guilty pleas. As a result of the investigations, both companies were debarred from doing business with the gov­ernment for 10 years.

An anonymous caller alleged an air traffic controller· had admitted smoking marijuana while on duty at an airport. According to the caller, this information was overheard at a party at which the controller was ob­served smoking the drug. As a result of a Department of Transportation OIG investi­gation, three controllers at the airport ad­mitted drug use during nonduty hours. One controller resigned. The other two complet­ed a drug rehabilitation program and re­turned to work-subject to post rehabilita­tion follow-up and drug screening at their own expense.

An anonymous informant alleged that a civilian Air Force contracting official and a contractor the official was doing business with lived together. Also, the official had in­structed employees in the office not to report contract violations by this contrac­tor. As a result of the investigation by the Air Force Office of Special Investigations, the official and immediate supervisor were formally notified that their employment was being terminated for violations of, and gross indifference to, Air Force regulations. The supervisor, because of her long and dis­tinguished career, was allowed to retire. The other official's employment is being termi­nated.

An anonymous caller reported to the Hot­line that he had often seen a chauffeur­driven government car transporting a woman to and from a neighborhood grocery store. The caller provided the license number of the car which showed it to be as­signed to the Department of Justice. Inves­tigation by the Department revealed that the car was assigned to the Attorney Gener­al and that it hr:.d been improperly used more than 300 times by his wife for personal errands between 1981 and 1984. The former Attorney General reimbursed the govern­ment $11,207 for the unauthorized use of the car.

An anonymous caller alleged that he and other nongovernment employees were able to walk in off the street and obtain govern­ment office supplies (pens, pencils, staplers, etc.) from the supply store located in a Vet­erans Administration <VA) facility. The caller claimed this was happening because the government employees were not asking anyone to show identification or sign for the supplies. The informant also indicated that the store was much busier around Sep­tember because children were returning to school. Upon investigation by the agency, it was found that supplies were being dis­pensed without requiring identification, re­sulting in nonemployees receiving govern­ment supplies. The store now requires pres-

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4089 entation of an appropriate ID badge, and a formal system of controls was implemented to ensure against further losses.

A Federal Aviation Administration <FAA) employee called to report that the FAA was buying batteries for use in runway lights at a cost of $23 per battery when the same bat­tery could be bought elsewhere for under $10. FAA substantiated the charges, and paid $6.75 per battery on a recent procure­ment. FAA buys about 250 to 300 of these batteries each year. The cost reduction will save about $4,500 a year. In response to this case, the FAA center acting on this matter has set up its own hotline to identify over­priced items in its $200 million dollar inven­tory.

An anonymous informant alleged that a junior college had been awarded a $7.7 mil­lion construction grant from the Depart­ment of Energy <DOE) but only a portion of the construction would be completed. The contractors involved were allegedly friends of the college's program director, and the informant alleged that illegal bidding, fa­voritism, and kickbacks were involved. A DOE IG investigation resulted in a subse­quent referral to the FBI and the Depart­ment of Justice. The program director was indicted on 19 counts for submission of false claims. He plea bargained and pleaded guilty on one count but failed to appear for sentencing. Warrants were issued for his arrest. In addition, he and his affiliate cor­porations were debarred from doing busi­ness with the government for 5 years. In January 1986, he was apprehended upon his return from Libya and is currently being held for sentencing.

An informant alleged that a wealthy indi­vidual had falsified statements to a VA Medical Center that he did not have suffi­cient money to pay for his treatment. The VA IG investigated and proved the individ­ual did have the ability to pay for his treat­ment and had falsely signed VA statements. The U.S. Attorney, however, declined to prosecute because the form VA was using was ambiguous. The VA is in the process of collecting over $16,000 from this individual for the treatment he received and is clarify­ing the forms used to apply for free VA care.

Ah anonymous informant alleged that a contractor had not given credit to the Bureau of Printing and Engraving, Depart­ment of the Treasury, for the return of de­fective supplies, even though the supplies had been returned approximately 1 year earlier. A review of Treasury records re­vealed that the Bureau's Office of Financial Management <OFM) had never received the forms documenting the return of the sup­plies. Actions were taken to record a credit of $130,000 against the next payment to the contractor. In addition, procedural changes were instituted to ensure that OFM received notification of any future returns.

An anonymous caller alleged a U.S. Coast Guard employee was collecting a rental sub­sidy of about $450 a month in Hawaii, while actually living with his parents rent free. In­vestigation by the DOT OIG substantiated that the subsidy was improper and it was terminated. In addition, the case prompted a study by the OIG resulting in five crimi­nal convictions and recommendations to tighten rent subsidy program controls in Hawaii, Alaska, and Puerto Rico.

A hotline caller alleged that a surgical supply center was billing Medicare in his name for equipment he had not received. An investigation of the billing procedure in­dicated that the supply center was billing

for services not rendered, resulting in an overpayment in excess of $1,900 to be repaid to Medicare.

An anonymous caller alleged that the De­partment of Commerce was violating federal law by paying the full share of health bene­fits for part-time Commerce employees in­stead of prorating the costs. Office of Per­sonnel Management officials discussed the allegation with Commerce officials who ac­knowledged the violation and took correc­tive action.

An anonymous caller alleged that two em­ployees of the National Oceanic and Atmos­pheric Administration were using a govern­ment computer to prepare documents asso­ciated with a private business venture. This was substantiated and both were admon­ished and counseled by their supervisor who obtained a commitment that there would be no further misuse of government equip­ment. They were also directed to attend a Standards of Conduct briefing.

An anonymous caller alleged that a woman was receiving Aid to Families with Dependent Children <AFDC) and food stamps while receiving unreported income under an assumed name. The state's depart­ment of social services investigated and found that she had improperly received $2,084 in AFDC and $921 in food stamps. The woman was indicted by the Grand Jury for welfare fraud.

An anonymous informant alleged that a Navy shipyard employee had hired five rela­tives and had unfairly assigned them over­time and preferential jobs. The Navy inves­tigated and found that, while the employee had not been responsible for hiring his rela­tives <brother-in-law, son-in-law, and neph­ews), a number of them were working for him. As a result, the Navy IG recommended that the relatives be transferred to other jobs in the organization where they would not be under his supervision and that proce­dures be initiated to prevent recurrence.

Although the shipyard commander dis­agreed with some of the conclusions, he agreed to reassign one of the relatives and institute procedures to ensure that new su­pervisors are aware of prohibitions on nepo­tism.

An informant alleged that a former Marine Corp sergeant had received govern­ment travel payments for trips he had taken with a woman posing as his dependent wife. Naval Investigative Service investigated and the sergeant admitted to owing over $3,800 for unauthorized travel payments. The gov­ernment is recovering this overpayment from his monthly retirement check.

A caller alleged that an Illinois contractor added false labor charges to a Department of Housing and Urban Development <HUD) contract for renovating a low income hous­ing project. The caller had copies of docu­ments substantiating his allegations. HUD's investigation verified the allegations and the contractor entered a guilty plea to the charge of submitting false statements to HUD. He was sentenced to 30 days in a work release program, placed on probation for 5 years, and debarred from further participa­tion in HUD programs for 3 years.

An informant alleged that a company's advertisement might be a mail fraud scheme because the company was disguising itself as a federal government agency and requesting payment for its services. An investigation by the Postal Inspection Service resulted in a cease and desist order against the company, the owner, and his representatives and em­ployees. Furthermore, the delivery of mail connected with the activity covered by the

order and the payment of money orders to the company were forbidden.

An anonymous informant made 12 allega­tions that the commanding officer of a major Army base was spending government money on unnecessary projects. The Army IG investigated each of these allegations and found that only one was substantiated. The IG found that the base golf course was improperly maintaining a putting green behind the general's house at a cost of $750 to $1,000 a year. This maintenance was stopped.

An anonymous caller alleged that certain National Railroad Passenger Corporation <Amtrak) employees in Texas were not at work during their assigned hours. The GAO hotline coordinated this allegation with Amtrak officials. Amtrak's police investiga­tion verified the allegation. Five employees were reprimanded and advised that a recur­rence would result in dismissal. Their super­visor, who had condoned their absences, was given 20 days leave without pay and will now report to a different manager. Two other managers involved were reprimanded for not reviewing the operation over an 18-month period.e

HOME CARE TECHNOLOGY CHILDREN

FOR MEDICAL DEPENDENT

e Mr. D'AMATO. Mr. President, I rise today in support of worthy legislation for children in this country. S. 1793, introduced by my distinguished col­leagues, Mr. HATCH and Mr. KENNEDY, provides alternatives to hospitalization for children who are dependent on medical technology. I thank my col­leagues for addressing this serious issue, and I commend their promotion of an innovative and sound solution to this problem.

S. 1793, the Alternatives to Hospital­ization for Medical Dependent Chil­dren Act of 1985, is designed to create greater access and alternative services in our health care system. Currently, children who are dependent on high­tech medical equipment, such as those who are dependent upon respirators, are given very little choice in selecting their health care service. Many fami­lies have health benefit plans that mandate that such services be provid­ed only in a hospital. Only three insur­ance companies in the country, howev­er, cover home health care for those children in need of technologically ad­vanced medical equipment.

Home health care has been proven to be cost effective and more desirable than hospitalization, but some insur­ance companies have been slow to change regardless of the acknowledged cost savings. One explanation for the slow response of insurance companies to off er home health benefits is the difficulty involved in developing new benefit plans to include home health coverage. S. 1793 addresses this issue by requesting the Office of Technolo­gy Assessment to develop a model home health plan for employer-spon­sored health plans. The plan will

4090 CONGRESSIONAL RECORD-SENATE March 7, 1986

insure that the home health plan will not be more expensive than hospital care coverage. In addition, the model plan will cover all in-hospital services as a minimum requirement. Insurance companies will have the option of using this plan as a model for design­ing company-specific benefit packages, which includes home health coverage for children whose lives depend upon our medical technology.

S. 1793 also designates $20 million annually to be used to improve and maintain home health and communi­ty-based health care systems to sup­port the in-home care for these chil­dren. This money will assist in the training and supervision of the re­quired home health services person­nel, because there currently are too few adequately trained health care personnel to help serve this popula­tion in their homes.

A final provision in the legislation is an insurance mandate. This provision is intended to serve as a catalyst, not as a punishment, to insurance compa­nies. The legislation requires the Sec­retary of Health and Human Services to survey health benefit plans 30 months after the enactment of S. 1793. If 80 percent of such plans have not voluntarily adopted in-home cover­age, the Secretary may mandate such coverage.

I believe this legislation will help de­crease health care costs and allow chil­dren dependent on highly sophisticat­ed medical equipment more humane health care service. Again, I commend Mr. HATCH and Mr. KENNEDY for ad­dressing this issue. I encourage my col­leagues to join me in supporting S. 1793 .•

A FRESH AND HONEST PERSPEC-TIVE HONORING GEORGIA O'KEEFFE, 1887-1986

e Mr. DOMENIC!. Mr. President, Georgia O'Keeffe has done what few are able to do. She has captured and communicated the special enchant­ment of life in the "Land of Enchant­ment" -New Mexico. She taught us to see our own State with new eyes. Na­ture's elements have taken on a new aspect in our consciousness thanks to her prolific career. Old bones, purple hillsides, adobe walls, vivid blossoms, and intense sunlight all add to our visual appreciation of the Southwest. In addition to the obvious geographic setting, her work creates a special glow and new understanding of life's stark beauty. Our innermost being learns to feel a new reality.

Like all great artists she eluded cate­gorization. Her work bursts forth on canvas with an energy and a harmony truly unique and truly New Mexican. Her insights speak for themselves. It is ironic that our Nation's Capitol will be treated to a display of her works that opens the day after her death. These

pictures are part of this morning's opening at the Smithsonian Institu­tion's National Museum of American Art: "Art in New Mexico, 1900-45: Paths to Taos and Santa Fe."

I had the distinct pleasure of work­ing personally with Georgia O'Keeffe to designate her home. in Abiquiu, NM, as a national historic site. Upon ap­proval, she noted that a new .commer­cialism started to spring up around her beloved home. Rather than change the area so dear to her heart and her work, she asked that we with­draw the official designation. We did.

As she herself might recommend, I invite my colleagues and friends to ex­perience her art directly. She pre­f erred silence to long discussions. I will honor her by commending her work to those who would learn to see in a new light and with a fresh and honest per­spective.

The fallowing editorial, which I ask be printed in the RECORD, from today's Albuquerque Journal expresses the high regard and love New Mexico has for this woman of high vision and ex­traordinary ability.

The article follows: [From the Albuquerque Journal, Mar. 7,

1986] GEORGIA O'KEEFFE

"Where I was born and where and how I have lived is unimportant. It is what I have done with where I have been that should be of interest."-Georgia O'Keeffe, 1976

To us in New Mexico, it is of course impor­tant that an artist of Georgia O'Keeffe's ability and stature selected our state as her home, and as the source of much of her in­spiration. Her choice and the visions she saw confirm our own wisdom in living here.

As for what O'Keeffe has done with New Mexico, along with other subjects of her canvas, that is not only of interest. It is strong evidence of the creative spirit and in­dependence of the human being. At her death in Santa Fe Thursday, at the age of 98, she was the dean of American painters. She was, if not the best, certainly among the best of American painters.

O'Keeffe's art had gained an international reputation by the 1930s-a decade before she moved to New Mexico-when critics were calling her the foremost ·woman paint­er in the world and a pioneer in modernism. Newsweek magazine later called her "a serene mistress of the desert, a survivor of the American modernist revolution of the 1920s and '30s." Last year, her "White Rose, New Mexico," fetched a purchase price of $1,265,000 from an anonymous buyer. It was nearly four times the highest price previ­ously paid for her work at an auction. Also last year, she was one of 12 internationally known artists and patrons to be awarded the first National Medal of the Arts, pre­sented by President Reagan.

Her immediate environment was her art­the trees, hills and bones that filled the landscape of her home in Abiquiu. Among her influences were Gaugin and Oriental art, as introduced to her by Alon Bement, a disciple of educator Arthur Wesley Dow, at the University of Virginia. Both instructors were credited with inspiring O'Keeffe early in her career.

But beyond inspiration and education, no outside influence can create the vision an

artist sees, the drive that compels the artist to transmit that vision onto canvas. For that, O'Keeffe needed her own inner eye, her own belief in her vision and ability.

This quiet, reclusive woman leaves behind her ghosts, her haunting images of sand, flowers and bones.e

A NEW TURN IN TURKEY e Mr. D'AMATO. Mr. President, I want to bring to the attention of my colleagues an article by Jeri Laber, en­titled, "A New Turn in Turkey" which recently appeared in the New York Review of Books. It is not a book review at all, but a review of the cur­rent state of human rights in Turkey. There are some disturbing reports con­tained in the article.

I commend the article to the atten­tion of the Senate, and I ask that it be printed in the RECORD.

The article follows: [From the New York Review of Books, Feb.

27, 19861 A NEW TuRN IN TURKEY

<By Jeri Laber> The atmosphere in Turkey today is very

different from what it was when I was there two and a half years ago. There is a new, almost inexplicable, sense of freedom in the country, a freedom that seems to exist in spite of continuing repression. There are still terrible problems-political prisoners, torture, and repressive legislation, but people are speaking openly about them now, seeking ways to correct them, and the press seems to have shed its inhibitions. In Istan­bul and Ankara last December almost eveyone I talked to agreed that things are better, that the climate, at the very least, had improved.

In 1983, when I began planning the first Belinski Watch human-rights mission to Turkey, both the Turkish government and the U.S. State Department did virtually ev­erything they could to discourage me. I was advised to postpone my trip until after the Turkish parliamentary elections. Eveyone would be too busy to see me, and I wa!; told my visit could be a "disadvantage to U.S. foreign-policy interests." What I found in Turkey in 1983 was appalling-tens of thou­sands of political prisoners jailed since the 1980 military coup, many still awaiting trial; routine torture; the destruction or tight control of practically all active civilian insti­tutions including the universities, the unions, and the press; and a pervasive fear among Turkish citizens. The U.S. embassy strongly defended the actions of the mili­tary leadership.

When I wrote about these matters after my return, I became the target of angry at­tacks from both Turkish and US officials. Yet some two years later, last December, I found all doors were open to me. In meet­ings that were reported daily in the Turkish press, I discussed human-rights abuses with the prime minister, the chief of police, the chairmen of all the major political parties in Turkey, and well over one hundred other people, both government officials and pri­vate citizens. The US ambassador to Turkey could not have been more cooperative-he invited Turkish officials to a special lunch for me in Ankara at which he gave the Hel­sinki Watch mission strong endorsement.

Some people told me that the recent changes in Turkey are the result both of

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4091 international pressure from human-rights groups and some Western European govern­ments, and of the recent lifting of martial law in all but nine of Turkey's sixty-seven provinces. Others trace the change back to the November 1983 parliamentary elections, the first to be held after the military take­over in 1980.

If the parliament has become a stage where human-rights issues are discussed, the perfomers so far appear merely to be playacting. The real human-rights drama, virtually unchanged, is being enacted far from the public eye. Thousands of political prisoners, some broken, some rebellious, are hidden away in military prisons, many of them still awaiting the outcome of trials that have dragged on for years. Most of these prisoners are young people, often stu­dents, who were arrested in 1980 or 1981 and charged with some form of terrorist ac­tivity. Many of them were badly tortured when they were arrested, and they continue to be treated harshly in prison. Some will eventually be acquitted through drawn-out appeals in the courts, and will leave prison with bitter memories of torture and of lost youth. Others face the prospect of long prison terms or even the death penalty.

Prison visits are harrowing. The prisoners face their relatives and lawyers from behind two thicknesses of glass partition. Conversa­tions are conducted by telephone, while the guards listen in, ready to cut off the talk at any moment or, still worse, to record it to be used as evidence against the prisoner. For these reasons, many prisoners refuse to meet with their families. I met mothers who said they had not seen their imprisoned children for three years or more.

What will happen to these young people who are becoming more rebellious and em­bittered with each passing year? Estimates to their numbers vary, but the Turkish gov­ernment acknowledges some ten thousand, a number that includes those sentenced for crimes of thought as well as for crimes of vi­olence. In prison, for example, are members of the Turkish Peace Association, including prominent lawyers, doctors, and other pro­fessionals, who have been charged and sen­tenced for their beliefs and not for any vio­lent acts. The Turkish constitution does not distinguish between the two categories of crime. It stipulates that no political prison­ers can be given amnesty. Yet nearly every­one agrees that an amnesty is sorely needed. Prime Minister Ozal, in an effort to circum­vent the constitutional prohibition, has sug­gested a one-time parole for good behavior. There have been other suggestions as well, but President Evren has so far opposed all of them.

The fate of this youthful, politicized prison population, a major problem in Turkey, is overshadowed only by the prob­lem of torture. Dispite all the protests to the contrary, it has not yet been brought under control. Torture was practiced in Turkey before 1980 as well, but it became more widespread and routine after the 1980 coup when tens of thousands of people were arrested. If there is less torture in Turkey today, it is mainly because there are fewer arrests, since torture usually takes place im­mediately after arrest, during police deten­tion. The detenton period, once as long as ninety days, has now been reduced to some­where between forty-eight hours and fifteen days, still much too long to be reassuring. Some Turkish authorities deny that sus­pects are kept incommunicado during this period, but the torture victims and the law­yers I met insist that this is invariably the practice.

Turkey has a restrictive constitution, a harsh penal code, a cumbersome court system, and much repressive legislation. Al­though many of these laws are now being disregarded, at least some of the time, there are no guarantees that current practices will continue. Nevertheless, there are coura­geous people in Turkey who are willing to take chances, and each time they do so the momentum for freedom becomes stronger. As former prime minister Bulent Ecevit said to me, "The difference between de jure and de facto continues to grow."

A dramatic recent example involves Mr. Ecevit himself, as well as another former prime minister, Suleyman Demirel. Both are restricted by law from any political ac­tivity or public statements, yet they have been speaking out in recent months and their remarks are being published in the press. Prime Minister Ozal acknowledged that although the two men "should not be involved," they are making speeches, travel­ing throughout Turkey, criticizing the budget, and indeed criticizing him. "I find it better to proceed on this basis," he told me, somewhat proudly. He also pointed out that in the March 1984 municipal elections he "disregarded the law" by allowing parties that reflect the positions of the banned po­litical tendencies to participate. In Turkey today, even the prime minister boasts of dis­regarding the law.

Turkey is the third largest recipient of US aid and a major NATO outpost. The US gov­ernment, seeking stability in Turkey, strongly supported the 1980 military takeov­er and the martial law regime, and now backs the government of Prime Minister Ozal. A visitor quickly has cause to worry about the US image there. Not one of the dozens of people I talked to, except for the prime minister, had anything favorable to say about the policies of the United States. Victims of human-rights abuses hold the US government responsible for their sufferings, they are convinced that the US is in a posi­tion to stop torture if it would only take a strong stand. The opposition leaders in the parliament are also angry with the United States. Mr. Husamettin Cindoruk, the chair­man of the conservative Correct Way party, who describes himself as pro-American, says that the Reagan administration is not " truly democratic." He claims that " the US administration is as responsible as the mili­tary for the suspension of human rights in Turkey."

Mr. Aydin Gurkan, chairman of the Social Democratic People's party, the left-of­center party currently favored to win in a new election, criticized the Reagan adminis­tration for its unqualified support of Prime Minister Ozal. "Everyone knows about the conditions in the prisons and about torture, but no one does anything about it," he said. "Reagan and Ozal come together very often. Why don't they solve this problem?" If the United States is committed to establishing a democratic proccess in Turkey, is it appro­priate or wise for it to be estranging the politicians who seem likely to be its future leaders and to give all its support to one po­litical party and its leader?

More than five years since the 1980 mili­tary takeover, Turkey seems at the thresh­old of a new phase of its political history. It is not the democracy that some suggest it has become-nor will it be so long as people are imprisoned for their views or tortured in police stations and there are restrictions on universities, unions, and civil associations of all kinds. It will not be a democracy until there are legal safeguards for the civil liber-

ties that are beginning to be exercised there. And yet I found good reason to be hopeful. The sensitivity of the authorities to international criticism and their recogni­tion of the need for improvements seem to me indisputable. So is the vitality of many of the political leaders and potential leaders in Turkey today. Turkish society is in the midst of dynamic changes, and the forces favoring freedom, democracy, and human rights are growing stronger.•

PROCEDURAL RULES OF THE SELECT COMMITTEE ON ETHICS •Mr. RUDMAN. Mr. President, in ac­cordance with the requirement to pub­lish the rules of each Senate commit­tee in the RECORD each year, I submit the procedural rules of the select com­mittee and ask that they be printed in the RECORD.

The material follows: RULES OF THE SELECT COMMITTEE ON ETHICS

<Adopted February 23, 1978> PART I:-ORGANIC AUTHORITY

Subpart A-S. Res. 338 as amended Resolved, That Ca> there is hereby estab­

lished a permanent select committee of the Senate to be known as the Select Commit­tee on Ethics 1 (referred to hereinafter as the "Select Committee" > consisting of six Members of the Senate, of whom three shall be selected from members of the ma­jority party and three shall be selected from members of the minority party. Members thereof shall be appointed by the Senate in accordance with the provisions of Para­graph 1 of Rule XXIV of the standing rules of the Senate at the beginning of each Con­gress.1 For purposes of paragraph 4 of rule XXV of the Standing Rules of the Senate, service of a Senator as a member or chair­man of the Select Committee shall not be taken into account.

Cb) Vacancies in the membership of the Select Committee shall not affect the au­thority of the remaining members to exe­cute the functions of the committee, and shall be filled in the same manner as origi­nal appointments thereto are made.

Cc)Cl) A majority of the Members of the Select Committee shall constitute a quorum for the transaction of business involving complaints and allegations of misconduct, including the consideration of matters in­volving sworn complaints, unsworn allega­tions or information, resultant preliminary inqmnes, initial reviews, investigations, hearings, recommendations or reports and matters relating to Senate Resolution 400, agreed to May 19, 1976.

(2) Three Members shall constitute a quorum for the transaction of routine busj, ness of the Select Committee not covered by the first paragraph of this subparagraph, including requests for opinions and inter­pretations concerning the Code of Official Conduct or any other statute or regulation under the jurisdiction of the Select Commit­tee, if one Member of the quorum is a Member of the Majority Party and one Member of the quorum is a Member of the Minority Party. During the transaction of routine business any Member of the Select Committee constituting the quorum shall have the right to postpone further discus-

' Changed by Section 102 of S. Res. 4 <February 4, 1977).

4092 CONGRESSIONAL RECORD-SENATE March 7, 1986 sion of a pending matter until such time as a majority of the Members of the Select Committee are present.

<3> The Select Committee may fix a lesser number as a quorum for the purpose of taking sworn testimony. 2

"(d)(l) 3 A member of the Select Commit­tee shall be ineligible to participate in any initial review or investigation relating to his own conduct, the conduct of any officer or employee he supervises, or the conduct of any employee of any officer he supervises, or relating to any complaint filed by him, and the determinations and recommenda­tions of the Select Committee with respect thereto. For purposes of this subparagraph, a Member of the Select Committee and an officer of the Senate shall be deemed to su­pervise any officer or employee consistent with the provision of paragraph 12 of rule XXXVII of the Standing Rules of the Senate.

"(2) A Member of the Select Committee may, at his discretion, disqualify himself from participating in any initial review or investigation pending before the Select Committee and the determinations and rec­ommendations of the Select Committee with respect thereto. Notice of such dis­qualification shall be given in writing to the President of the Senate.

"(3) Whenever any member of the Select Committee is ineligible under paragraph < 1 > to participate in any initial review or inves­tigation or disqualfies himself under para­graph <2> from participating in any initial review or investigation, another Member of the Senate shall, subject to the provisions of subsection Cd), be appointed to serve as a member of the Select Committee solely for purposes of such initial review or investiga­tion and the determinations and recommen­dations of the Select Committee with re­spect thereto. Any Member of the Senate appointed for such purposes shall be of the same party as the Member who is ineligible or disqualifies himself."

SEc. 2. <a> It shall be the duty of the Select Committee to-

< 1 > receive complaints and investigate alle­gations of improper conduct which may re­flect upon the Senate, violations of law, vio­lations of the Senate Code of Official Con­duct 4 and violations of rules and regula­tions of the Senate, relating to the conduct of individuals in the performance of their duties as Member of the Senate, or as offi­cers or employees of the Senate, and to make appropriate findings of fact and con­clusions with respect thereto;

<2> recommend to the Senate by report or resolution by a majority vote of the full committee disciplinary action <including, but not limited to, in the case of a Member: censure, expulsion, or recommendation to the appropriate party conference regarding such Member's seniority or positions of re­sponsibility; and, in the case of an officer or employee: suspension or dismissal>" 5 to be taken with respect to such violations which the Select Committee shall determine, after according to the individuals concerned due notice and opportunity for hearing, to have occurred;

<3> recommend to the Senate, by report or resolution, such additional rules or regula­tions as the Select Committee shall deter-

2 Changed by S . Res. 78 <February 24. 1981>. 3 Added by S . Res. llO <April 2, 1977>. •Added by Section 201 of S . Res. llO <April 2.

1977). • Added by Section 205 of S. Res. 110 <April 2,

1977).

mine to be necessary or desirable to insure proper standards of conduct by Members of the Senate, and by officers or employees of the Senate, in the performance of their duties and the discharge of their responsi­bilities; and

<4> report violations by a majority vote of the full committee of any law to the proper Federal and State authorities.

"Cb><l> Each sworn complaint filed with the Select Committee shall be in writing, shall be in such form as the Select Commit­tee may prescribe by regulation, and shall be under oath.

"(2) For purposes of this section, 'sworn complaint' means a statement of facts within the personal knowledge of the com­plainant alleging a violation of law, the Senate Code of Official Conduct, or any other rule or regulation of the Senate relat­ing to the conduct of individuals in the per­formance of their duties as Members, offi­cers, or employees of the Senate.

"(3) Any person who knowingly and will­fully swears falsely to a sworn complaint does so under penalty of perjury, and the Select Committee may refer any such case to the Attorney General for prosecution.

"(4) For the purposes of this section, 'in­vestigation' is a proceeding undertaken by the Select Committee after a finding, on the basis of an initial review, that there is sub­stantial credible evidence which provides substantial cause for the Select Committee to conclude that a violation within the juris­diction of the Select Committee has oc­curred.

"Cc><l> No investigation of conduct of a Member or officer of the Senate, and no report, resolution, or recommendation relat­ing thereto, may be made unless approved by the affirmative recorded vote of not less than four members of the Select Commit­tee.

" (2) No other resolution, report, recom­mendation, interpretative ruling, or adviso­ry opinion may be made without an affirma­tive vote of a majority of the members of the Select Committee voting.

"Cd><l> When the Select Committee re­ceives a sworn complaint against a Member or officer of the Senate, it shall promptly conduct an initial review of that complaint. The initial review shall be of duration and scope necessary to determine whether there is substantial credible evidence which pro­vides substantial cause for the Select Com­mittee to conclude that a violation within the jurisdiction of the Select Committee has occurred.

"(2) If as a result of an initial review under paragraph < 1 >. the Select Committee determines by a recorded vote that there is no such substantial credible evidence, the Select Committee shall report such determi­nation to the complainant and to the party charged together with an explanation of the basis of such determination.

"(3) If as a result of an initial review under paragraph < 1 >. the Select Committee determines that a violation is inadvertent, technical or otherwise of a de minimus nature, the Select Committee may attempt to correct or prevent such a violation by in­formal methods.

"(4) If as a result of an initial review under paragraph < 1 >. the Select Committee determines that there is such substantial credible evidence but that the violation, if proven is neither of a de minimus nature nor sufficiently serious to justify any of the penalties expressly referred to in subsection (a)(2), the Select Committee may propose a remedy it deems appropriate. If the matter

is thereby resolved, a summary of the Select Committee's conclusions and the remedy proposed shall be filed as a public record with the Secretary of the Senate and a notice of such filing shall be printed in the Congressional Record.

"(5) If as the result of an initial review under paragraph < 1 >. the Select Committee determines that there is such substantial credible evidence, the Select Committee shall promptly conduct an investigation if <A> the violation, if proven, would be suffi­ciently serious, in the judgment of the Select Committee, to warrant imposition of one or more of the penalties expressly re­f erred to in subsection (a)(2), or <B> the vio­lation, if proven, is less serious, but was not resolved pursuant to paragraph <4> above. Upon the conclusion of such investigation, the Select Committee shall report to the Senate, as soon as practicable, the results of such investigation together with its recom­mendations (if any) pursuant to subsection <a><2>.

"(6) Upon the conclusion of any other in­vestigation respecting the conduct of a Member or officer undertaken by the Select Committee, the Select Committee shall report to the Senate, as soon as practicable, the results of such investigation together with its recommendations <if any> pursuant to subsection <a><2>.

"(e) When the Select Committee receives a sworn complaint against an employee of the Senate, it shall consider the complaint according to procedures it deems appropri­ate. If the Select Committee determines that the complaint is without substantial merit, it shall notify the complainant and the accused of its determination, together with an explanation of the basis of such de­termination.

"(f) The Select Committee may, in its dis­cretion, employ hearing examiners to hear testimony and make findings of fact an!i/ or recommendations to the Select Committee concerning the disposition of complaints.

"(g) Notwithstanding any other provision of this section, no initial review or investiga­tion shall be made of any alleged violation of any law, the Senate Code of Official Con­duct, rule, or regulation which was not in effect at the time the alleged violation oc­curred. No provisions of the Senate Code of Official Conduct shall apply to or require disclosure of any act, relationship, or trans­action which occurred prior to the effective date of the applicable provision of the Code. The Select Committee may conduct an ini­tial review or investigation of any alleged violation of a rule or law which was in effect prior to the enactment of the Senate Code of Official Conduct if the alleged violation occurred while such rule or law was in effect and the violation was not a matter resolved on the merits by the predecessor Select Committee.

"Ch) The Select Committee shall adopt written rules setting forth procedures to be used in conducting investigations of com­plaints." 6

(i) 7 The Select Committee from time to time shall transmit to the Senate its recom­mendation as to any legislative measures which it may consider to be necessary for the effective discharge of its duties.

SEc. 3. <a> The Select Committee is au­thorized to <1> make such expenditures; (2)

6 Added by Section 202 of S. Res. llO <April 2, 1977).

7 Changed by Section 202 of S. Res. 110 <April 2, 1977>.

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4093 hold such hearings; (3) sit and act at such times and places during the sessions, recess­es, and adjournment periods of the Senate; <4> require by subpoena or otherwise the at­tendance of such witnesses and the produc­tion of such correspondence, books, papers, and documents; < 5) administer such oaths; <6> take such testimony orally or by deposi­tion; <7> employ and fix the compensation of a staJf director, a counsel, an assistant counsel, one or more investigators, one or more hearing examiners, 8 and such techni­cal, clerical, and other assistants and con­sultants as it deems advisable; and (8) to procure the temporary services <not in excess of one year> or intermittent services of individual consultants, or organizations thereof, by contract as independent contrac­tors or, in the case of individuals, by em­ployment at daily rates of compensation not in excess of the per diem equivalent of the highest rate of compensation which may be paid to a regular employee of the Select Committee. 9

<b>O> 10 The Select Committee is author­ized to retain and compensate counsel not employed by the Senate <or by any depart­ment or agency of the executive branch of the Government) whenever the Select Com­mittee determines that the retention of out­side counsel is necessary or appropriate for any action regarding any complaint or alle­gation, which, in the determination of the Select Committee is more appropriately conducted by counsel not employed by the Government of the United States as a regu­lar employee.

"(2) Any investigation conducted under section 2 shall be conducted by outside counsel as authorized in paragraph < 1 ), unless the Select Committee determines not to use outside counsel."; and

"Cc) 11 With the prior consent of the de­partment or agency concerned, the Select Committee may < 1 > utilize the services, in­formation and facilities of any such depart­ment or agency of the Government," and <2> employ on a reimbursable basis or other­wise the services of such personnel of any such department or agency as it deems ad­visable.

With the consent of any other committee of the Senate, or any subcommittee thereof, the Select Committee may utilize the facili­ties and the services of the staff of such other committee or subcommitte whenever the chairman of the Select Committee de­termines that such action is necessary and appropriate.

" Cd> Subpoenas may be issued (1) by the Select Committee or <2> by the chairman and vice chairman, acting jointly. Any such subpoena shall be signed by the chairman or the vice chairman and may be served by any person designated by such chairman or vice chairman. The chairman of the Select Committee or any member thereof may ad­minister oaths to witnesses." 12

"<e>O> 13 The Select Committee shall pre­scribe and publish such regulations as it

• Added by Section 204 of S. Res. 110 <April 2, 1977).

•Added by S . Res. 230 <July 25, 1977>. 10 Added by Section 204 of S . Res. 110 <April 2,

1977). 11 Changed by Section 204 of S. Res. 110 <April 2,

1977). 12 Section added by S . Res. 312 <Nov. 1, 1977>. 10 Section added by Section 206 of S . Res. 110

<April 2, 1977>.

feels are necessary to implement the Senate Code of Official Conduct.

"(2) The Select Committee is authorized to issue interpretative rulings explaining and clarifying the application of any law, the Code of Official Conduct, or any rule or regulations of the Senate within its jurisdic­tion.

"(3) The Select Committee shall render an advisory opinion, in writing within a reason­able time, in response to a written request by a Member or officer of the Senate or a candidate for nomination for election, or election to the Senate, concerning the appli­cation of any law, the Senate Code of Offi­cial Conduct, or any rule or regulation of the Senate within its jurisdiction to a specif­ic factual situation pertinent to the conduct or proposed conduct of the person seeking the advisory opinion.

" (4) The Select Committee may in its dis­cretion render an advisory opinion in writ­ing within a reasonable time in response to a written request by any employee of the Senate concerning the application of any law, the Senate Code of Official Conduct, or any rule or regulation of the Senate within its jurisdiction to a specific factual situation pertinent to the conduct or proposed con­duct of the person seeking the advisory opinion.

" (5) Notwithstanding any provision of the Senate Code of Official Conduct or any rule or regulation of the Senate, any person who relies upon any provision or finding of an advisory opinion in accordance with the pro­visions of paragraphs <3> and (4) and who acts in good faith in accordance with the provisions and findings of such advisory opinion shall not, as a result of any such act, be subject to any sanction by the Senate.

"(6) Any advisory opinion rendered by the Select Committee under paragraphs <3> and <4> may be relied upon by <A> any person in­volved in the specific transaction or activity with respect to which such advisory opinion is rendered: Provided, however, That the re­quest for such advisory opinion included a complete and accurate statement of the spe­cific factual situation; and, <B> any person involved in any specific transaction or activ­ity which is indistinguishable in all its mate­rial aspects from the transaction or activity with respect to which such advisory opinion is rendered.

"(7) Any advisory opinion issued in re­sponse to a request under paragraph <3> or <4> shall be printed in the Congressional Record with appropriate deletions to assure the privacy of the individual concerned. The Select Committee shall, to the extent prac­ticable, before rendering an advisory opin­ion, provide any interested party with an opportunity to transmit written comments to the Select Committee with respect to the request for such advisory opinion. The advi­sory opinions issued by the Select Commit­tee shall be compiled, indexed, reproduced, and made available on a periodic basis.

"(8) A brief description of a waiver grant­ed under paragraph 2<c> of rule XXXIV or paragraph 1 of rule XXXV of the Standing Rules of the Senate shall be made available upon request in the Select Committee office with appropriate deletions to assure the pri­vacy of the individual concerned."

SEc. 4. The expenses of the Select Com­mittee under this resolution shall be paid from the contingent fund of the Senate upon vouchers approved by the chairman of the Select Committee.

SEc. 5. As used in this resolution, the term "officer or employee of the Senate" means-

< 1 > an elected officer of the Senate who is not a Member of the Senate;

<2> an employee of the Senate, any com­mittee or subcommittee of the Senate, or any Member of the Senate;

<3> the Legislative Counsel of the Senate or any employee of his office;

<4> an Official Reporter of Debates of the Senate and any person employed by the Of­ficial Reporters of Debates of the Senate in connection with the performance of their official duties;

<5> a member of the Capitol Police force whose compensation is disbursed by the Sec­retary of the Senate;

<6> and employee of the Vice President if such employee's compensation is disbursed by the Secretary of the Senate; and

<7> an employee of a joint committee of the Congress whose compensation is dis­bursed by the Secretary of the Senate. Subpart B-Public Law 93-191-Franked

Mail, Provisions Relating to the Select Committee SEc. 6. <a> The Select Committee on

Standards and Conduct of the Senate shall provide guidance, assistance, advice and counsel, through advisory opinions or con­sultations, in connection with the mailing or contemplated mailing of franked mail under section 3210, 3211, 3212, 3218<2> or 3218, and in connection with the operation of section 3215, of title 39, United States Code, upon the request of any Member of the Senate or Member-elect, surviving spouse of any of the foregoing, or other Senate official, enti­tled to send mail as franked mail under any of those sections. The select committee shall prescribe regulations governing the proper use of the franking privilege under those sections by such persons.

<b> Any complaint filed by any person with the select committee that a violation of any section of title 39, United States Code, referred to in subsection <a> of this section is about to occur or has occurred within the immediately preceding period of 1 year, by any person referred to in such subsection <a), shall contain pertinent factual material and shall conform to regulations prescribed by the select committee. The select commit­tee, if it determines there is reasonable jus­tification for the complaint, shall conduct an investigation of the matter, including an investigation of reports and statements filed by that complainant with respect to the matter which is the subject of the com­plaint. The committee shall afford to the person who is the subject of the complaint due notice and, if it determines that there is substantial reason to believe that such viola­tion has occurred or is about to occur, op­portunity for all parties to participate in a hearing before the select committee. The select committee shall issue a written deci­sion on each complaint under this subsec­tion not later than thirty days after such a complaint has been filed or, if a hearing is held, not later than thirty days after the conclusion of such hearing. Such decision shall be based on written findings of fact in the case by the select committee. If the select committee finds, in its written deci­sion, that a violation has occurred or is about to occur, the committee may take such action and enforcement as it considers appropriate in accordance with applicable rules, precedents, and standing orders of the Senate, and such other standards as may be prescribed by such committee.

<c> Notwithstanding any other provision of law, no court or administrative body in the United States or in any territory thereof

4094 CONGRESSIONAL RECORD-SENATE March 7, 1986 shall have jurisdiction to entertain any civil action of any character concerning or relat­ed to a violation of the franking laws or an abuse of the franking privlege by any person listed under subsection Ca) of this section as entitled to send mail as franked mail, until a complaint has rendered a deci­sion under subsection Cb) of this section.

Cd) The select committee shall prescribe regulations for the holding of investigations and hearings, the conduct of proceedings, and the rendering of decisions under this subsection providing for equitable proce­dures and the protection of individual, public, and Government interests. The regu­lations shall, insofar as practicable, contain the substance of the administrative proce­dure provisions of sections 551-559 and 701-706, of title 5 United States Code. These regulations shall govern matters under this subsection subject to judicial review thereof.

Ce ) The select committee shall keep a com­plete record of all its actions; including a record of the votes on any question on which a record vote is demanded. All records, data and files of the select commit­tee shall be the property of the Senate and shall be kept in the offices of the select committee or such other places as the com­mittee may direct. Subpart C-Standing Orders of the Senate

Regarding Unauthorized Disclosure of In­telligence Information, S. Res. 400, 94th Congress, Provisions Relating to the Select Committee SEC. 8 .••• (c)(l) No information in the possession of

the select committee relating to the lawful intelligence activities of any department or agency of the United States which has been classified under established security proce­dures and which the select committee, pur­suant to subsection (a) or Cb) of this section, has determined should not be disclosed, shall be made available to any person by a Member, officer, or employee of the Senate except in a closed session of the Senate or as provided in paragraph (2).

(2) The select committee may, under such regulations as the committee shall prescribe to protect the confidentiality of such infor­mation, make any information described in paragraph (1) available to any other com­mittee or any other Member of the Senate. Whenever the select committee makes such information available, the committee shall keep a written record showing, in the case of any particular information, which com­mittee or which Members of the Senate re­ceived such information. No Member of the Senate who, and no committee which, re­ceives any information under this subsec­tion, shall disclose such information except in a closed session of the Senate.

Cd) It shall be the duty of the Select Com­mittee on Standards and Conduct to investi­gate any unauthorized disclosure of intelli­gence information by a Member, officer or employee of the Senate in violation of sub­section Cc) and to report to the Senate con­cerning any allegation which it finds to be substantiated.

Ce) Upon the request of any person who is subject to any such investigation, the Select Committee on Standards and Conduct shall release to such individual at the conclusion of its investigation a summary of its investi­gation together with its findings. If, at the conclusion of its investigation, the Select Committee on Standards and Conduct de­termines that there has been a significant breach of confidentiality or unauthorized disclosure by a Member, officer, or employ­ee of the Senate, it shall report its findings

to the Senate and recommend appropriate action such as censure, removal from com­mittee membership, or expulsion from the Senate, in the case of a Member, or removal from office or employment or punishment for contempt, in the case of an officer or employee. Subpart D-Public Law 95-105, Secti on 515,

Relating to Receipt and Disposition of Foreign Gifts and Decorati ons Received by Members, Officers and Employees of the Senate or Their Spouses or Dependents, Provisions Relating to the Select Commit­tee on Ethics SEc. 515. Ca)(l) Section 7342 of title 5,

United States Code, is amended to read as follows:

§ 7342. Receipt and disposition of foreign gifts and decorations.

"(a) For the purposes of this section-

• • " (6) 'employing agency' means-"(A) the Committee on Standards of Offi­

cial Conduct of the House of Representa­tives, for Members and employees of the House of Representatives, except that those responsibilities specified in subsections (c)(2)(A), Ce), and (g)(2)(B) shall be carried out by the Clerk of the House;

"CB) the Select Committee on Ethics of the Senate, for Senators and employees of the Senate;

" CC) the Administrative Office of the United States Courts, for judges and judi­cial branch employees; and

" CD) the department, agency office, or other entity in which an employee is em­ployed, for other legislative branch employ­ees and for all executive branch employees.

"Cb) An employee may not-"( 1) request or otherwise encourage the

tender of a gift or decoration; or "(2) accept a gift or decoration, other than

in accordance with the provisions of subsec­tions Cc) and Cd).

" (c)(l) The Congress consents to-"(A) the accepting and retaining by an

employee of a gift of minimal value ten­dered and received as a souvenir or mark of courtesy; and

"CB) the accepting by an employee of a gift of more than minimal value when such gift is in the nature of an educational schol­arship or medical treatment or when it ap­pears that to refuse the gift would likely cause offense or embarrassment or other­wise adversely affect the foreign relations of the United States, except that-

"(i) a tangible gift of more than minimal value is deemed to have been accepted on behalf of the United States and, upon ac­ceptance, shall become the property of the United States; and

"<ii) an employee may accept gifts of travel or expenses for travel taking place en­tirely outside the United States <such as transportation, food, and lodging) of more than minimal value if such acceptance is ap­propriate, consistent with the interests of the United States, and permitted by the em­ploying agency and any regulations which may be prescribed by the employing agency.

"(2) Within 60 days after accepting a tan­gible gift of more than minimal value <other than a gift described in paragraph (l)(B)(ii), an employee shall-

"(A) deposit the gift for disposal with his or her employing agency; or

" CB) subject to the approval of the em­ploying agency, deposit the gift with that agency for official use. Within 30 days after terminating the official use of a gift under subparagraph CB), the employing agency

shall forward the gift to the Administrator of General Services in accordance with sub­section Ce).

" (3) When an employee deposits a gift of more than minimal value for disposal or for official use pursuant to paragraph (2), or within 30 days after accepting travel or travel expenses as provided in paragraph (l)(B)(ii) unless such travel or travel ex­penses are accepted in accordance with spe­cific instructions of his or her employing agency, the employee shall file a statement with his or her employing agency or its dele­gate containing the information prescribed in subsection Cf) for that gift.

"Cd) The Congress consents to the accept ­ing, retaining, and wearing by an employee of a decoration tendered in recognition of active field service in time of combat oper­ations or awarded for other outstanding or unusually meritorious performance, subject to the approval of the employing agency of such employee. Without this approval, the decoration is deemed to have been accepted on behalf of the United States, shall become the property of the United States, and shall be deposited by the employee, within sixty days of acceptance, with the employing agency for official use or forwarding to the Administrator of General Services for dis­posal in accordance with subsection Ce).

"Ce) Gifts and decorations that have been deposited with an employing agency for dis­posal shall be (1) returned to the donor, or <2> frowarded to the Administrator of Gen­eral Services for transfer, donation, or other disposal in accordance with the provisions of the Federal Property and Administrative Services Act of 1949. However, no gift or decoration that has been deposited for dis­posal may be sold without the approval of the Secretary of State, upon a determina­tion that the sale will not adversely affect the foreign relations of the United States. Gifts and decorations may be sold by negoti­ated sale.

" (f)(l) Not later than January 31 of each year, each employing agency or its delegate shall compile a listing of all statements filed during the preceding year by the employees of that agency pursuant to subsection <c><3> and shall transmit such listing to the Secre­tary of State who shall publish a compre­hensive listing of all such statements in the Federal Register.

"(2) Such listings shall include for each tangible gift reported-

"(A) the name and position of the employ­ee;

" <B> a brief description of the gift and the circumstances justifying acceptance;

" CC) the identity, if known, of the foreign government and the name and position of the individual who presented the gift;

" CD> the date of acceptance of the gift; "CE> the estimated value in the United

States of the gift at the time of acceptance; and

"CF> disposition or current location of the gift.

"(3) Such listings shall include for each gift of travel or travel expenses-

"CA> the name and position of the employ­ee;

" <B> a brief description of the gift and the circumstances justifying acceptance; and

" CC) the identity, if known, of the foreign government and the name and position of the individual who presented the gift.

"(4) In transmitting such listing for the Central Intelligence Agency, the Director of Central Intelligence may delete the infor­mation described in subparagraphs <A> and CC) of paragraphs (2) and (3) if the Director

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4095 certifies in writing to the Secretary of State that the publication of such information could adversely affect United States intellil­gence sources.

"(g)(l) Each employing agency shall pre­scribe such regulations as may be necessary to carry out the purpose of this section. For all employing agencies in the executive branch, such regulations shall be prescribed pursuant to guidance provided by the Secre­tary of State. These regulations shall be im­plemented by each employing agency for its employees.

"(2) Each employing agency shall-"CA) report to the Attorney General cases

in which there is reason to believe that an employee has violated this section;

"CB> establish a procedure for obtaining an appraisal, when necessary, of the value of gifts; and

"CC) take any other actions necessary to carry out the purpose of this section.

.. Ch) The Attorney General may bring a civil action in any district court of the United States against any employee who knowingly solicits or accepts a gift from a foreign government not consented to by this section or who fails to deposit or report such gift as required by this section. The court in which such action is brought may assess a penalty against such employee in any amount not to exceed the retail value of the gift improperly solicited or received plus $5,000.

"(i) The President shall direct all Chiefs of a United States Diplomatic Mission to inform their host governments that it is a general policy of the United States Govern­ment to prohibit United States Government employees from receiving gifts or decora­tions of more than minimal value.

"(j) Nothing in this section shall be con­strued to derogate any regulation prescribed by any employing agency which provides for more stringent limitations on the receipt of gifts and decorations by its employees.

"Ck) The provisions of this section do not apply to grants and other forms of assist­ance to which section 108A of the Mutual Educational and Cultural Exchange Act of 1961 applies."

(2) The amendment made by paragraph Cl) of this subsection shall take effect on January 1, 1978.

RULE 1. GENERAL PROCEDURES

Ca) Officers: The Committee shall select a Chairman and a Vice Chairman from among its members. In the absence of the Chair­man, the duties of the Chair shall be filled by the Vice Chairman or, in the Vice Chair­man's absence, a Committee member desig­nated by the Chairman.

Cb) Procedural Rules: The basic procedur­al rules of the Committee are stated as a part of the Standing Orders of the Senate in Senate Resolution 338, 88th Congress, as amended, as well as other resolutions and laws. Supplementary Procedural Rules are stated herein and are hereinafter referred to as the Rules. The Rules shall be pub­lished in the Congressional Record not later than thirty days after adoption, and copies shall be . made available by the Committee office upon request.

Cc) Meetings: ( 1) The regular meeting of the Committee

shall be the first Thursday of each month while the Congress is in session.

(2) Special meetings may be held at the call of the Chairman or Vice Chairman if at least forty-eight hours notice is furnished to all members. If all members agree, a special meeting may be held on less than forty­eight hours notice.

C3)(A) If any members of the Committee desires that a special meeting of the Com­mittee be called, the member may file in the office of the Committee a written request to the Chairman or Vice Chairman for that special meeting.

CB> Immediately upon the filing of the re­quest the Clerk of the Committee shall notify the Chairman and Vice Chairman of the filing of the request. If, within three calendar days after the filing of the request, the Chairman or the Vice Chairman does not call the requested special meeting, to be held within seven calendar days after the filing of the request, any three of the mem­bers of the Committee may file their writ­ten notice in the office of the Committee that a special meeting of the Committee will be held at a specified date and hour; such special meeting may not occur until forty­eight hours after the meeting may not occur until forty-eight hours after the notice is filed. The Clerk shall immediately notify all members of the Committee of the date and hour of the special meeting. The Committee shall meet at the specified date and hour.

Cd) Quorum: < 1) A majority of the members of the

Select Committee shall constitute a quorum for the transaction of business involving complaints and allegations of misconduct, including the consideration of matters in­volving sworn complaints, unsworn allega­tions or information, resultant preliminary inquires, initial reviews, investigations, hear­ings, recommendations or reports and mat­ters relating to Senate Resolution 400, agreed to May 19, 1976.

(2) Three members shall constitute a quorum for the transaction of the routine business of the Select Committee not cov­ered by the first subparagraph of this para­graph, including requests for opinions and interpretations concerning the Code of Offi­cial Conduct or any other statute or regula­tion under the jurisdiction of the Select Committee, if one member of the quorum is a Member of the Majority Party and one member of the quorum is a Member of the Minority party. During the transaction of routine business any member of the Select Committee, constituting the quorum shall have the right to postpone further discus­sion of a pending matter until such time as a majority of the members of the Select Committee are present.

(3) The Select Committee may fix a lesser number as a quorum for the purpose of taking sworn testimony.

c e) Order of Business: Questions as to the order of business and the procedure of the Committee shall in the first instance be de­cided by the Chairman and Vice Chairman, subject to reversal by a vote by a majority of the Committee.

en Hearings Announcements: The Com­mittee shall make public announcement of the date, place and subject matter of any hearing to be conducted by it at least one week before the commencement of that hearing, and shall publish such announce­ment in the Congressional Record. If the Committee determines that there is good cause to commence a hearing at an earlier date, such notice will be given at the earliest possible time.

Cg) Open and Closed Committee Meetings: Meetings of the Committee shall be open to the public or closed to the public <executive session), as determined under the provisions of paragraphs 5Cb) to Cd) of Rule XXVI of the Standing Rules of the Senate. Executive session meetings of the Committee shall be closed except to the members and the staff

of the Committee. On the motion of any member, and with the approval of a majori­ty of the Committee members present, other individuals may be admitted to an ex­ecutive session meeting for a specified period or purpose.

Ch) Record of Testimony and Committee Action: An accurate stenographic or tran­scribed electronic record shall be kept of all Committee proceedings, whether in execu­tive or public session. Such record shall in­clude Senators' votes on any question on which a recorded vote is held. The record of a witness' testimony, whether in public or executive session, shall be made available for inspection to the witness or his counsel under Committee supervision; a copy of any testimony given by that witness in public session, or that part of the testimony given by the witness in executive session and sub­sequently quoted or made part of the record in a public session, shall be made available to any witness if he so requests. <See Rule 6 on Procedures for Conducting Hearings.)

(i) Secrecy of Executive Testimony and Action and of Complaint Proceedings:

< 1) All testimony and action taken in exec­utive session shall be kept secret and shall not be released outside the Committee to any individual or group, whether govern­mental or private, without the approval of a majority of the Committee.

C 2) All testimony and action relating to a sworn complaint shall be kept secret and shall not be released by the Committee to any individual or group, whether govern­mental or private, except the respondent, without the approval of a majority of the Committee, until such time as a report to the Senate is required under Senate Resolu­tion 338, 88th Congress, as amended, or unless otherwise permitted under these Rules. <See Rule 9 on Procedures for Han­dling Committee Sensitive and Classified Materials.)

(j) Release of Reports to Public: No infor­mation pertaining to, or copies of any Com­mittee report, study, or other document which purports to express the view, find­ings, conclusions or recommendations of the Committee in connection with any of its ac­tivities or proceedings may be released to any individual or group whether govern­mental or private, without the authoriza­tion of the Committee. Whenever the Chairman or Vice Chairman is authorized to make any determination, then the determi­nation may be released at his or her discre­tion. Each member of the Committee shall be given a reasonable opportunity to have separate views included as part of any Com­mittee report. <See Rule 9 on Procedures for Handling Committee Sensitive and Classi­fied Materials.)

Ck) Ineligibility or Disqualification of Members and Staff:

( 1) A member of the Committee shall be ineligible to participate in any Committee proceeding that relates specifically to any of the following:

CA> The member's own conduct; CB> The conduct of any employee or offi­

cer that the member supervises, as defined in paragraph 11 of Rule XXXVII of the Standing Rules of the Senate;

CC> The conduct of any employee or any officer that the member supervises; or

CD> A complaint, sworn or unsworn, that was filed by a member, or by any employee or officer that the member supervises.

C2) If any Committee proceeding appears to relate to a member of the Committee in a manner described in subparagraph ( 1) of this paragraph, the staff shall prepare a

4096 CONGRESSIONAL RECORD-SENATE March 7, 1986 report to the Chairman and Vice Chairman. If either the Chairman or the Vice Chair­man concludes from the report that it ap­pears that the member may be ineligible, the member shall be notified in writing of the nature of the particular proceeding and the reason that it appears that the member may be ineligible to participate in it. If the member agrees that he or she is ineligible, the member shall so notify the Chairman or Vice Chairman. If the member believes that he or she is not ineligible, he or she may ex­plain the reasons to the Chairman and Vice Chairman, and if they both agree that the member is not ineligible, the member shall continue to serve. But if either the Chair­man or Vice Chairman continues to believe that the member is ineligible, while the member believes that he or she is not ineli­gible, the matter shall be promptly referred to the Committee. The member shall present his or her arguments to the Com­mittee in executive session. Any contested questions concerning a member's eligibility shall be decided by a majority vote of the Committee, meeting in executive session, with the member in question not participat­ing.

(3) A member may also disqualify himself from participating in a Committee proceed­ing in other circumstances not listed in sub­paragraph <k>O >.

<4> The President of the Senate shall be given written notice of the ineligiblity or disqualification of any member from any initial review, investigation or other pro­ceeding requiring the appointment of an­other member in accordance with subpara­graph <k><5>.

(5) Whenever a member of the Committee is ineligible to participate in or disqualifies himself from participating in any initial review, investigation, or other substantial Committee proceeding, another Member of the Senate who is of the same party shall be appointed by the Senate in accordance with the provisions of paragraph 1 of Rule XXIV of the Standing Rules of the Senate of the Senate, to serve as member of the Commit­tee solely for the purposes of that proceed­ing.

(6) A member of the Committee staff shall be ineligible to participate in any Commit­tee proceeding that the staff director or out­side counsel determines relates specifically to any of the following.

<A> the staff member's own conduct; <B> The conduct of any employee that the

staff member supervises; <C> the conduct of any Member, officer or

employee for whom the staff member has worked for any substantial period; or

<D> a compliant, sworn or unsworn, that was filed by the staff member. At the direc­tion or with the consent of the staff director or outside counsel, a staff member may also be disqualified from participating in a Com­mittee proceeding in other circumstances not listed above.

m Recorded Votes: Any member may re­quire a recorded vote on any matter.

<m> Proxies; Recording Votes of Absent Members:

< 1 > Proxy voting shall not be allowed when the question before the Committee is the initiation or continuation of an initial review or an investigation, or the issuance of a report or recommendation related thereto concerning a Member or officer of the Senate. In any such case an absent mem­ber's vote may be announced solely for pur­pose of recording the member's position and such announced votes shall not be counted for or against the motion.

<2> On matters other than matters listed in paragraph <m>O> above, the Committee may order that the record be held open for the vote of absentees or recorded proxy votes if the absent Committee member has been informed of the matter on which the vote occurs and has affirmatively requested of the Chairman or Vice Chairman in writ­ing that he be so recorded.

<3> All proxies shall be in writing, and shall be delivered to the Chairman or Vice Chairman to be recorded.

< 4 > Proxies shall not be considered for the purpose of establishing a quorum.

<n> Approval of Blind Trusts and Foreign Travel Requests Between Sessions and During Extended Recesses:

During any period in which the Senate stands in adjournment between sessions of the Congress or stands in a recess scheduled to extend beyond fourteen days, the Chair­man and Vice Chairman, or their designees, acting jointly, are authorized to approve or disapprove blind trusts under the provision of Rule XXXIV, and to approve or disap­prove foreign travel requests which require immediate resolution.

<o> Committee Use of Services or Employ­ees of Other Agencies and Departments:

With the prior consent of the department or agency involved, the Committee may < 1 > utilize the services, information, or facilities of any such department or agency of the Government, and (2) employ on a reimburs­able basis or otherwise the services of such personnel of any such department or agency as it deems advisable. With the consent of any other committee of the Senate, or any subcommittee, the Committee may utilize the facilities and the services of the staff of such other committee or subcommittee whenever the Chairman and Vice Chairman of the Committee, acting jointly, determine that such action is necessary and appropri­ate.

RULE 2: PROCEDURES FOR SWORN COMPLAINTS

Ca> Sworn Complaints: Any person may file a sworn complaint with the Committee, alleging that any Senator, or officer, or em­ployee of the Senate has violated a law, the Senate Code of Official Conduct, or any rule or regulation of the Senate relating to the conduct of any individual in the per­formance of his or her duty as a Member, officer, or employee of the Senate, or has engaged in improper conduct which may re­flect upon the Senate.

<b> Form and Content of Complaints: A complaint filed under paragraph <a> shall be in writing and under oath, and shall set forth in simple, concise and direct state­ments:

< 1 > The name and legal address of the party filing the complaint <hereinafter, the complainant>:

<2> The name and position or title of each Member, officer, or employee of the Senate who is specifically alleged to have engaged in the improper conduct or committed the violation <hereinafter, the respondent>:

<3> The nature of the alleged improper conduct or violation, including if possible, the specific provision of the Senate Code of Official Conduct or other law, rule, or regu­lation alleged to have been violated.

<4><A> A statement of the facts within the personal knowledge of the complainant that are alleged to constitute the improper con­duct or violation.

<B> The term "personal knowledge" is not intended to and does not limit the complain­ant's statement to situations that he or she personally witnessed or to activities in which the complainant was a participant.

<C> Where allegations in the sworn com­plaint are made upon the information and belief of the complainant, the complaint shall so state, and shall set forth the basis for such information and belief.

(5) The complainant must swear that all of the information contained in the com­plaint either <a> is true, or (b) was obtained under circumstances such that the com­plainant has sufficient personal knowledge of the source of the information reasonably to believe that it is true. The complainant may so swear either by oath or by solemn affirmation before a notary public or other authorized official.

(6) All documents in the possession of the complainant relevant to or in support of his or her allegations may be appended to the complaint.

<c> Processing of Sworn Complaints: (1) When the Committee receives a sworn

complaint against a Member, officer or em­ployee of the Senate. it shall determine by majority vote whether the complaint is in substantial compliance with paragraph Cb) of this rule.

(2) If it is determined by the Committee that a sworn complaint does not substantial­ly comply with the requirements of para­graph <b>. the complaint shall be returned promptly to the complainant, with a state­ment explaining how the complaint fails to comply and a copy of the rules for filing sworn complaints. The complainant may re­submit the complaint in the proper form. If the complaint is not revised so that it sub­stantially complies with the stated require­ments, the Committee may in its discretion process the complaint in accordance with Rule 3.

(3) A sworn complaint against any Member, officer, or employee of the Senate that is determined by the Committee to be in substantial compliance shall be transmit­ted to the respondent within five days of that determination. The transmittal notice shall include the date upon which the com­plaint was received, a statement that the complaint conforms to the applicable rules, a statement that the Committee will imme­diately begin an initial review of the com­plaint, and a statement inviting the re­spondent to provide any information rele­vant to the complaint to the Committee. A copy of the Rules of the Committee shall be supplied with the notice. RULE 3: PROCEDURES ON RECEIPT OF ALLEGA­

TIONS OTHER THAN A SWORN COMPLAINT; PRE­LIMINARY INQUIRY

<a> Unsworn Allegations or Information: Any member or staff member of the Com­mittee shall report to the Committee, and any other person may report to the Com­mittee, any credible information available to him or her that indicates that any named or unnamed Member, officer or employee of the Senate may have-

( 1 > violated the Senate Code of Official Conduct;

<2> violated a law; <3> violated any rule or regulation of the

Senate relating to the conduct of individuals in the performance of their duties as Mem­bers, officers, or employees of the Senate; or

<4> engaged in improper conduct which may reflect upon the Senate. Such allega­tions or information may be reported to the Chairman, the Vice Chairman, a Committee member, or a Committee staff member.

<b> Sources of Unsworn Allegations or In­formation: The information to be reported to the Committee under paragraph <a>. may

March 7, 1986 CONGRESSIONAL RECORD-SENA TE 4097 be obtained from a variety of sources, in­cluding but not limited to the following:

< 1 > sworn complaints that do not satisfy all of the requirements of Rule 2;

<2> anonymous or informal complaints, whether or not satisfying the requirements of Rule 2;

<3> information developed during a study or inquiry by the Committee or other com­mittees or subcommittees of the Senate, in­cluding information obtained in connection with legislative or general oversight hear­ings;

<4> information reported by the news media; or

(5) information obtained from any individ­ual, agency or department of the executive branch of the Federal Government.

<c> Preliminary Inquiry: < 1 > When information is presented to the

Committee pursuant to paragraph <a>. it shall immediately be transmitted to the Chairman and the Vice Chairman, for one of the following actions.

<A> The Chairman and Vice Chairman, acting jointly, may conduct or may direct the Committee staff to conduct, a prelimi­nary inquiry.

<B > The Chairman and Vice Chairman, acting jointly, may present the allegations or information received directly to the Com­mittee for it to determine whether an initial review should be undertaken. <See para­graph <d).)

C2) A preliminary inquiry may include any inquiries or interviews that the Chairman and the Vice Chairman deem necessary or appropriate. In particular, the preliminary inquiry may seek independent credible evi­dence that tends to corroborate the infor­mation received and may also include dis­cussions or correspondence with the com­plainant, if any, and the respondent, if any.

C3) At the conclusion of a preliminary in­quiry, the Chairman and Vice Chairman shall receive a full report of its findings. The Chairman and Vice Chairman, acting jointly, shall then determine what further action, if any, is appropriate in the particu­lar case, including any of the following:

CA) No further action is appropriate, be­cause the alleged improper conduct or viola­tion is clearly not within the jurisdiction of the Committee;

CB) No further action is appropriate, be­cause there is no reason to believe that the alleged improper conduct or violation may have occurred; or

CC) The unsworn allegations or informa­tion, and a report on the preliminary in­quiry, should be referred to the Committee, to determine whether an initial review should be undertaken. <See paragraph (d).)

C4) If the Chairman and Vice Chairman are unable to agree on a determination at the conclusion of a preliminary inquiry, then they shall refer the allegations or in­formation to the Committee, with a report on the preliminary inquiry, for the Commit­tee to determine whether an initial review should be undertaken. <See paragraph Cd).)

(5) A preliminary inquiry shall be com­pleted within sixty days after the unsworn allegations or information were received by the Chairman and Vice Chairman. The sixty day period may be extended for a spec­ified period by the Chairman and Vice Chairman, acting jointly. A preliminary in­quiry is completed when the Chairman and the Vice Chairman have made the determi­nation required by subparagraphs (3) and (4) of this paragraph.

<d> Determination Whether to Conduct an Initial Review: When information or allega-

tions are presented to the Committee by the Chairman and the Vice Chairman, the Com­mittee shall determine whether an initial review should be undertaken.

C 1) An initial review shall be undertaken when-

< A> there is reason to believe on the basis of the information before the Committee that the possible improper conduct or viola­tion may be within the jurisdiction of the Committee; and

CB) there is reason to believe on the basis of the information before the Committee that the improper conduct or violation may have occurred.

<2> The determination whether to under­take an initial review shall be made by re­corded vote within thirty days following the Committee's receipt of the unsworn allega­tions or information from the Chairman or Vice Chairman, or at the first meeting of the Committee thereafter if none occurs within thirty days, unless this time is ex­tended for a specified period by the Com­mittee.

(3) The Committee may determine that an initial review is not warranted because (a) there is no reason to believe on the basis of the information before the Committee that the improper conduct or violation may have occurred, or (b) the improper conduct or violation, even if proven, is not within the jurisdiction of the Committee.

CA) If the Committee determines that an initial review is not warranted, it shall promptly notify the complainant, if any, and any known respondent.

<B> If there is a complainant, he or she may also be invited to submit additional in­formation, and notified of the procedures for filing a sworn complaint. If the com­plainant later provides additional informa­tion, not in the form of a sworn complaint, it shall be handled as a new allegation in ac­cordance with the procedures of Rule 3. If he or she submits a sworn complaint, it shall be handled in accordance with Rule 2.

(4)(A) The Committee may determine that there is reason to believe on the basis of the information before it that the im­proper conduct or violation may have oc­curred and may be within the jurisdiction of the Committee, and that an initial review must therefore be conducted.

<B> If the Committee determines that an initial review will be conducted, it shall promptly notify the complainant, if any, and the respondent, if any.

CC) The notice required under subpara­graph <B> shall include a general statement of the information or allegations before the Committee, and a statement that the Com­mittee will immediately begin an initial review of the complaint. A copy of the Rules of the Committee shall be supplied with the notice.

(5) If a member of the Committee believes that the preliminary inquiry has provided sufficient information for the Committee to determine whether there is substantial cred­ible evidence which provides substantial cause for the Committee to conclude that a violation within the jurisdiction of the Com­mittee has occurred, the member may move that the Committee dispense with the ini­tial review and move directly to the determi­nations described in Rule 4<0. The Commit­tee may adopt such a motion by majority vote of the full Committee.

RULE 4: PROCEDURES FOR CONDUCTING AN INITIAL REVIEW

(a) Basis for Initial Review: The Commit­tee shall promptly commence an initial review whenever it has received either < 1) a

sworn complaint that the Committee has determined is in substantial compliance with the requirements of Rule 2, or (2) un­sworn allegations or information that have caused the Committee to determine in ac­cordance with Rule 3 that an initial review must be conducted.

(b) Scope of Initial Review: 0) The initial review shall be of such du­

ration and scope as may be necessary to de­termine whether there is substantial credi­ble evidence which provides substantial cause for the Committee to conclude that a violation within the jurisdiction of the Com­mittee has occurred.

<2> The initial review may include any in­quiries or interviews that the Committee deems appropriate to obtain the evidence upon which to make the determination re­quired by subparagraph < 1 ), including the taking of sworn statements and the use of subpoenas.

<c> Opportunity for Response: An initial review may include an opportunity for any known respondent or his designated repre­sentative, to present either a written or oral statement, or to respond orally to questions from the Committee. Such an oral state­ment or answers shall be transcribed and signed by the person providing the state­ment or answers.

(d) Status Reports: The Committee staff or outside counsel shall periodically report to the Committee in the form and according to the schedule prescribed by the Commit­tee. The reports shall be confidential.

<e> Final Report: When the initial review is completed, the staff or outside counsel shall make a confidential report to the Committee on findings and recommenda­tions.

(f) Committee Action: As soon as practica­ble following submission of the report on the initial review, the Committee shall de­termine by a recorded vote whether there is substantial credible evidence which provides substantial cause for 'the Committee to con­clude that a violation within the jurisdiction of the Committee has occurred. The Com­mittee may make any of the following deter­minations:

< 1) The Committee may determine that there is not such substantial credible evi­dence. In this case, the Committee shall report its determination to the complainant, if any, and to the respondent, together with an explanation of the basis for the determi­nation. The explanation may be as detailed as the Committee desires, but it is not re­quired to include a complete discussion of the evidence collected in the initial review.

<2> The Committee may determine that there is such substantial credible evidence, but that the alleged violation is inadvertent, technical, or otherwise of a de minimis nature. In this case, the Committee may at­tempt to correct or to prevent such violation by informal methods. The Committee's final determination in this matter shall be re­ported to the complainant, if any, and to the respondent, if any.

(3) The Committee may determine that there is such substantial credible evidence, but that the alleged violation, if proven, al­though not of a de minimis nature, would not be sufficiently serious to justify the severe disciplinary actions specified in Senate Resolution 338, 88th Congress, as amended <i.e., for a Member, censure, expul­sion, or recommendation to the appropriate party conference regarding the Member's seniority or positions of responsibility; or for an officer or employee, suspension or dismissal). In this case, the Committee, by

4098 CONGRESSIONAL RECORD-SENATE March 7, 1986 the recorded affirmative vote of at least four members, may propose a remedy that it deems appropriate. If the respondent agrees to the proposed remedy, a summary of the Committee's conclusions and the remedy proposed and agreed to shall be filed as a public record with the Secretary of the Senate and a notice of the filing shall be printed in the Congressional Record.

(4) The Committee may determine, by re­corded affirmative vote of at least four members, that there is such substantial credible evidence, and also either:

<A> that the violation, if proved, would be sufficiently serious to warrant imposition of one of the severe disciplinary actions listed in paragraph (3); or

CB) that the violation, if proven, is less se­rious, but was not resolved pursuant to the procedure in paragraph (3). In either case, the Committee shall order that an investi­gation promptly be conducted in accordance with Rule 5.

RULE s: PROCEDURES FOR CONDUCTING AN INVESTIGATION

<a> Definition of Investigation: An "inves­tigation" is a proceeding undertaken by the Committee, by recorded affirmative vote of at least four members, after a finding on the basis of an initial review that there is substantial credible evidence which provides substantial cause for the Committee to con­clude that a violation within its jurisdiction has occurred.

Cb) Scope of Investigation: When the Committee decides to conduct an investiga­tion, it shall be of such duration and scope as is necessary for the Committee to deter­mine whether a violation within its jurisdic­tion has occurred. In the course of the in­vestigation, designated outside counsel, or if the Committee determines not to use out­side counsel, the Committee or its staff, may conduct inquires or interviews, take sworn statements, use compulsory process as described in Rule 7, or take any other ac­tions that the Committee deems appropri­ate to secure the evidence necessary to make this determination.

(c) Notice to Respondent: The Committee shall give written notice to any known re­spondent who is the subject of an investiga­tion. The notice shall be sent to the re­spondent no later than five working days after the Committee has voted to conduct an investigation. The notice shall include a statement of the nature of the possible vio­lation, and a description of the evidence in­dicating that a possible violation occurred. The Committee shall offer the respondent an opportunity to present a statement or to respond to questions from members of the Committee, the Committee staff, or outside counsel.

Cd) Right to a Hearing: The Committee shall accord a respondent an opportunity for a hearing before it recommends discipli­nary action against that respondent to the Senate.

Ce> Progress Reports to Committee: The Committee staff or outside counsel shall pe­riodically report to the Committee concern­ing the progress of the investigation. Such reports shall be delivered to the Committee in the form and according to the schedule prescribed by the Committee, and shall be confidential.

(f) Report of Investigation: ( 1) Upon completion of an investigation,

including any hearings held pursuant to Rule 6, the outside counsel or the staff shall submit a confidential written report to the Committee, which shall detail the factual findings of the investigations and which

may recommend disciplinary action, if ap­propriate. Findings of fact of the investiga­tion shall be detailed in this report whether or not disciplinary action is recommended.

(2) The Committee shall consider the report of the staff or outside counsel promptly following its submission. The Committee shall prepare and submit a report to the Senate, including a recommen­dation to the Senate concerning disciplinary action, if appropriate. A report shall be issued, stating in detail the Committee's findings of fact, whether or not disciplinary action is recommended. The report shall also explain fully the reasons underlying the Committee's recommendation concern­ing disciplinary action, if any. No recom­mendation or resolution of the Committee concerning the investigation of a Member, officer or employee of the Senate may be approved except by the affirmative recorded vote of not less than four members of the Committee.

(3) Promptly after the conclusion of the investigation, the Committee's report and recommendation shall be forwarded to the Secretary of the Senate, and a copy shall be provided to the complainant and the re­spondent. The full report and recommenda­tion shall be printed and made public, unless the Committee determines by majori­ty vote that it should remain confidential.

RULE 6: PROCEDURES FOR HEARINGS

<a> Right to a Hearing: The Committee may hold a public or executive hearing in any inquiry, initial review, investigation, or other proceeding. The Committee shall accord a respondent an opportunity for a hearing before it recommends disciplinary action against that respondent to the Senate. <See Rule 5Ce).)

Cb> Non-public Hearings: The Committee may at any time during a hearing determine in accordance with paragraph 5(b) of Rule XXVI of the Standing Rules of the Senate whether to receive the testimo,ny of specific witnesses in executive session: If a witness desires to express a preference for testifying in public or in executive session, he or she shall so notify the Committee at least five days before he or she is scheduled to testify.

Cc> Adjudicatory Hearings: The Commit­tee may, by majority vote, designate any public or executive hearing as an adjudica­tory hearing; and, any hearing which is con­cerned with possible disciplinary action against a respondent or respondents desig­nated by the Committee shall be an adjudi­catory hearing. In any adjudicatory hearing, the procedures described in paragraph (j) shall apply.

(d) Subpoena Power: The Committee may require, by subpoena or otherwise, the at­tendance and testimony of such witnesses and the production of such correspondence, books, papers, documents or other articles as it deems advisable. <See Rule 7.)

(e) Notice of Hearings: The Committee shall make public an announcement of the date, place, and subject matter of any hear­ing to be conducted by it, in accordance with Rule 1<0.

(f) Presiding Officer: The Chairman shall preside over the hearings, or in his absence the Vice Chairman. If the Vice Chairman is also absent, a Committee member designat­ed by the Chairman shall preside. If an oath or affirmation is required, it shall be admin­istered to a witness by the Presiding Officer, or in his absence, by any Committee member.

(g) Witnesses: ( 1) A subpoena or other request to testify

shall be served on a witness sufficiently in

advance of his or her scheduled appearance to allow the witness a reasonable period of time, as determined by the Committee, to prepare for the hearing and to employ coun­sel if desired.

(2) The Committee may, by majority vote, rule that no member of the Committee or staff or outside counsel shall make public the name of any witness subpoenaed by the Committee before the date of that witness' scheduled appearance, except as specifically authorized by the Chairman and Vice Chairman, acting jointly.

(3) Any witness desiring to read a pre­pared or written statement in executive or public hearings shall file a copy of such statement with the Committee at least two working days in advance of the hearing at which the statement is to be presented. The Chairman and Vice Chairman shall deter­mine whether such statements may be read or placed in the record of the hearing.

(4) Insofar as practicable, each witness shall be permitted to present a brief oral opening statement, if he or she desires to do so.

Ch) Right to Testify: Any person whose name is mentioned or who is specifically identified or otherwise referred to in testi­mony or in statements made by a Commit­tee member, staff member or outside coun­sel, or any witness, and who reasonably be­lieves that the statement tends to adversely affect his or her reputation may-

( 1) Request to appear personally before the Committee to testify in his or her own behalf; or

(2) File a sworn statement of facts rele­vant to the testimony or other evidence or statement of which he or she complained. Such request and such statement shall be submitted to the Committee for its consider­ation and action.

(i) Conduct of Witnesses and Other Atten­dees: The Presiding Officer may punish any breaches of order and decorum by censure and exclusion from the hearings. The Com­mittee, by majority vote, may recommend to the Senate that the offender be cited for contempt of Congress.

(j) Adjudicatory Hearing Procedures: (1) Notice of Hearings: A copy of the

public announcement of an adjudicatory hearing, required by paragraph (e), shall be furnished together with a copy of these Rules to all witnesses at the time that they are subpoenaed or otherwise summoned to testify.

(2) Preparation for Adjudicatory Hear­ings:

CA) At least five working days prior to the commencement of an adjudicatory hearing, the Committee shall provide the following information and documents to the respond­ent, if any:

(i) a list of proposed witnesses to be called at the hearing;

OD copies of all documents expected to be introduced as exhibits at the hearing; and

(iii) a brief statement as to the nature of the testimony expected to be given by each witness to be called at the hearing.

CB> At least two working days prior to the commencement of an adjudicatory hearing, the respondent, if any, shall provide the in­formation and documents described in divi­sions m, (ii) and (iii) of subparagraph CA) to the Committee.

CC> At the discretion of the · Committee, the information and documents to be ex­changed under this paragraph shall be sub­ject to an appropriate agreement limiting access and disclosure.

March 7, 1986 CONGRESSIONAL RECORD-SENATE 4099 <D> If a respondent refuses to provide the

information and documents to the Commit­tee <see <A> and <B> of this subparagraph), or if a respondent or other individual vio­lates an agreement limiting access and dis­closure, the Committee, by majority vote, may recommend to the Senate that the of­f ender be cited for contempt of Congress.

(3) Swearing of Witnesses: All witnesses who testify at adjudicatory hearings shall be sworn unless the Presiding Officer, for good cause, decides that a witness does not have to be sworn.

(4) Right to Counsel: Any witness at an adjudicatory hearing may be accompanied by counsel of his or her own choosing, who shall be permitted to advise the witness of his or her legal rights during the testimony.

(5) Right to Cross-Examine and Call Wit­nesses:

<A> In adjudicatory hearings, any respond­ent who is the subject of an investigation, and any other person who obtains the per­mission of the Committee, may personally or through counsel cross-examine witnesses called by the Committee and may call wit­nesses in his or her own behalf.

<B> A respondent may apply to the Com­mittee for the issuance of subopenas for the appearance of witnesses or the production of documents on his or her behalf. An appli­cation shall be approved upon a concise showing by the respondent that the pro­posed testimony or evidence is relevant and appropriate, as determined by the Chair­man and Vice Chairman.

<C> With respect to witnesses called by a respondent, or other individual given per­mission by the Committee, each such wit­ness shall first be examined by the party who called the witness or by that party's counsel.

<D> At least one working day before a wit­ness ' scheduled appearance, a witness or a witness counsel may submit to the Commit­tee written questions proposed to be asked of that witness. If the Committee deter­mines that it is necessary, such questions may be asked by any member of the Com­mittee, or by any Committee staff member if directed by a Committee member. The witness or witness' counsel may also submit additional sworn testimony for the record within twenty-four hours after the last day that the witness has testified. The insertion of such testimony in that days' record is subject to the approval of the Chairman and Vice Chairman acting jointly within five days after the testimony is received.

<6> Admissibility of Evidence: <A> The object of the hearing shall be to

ascertain the truth. Any evidence that may be relevant and probative shall be admissi­ble, unless privileged under the Federal Rules of Evidence. Rules of evidence shall not be applied strictly, but the Presiding Of­ficer shall exclude irrelevant or unduly rep­etitious testimony. Objections going only to the weight that should be given evidence will not justify its exclusion.

<B> The Presiding Officer shall rule upon any question of the admissibility of testimo­ny or other evidence presented to the Com­mittee. Such rulings shall be final unless re­versed or modified by a majority vote of the Committee before the recess of that day's hearings.

(7) Supplementary Hearing Procedures: The Committee may adopt any additional special hearing procedures that it deems necessary or appropriate to a particular ad­judicatory hearing. Copies of such supple­mentary procedures shall be furnished to witnesses and respondents, and shall be

made available upon request to any member of the public.

<k> Transcripts: < 1) An accurate stenographic or recorded

transcript shall be made of all public and executive hearings. Any member of the Committee, Committee staff member, out­side counsel retained by the Committee, or witness may examine a copy of the tran­script retained by the Committee of his or her own remarks and may suggest to the of­ficial reporter any typographical or tran­scription errors. If the reporter declines to make the requested corretions, the member, staff member, outside counsel or witness may request a ruling by the Chairman and Vice Chairman, acting jointly. Any member or witness shall return the transcript with suggested corrections to the Committee of­fices within five working days after receipt of the transcript, or as soon thereafter as is practicable. If the testimony was given in executive session, the member or witness may only inspect the transcript at a location determined by the Chairman and Vice Chairman, acting jointly. Any questions arising with respect to the processing and correction of transcripts shall be decided by the Chairman and Vice Chairman, acting jointly.

(2) Except for the record of a hearing which is closed to the public, each tran­script shall be printed as soon as is practica­ble after receipt of the corrected version. The Chairman and Vice Chairman, acting jointly, may order the transcript of a hear­ing to be printed without the corrections of a member or witness if they determine that such member or witness has been afforded a reasonable time to correct such transcript and such transcript has not been returned within such time.

<3> The Committee shall furnish each wit­ness, at no cost, one transcript copy of that witness' testimony given at a public hearing. If the testimony was given in executive ses­sion, then a transcript copy shall be provid­ed upon request, subject to appropriate con­ditions and restrictions prescribed by the Chairman and Vice Chairman. If any indi­vidual violates such conditions and restric­tions, the Committee may recommend by majority vote that he or she be cited for contempt of Congress.

RULE 7: SUBPOENAS

(a) Procedure: Subpoenas may be issued either-

< 1) by majority vote of the Committee, or <2> by the Chairman and Vice Chairman,

acting jointly. All subpoenas shall be signed by the

Chairman or the Vice Chairman and may be served by any person eighteen years of age or older, who is designated by the Chairman or Vice Chairman. Each subpoena shall be served with a copy of the Rules of the Com­mittee and a brief statement of the purpose of the initial review, investigation, or other proceeding.

(b) Subpoena Power: Pursuant to Federal law <2 U.S.C. 190(b)), the Committee is au­thorized to sit and act at such times and places during the sessions, recesses, and ad­journed periods of the Senate as it deems advisable. The Committee is similarly au­thorized to require by subpoena or other­wise the attendance of such witnesses or the production of such correspondence, books, papers, documents, or other articles as it deems advisable.

<c> Withdrawal of Subpoena: The Com­mittee may, by majority vote, withdraw any subpoena issued by it or issued by the

Chairman and Vice Chairman, acting joint­ly.

The Chairman and Vice Chairman, acting jointly, may withdraw any subpoena issued by them. RULE s: VIOLATIONS OF LAW; PERJURY; LEGISLA­

TIVE RECOMMENDATIONS; AND APPLICABLE RULES AND STANDARDS OF CONDUCT

<a> Violations of Law: Whenever the Com­mittee determines by majority vote that there is reason to believe that a violation of law may have occurred, it shall report such possible violation to the proper state and federal authorities.

(b) Perjury: Any person who knowingly and willfully swears falsely to a sworn com­plaint or any other sworn statement to the Committee does so under penalty of perju­ry. The Committee may refer any such case to the Attorney General for prosecution.

<c> Legislative Recommendations: The Committee shall recommend to the Senate by report or resolution such additional rules, regulations, or other legislative meas­ures as it determines to be necessary or de­sirable to ensure proper standards of con­duct by Members, officers, or employees of the Senate. The Committee may conduct such inquiries as it deems necessary to pre­pare such a report or resolution, including the holding of hearings in public or execu­tive session and the use of subpoenas to compel the attendance of witnesses or the production of materials. The Committee may make legislative recommendations as a result of its findings in an initial review, in­vestigation, or other proceeding.

(d) Applicable Rules and Standards of Conduct:

(1) No initial review or investigation shall be made of an alleged violation of any law, rule, regulation, or provision of the Senate Code of Official Conduct which was not in effect at the time the alleged violation oc­curred. No provision of the Senate Code of Official Conduct shall apply to, or require disclosure of any act, relationship, or trans­action which occurred prior to the effective date of the applicable provision of the Code.

(2) The Committee may conduct an initial review or investigation of an alleged viola­tion of a rule or law which was in effect" prior to the enactment of the Senate Code of Official Conduct if the alleged violation occurred while such rule or law was in effect and the violation was not a matter resolved on the merits by the predecessor Commit­tee. RULE 9; PROCEDURES FOR HANDLING COMMITTEE

SENSITIVE AND CLASSIFIED MATERIALS

<a> Procedures for Handling Committee Sensitive Materials:

(1) Committee Sensitive information or material is information or material in the possession of the Select Committee on Ethics which pertains to illegal or improper conduct by a present or former Member, of­ficer, or employee of the Senate; to allega­tions or acquisition of such conduct; to any resulting preliminary inquiry, initial review, or investigation l;>y the Select Committee on Ethics into such allegations or conduct; to the investigative techniques and procedures of the Select Committee on Ethics; or to other information or material designated by the staff director, or outside counsel de­signed by the Chairman and Vice Chairman.

(2) The Chairman and Vice Chairman of the Committee shall establish such proce­dures as may be necessary to prevent the unauthorized disclosure of Committee Sen­sitive information in the possession of the Committee or its staff. Procedures for pro-

4100 CONGRESSIONAL RECORD-SENATE March 7, 1986 tecting Committee Sensitive materials shall be in writing and shall be given to each Committee staff member.

Cb) Procedures for Handling Classified Materials:

< 1 > Classified information or material is information or material which is specifically designated as classified under the authority of Executive Order 11652 requiring protec­tion of such information or material from unauthorized disclosure in order to prevent damage to the United States.

(2) The Chairman and Vice Chairman of the Committee shall establish such proce­dures as may be necessary to prevent the unauthorized disclosure of classified infor­mation in the possession of the Committee or its staff. Procedures for handling such in­formation shall be in writing and a copy of the procedures shall be given to each staff member cleared for access to classified in­formation.

(3) Each member of the Committee shall have access to classified material in the Committee's possession. Only Committee staff members with appropriate security clearances and a need-to-know, as approved by the Chairman and Vice Chairman, acting jointly, shall have access to classified infor­mation in the Committee's possession.

<c> Procedures for Handling Committee Sensitive and Classified Documents:

< 1) Committee Sensitive and classified documents and materials shall be segregat­ed in secure filing safes. Removal from the Committee offices of such documents or ma­terials is prohibited except as necessary for use in, or preparation for, interviews or Committee meetings, including the taking of testimony, or as otherwise specifically ap­proved by the staff director or by outside counsel designated by the Chairman and Vice Chairman.

<2> Each member of the Committee shall have access to all materials in the Commit­tee's possession. The staffs of members shall not have access to Committee Sensitive or classified documents and materials without the specific approval in each instance of the Chairman, and Vice Chairman, acting joint­ly. Members may examine such materials in the Committee's offices. If necessary, re­quested materials may be taken by a member of the Committee staff to the office of a member of the Committee for his or her examination, but the Committee staff member shall remain with the Committee Sensitive or classified documents or materi­als at all times except as specifically author­ized by The Chairman or Vice Chairman.

<3> Any Member of the Senate who is not a member of the Committee and who seeks access to any Committee Sensitive or classi­fied documents or materials, other than doc­uments or materials which are matters of public record, shall request access in writ­ing. The Committee shall decide by majori­ty vote whether to make documents or ma­terials available. If access is granted, the Member shall not disclose the information except as authorized by the Committee.

<4> Whenever the Committee makes Com­mittee Sensitive or classified documents or materials available to any Member of the Senate who is not a member of the Commit­tee, or to a staff person of a Committee member in response to a specific request to the Chairman and Vice Chairman, a written record shall be made identifying the Member of the Senate requesting such doc­uments or materials and describing what was made available and to whom.

<d> Non-disclosure Policy and agreement: <1 > Except as provided in the last sentence

of this paragraph, no member of the Select

Committee on Ethics, its staff, or any person engaged by contract or otherwise to perform services for the Select Committee on Ethics shall release, divulge, publish, reveal by writing, word, conduct, or disclose in any way, in whole, or in part, or by way of summary, during tenure with the Select Committee on Ethics or anytime thereafter, any testimony given before the Select Com­mittee on Ethics in executive session <in­cluding the name of any witness who ap­peared or was called to appear in executive session), any classified or Committee Sensi­tive information, document or material, re­ceived or generated by the Select Commit­tee on Ethics or any classified or Committee Sensitive information which may come into the possession of such person during tenure with the Select Committee on Ethics or its staff. Such information, documents, or ma­terial may be released to an official of the executive branch properly cleared for access with a need-to-know, for any purpose or in connection with any proceeding, judicial or otherwise, as authorized by the Select Com­mittee on Ethics, or in the event of termina­tion of the Select Committee on Ethics, in such a manner as may be determined by its successor or by the Senate.

(2) No member of the Select Committee on Ethics staff or any person engaged by contract or otherwise to perform services for the Select Committee on Ethics, shall be granted access to classified or Committee Sensitive information or material in the pos­session of the Select Committee on Ethics unless and until such person agrees in writ­ing, as a condition of employment, to the non-disclosure policy. The agreement shall become effective when signed by the Chair­man and Vice Chairman on behalf of the Committee. RULE 1 o: BROADCASTING AND NEWS COVERAGE OF

COMMITTEE PROCEEDINGS <a> Whenever any hearing or meeting of

the Committee is open to the public, the Committee shall permit that hearing or meeting to be covered in whole or in part, by television broadcast, radio broadcast, still photography, or by any other methods of coverage, unless the Committee decides by majority vote that such coverage is not ap­propriate at a particular hearing or meet­ing.

Cb> Any witness served with a subpoena by the Committee may request not to be photo­graphed at any hearing or to give evidence or testimony while the broadcasting, repro­duction, or coverage of that hearing, by radio, television, still photography, or other methods is occurring. At the request of any such witness who does not wish to be sub­jected to radio, television, still photography, or other methods of coverage, and subject to the approval of the Committee, all lenses shall be covered and all microphones used for coverage turned off.

<c> If coverage is permitted, it shall be in accordance with the following requirements:

< 1 > Photographers and reporters using me­chanical recording, filming, or broadcasting apparatus shall position their equipment so as not to interfere with the seating, vision, and hearing of the Committee members and staff, or with the orderly process of the meeting or hearing.

<2> If the television or radio coverage of the hearing or meeting is to be presented to the public as live coverage, that coverage shall be conducted and presented without commercial sponsorship.

C3) Personnel providing coverage by the television and radio media shall be currently

accredited to the Radio and Television Cor­respondents' Galleries.

<4> Personnel providing coverage by still photography shall be currently accredited to the Press Photographers' Gallery Com­mittee of Press Photographers.

< 5 > Personnel providing coverage by the television and radio media and by still pho­tography shall conduct themselves and the coverage activities in an orderly and unob­trusive manner. RULE 11: PROCEDURES FOR ADVISORY OPINIONS

<a> When Advisory Opinions are Ren­dered:

< 1 > The Committee shall render an adviso­ry opinion, in writing within a reasonable time, in response to a written request by a Member or officer of the Senate or a candi­date for nomination for election, or election to the Senate, concerning the application of any law, the Senate Code of Official Con­duct, or any rule or regulation of the Senate within the Committee's jurisdiction, to a specific factual situation pertinent to the conduct or proposed conduct of the person seeking the advisory opinion.

<2> The Committee may issue an advisory opinion in writing within a reasonable time in response to a written request by any em­ployee of the Senate concerning the applica­tion of any law, the Senate Code of Official Conduct, or any rule or regulation of the Senate within the Committee's jurisdiction, to a specific factual situation pertinent to the conduct or proposed conduct of the person seeking the advisory opinion.

<b> Form of Request: A request for an ad­visory opinion shall be directed in writing to the Chairman of the Committee and shall include a complete and accurate statement of the specific factual situation with respect to which the request is made as well as the specific question or questions which the re­questor wishes the Committee to address.

<c> Opportunity for Comment: < 1) The Committee will provide an oppor­

tunity for any interested party to comment on a request for an advisory opinion-

<A> which requires an interpretation on a significant question of first impression that will affect more than a few individuals; or

<B> when the Committee determines that comments from interested parties would be of assistance.

<2> Notice of any such request for an advi­sory opinion shall be published in the CON­GRESSIONAL RECORD, with appropriate dele­tions to insure confidentiality, and interest­ed parties will be asked to submit their com­ments in writing to the Committee within ten days.

(3) All relevant comments received on a timely basis will be considered.

Cd> Issuance of an Advisory Opinion: < 1 > The Committee staff shall prepare a

proposed advisory opinion in draft form which will first be reviewed and approved by ~h.e Chairman and Vice Chairman, acting Jomtly, and will be presented to the Com­mittee for final action. If <A> the Chairman and Vice Chairman cannot agree or <B> either the Chairman or Vice Chai;man re­quests that it be taken directly to the Com­mittee, then the proposed advisory opinion shall be referred to the Committee for its decision.

<2> An advisory opinion shall be issued only by the affirmative recorded vote of a majority of the members voting.

(3) Each advisory opinion issued by the Committee shall be promptly transmitted for publication in the CONGRESSIONAL RECORD after appropriate deletions are

March 7, 1986 CONGRESSIONAL RECORD-SENA TE 4101 made to insure confidentiality. The Com­mittee may at any time revise, withdraw, or elaborate on any advisory opinion.

< e) Reliance on Advisory Opinions: < 1) Any advisory opinion issued by the

Committee under Senate Resolution 338, 88th Congress, as amended, and the rules may be relied upon by-

<A> Any person involved in the specific transaction or activity with respect to which such advisory opinion is rendered if the re­quest for such advisory opinion included a complete and accurate statement of the spe­cific factual situation; and

<B> any person involved in any specific transaction or activity which is indistin­guishable in all its material aspects from the transaction or activity with respect to which such advisory opinion is rendered.

(2) Any person who relies upon any provi­sion or finding of an advisory opinion in ac­cordance with the provisions of Senate Res­olution 338, 88th Congress, as amended, and of the rules, and who acts in good faith in accordance with the provisions and findings of such advisory opinion shall not, as a result of any such act, be subject to any sanction by the Senate.

RULE 12: PROCEDURES FOR INTERPRETATIVE RULINGS

(a) Basis for Interpretative Rulings: Senate Resolution 338, 88th Congress, as amended, authorizes the Committee to issue interpretative rulings explaining and clari­fying the application of any law, the Code of Official Conduct, or any rule or regula­tion of the Senate within its jurisdiction. The Committee also may issue such rulings clarifying or explaining any rule or regula­tion of the Select Committee on Ethics.

Cb) Request for Ruling: A request for such a ruling must be directed in writing to the Chairman or Vice Chairman of the Commit­tee.

<c> Adoption of Ruling: ( 1) The Chairman and Vice Chairman,

acting jointly, shall issue a written interpre­tative ruling in response to any such re­quest, unless-

<A> they cannot agree, <B> it requires an interpretation of a sig­

nificant question of first impression, or <C> either requests that it be taken to the

Committee, in which event the request shall be directed to the Committee for a ruling.

(2) A ruling on any request taken to the Committee under subparagraph Cl> shall be adopted by a majority of the members voting and the ruling shall then be issued by the Chairman and Vice Chairman.

Cd) Publication of Rulings: The Commit­tee will publish in the CONGRESSIONAL RECORD, after making appropriate deletions to ensure confidentiality, any interpretative rulings issued under this Rule which the Committee determines may be of assistance or guidance to other Members, officers or employees. The Committee may at any time revise, withdraw, or elaborate on interpreta­tive rulings.

<e> Reliance on Rulings: Whenever an in­dividual can demonstrate to the Commit­tee's satisfaction that his or her conduct was in good faith reliance on an interpreta­tive ruling issued in accordance with this Rule, the Committee will not recommend sanctions to the Senate as a result of such conduct.

(f) Rulings by Committee Staff: The Com­mittee staff is not authorized to make rul­ings or give advice, orally or in writing, which binds the Committee in any way.

RULE 13: PROCEDURES FOR COMPLAINTS INVOLV­ING IMPROPER USE OF THE MAILING FRANK <a> Authority to Receive Complaints: The

Committee is directed by section 6(b) of Public Law 93-191 to receive and dispose of complaints that a violation of the use of the mailing frank has occurred or is about to occur by a Member or officer of the Senate or by a surviving spouse of a Member. All such complaints will be processed in accord­ance with the provisions of these Rules, except as provided in paragraph Cb).

Cb> Disposition of Complaints: < 1 > The Committee may dispose of any

such complaint by requiring restitution of the cost of the mailing if it finds that the franking violation was the result of a mis­take.

(2) Any complaint disposed of by restitu­tion that is made after the Committee has formally commenced an initial review or in­vestigation, must be summarized, together with the disposition, in a notice promptly transmitted for publication in the CONGRES­SIONAL RECORD.

<3> If a complaint is disposed of by restitu­tion, the complainant, · if any shall be noti­fied of the disposition in writing.

(c) Advisory Opinions and Interpretative Rulings: Requests for advisory opinions or interpretative rulings involving franking questions shall be processed in accordance with Rules 11and12.

RULE 14: PROCEDURES FOR WAIVERS <a> Authority for Waivers: The Committee

is authorized to grant a waiver under the following provisions of the Standing Rules of the Senate:

(1) Section lOl<h> of the Ethics in Govern­ment Act of 1978, as amended, <Rule XXXIV> relating to the filing of financial disclosure reports by individuals who are ex­pected to perform or who have performed the duties of their offices or positions for less than one hundred and thirty days in a calendar year:

<2> Section 102<a><2><D> of the Ethics in Government Act, as amended, <Rule XXXIV> relating to the reporting of gifts;

<3> Paragraph 1 of Rule XXXV relating to acceptance of gifts; or

(4) Paragraph 5 of Rule XLI relating to applicability of any of the provisions of the Code of Official Conduct to an employee of the Senate hired on a per diem basis.

Cb) Requests for Waivers: A request for a waiver under paragraph <a> must be direct­ed to the Chairman or Vice Chairman in writing and must specify the nature of the waiver being sought and explain in detail the facts alleged to justify a waiver. In the case of a request submitted by an employee, the views of his or her supervisor <as deter­mined under paragraph 11 of Rule XXXVII of the Standing Rules of the Senate> should be included with the waiver request.

<c> Ruling: The Committee shall rule on a waiver request by recorded vote, with a ma­jority of those voting affirming the decision.

Cd> Availability of Waiver Determinations: A brief description of any ·waiver granted by the Committee, with appropriate deletions to ensure confidentiality, shall be made available for review upon request in the Committee office. Waivers granted by the Committee pursuant to the Ethics in Gov­ernment Act of 1978, as amended, may only be granted pursuant to a publicly available request as required by the Act.

RULE 15: DEFINITION OF "OFFICER OR EMPLOYEE"

<a> As used in the applicable resolutions and in these rules and procedures, the term "officer or employee of the Senate" means:

< 1 > An elected officer of the Senate who is not a Member of the Senate;

<2> An employee of the Senate, any com­mittee or subcommittee of the Senate, or any Member of the Senate;

<3> The Legislative Counsel of the Senate or any employee of his office;

<4> An Official Reporter of Debates of the Senate and any person employed by the Of­ficial Reporters of Debates of the Senate in connection with the performance of their official duties;

(5) A member of the capitol Police force whose compensation is disbursed by the Sec­retary of the Senate;

<6> An employee of the Vice President, if such employee's compensation is disbursed by the Secretary of the Senate;

<7> An employee of a joint committee of the Congress whose compensation is dis­bursed by the Secretary of the Senate;

<8> An officer or employee of any depart­ment or agency of the Federal Government whose services are being utilized on a full­time and continuing basis by a Member, of­ficer, employee, or committee of the Senate in accordance with Rule XLI<3> of the Standing Rules of the Senate; and

(9) Any other individual whose full-time services are utilized for more than ninety days in a calendar year by a Member, offi­cer, employee, or committee of the Senate in the conduct of official duties in accord­ance with Rule XLI<4> of the Standing Rules of the Senate.

RULE 16: COMMITTEE STAFF (a) Committee Policy: < 1 > The staff is to be assembled and re­

tained as a permanent, professional, nonpar­tisan staff.

<2> Each member of the staff shall be pro­fessional and demonstrably qualified for the position for which he or she is hired.

<3> The staff as a whole and each member of the staff shall perform all official duties in a nonpartisan manner.

<4> No member of the staff shall engage in any partisan political activity directly af­fecting any congressional or presidential election.

(5) No member of the staff or outside counsel may accept public speaking engage­ments or write for publication on any sub­ject that is in any way related to his or her employment or duties with the Committee without specific advance permission from the Chairman and Vice Chairman.

(6) No member of the staff may make public, without Committee approval, any Committee Sensitive or classified informa­tion, documents, or other material obtained during the course of his or her employment with the Committee.

Cb> Appointment of Staff: < 1) The appointment of all staff members

shall be approved by the Chairman and Vice Chairman, acting jointly.

<2> The Committee may determine by ma­jority vote that it is necessary to retain staff members, including a staff recommended by a special counsel, for the purpose of a par­ticular initial review, investigation, or other proceeding. Such staff shall be retained only for the duration of that particular un­dertaking.

<3> The Committee is authorized to retain and compensate counsel not employed by the Senate <or by any department or agency

4102 CONGRESSIONAL RECORD-SENATE March 7, 1986 of t he Executive Branch of the Govern­ment> whenever the Committee determines that the retention of outside counsel if nec­essary or appropriate for any action regard­ing any complaint or allegation, initial review, investigation, or other proceeding, which in the determination of the Commit­tee, is more appropriately conducted by counsel not employed by the Government of the United States as a regular employee. The Commit tee shall retain and compensate outside counsel to conduct any investigation undertaken after an initial review of a sworn complaint, unless the Committee de­termines that the use of outside counsel is not appropriate in the particular case.

<c> Dismissal of Staff: A staff member may not be removed for partisan, political reasons, or merely as a consequence of the rotation of the Committee membership. The Chairman and Vice Chairman, acting jointly, shall approve the dismissal of any staff member.

(d) Staff Works for Committee as Whole: All staff employed by the Committee or housed in Committee offices shall work for the Committee as a whole, under the gener­al direction of the Chairman and Vice Chairman, and the immediate direction of the staff director or outside counsel.

(e) Notice of Summons to Testify: Each member of the Committee staff shall imme­diately notify the Committee in the event that he or she is called upon by a properly constituted authority to testify or provide confidential information obtained as a result of and during his or her employment with the Committee.

RULE 17: CHANGES IN SUPPLEMENTARY PROCEDURAL RULES

<a> Adoption of Changes in Supplementa­ry Rules: The Rules of the Committee, other than rules established by statute, or by the Standing Rules and Standing Orders of the Senate, may be modified, amended, or suspended at any time, pursuant to a ma­jority vote of the entire membership taken at a meeting called with due notice when prior written notice of the proposed change

has been provided each member of the Com­mittee.

(b) Publication: Any amendments adopted to the Rules of the Committee shall be pub­lished in the CONGRESSIONAL RECORD not later than thirty days after adoption.•

PROGRAM Mr. ABDNOR. Mr. President, on

behalf of the majority leader, I say to the minority leader, I ask unanimous consent that when the Senate con­venes on Monday, March 10, 1986, at 11 a.m., the reading of the Journal be dispensed with, no resolutions come over under the rule, the call of the cal­endar be dispensed with, and following the recognition of the two leaders under the standing order there be spe­cial orders in favor of Senators PROX­MIRE and SIMON for not to exceed 15 minutes each, to be followed by a period for the transaction of routine morning business not to extend beyond 12 noon, with Senators permit­ted to speak therein for not more than 5 minutes each, provided further that the morning hour be deemed to have expired.

Mr. BYRD. Mr. President, is the dis­tinguished acting majority leader planning to adjourn until Monday or to recess until Monday?

Mr. ABDNOR. Adjourn. Mr. BYRD. I thank the distin­

guished Senator. There is no objec­tion.

Mr. ABDNOR. I thank. the minority leader.

The PRESIDING OFFICER. With­out objection, it is so ordered.

ADJOURNMENT UNTIL 11 A.M. MONDAY, MARCH 10, 1986

Mr. ABDNOR. Mr. President, I move that the Senate stand in adjournment until 11 a.m. on Monday, March 10, 1986.

The motion was agreed to, and at 5:04 p.m., the Senate adjourned until Monday, March 10, 1986, at 11 a.m.

CONFIRMATIONS Executive nominations confirmed by

the Senate March 7, 1986: U.S. INTERNATIONAL TRADE COMMISSION

David B. Rohr, of Maryland, to be a member of the U.S. International Trade Commission for the term expiring Decem­ber 16, 1994.

The above nomination was approved subject to the nominee's commitment to respond to requests to appear and testify before any duly constituted committee of the Senate.

DEPARTMENT OF JUSTICE Robert Q. Whitwell, of Mississippi, to be

U.S. attorney for the northern district of Mississippi for the term of 4 years.

P.A. Mangini, of Connecticut, to be U.S. Marshal for the district of Connecticut for the term of 4 years.

J. Jerome Perkins, of Indiana, to be U.S. Marshal for the northern district of Indiana for the term of 4 years.

Lee Koury, of Missouri, to be U.S. Mar­shal for the western district of Missouri for the term of 4 years.

Ralph L. Boling, of Kentucky, to be U.S. Marshal for the western district of Ken­tucky for the term of 4 years.

Wayne D. Beaman, of Virginia, to be U.S. Marshal for the western district of Virginia for the term of 4 years.

William I. Berryhill, Jr., of North Caroli­na, to be U.S. Marshal for the eastern dis­trict of North Carolina for the term of 4 years.