E PL UR UM IB N U U S Congressional Record United States th of America PROCEEDINGS AND DEBATES OF THE 105 CONGRESS, SECOND SESSION

Vol. 144 WASHINGTON, WEDNESDAY, MAY 13, 1998 No. 60 Senate The Senate met at 9:30 a.m., and was ing, between now and 11:30 a.m., the AMERICAN MISSILE PROTECTION called to order by the President pro Senate will debate the motion to pro- ACT OF 1998—MOTION TO PROCEED tempore [Mr. THURMOND.] ceed to the missile defense bill. Follow- The PRESIDING OFFICER. Under ing that debate, the Senate will pro- the previous order, the Senate will re- PRAYER ceed to vote on the motion to invoke sume consideration of the motion to The Chaplain, Dr. Lloyd John cloture on the motion to proceed to the proceed to S. 1873, and the time until Ogilvie, offered the following prayer: missile defense bill. And following that 11:30 a.m. will be equally divided. Lord of all life, You have shown us vote, the Senate will begin consider- The clerk will now report. that a great life is an accumulation of ation of S. 1244, the charitable con- The bill clerk read as follows: days lived to the fullest, one at a time, tributions bill, under a short time Motion to proceed to the consideration of by Your grace and for Your glory. agreement. At the conclusion or yield- Calendar No. 345 (S. 1873), a bill to state the Thank You for the strength and vital- ing back of the time, the Senate will policy of the United States regarding the de- ity that surge within us when we open proceed to a vote on passage of that ployment of a missile defense system capable the floodgates of our minds and hearts bill. of defending the territory of the United and allow Your Spirit to empower us. Following that vote, it is the leader’s States against limited ballistic missile at- When we invite You to be the unseen intention to begin consideration of the tack. but enabling Presence in everything, Department of Defense authorization The Senate resumed consideration of we experience greater creativity, we bill. Therefore, Members should expect the motion to proceed. think more clearly, we speak more lu- votes throughout today’s session with Mr. COCHRAN addressed the Chair. cidly, and we accomplish more with the first votes occurring at approxi- The PRESIDING OFFICER. The Sen- less strain and stress. mately 11:30 a.m. As a reminder to all ator from Mississippi is recognized. Make us so secure in Your love, Lord, Members, several time agreements PRIVILEGE OF THE FLOOR that we live this day with more con- were reached last night with respect to Mr. COCHRAN. Mr. President, I ask cern for the future of our Nation than two high-tech bills, and those may be unanimous consent the privilege of the for the future of our careers, with more considered at some point this week. floor be extended to Dr. Anne Vopatek, concern for our success together than Mr. President, may I inquire of the a fellow on my staff, during the consid- for personal success, and with more Parliamentarian if there is a time eration of S. 1873 and all relevant mo- dedication to honest debate with civil- agreement for the consideration and tions thereto. ity than to winning arguments. We debate of the motion to proceed to the The PRESIDING OFFICER. Without commit ourselves to press on with cru- missile defense bill. objection, it is so ordered. cial issues on the agenda. Give us a re- The PRESIDING OFFICER (Mr. Mr. COCHRAN. Mr. President, it newed sense of our calling to serve You BROWNBACK). The time is to be evenly should be noticed by those who are in- and a deeper trust in Your faithfulness divided until 11:30 on the motion to terested in the subject of missile de- to give us exactly what we need in each proceed, and then there will be a clo- fense that what we are actually debat- hour. Through our Lord and Saviour. ture vote. ing and deciding this morning is Amen. Mr. COCHRAN. I assume that under whether or not the Senate should pro- f that agreement this Senator is in ceed to consider the bill that has been charge of the time for the proponents introduced by me and the distinguished RECOGNITION OF THE ACTING of the bill and the distinguished Sen- Senator from Hawaii, Mr. INOUYE. MAJORITY LEADER ator from Michigan, Mr. LEVIN, is in This bill is not going to be voted on The PRESIDENT pro tempore. The charge of the time for the opponents of up or down today; what we will have a able acting majority leader, the Sen- the motion. vote on at 11:30 is whether or not to ator from Mississippi is recognized. The PRESIDING OFFICER. The Sen- proceed to consider the bill. When the f ator is correct. majority leader decided to call up this Mr. COCHRAN. I thank the Chair. legislation, there was an objection SCHEDULE f made to proceeding to consider the Mr. COCHRAN. Mr. President, at the bill. So under the procedures of the request of the majority leader, I am RESERVATION OF LEADER TIME Senate, the majority leader, who is in pleased to advise all Senators of the The PRESIDING OFFICER. Under charge of making decisions about the schedule of legislative business for to- the previous order, leadership time is schedule of the Senate and how we day’s session of the Senate. This morn- reserved. take up legislation in the Senate, was

∑ This ‘‘bullet’’ symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor.

S4749 S4750 CONGRESSIONAL RECORD — SENATE May 13, 1998 obligated to file a motion to proceed to clear for us, in moral terms, as a gov- now than ever before for nation states consider the bill. That motion is debat- ernment. who want to improve and develop their able. With India having a missile capabil- missile systems, and to give them Under notice from the opponents of ity of a range of about 1,400 miles al- longer ranges, to do so with the access the bill, it was clear that motion would ready, according to recent reports that they have to information from the be debated at length. So to get to the are available to the Senate, Pakistan Internet and to experts in Russia and bill, it was decided by the majority having tested for the first time on other nation states where they already leader that a cloture motion should be April 6 a new medium-range missile have the capabilities. filed on the motion to proceed, bring- with a range of 1,500 kilometers, and Iran provides an example of the sur- ing debate on the motion to a close. If India announcing that it is concerned prises we face. One surprise occurred we get 60 votes on that cloture motion, that Pakistan is a covert nuclear weap- when we found out that Iran had ac- then we can proceed to consider the on state, although it hasn’t announced quired the technology, the components, bill and it can be open for amendment, that, we are seeing evidence that and the expertise to put together a me- and Senators who have alternative around the world—in North Korea, in dium-range missile system. They are in ideas, or think that the current policy Iran, and, of course, in Russia and the process of doing that now. One is the policy we should have for missile China—there are nation states that are State Department official said that defense, can make those points and the developing, or now have, longer range they could have that missile system Senate can consider those views. But missile capabilities than ever before. available by the end of this year. until this cloture motion is approved, Some have the added capability of nu- Last year, when we had the Director we can’t get to that point. We can’t get clear weapons and, some have other of Central Intelligence before a com- to the point of considering this bill on weapons of mass destruction that can mittee of the Senate talking about the its merits and considering any amend- be delivered with those long-range mis- advancements that had been made in ments which Senators would have. sile systems. And the United States is Iran, he said that he thought—this is in So I am trying to put in context what defenseless against attack from long- 1997—that it would be up to 10 years be- is before the Senate, what the issue is range ballistic missiles. fore Iran would have medium-range here. The issue this morning is whether It has been our policy up until now to missile system capability. Then he sent or not the Senate thinks this is a mat- have the capacity to destroy any na- word up, that because of new develop- ter of such seriousness and con- tion that would think about using a ments and the acquisition of expertise sequence to our national security that nuclear weapon against us. Russia and and components from Russia, Iran had we ought to consider it, that we ought the United States have had over a pe- made surprising advances and they to debate it, that we ought to let the riod of time this mutual assured de- would have the capability to deploy Senate work its will on a proposal to struction relationship: If you destroy such a system much sooner. It is be- change our policy with respect to na- me, you can be assured I will destroy cause of gaps and uncertainties, he tional missile defense. I can’t think of you. That confrontation and that bal- said, that you can’t predict when peo- a more interesting and serious time, ance of power has prevented any use of ple are going to get these technologies given the events which are occurring in a missile system or nuclear weapon and other equipment from foreign the world today, for the consideration against the territory of the United sources, or how quickly they can de- of this issue. It is on everybody’s mind, States, even though that is not a very velop an ICBM threat—you just can’t Mr. President, because of the tests happy relationship to have. predict that. which have been undertaken in India of Now, we hope, we are moving toward So we have seen in Pakistan now, in a nuclear warhead. India now an- a better and more stable relationship, India, of course, in China, Russia, in nounces to the world they are prepared but there is still always the chance of Iran, and in North Korea solid evidence to use this as a part of their nuclear an unauthorized launch even from Rus- of what we are talking about today. weapons arsenal, that they have it sia. We are working to destroy and And that is that there is in the world available, and that they are a nuclear build down the weapons stockpile. That today a real threat to the security of weapons state. This is a dramatic is good. But we are not yet to the point this Nation because of the emerging ca- change in the situation in India. It is a where there is no risk. This is not a pabilities and technologies for develop- dramatic change in the security inter- risk-free relationship with Russia. ing and deploying long-range missiles, ests of the entire world. There could be an accidental launch. If that there are available in these coun- At this time, we find the United there is, we have no defense whatso- tries weapons of mass destruction that States relying upon a policy with re- ever. can be carried by these missiles over spect to missile defense of developing a With respect to China, it is certainly long ranges, and that it is time for the national missile defense system in two unlikely that we are going to have any United States to acknowledge this stages, unlike any other defense acqui- missile attack from there. Nonetheless, threat and say as a matter of policy sition program that we have ever had, there is an emerging long-range missile that we are going to deploy a national or that we now have. We have a tech- system capability in China that is missile defense system. nology program—one that is develop- growing more sophisticated, that is That is what this bill says. It doesn’t ing the capabilities to have an effective going to continue to grow and develop set out what kind of architecture the defense system, but we do not have any more lethality and longer ranges, and missile defense system should have or policy with respect to ever putting it presents a threat—unlikely, but, any deadlines for doing it. We would that system in the field, or to integrat- nonetheless, there could be an unau- rely upon the orderly processes of au- ing it into our national defense struc- thorized or accidental launch of a mis- thorization and appropriation, as we ture. That decision hasn’t been made. sile from China. have for all other defense acquisition We are suggesting in offering this bill Already we are seeing the North Ko- programs, to determine how soon it is that the time has come for the United reans developing—and already deploy- developed and when it is deployed. But States to say to the world we are going ing—some medium-range missile sys- what we are saying today is that, as a to develop and deploy a national mis- tems. They are now developing, we are matter of policy, we are going to de- sile defense system. told, a missile with a range of 6,000 kil- ploy a national missile defense system. We are going to protect the security ometers. That missile could reach I think it is also important to notice interests of the United States and the Alaska. It could reach Hawaii. Who that this does not require a violation of territory of the United States. As a knows what their plans are for con- any existing arms control agreement. matter of national policy, the Federal tinuing to develop missiles with in- In our early discussions of this legisla- Government is going to obligate itself creased ranges. tion, we heard others say that this puts to undertake to protect the security We found out, through a year-long se- in jeopardy the ABM—the antiballistic interests of the citizens of the United ries of hearings that we conducted last missile—agreement. It does not. That States and the United States itself year in our Subcommittee on Inter- agreement contemplates that a party from ballistic missile attack. It seems national Security, Proliferation, and to the agreement could have a national to me that is an obligation that is very Federal Services, that it is much easier missile defense system. It permits a May 13, 1998 CONGRESSIONAL RECORD — SENATE S4751 single site for interceptor rockets. We tect that Pakistan has a missile sys- U.S.S.R. had, and they knew what we have been proceeding under the current tem that has a range five times greater had. We had an agreement that I didn’t administration plan that this is the than what we thought they had, if we agree with back then. It was called mu- kind of a system that would be devel- can’t detect that Iran is developing a tually assured destruction; that is, we oped, and eventually, if—under the ad- medium-range missile with technology agree we won’t defend ourself and you ministration’s policy—a threat is per- and components imported from other agree you won’t defend yourself. And ceived to exist, then an effort would be countries, and they will be able to put then, of course, you shoot us, we shoot made to deploy the system. that in the field as many as 9 years you, everybody dies, and nobody is So the real difference in what we are earlier than we had thought 1 year ago, happy. presenting to the Senate today is that then we need to change our policy and That was a philosophy we lived by this is a policy that is announced to quit assuming that we are going to be which I didn’t agree with at the time. the world and to rogue states that may able to detect the development of an And I have to hasten to say, this came be saying, ‘‘Look, the United States is intercontinental ballistic missile sys- in a Republican administration. This defenseless. We have an opportunity to tem somewhere in the world that can was Henry Kissinger and Richard put some pressure on them by develop- threaten the territory of the United Nixon. But regardless of how flawed ing a missile system that is capable of States. that might have been as a policy at striking the United States. We can co- That is the point of this legislation. that time, certainly now it should not erce them, intimidate them, and black- We can’t be sure. And if we can’t be have any application. In fact, I have mail them because they are not at this sure that we can detect the threat, we quoted many times Henry Kissinger on point considering deploying a defense need to be prepared to defend against this floor. When I asked him the ques- against intercontinental ballistic mis- that threat. The Senate ought to con- tion: Do you feel with the changing siles.’’ We would end that kind of sider this issue, and so today we are threat that’s out there and the envi- thinking in nations who may be taking going to vote on cloture on the motion ronment we are in right now, with that approach by saying, ‘‘Yes, we are. to proceed to consider that issue. I some 25 nations with weapons of mass You are not going to see the United urge the Senate to vote to invoke clo- destruction, biological, chemical and States any longer taking a wait-and- ture. We don’t need to drag out a de- nuclear, that it still makes sense to see approach.’’ And that is what the ad- bate on a motion to proceed to this abide by the ABM Treaty? And he ministration’s policy is—to wait and issue. Sure, there are other things that said—this is a quote—‘‘It’s nuts to see if a threat develops. are on the schedule for today, and the make a virtue out of your vulner- We are saying, ‘‘Mr. President, you leader has committed to taking up ability.’’ have signed Executive orders over the other bills after this vote, but I am op- That is Henry Kissinger. He was the last 4 years, starting in 1994, saying timistic that we will have enough Sen- architect of this ABM Treaty. Of that the United States is confronted ators who understand the seriousness course, I was one who voted against the with a national emergency because of of this and the urgency of this for us to START II Treaty and even said in the the proliferation of weapons of mass turn to the missile defense bill. I hope Chamber we had no indication that destruction and missile systems around Senators will consider this, and I am Russia was going to be signing this the world.’’ The President has ac- happy to yield to other Senators. anyway. And, of course, we know what knowledged that, and he signed Execu- I know the distinguished Senator is happened since that time. So I think tive orders that say that. But now it is from Michigan is in the Chamber. We that argument on the ABM Treaty, time to say we are going to do some- have had a number of Senators who even if it did offend that treaty, I thing about it, we are going to do have asked for time. I hope my friend would still support this legislation something to protect our security in- from Michigan will allow me to yield from the Senator from Mississippi. terests against this national emer- to the Senator from Oklahoma, who The second objection yesterday was gency that exists. Up until now, we has another commitment at 10 o’clock, the cost. They said—and this is a have said we will wait and see if there for whatever time he may consume be- quote—‘‘We don’t know how much it is a real threat. That puts us at risk tween now and 10 o’clock. will cost since the bill does not specify here in the United States. Mr. President, I yield to the Senator any particular system.’’ Well, it I am saying that we had better get from Oklahoma. doesn’t. And I am glad this bill does busy. We had better get busy and de- The PRESIDING OFFICER. The Sen- not specify a specific system. I have a velop and deploy a system. It would be ator from the great State of Oklahoma. preference. Mine would be the upper- much better for all of us if we deployed Mr. INHOFE. Mr. President, first of tier system. The upper-tier system is a system that may be a year or two all, let me say that I applaud the sen- very close to where we would be able to years early getting to the field than ior Senator from Mississippi for bring- deploy this thing. We have a $50 billion waiting until it is a year too late. ing this up. Yesterday I spent some investment in 22 Aegis ships that are That is the issue and it is important time in the Chamber and evaluated the floating around out there today. They given what is happening in the world arguments against this so that I could have a capability of knocking down today, given the fact that our intel- respond to those arguments. And I will missiles, but they can’t go beyond the ligence agencies were not able to even just take a couple moments because I upper tier. So it doesn’t do us any good detect that this test in India was about am supposed to be presiding, and I except with short-range missiles that to take place, given that they weren’t would like to respond to those objec- stay in the atmosphere. able to detect, as far as I know, that tions to this legislation that came If you have from North Korea a mis- Pakistan was going to test, or even from the floor. sile coming over here that takes 30 had, the new missile they tested in First of all—and I think this has been minutes to get here, it is only in the April, and given they weren’t able to discussed already by the senior Senator last minute and a half that we would detect that Iran was going to be able to from Mississippi—the possible effect be able to use any current technology put together a medium-range ballistic this would have on the ABM Treaty. I to knock it down, and then we couldn’t missile within 1 year rather than with- know he presents a very persuasive do it because we don’t have anything in as many as 10 years. The latest as- case that it would not have any threat. that would be that fast, so we are sessment was as many as 10 years; now Quite frankly, even if it did have a naked. it is perhaps within 1 year. These are threat to the ABM Treaty of 1972, I And the cost is not that great. The not the only surprises, they are just would still be supporting this, because opponents of defending America by the most recent ones. Some of us have I think when you talk to most people having a national missile defense sys- known about these surprises before who were around in 1972, back when we tem keep saying over and over again now, but now the whole world knows had two superpowers—we had the that it is going to cost billions and bil- about them. They are acknowledged at U.S.S.R. and the United States—it was lions. I have heard $100 billion, a whole the highest levels of our Government. not the threat in the world, quite range. And I suggest to you that we If we can’t detect that India is about to frankly, that it is now, because it was have some specific costs. With that $50 test a nuclear warhead, if we can’t de- more predictable; we knew what the billion investment, it would be about $4 S4752 CONGRESSIONAL RECORD — SENATE May 13, 1998 billion more to reach the upper tier have a system that could be deployed India, as we know, in the last 2 days with the Navy upper-tier system. There for a limited attack by fiscal year 1998. has actually—has actually—tested nu- might be another billion and a half on Here we are, and we are overdue. clear weapons. So, of course, the arms Brilliant Eyes so we would be able to I yield the floor. race between Pakistan and India has accurately detect where in the world The PRESIDING OFFICER. The Sen- been rekindled. one would be deployed. ator from Mississippi. Iraq—we fought the Desert Storm And anyone who is among the 81 who Mr. COCHRAN. Mr. President, I war because Iraq was getting ballistic supported last week the expansion of thank the distinguished Senator for his missile technology, and we know they NATO—I was one who did not support excellent remarks. have chemical and biological weapons. it—you might keep in mind that if you Mr. President, if the distinguished Iran—they are receiving assistance are concerned about not having an ac- Senator from Texas is prepared to from the Russians to develop missile curate cost figure for this program to speak, I am prepared to yield to her 10 systems. Russia is willing to export a defend America from a missile attack, minutes. good part of their scientific basis for look what we voted on last week in I yield to the Senator from Texas. nuclear weapons, and we don’t know ratifying NATO expansion. We agreed The PRESIDING OFFICER. The Sen- how secure is what is left in Russia. that we are going to expand that to the ator from the great State of Texas is So, how can we look at the facts and three countries, and the cost figures recognized for up to 10 minutes. not address them vigorously, if we are had a range from $400 million to $125 Mrs. HUTCHISON. Mr. President, I doing what is right for the American billion. Now, I can assure you we are a thank the distinguished senior Senator people? We have the capability to do lot closer to being able to determine from Mississippi, who has provided this if we make it a priority. The Sen- what this cost would be. great leadership in this area. In fact, I ator from Mississippi is introducing a The last thing, I think, is that when said to the Senator from Mississippi bill that basically says this is a prior- this is all over and the dust settles, yesterday, if I am ever going to need a ity, that we will go forward full bore maybe what happened yesterday in consultant on the timing of introduc- with the capabilities that we have, India and this morning in India might ing bills, I am going to call him imme- doing the technological research, doing really be a blessing, because at least diately, because, of course, what has the testing. All of us are very dis- now we can diffuse the argument that happened just in the last 5 days, proves appointed that the recent THAAD test was quoted of General Shelton when he how absolutely correct the Senator was not successful. But we should not said there is no serious threat emerg- from Mississippi has been in pursuing back away from it. We should be going ing, and he said our intelligence said this very important legislation. I forward full bore to try to make sure that we will have at least 3 years’ thank the Senator from Mississippi for that we have a national missile defense warning of such a threat. Well, that is his leadership. system, an intercontinental missile the same intelligence that did not It is clear that the greatest security system, and a theater missile ballistic know what India was doing. threat the United States faces today is system that would defend against any If you try everything else and that that we do not have a defense for in- incoming missiles. does not work, let’s just look at what coming ballistic missiles. In fact, if Let me make another argument, and is common sense. We know that we you look back at the latest war that that is, as we are going through all of have these countries that have weap- we have had, the gulf war, the largest the countries that we know are now ons of mass destruction. We know that number of casualties in that war was building ballistic missile capability both China and Russia and perhaps from a single ballistic missile attack. with chemical, biological, and nuclear other countries have missiles that will We had the Patriot, and the Patriot weapons, what would be the very best reach all the way to any place in the was actually a missile that was sup- deterrence from them making that in- United States of America today. Using posed to hit airplanes. We quickly tried vestment? What would be the best de- the polar route, they can reach any to make the Patriot into something terrence, so India would not feel that it place in the United States of America. that would hit missiles, and, phenome- is necessary for their security to test And with that out there, why would we nally, it actually had a 30-percent suc- ballistic missiles? The best deterrence assume that China would not do it, or cess rate. But when we have our troops would be the capability to deter a that it would not be an accidental in the field and we have the capability launched missile in its boost phase. launch, or with some of this tech- to do better than 30 percent, how could Simply put, if we can take a missile as nology they are selling to countries we even think of not going full force to it is just being launched and turn it like Iran, that other countries protect our troops in any theater back on the country that is trying to wouldn’t use it? I am not willing to put where they might be, anywhere in the send that missile, isn’t that the best the lives of my seven grandchildren at world, and to protect the citizens of deterrence for that country not to send stake by assuming that somehow we the United States within the sovereign the missile in the first place? Because, are going to have 3 years’ warning. I territory of our country? How could we obviously, no country is going to think that is totally absurd. be sitting on technology without say- launch a ballistic missile if it is going Lastly, I would only share with you ing this is our highest defense priority? to come back on its own people. that I went through a personal experi- Today, we have a chance to say this So, if we can get that defense tech- ence with our explosion in Oklahoma is our highest defense priority. Because nology, perhaps that is the best way to City, which I think everyone is aware if we cannot protect our citizens in our stop this arms race. Most certainly, of, that took 168 lives. And as tragic as country and our troops in the field, we the joint threat to us, and to our allies, that was, and what a disaster that are leaving ourselves open. And we should be our highest priority. This bill was—and as I walked through there don’t have to do that. Today, we know establishes missile defense as a top pri- and I saw the firemen and all of them that over 30 countries in the world ority because it says we are going to risking their lives to try to save one or have ballistic missile technology. The fund ballistic missile defenses and we two people after some time had gone Senator from Mississippi has gone are going to deploy them as soon as the by—and you have to have been there, through what some of these countries technology is there. not just seeing it on TV, to really get now have. Just in the last 5 days, we The argument against it is incompre- the full impact on this—the explosive have seen North Korea threaten to go hensible to me, although I do not in power that blew up the Murrah Federal back on the agreement they made and any way suggest that those making the Office Building in Oklahoma City is refuel their nuclear reactors. We have argument aren’t doing it with good one-tenth the power, the explosive seen, in the last few weeks, that China faith. I am positive that they believe power, of the smallest nuclear warhead has been buying our technology with- they are doing the right thing. But to known today. out our permission—except for the say that the world’s greatest super- So I just think my only regret is that President letting people do it, presum- power is going to wait and see what we didn’t do this 3 years ago or 4 years ably because they contributed to his other countries might get, what ballis- ago, because somebody back in 1983 was campaign. Pakistan is now deploying a tic missile technology, and then set on pretty smart when they said we need to missile with a 1,500 kilometer range. a program full bore that would defend May 13, 1998 CONGRESSIONAL RECORD — SENATE S4753 against that—they could not be talking Mr. LEVIN. Mr. President, I yield is no policy on missile defense in this as representatives of the only super- myself 10 minutes. country. There is no policy to deploy a power left in the world. They cannot be The bill before us could lessen the se- missile defense. We hear that over and thinking what a superpower must do, curity of this Nation, and that is the over. Here is what General Shelton which is to do what no one else in this reason so many of us oppose it. Will says, as his second reason for not being world has the capability to do. We are the bill add to our security by commit- able to support this bill: the only country that has the capabil- ting us to deploy a system before it is Second, the bill asserts that the United ity to put the resources behind a ballis- even developed, threatening the abro- States has no policy to deploy [a national tic missile defense capability. We are gation of a treaty between ourselves missile defense] system. In fact, the [na- the only country that can do that. Why and the Russians which have allowed tional missile defense] effort is currently a would we hesitate for one moment? significant reductions in the number of robust research and development program Why would we leave one of our troops nuclear weapons in this world? that provides the flexibility to deploy an ini- tial capability within 3 years of a deploy- in the field unprotected for one more In my judgment—more important, in ment decision. This prudent hedge ensures moment than is absolutely necessary? the judgment of the uniform and civil- that the United States will be capable of There is no excuse. Why would we leave ian military leaders of this country— meeting the need for missile defenses with the people of our country unprotected this bill does not contribute to our se- the latest technology when a threat emerges. for one more moment than is nec- curity. This bill risks a reduction in So his second reason for not support- essary, when we have the resources to the security of this Nation. This bill ing this bill is this bill says we don’t go full force? could contribute to the proliferation of have a policy to deploy a system. In It is not an argument from the super- weapons of mass destruction, in this fact, General Shelton writes, we have a power to say when we know that some- case, nuclear weapons which is the current robust research and develop- one has perfected a technology that greatest threat that this Nation faces. ment program that gives us the flexi- could reach the United States then we It is the proliferation of weapons of bility to deploy a system at the right will deploy our full forces. How many mass destruction, in this case, nuclear time. That is what is called a prudent people will die or be maimed because weapons, which is the greatest threat hedge strategy. That is the 3+3 Pro- we are not going full force right now? that this Nation faces. And yet this gram. That is the 3+3 policy which we What better quality-of-life issue is bill, which purportedly is aimed at a adopted in the Senate 2 years ago. there for our military than to give defense against ballistic missiles, Section 233 of that bill says: them every safety precaution, protect- could, because it threatens a very sig- It is the policy of the United States to— ing them in the field that we have the nificant treaty between us and the (1) deploy as soon as possible affordable capability to do? Russians which has allowed for signifi- and operationally effective theater missile We are the leadership of the greatest cant reduction of nuclear weapons, in- defenses capable of countering existing and superpower in the world. We must say crease the threat to this Nation from emerging theater ballistic missiles; we cannot wait for one more moment (2)(A) develop for deployment a multiple nuclear weapons proliferation. site national missile system that: (i) is af- for the full priority to be given to mis- That is not me saying it, although I sile defense technology and capability fordable and operationally effective against believe it; that is Secretary Cohen say- limited, accidental, and unauthorized ballis- for our country, for the people who live ing it, that is General Shelton saying tic missile attacks on the territory of the here, from potential terrorist attacks, it, that is the military leadership of United States, and (ii) can be augmented and for anyone representing the United this Nation saying it. over time as the threat changes to provide a States of America in the field. I think we all believe in the security layered defense against limited, accidental, When our young men and women of this Nation with equal passion. I or unauthorized ballistic missile threats; pledge their lives for our freedom, how (B) initiate negotiations with the Russian don’t doubt that for 1 minute. I think can we not give them every protection Federation as necessary to provide for the everybody in this Chamber, everybody they deserve to have when they are, in national missile defense systems. .. who serves in this Senate has an equal (C) consider, if those negotiations fail, the fact, defending our ability to speak on commitment to the security of this Na- option of withdrawing from the ABM Treaty this floor today? in accordance with the provisions of Article Mr. President, I hope our colleagues tion. The issue here is how do we con- tribute to the security of this Nation? XV of the Treaty. . . on both sides of the aisle will in a very (3) ensure congressional review, prior to a The answer comes, it seems to me, bipartisan vote say, ‘‘We will not walk decision to deploy the system developed for away from our responsibility to pro- from General Shelton in a letter which deployment under paragraph (2), of: (A) the vide the protection to our people that he wrote to me on April 21. He is the affordability and operational effectiveness of they expect and the protection of our Chairman of the Joint Chiefs of Staff, such a system; (B) the threat to be countered troops in the field, wherever they as we all know. What he says is the fol- by such a system; and (C) ABM Treaty con- siderations with respect to such a system. might be, fighting for our freedom or lowing: for the freedom of oppressed people in Thank you for the opportunity to com- There is a policy. And the policy is a other places.’’ We must give them the ment on the American Missile Protection prudent hedge strategy. The policy, Act of 1998 (S. 1873). I agree that the pro- most importantly, is to develop a na- protection that we have the capability liferation of weapons of mass destruction to do. It is a very clear-cut issue. tional missile defense system as quick- and their delivery systems poses a major ly as we can so we can be in a position Thank you, Mr. President. threat to our forces, allies, and other friend- Mr. COCHRAN addressed the Chair. ly nations. U.S. missile systems play a criti- to make a deployment decision as The PRESIDING OFFICER (Mr. cal role in our strategy to deter these quickly as possible. We have a policy. INHOFE). The Senator from Mississippi. threats, and the current National Missile De- That is not me saying it. That is Gen- Mr. COCHRAN. Mr. President, I com- fense Deployment Readiness Program (3+3) is eral Shelton saying it. mend the distinguished Senator from structured to provide a defense against them Our policy is to put the horse before Texas for her excellent statement and when required. the cart. This bill would put the cart thank her for her assistance in the de- The bill and the NMD program— before the horse, because what this bill velopment of this legislation and our And he is referring to our current does is say—not just develop and make policies on missile defense. program— a decision after you have developed PRIVILEGE OF THE FLOOR are consistent on many points; however, the whether to deploy, depending on the Mr. COCHRAN. Mr. President, I ask following differences make it difficult to circumstances which exist—this bill unanimous consent that James Nielsen support enactment. says commit yourself now to deploy a of Senator KYL’s staff be granted the Then he goes through those dif- system no matter what the con- privilege of the floor during the debate ferences, why it is that he does not sup- sequences are, no matter what the cir- on the motion on S. 1873. port enactment of the bill before us; cumstances are, as soon as you have The PRESIDING OFFICER. Without why it is that the Chairman of the something which is technologically objection, it is so ordered. Joint Chiefs of Staff does not support feasible. Mr. LEVIN addressed the Chair. enactment of this bill. Now, what is wrong with that? Why The PRESIDING OFFICER. The Sen- One of the things that we hear from not do what we have never done in his- ator from Michigan. the proponents of this bill is that there tory, which is to commit ourselves to S4754 CONGRESSIONAL RECORD — SENATE May 13, 1998 deploy a system before we have even is the fear here that General writing an op-ed piece in some news- developed it? What is wrong with that? Shalikashvili has expressed in a letter paper. These are the Presidents of two What is wrong with it is that, No. 1, that he wrote when he was Chairman of nations with the largest nuclear inven- there is no consideration of the costs of the Joint Chiefs—we have done severe tories in the world, President Clinton the system. We do not even know what damage to the security of this Nation. and President Yeltsin, expressing their the system is. We are developing it as For what reason would we take that commitment to strengthen the strate- quickly as possible, but we do not risk? In order to develop a system? No. gic stability and international secu- know what the costs of that system We are developing that system right rity, emphasizing the importance of are. We do not know what the threats now. And we should. We are developing further reductions in strategic offen- are at the time when we have a system a national missile defense system. And sive arms, and recognizing the fun- developed. we should. It is the commitment to de- damental significance of the Anti-Bal- We do know that North Korea could— ploy which risks the security of this listic Missile Treaty for these objec- could—have a capability to hit parts of Nation without consideration of the tives, as well as the necessity for effec- this Nation as early as 2005. We know impact on arms reduction. tive theater missile defense systems, that is a possibility. But we do not That is the mistake that this bill considered their common task to pre- know that that threat will continue. It makes. That is what General serve the ABM Treaty, prevent cir- depends on whether they can success- Shalikashvili pointed out in his letter cumvention of it, and enhance its via- fully test a long-range missile. to Senator Nunn in May of 1996 when bility. But what is really critical here, in he said: Then later in that same statement, terms of our battle against prolifera- . . . efforts which suggest changes to or both Presidents state that the United tion, is that what this bill commits us withdraw from the ABM Treaty may jeop- States and Russia have recently de- to is to deploy a system which almost ardize Russian ratification of START II and, voted special attention to developing certainly will violate a treaty between as articulated in the Soviet Statement to measures aimed at assuring confidence us and the Russians. Do we care? Do we the United States of 13 June 1991, could of the parties that their ballistic mis- care if we breach a treaty called the prompt Russia to withdraw from START I. I sile defense activities will not lead to am concerned [General Shalikashvili said] ABM Treaty? Is it just a cold war relic, that failure of either START initiative will circumvention of the ABM Treaty, to that ABM Treaty? Or is it a real deal result in Russian retention of hundreds or which the parties have repeatedly re- between us and Russia, a deal that even thousands more nuclear weapons there- affirmed their adherence. matters, and the breaking of which will by increasing both the costs and risks we This bill before the Senate, where have consequences? And the con- may face. there is a motion to proceed pending, sequences will be that they will not We can reduce the possibility of facing surely will undermine the confidence of ratify START II, will not negotiate these increased costs and risks by planning Russia that we are adhering to a trea- an NMD system consistent with the ABM ty. Since the commitment which this START III and will, therefore, not re- treaty. duce the number of weapons that bill makes to deploy missile defenses threaten us. That is General Shalikashvili. Is this will almost certainly—almost cer- I ask unanimous consent for an addi- resolution consistent with the ABM tainly—violate that treaty—and again tional 5 minutes. Treaty? Probably not. It is very un- I emphasize, if that is not the intent The PRESIDING OFFICER. Without likely we could deploy a system con- and if that is to be precluded, then the objection, it is so ordered. sistent with the ABM Treaty which de- words ‘‘treaty compliant’’ should be Mr. LEVIN. The consequences of fends the entire continental United added. But I think, as we all know be- committing ourselves to deploy a sys- States. But there is an easy way to do cause we debated this issue so many tem which almost certainly will vio- it, if that is the intent of the resolu- times, that is not the intent of this res- late that agreement are real-world con- tion: Just put down ‘‘treaty compli- olution. sequences. They threaten our security. ant’’ system in the resolution. Just add Mr. President, I hope the words of They will contribute to the prolifera- those two words, ‘‘treaty compliant’’ our top military officers will be heeded tion of weapons of mass destruction. Is system. Put the words ‘‘treaty compli- and that the danger of this bill will be that me saying it? Yes. More impor- ant’’ before the word ‘‘deployment,’’ considered. Its intent, obviously, is to tantly, is it Secretary Cohen saying it and that would solve that problem. contribute to the security, but its ef- and General Shelton saying it? Yes. Those words are missing, and they fect is to lessen the security of this Na- This is what General Shelton said in are not missing inadvertently. It is ob- tion. We simply cannot afford that his final reason for not supporting this vious that many supporters of this res- risk. bill. The Chairman of our Joint Chiefs olution do not care whether or not Mr. COCHRAN. Mr. President, I have says: there would be a violation of the ABM agreed to yield 5 minutes to the chair- Treaty because they believe that we Finally, the bill does not consider afford- man of the full committee at some ability or the impact a deployment would should unanimously withdraw from point. I hope he can be recognized soon. have on arms control agreements and nu- that treaty. But such an action will Mr. LEVIN. How much time does the clear arms reductions. Both points are ad- lead to exactly the result which we Senator desire? dressed [he says] in the [current national should dread as much as anything, Mr. COCHRAN. Five minutes. missile defense program] and should be in- which is the increase in the number of Mr. BINGAMAN. Mr. President, I will cluded in any bill on [national missile de- nuclear weapons on the face of this consume 10 minutes. I have no objec- fense]. Earth. tion to Senator THOMPSON speaking Our highest military officer is telling Finally, Mr. President, on the ABM now if he would like. us that the impact that a deployment Treaty—how many minutes do I have Mr. COCHRAN. I thank the Senator. will have on arms control agreements left? I yield 5 minutes to the distinguished and nuclear arms reductions should be The PRESIDING OFFICER. The Sen- Senator from Tennessee. included in any bill on national missile ator has used his additional 5 minutes. Mr. THOMPSON. Thank you. defense. The Senator has 42 minutes remaining. The PRESIDING OFFICER. The Sen- Well, Mr. President, they are not in- Mr. LEVIN. I thank the Chair. Mr. ator from Tennessee. cluded in this bill. And they should be. President, I yield myself 3 additional Mr. THOMPSON. Mr. President, I The security of this Nation requires minutes. thank my colleagues. that we at least consider the impact of Mr. President, the ABM Treaty is not Mr. President, in his State of the deployment of a system on arms reduc- some abstract relic. It is a living com- Union Address, President Clinton un- tion, because if we commit to deploy a mitment which has been reasserted at derscored the importance of foresight. system, and that commitment destroys the highest levels at a summit in Hel- He said, ‘‘preparing for a far off storm a treaty between us and the Russians, sinki in 1997. that may reach our shores is far wiser and leads to nonratification of START President Clinton and President than ignoring the thunder until the II and the reversal of START I and the Yeltsin issued the following joint clouds are just overhead.’’ He was not nonnegotiation of START III—and that statement. Now, this isn’t some person talking about weapons proliferation May 13, 1998 CONGRESSIONAL RECORD — SENATE S4755 and national missile defense, but he what will we tell the American people? more than we committed to, where we could have been—and he probably That we had hoped this would not hap- had not adequately considered the per- should have been. pen? That we believed the threat was formance capability of the system and Well, we are hearing the thunder not so serious? we find out the system doesn’t work as now. It is coming from Iran, where the It should now be clear to all that our we earlier hoped it would. And we have Shahab–3 missile program made up present non-proliferation and missile put in place, and we have required the years of development time in just one defense policies are out-dated and in- Department of Defense to put in place, year, reminding us that some countries sufficient. We must prepare now for procedures to assure that they keep a are more technically clever than we that ‘‘far-off storm.’’ The first step in sensible balance in the development of give them credit for, and that outside doing so is to pass S. 1873, the America their weapons programs. There is a De- assistance can dramatically accelerate Missile Protection Act, and commit fense Department directive, which is technical progress. the United States to a policy of deploy- No. 5000.1. It sets out the Department’s It is coming from Pakistan which has ing national missile defenses. I com- basic guidance on weapons system ac- now launched a missile with five times mend Senator COCHRAN for his thought- quisition. It spells out the regulations greater range than their next most ca- ful leadership on this bill and the many governing procurement and states: pable missile, and five times what the hours he has spent working as Chair- ‘‘All programs need to strike a sensible United States had given them credit man of the International Security and balance among cost, schedule, and per- for just six months earlier. Proliferation Subcommittee to high- formance considerations given afford- It’s coming from North Korea, where light America’s vulnerabilities in this ability constraints.’’ What we would be the Taepo-Dong 2, capable of striking area. saying in this legislation is that none Alaska and Hawaii, is nearing flight Mr. LEVIN. I yield 10 minutes to of that is required with regard to this testing, and where the No-Dong is now Senator BINGAMAN. program. That would be shortsighted being deployed, despite the administra- Mr. BINGAMAN. Thank you. and would undermine our real long- tion’s assurances that North Korea PRIVILEGE OF THE FLOOR term security needs. would never deploy that missile after Mr. BINGAMAN. Mr. President, I ask The bill threatens to exacerbate the only one flight test. unanimous consent two fellows in my scheduling and technical risks already It is coming from Russia, where the office, Bill Monahan and John Jen- present in this national missile defense government appears either disinclined, nings, be given floor privileges during program. The Armed Services Commit- or incapable of controlling the flood of consideration of this bill. tee, about a month ago, heard testi- hardware and technical assistance The PRESIDING OFFICER. Without mony from General Larry Welch, who flowing to rogue states around the objection, it is so ordered. is the former Chief of Staff of the Air globe. Mr. BINGAMAN. Mr. President, I Force. He led a panel of experts to re- It is coming from India, where this want to join Senator LEVIN in express- view U.S. missile defense programs at week their government exploded five ing my opposition to Senate bill 1873, the request of the Pentagon. That nuclear weapons, to the complete and the American Missile Protection Act. panel found that pressures to deploy admitted surprise of the United States The policy expressed in this bill of put- systems as quickly as possible have led policy-making and intelligence com- ting the United States in a position to very high levels of risk in the test munity. where we are required to deploy a na- programs of THAAD, the theater high- It is coming from China, where the tional missile defense system as soon altitude air defense system. It is a the- government repeatedly breaks its non- as it is technologically possible I think ater missile defense system, not a na- proliferation promises, and is then re- is a major mistake and undermines our tional missile defense system. They warded with technology transfers from long-term security. We are rushing pre- pointed out the high levels of risk and the U.S. maturely—if this legislation becomes failure in that program and in other Despite these and other ominous ex- law, we will be rushing prematurely to missile defense systems. This con- amples, the United States continues to deploy a national missile defense sys- firmed similar findings in a GAO study maintain a non-proliferation policy of tem where that is not necessary and that Senator LEVIN and I requested self-delusion and a missile defense pol- where it could undermine our real se- earlier. icy of vain hope. For years, we con- curity interests. This Senate bill we are considering vinced ourselves that developing coun- Why do I say it is not necessary? I today, S. 1873, would generate the same tries could not, or would not, fully de- say it is not necessary to pass this leg- pressures to hastily field a national velop nuclear and other weapons of islation because we already have in missile defense system that have re- mass destruction, or the missiles to ef- place a program to develop a national sulted in what General Welch referred fectively deliver. Now we know they missile defense for this country. The to as the ‘‘rush to failure’’ in the have. They continue to hope that administration is committed to the de- THAAD program. That program is now maybe rogue states will prove less velopment of a national missile defense 4 years behind schedule. It is still wait- clever than they have in the past, or over 3 years, so that by the year 2000 ing for the first intercept, as was pro- that our intelligence community will the United States will be positioned to posed when the program was designed. prove more clever, or that our luck deploy an initial capability within 3 They have had five unsuccessful inter- just holds out. years after that, if it is warranted by cept tests. The most recent was yester- My friends, it is time to wake up. the threat. We need to continue to as- day in my home State of New Mexico, The technology to develop nuclear and sess this threat as we move ahead. at White Sands Missile Range. Despite other weapons of mass destruction is The Cochran bill, which we are con- the delay in the THAAD development widely available. Many nations, some sidering here, seeks to commit our program of over a year since the pre- quite hostile to the U.S. now possess country to deploy the first available vious test flights, they still have not them and are on a crash course to ac- missile defense technology, national been able to have a successful test. quire the missiles to carry them to missile defense technology, regardless Now, national missile defense involves America. And third countries, Russia of a whole variety of issues. Let me even more complex and technological and China in particular, appear happy just discuss those briefly. challenges that will risk failure if we to help. Weapons of mass destruction The first set of issues that this bill rush to deploy that system as well. are not going away. The United States would sidestep entirely is the issues What we need to do is to take the les- will soon face this threat and it’s time that we have required the Pentagon to sons General Welch is trying to teach to prepare. take into account in all weapons sys- us, by pointing to the problems in the When the day arrives that America is tems that we develop. We have had a THAAD program, and use those lessons handcuffed by our vulnerability to bal- long history, even in the time I have to do better in the development of a listic missile attack, when our world been here in the Senate, of developing national missile defense program. leadership is in question because of weapons systems when we had not ade- Secretary Cohen’s letter has been re- that vulnerability, or when—heaven quately considered the cost and we find ferred to by Senator LEVIN and, of help us—an attack actually occurs, out they are costing substantially course, the position of the Chief of the S4756 CONGRESSIONAL RECORD — SENATE May 13, 1998 Joint Chiefs of Staff. This is one of The most ominous response came nian indigenous advances and help re- these cases where the Pentagon clearly from Pakistan, which recently tested ceived from Russia. is opposed to the legislation we are its newest ballistic missile, with a The Director of Central Intelligence considering. Yet, we, in our ultimate range of 1,500 kilometers, and now says told the Senate that, ‘‘Gaps and uncer- wisdom on the Senate floor, believe it may conduct a nuclear test of its tainties preclude a good projection of that we know better what is in the na- own. when the ‘rest of the world’ countries tional security interests of the country It is against this very stark backdrop will deploy ICBM’s,’’ thereby explain- than do the people in charge of imple- that we are today, this week, consider- ing why we might be surprised in the menting that national security policy. ing the American Missile Protection future. I think it is shortsighted on our part. Act of 1998. From an intelligence standpoint, Senator LEVIN also pointed out that I want to commend my colleague, there is nothing fundamentally dif- not only does this legislation put us in Senator COCHRAN, for his long-time ferent between medium- and long- a position where we are mandating pur- leadership on this issue. He deserves a range missiles—nothing. We will be suit of this program, regardless of the lot of credit. It is a very timely situa- just as surprised by ICBM develop- various factors we believe are impor- tion, I must say. ments as we have been with Iran and tant in developing of any system, but S. 1873 would establish a U.S. policy Pakistan’s shorter-range missiles. we are also pursuing it without ade- of deploying a national missile defense These questions and failures, com- quate consideration of the arms con- system capable of defending the terri- bined with yesterday’s events in India, trol implications. There is no question tory of the United States against a completely invalidate the administra- that in this world we need to have the limited ballistic missile attack as soon tion’s approach to NMD. The fact is, we cooperation of the Russians in order to as is technologically possible. How don’t know where all of the threats effectively limit proliferation of nu- could anyone be opposed to that? It is will come from and how fast they will clear and other types of weapons of irresponsible to be opposed to it. develop. It is irresponsible to stand on mass destruction. If we take action in The current administration plan for this floor and oppose a policy that says this Congress and in this country to ab- ‘‘3+3’’ means that an NMD system will we ought to produce this system when rogate the ABM Treaty at this point, it be developed for 3 years. And when a it is technologically feasible. is almost a certainty that the START threat is acknowledged, this system According to Tom Collina of the II Treaty will not be ratified by the will be deployed in 3 years. It is a naive Union of Concerned Scientists, India Duma and that our ability to continue plan. It assumes that we see all emerg- tests were designed to ‘‘finalize a war- to build down the nuclear weapons ar- ing threats and that when we see one, head for delivery on a missile.’’ Mr. senals of the two countries will be sub- we can confidently deploy a complex Collina added that ‘‘it will not take stantially impeded. system in 3 years. It is just not fea- long for India to take the next steps to I believe it is clearly in our best in- sible. have a fully deployed, fielded system.’’ terest to defeat this bill, to vote Well, we saw how easy it was to see Yet, the administration persists in against cloture, and not to even pro- three nuclear devices that were tested misleading the American people, and in ceed to full debate of this bill. The ad- by India yesterday. We didn’t know a Senate hearing on May 1 of this year, ministration has indicated its strong about it. We didn’t know they were the Director of the Arms Control and opposition to the legislation, as have coming. Even John Pike of the Federa- Disarmament Agency [ACDA] stated the Pentagon and various former mem- tion of American Scientists, a long- that the Defense Department will de- bers of our national security policy time critic of missile defense, says it is sign a system as the threat emerges, to team. ‘‘the intelligence failure of the dec- answer that threat. So, Mr. President, I hope that when ade.’’ Mike McCurry said, ‘‘We had no How will the Director of ACDA know the final vote comes here—I gather it advance notification of the tests.’’ when the threat is emerging or has will be in about 45 minutes or an According to administration officials emerged? hour—Senators will join in resisting quoted in the Washington Times, the Trying to deploy an NMD system in 3 the effort to move ahead with this leg- United States has been ‘‘watching this years is difficult and extremely risky. islation. site fairly carefully and on a fairly reg- It requires doing everything at once— Mr. President, I yield the floor. Mr. COCHRAN. Mr. President, I am ular basis.’’ If that is careful and regu- impossible to run a low risk test pro- happy to yield 5 minutes to the distin- lar and we don’t know about it, I don’t gram to make sure everything fits to- guished Senator from New Hampshire, know how we can possibly expect to be gether first. It leaves no margin for failure or problems—if one thing goes Mr. SMITH. able to deploy missiles 3 years after we The PRESIDING OFFICER. The Sen- know they are being produced. If we wrong the whole program could col- ator from New Hampshire is recog- can’t detect in advance activities at fa- lapse. It is a dangerous way to ap- nized. cilities that we are watching, what is proach defense. The events in south Asia confirm PRIVILEGE OF THE FLOOR going on at facilities we don’t know Mr. SMITH of New Hampshire. Mr. anything about and are not watching? once and for all that we cannot base President, first of all, I ask unanimous This is extremely dangerous policy, the security of the United States on consent that Mr. Brad Lovelace, a fel- Mr. President. rosy assumptions about our ability to low in my office, be granted floor privi- How can this administration con- detect and predict existing or emerging leges throughout debate on both S. 1873 tinue to believe that we will have ad- threats around the world. and S. 2060, the fiscal year 1999 DOD au- vance warning and plenty of time to re- North Korea: In addition to the news thorization bill. spond to a missile threat when we can- out of south Asia, I find that today’s The PRESIDING OFFICER. Without not even detect in advance three unan- New York Times reports that North objection, it is so ordered. ticipated nuclear tests? Korea has announced they are suspend- Mr. SMITH of New Hampshire. Mr. This week’s failure to predict India’s ing their compliance with the 1994 Nu- President, yesterday, India conducted nuclear tests is part of a pattern. clear Freeze Agreement that was in- three underground nuclear tests, fur- Pakistan—in a 1997 U.S. Defense De- tended to dismantle that country’s nu- ther destabilizing relations among partment report on proliferation, Paki- clear program. Pakistan, India, and China. Today, two stan was only credited with a missile Who will tell the citizens of a de- more tests were conducted. that could fly 300 kilometers. Yet, they stroyed Los Angeles or New York that The whole world was caught by sur- tested one at 1,500 kilometers. Here they were left undefended from ballis- prise—including the U.S. intelligence again, the United States was unable to tic missiles because their Government community and the Clinton adminis- predict the appearance of a new ballis- ‘‘did not see an emerging threat’’? tration. In fact, administration offi- tic missile system. With our inability to track and de- cials were quoted in the Washington Iran—the DCI told the Senate a few tect ballistic missile development and Times yesterday saying that, ‘‘Our months ago that the intelligence com- nuclear tests, and the inherent chal- overhead [satellites] saw nothing, and munity was surprised at the progress lenges of fielding highly complex de- we had zero warning.’’ made on this Shahab-3 because of Ira- fense systems, we must support the May 13, 1998 CONGRESSIONAL RECORD — SENATE S4757 American Missile Protection Act of bill’s requirement to deploy a national appropriate, which has resulted in saw- 1998. missile defense system? No, this sys- ing off bombers’ wings, resulted in I thank my colleague for yielding. tem doesn’t defend us against that. digging up missiles buried in the soil of Mr. DORGAN addressed the Chair. How about a chemical weapon attack Ukraine and Russia. The PRESIDING OFFICER. The Sen- in the United States? No, this wouldn’t I just do not understand the ration- ator from North Dakota. defend us against a chemical weapons ale here. How can we get this notion of Mr. DORGAN. Mr. President, with attack. A biological weapon attack defending against a small part of the the permission of the Senator from here? No. A cruise missile attack, threats our country faces? This bill Michigan, I yield myself 8 minutes. which is far more likely than an doesn’t address the cruise missile Mr. President, I support the strong- ICBM—a cruise missile attack? Cruise threat, or the suitcase bomb threat, or est possible defense against the most missiles are proliferating all around a range of other threats. It just tries to credible threats to our Nation s secu- the world. Putting a nuclear device on address this sliver of threat. rity. But I do not support this legisla- the tip of a cruise missile and aiming And this bill requires us to deploy a tion, and I want to explain why. at this country, would this bill defend system as soon as technologically pos- Nearly 30 years ago, the Department us against that? No. It wouldn’t defend sible notwithstanding any other con- of Defense spent $21 billion in today’s us against that threat, either. A bomb- sideration, notwithstanding how much dollars on an antiballistic missile sys- er attack, dropping a nuclear bomb? money we are going to ask the tax- tem. It was built in my State of North No. Loose nuclear weapons inside the payer to pay, notwithstanding what Dakota. The military declared that old Soviet Union that must be con- the credible threat is at the moment, antiballistic missile system oper- trolled and we must be concerned notwithstanding the impact on arms ational on October 1, 1975. On October about, does this deal with that? No. control agreements. I just do not un- 2, 1975, the next day, the U.S. House of Obviously, this bill deals with one derstand that logic. Representatives voted to close it— threat. And it is probably the less like- I must say I have the greatest re- mothball it. It was too expensive to ly threat—an ICBM with a nuclear war- spect for the author of this legislation. run, and it didn’t offer us much in the head aimed at this country by a rogue I think he is a wonderful legislator. I way of more security. It wouldn’t pro- nation or by a terrorist group. hate to oppose him on this, but I just tect this country. Mr. President, $21 But this bill tells us to deploy as feel very strongly that we should con- billion for what? soon as technologically possible—not- tinue with the national missile defense The bill on the floor today would re- withstanding cost, whatever the cost. research program. I might add that the quire us to deploy a system as soon as No matter that the cost estimates from Administration is seeking over $900 it is technologically possible. A quarter the Congressional Budget Office range million for research funding for this century ago it was technologically pos- up to nearly $200 billion to construct program this coming year. We should sible to spend $21 billion and build an and maintain a national missile de- continue that aggressive research. antiballistic missile site in North Da- fense system. Cost is not relevant here, We ought to continue working on a kota. That system had interceptor mis- according to this bill. It requires us to range of defense mechanisms to deal siles with nuclear warheads on them. deploy when technologically possible. with threats, not just ICBMs, but That was technologically possible. It This bill also requires us to deploy cruise missile threats and a range of was completely irresponsible, but it notwithstanding the impact on arms other threats, including the terrorist was technologically possible. control. The fact is that strategic threat of a suitcase nuclear device in I don’t know whether this bill relates weapons are being destroyed, nuclear this country. But we ought not decide to that technology. The bill itself weapons are being destroyed. Different that one of those threats ought to be doesn’t tell us what kind of technology systems are being destroyed today in addressed at the expense of defending we’d be required to deploy. the Soviet Union as a result of arms against other threats. I assume it relates to a hit-to-kill control: arms control has destroyed Mr. President, let me make one final technology, where you try to hit one 4,700 nuclear warheads; destroyed 293 point. I have told this story twice be- bullet with another bullet. The failure ICBMs and 252 ICBM silos; cut the fore on this floor because I think it is on Monday of a test flight for THAAD, wings off of 37 former Soviet bombers; important for people to understand a theater missile defense system, sug- eliminated 80 submarine missile launch what is being done in the area of arms gests that hit-to-kill is not nearly as tubes; and sealed 95 nuclear warhead control and missile defense right now— possible as some suggest, at least not test tunnels. not what is proposed to be done in this now. That is an awfully good way to meet bill. But I would ask the question: If it the threat—destroy the missile before On December 3 of last year, in the was technologically possible to create it leaves the ground. Arms control is dark hours of the early morning, north an antiballistic missile system in giving us missile defense that works of Norway in the Barents Sea, several Nekoma, ND, a quarter century ago, it right now. Russian antiballistic submarines sur- is technologically possible now, using I have shown my colleagues this be- faced and prepared to fire SS–20 mis- the nuclear interceptor approach. Does fore, and with permission I will do it siles. Each of these missiles can carry this bill, then, require immediate de- again. This is a piece of metal from a 10 nuclear warheads and travel 5,000 ployment? silo in Pervomaisk, Ukraine. The silo miles, and can reach the United States Let’s step back a bit and look at this held a Soviet missile aimed at the from the Barents Sea. bill in the context of the security United States of America. There is no Those submarines, last December 3, threats this country faces. One threat missile there anymore. The warhead is launched 20 missiles that soared sky- is, indeed, a rogue nation, or a terrorist gone. The missile is gone. The silo is ward, and all of our alert systems knew group, or an adversary getting an destroyed. And where this piece of it and saw them immediately and intercontinental ballistic missile and metal used to be, in a silo holding a tracked them at Cheyenne Mountain, putting a nuclear warhead on it and missile aimed at this country, there NORAD, you name it. having the wherewithal to aim it and are now sunflowers planted. Not the And in a few moments at 30,000 feet fire it at this country. That is, in my missile—sunflowers. How did that hap- all of those missiles exploded. judgment, a less likely threat than, for pen? By accident? No. By arms control Why? Because this was not a Russian example, a terrorist group or a rogue agreements, by treaties. missile attack on the United States. In nation getting a suitcase-sized nuclear But this bill says, deploy a national fact, seven American weapons inspec- device, putting it in the rusty trunk of missile defense system notwithstand- tors were watching the submarines a Yugo, parked on a New York City ing what it might mean to our treaties, from a nearby ship. These self-destruct dock, and saying, ‘‘By the way, we now notwithstanding what it might mean launches were a quick and inexpensive threaten the United States of America to future arms control agreements, way for Russia to destroy submarine- with a nuclear device.’’ notwithstanding what it might mean launched ballistic missiles, which it The threat of a truck bomb or suit- to arms reductions that occur now was required to do under our START I case bomb, is that addressed by this under the Nunn-Lugar money that we arms reduction treaty. S4758 CONGRESSIONAL RECORD — SENATE May 13, 1998 On the morning of December 3 of last pate to develop complex systems, and signed with other countries but upon year when, at 30,000 feet, those Russian this is particularly true with respect to what we can do for ourselves to protect missiles exploded, it was not an acci- missile defenses. the American people. dent. And it was not a threat to our So the legislation introduced by the We heard the argument that the country. It was a result of arms control Senator from Mississippi is a much bet- United States must refrain from exer- agreements that said we must reduce ter idea, to protect the American peo- cising our rights under the ABM Trea- the threat of nuclear weapons, we must ple, Mr. President. It simply says that ty to deploy even a limited missile de- reduce delivery systems. The fact is, it is our policy to deploy a national fense lest we upset the Russians, the the Nunn-Lugar program, which we missile defense as soon as it is techno- same Russians who operate the world’s fund each year in order to further these logically possible. only current ABM system. Should we arms reductions, is working. Now, what could be more straight- take from this suggestion that the We also should, as we make certain forward and more protective for the Russians have a right not only to de- Nunn-Lugar continues, be concerned American people? The American people fend themselves but to insist that we about the ABM Treaty, be concerned demand no less. do not? And yet that is precisely what about a range of other threats, and we I would note that the argument of the opponents of this legislation are ought to invest money in research and the Senator from North Dakota just a saying. development on the ballistic missile moment ago illustrates, I believe, the Mr. President, the defense of America defense system. lack of ideas to oppose this simple leg- should not be subject to a Russian But we ought not under any set of islation of the Senator from Mis- veto. Linking the deployment of na- circumstances say a system here must sissippi. His primary argument was tional missile defenses to some hoped- be deployed no matter what its cost, no that we need to continue research be- for arms control agreement is to be ex- matter what the threat and no matter cause, after all, there are other pected from the Russians, but it is un- what its consequences to arms control threats, too, like the suitcase bomb. Of conscionable to be offered by Rep- agreements. That is not in this coun- course, there are other threats. And resentatives of this Congress. Arms try’s interests. That is not in the tax- our position has always been to prepare control for the sake of arms control is payers’ interests. to defend against all of the threats but not in the national interest, and the Does our country need to worry not to ignore one very big threat just Constitution does not allow us to sub- about the proliferation of nuclear because there are other threats as well. stitute pieces of paper for the real weapons? Of course we do. The nuclear There have been other charges that measures which must be taken to pro- tests by India in just the last 2 days the adoption of the American Missile tect America. demonstrate once again that we have a Protection Act is somehow going to Then there is an argument that com- serious problem in this world with re- wreck arms agreements that the mitting to deploy an ABM system will spect to the proliferation of nuclear de- United States has entered into. First, cause the sky to fall on offensive arms vices. there is the complaint about the ABM control agreements. Let me quote the But what it ought to tell us is that Treaty that we heard which is particu- Senator from Michigan on this issue: we need to be very, very aggressive as larly puzzling since the words, ABM Nothing in this bill says that the national a Nation to lead in the area of non- Treaty don’t appear anywhere in this missile defense system that it commits us to proliferation. We need to make certain legislation. The bill doesn’t require any deploy will be compliant with the Anti-Bal- that this club that possesses nuclear violation of the ABM Treaty as a mat- listic Missile Treaty. That is a treaty, a sol- weapons on this Earth does not expand. ter of fact. It doesn’t specify the num- emn agreement between us and Russia. If we ber of sites, where they would be, or threaten to break out of that treaty unilat- We need to do everything we possibly erally, we threaten the security of this Na- can do in foreign policy to try to see what kind of interceptors or missiles tion because that treaty permits Russia to that our children and grandchildren we would have. So that argument is ratify the START II agreement and to nego- are not victims of the proliferation, specious. tiate a START III agreement, reducing the wide proliferation of nuclear weapons Secondly, we have heard the argu- number of warheads that they have on their that then hold the rest of the world ment that if the United States decides missiles and warheads that could also poten- hostage. to deploy an NMD even against limited tially proliferate around the world and But in dealing with the various threats, the Russians will refuse to rat- threaten any number of places, including us. threats we face, it seems to me the ify START II or negotiate START III. This statement is incorrect in several question for all of us is what kind of How many times do we have to pay for ways. First, the ABM Treaty is not a threats exist? And what kind of credi- START II? I count about eight dif- ‘‘solemn agreement between us and ble defense that is both technologically ferent things that the Russians have Russia.’’ The ABM Treaty was signed possible and financially reasonable can said we have to do in order for them to by the United States and the Soviet be constructed to respond to those ratify START II or fully implement Union. That country no longer exists, threats? This bill is not the answer to START I or START II. And we could and the administration spent four those questions. list those but I am going to put them years in negotiations to see who would Mr. President, I yield the floor. in the RECORD. replace the Soviet Union as parties to Mr. COCHRAN. Mr. President, I am The point is the United States needs that treaty. The President has certified happy to yield 5 minutes to the distin- to take its defense into its own hands. that he will submit the results of those guished Senator from Arizona, Mr. We cannot simply rely upon a piece of negotiations to the Senate for advice KYL. paper with another country, particu- and consent. When and if the Senate The PRESIDING OFFICER (Mr. larly where in the case of, first, the So- agrees, then the ABM Treaty may be- HUTCHINSON). The Senator from Ari- viet Union, and now Russia, after that come ‘‘a solemn agreement between us zona. piece of paper is signed—and remember and Russia,’’ but not until then. Mr. KYL. I thank the Chair. I thank we are putting our safety in the hands Second, S. 1873 does not require the Senator from Mississippi. of people across the sea who have ‘‘break out’’ from the ABM treaty. In Mr. President, the administration’s signed that piece of paper with us—we fact, as I have already pointed out, it position on defending the American find that they have changed their mind allows for deployment of exactly the people is essentially twofold: One, wait and tell us that they can’t implement system being developed under the ad- until there is a threat; and, two, we that piece of paper until we do other ministration’s so-called 3+3 program. will then develop a defense. There are things. And there is nothing in any legislation two things wrong with this approach: First of all, it was that we had to ad- that calls for that system to be treaty First, as the Indian nuclear testing has dress concerns regarding NATO expan- compliant. To the contrary, a non-com- just demonstrated to us, we won’t nec- sion and then the CFE Treaty had to be pliant system is explicitly con- essarily know when there is a threat. modified. Then they could not afford to templated by the Defense Department. In fact, we always seem to underesti- dismantle their weapons, and on and on Here is what the Department of De- mate the threat. Secondly, it always and on. The point here is we should not fense said about its 3+3 program in the seems to take longer than we antici- place our reliance upon pieces of paper Secretary’s 1998 report to Congress: ‘‘a May 13, 1998 CONGRESSIONAL RECORD — SENATE S4759 deployed NMD system either could be Missile Defense system capable of de- Times disclosed that a Top Secret CIA compliant with the ABM Treaty as fending the territory of the United report indicated 13 of China’s 18 nu- written, or might require amendment States against limited ballistic missile clear-tipped CSS–4 ICBM’s are targeted of the treaty’s provisions.’’ So accord- attack (whether accidental, unauthor- at American cities. These missiles are ing to the Secretary of Defense, the ized, or deliberate).’’ Outside of the reportedly being improved as well, with system DoD is developing now may not title and findings of the legislation, the addition of upgraded guidance sys- comply with the ABM treaty. And so this is the only sentence in the bill. tems. this arms control argument is nothing As a matter of fact, S. 1873 is note- In addition to its modernization ef- but a strawman, erected to be knocked worthy for the things it does not say. forts, I am also concerned that Beijing down though it bears no resemblance The bill does not say what kind of sys- has shown a willingness to use ballistic to anything in this bill. tem architecture the missile defense missiles to intimidate its neighbors. Senator LEVIN cites as an authority system should have. It does not say For example, during Taiwan’s national for this odd proposition, the Chairman where such a system should be located, legislative elections in 1995, China fired of the Joint Chiefs of Staff, who, in a or more generally, whether it should be six M–9 ballistic missiles to an area letter commenting on S. 1873, said the based on land, at sea, or in space. It about 160 kilometers north of the is- bill doesn’t consider ‘‘the impact a de- does not specify a date by which such a land. Less than a year later, on the eve ployment would have on arms control system should be deployed, or when we of Taiwan’s first democratic presi- agreements and nuclear arms reduc- believe specific missile threats to the dential election, China again launched tions.’’ Let’s think about what General United States will materialize. M–9 missiles to areas within 50 kilo- Shelton is saying here. The United And the bill is silent on arms control meters north and south of the island, States has a right to deploy a national issues. It does not address whether con- establishing a virtual blockade of Tai- missile defense system under the ABM tinued adherence to the ABM Treaty is wan’s two primary ports. Treaty, and S. 1873 merely calls for a in the best interests of the United RUSSIA commitment to exercise that right. States or whether the treaty should be Russia retains over 6,000 strategic But General Shelton is saying that our modified. Nor does the bill discuss the nuclear warheads, which still pose the decision to exercise that right should merits of any future arms control greatest threat to our nation. While we be conditioned on the possible impact a agreements. All of these issues will do not believe Russia has hostile inten- deployment would have on future arms have to be debated another day. I am tions, we must be cautious because its control agreements, meaning, presum- disappointed, however, that we are still evolution is incomplete. For example, Russia is continuing to modernize its ably, Russian objections. So General debating whether the United States strategic nuclear forces. According to Shelton is saying that our right to de- should deploy a national missile de- the Washington Times, Russian R&D ploy a system to protect our citizens— fense system at some point in the fu- spending on strategic weapons has even the severely constrained right em- ture. soared nearly six-fold over the past bodied in the ABM treaty—should be THE THREAT The ballistic missile threat facing three years and Moscow is developing subject to further negotiation with, an upgraded version of the SS–25 ICBM, and the approval of, the Russian Fed- the U.S. is real and growing. Russia and China already have ballistic mis- as well as a new strategic nuclear sub- eration. marine armed with a new nuclear- I would find this an extraordinary ar- siles capable of reaching our shores and several other nations, including North tipped SLBM. gument under any circumstances, and At the same time Russia is spending Korea and Iran are developing missiles extraordinarily disturbing coming precious resources on its moderniza- with increasing ranges. from the Chairman of the Joint Chiefs tion effort, its nuclear command and of Staff. It can’t be comforting to the CHINA control complex continues to deterio- people of the United States to know In November 1997, the Defense De- rate. Although unlikely, the threat of that their Chairman believes their de- partment published a report titled, an unauthorized or accidental launch fense should be subject to the veto of Proliferation: Threat and Response in of a Russian ICBM has increased in re- the Russians. When one considers that which it said China already has over cent years as Russia’s armed forces the Russians have exercised their right 100 nuclear warheads deployed oper- have undergone difficult changes. For to defend themselves with the only ationally on ballistic missiles. Accord- example, last March the Wall Street operational ABM system in the world, ing to this report, Beijing has ‘‘em- Journal reported that, according to the position of the Chairman becomes barked on a ballistic missile mod- Russian colonel who spent much of his downright bizarre. ernization program,’’ and ‘‘while add- 33 year career in the Strategic Rocket The complaints about arms control ing more missiles and launchers to its Forces, Russian nuclear command and from opponents of the Cochran-Inouye inventory, [is] concentrating on replac- control equipment began breaking bill are without merit. They spring ing liquid-propellant missiles with mo- down 10 years ago and on several occa- from this administration’s infatuation bile solid-propellant missiles, reflect- sions parts of system spontaneously with paper agreements, no matter how ing concerns for survivability, mainte- went into ‘‘combat mode.’’ Even more disconnected from reality those agree- nance, and reliability.’’ troubling were comments made by Rus- ments may be. We have a paper arms Details about this modernization pro- sian Defense Minister Rodionov last control agreement called START I, gram have been published in the press. February, who in a departure from pre- which the Russians are routinely vio- The Washington Times reported on vious assurances that Moscow’s nu- lating. We have START II, which was May 23, 1997, that a new Chinese road- clear forces were under tight control negotiated, then renegotiated to give mobile ICBM, called the Dong Feng-31, stated, ‘‘Today, no one can guarantee the Russians a better deal, and still it is in the late stages of development and the reliability of our systems of con- lies before the Duma unratified. Yet may be deployed around the year 2000. trol . . . Russia might soon reach the opponents of this bill would have the This missile’s 8,000 kilometer range is threshold beyond which its rockets and United States forego the defense of its sufficient to reach the entire U.S. West nuclear systems cannot be controlled.’’ people against a threat wholly unre- Coast and several Rocky Mountain ROGUE NATIONS lated to any of these agreements, sim- states and it will reportedly utilize re- Although Russia and China are the ply because they fear the Russians will entry vehicle decoys, complicating only countries that currently possess insist upon it. missile defense. China is also develop- missiles capable of reaching the United Mr. President, I urge my colleagues ing the JL–2 SLBM with a 7,300 kilo- States, several rogue states such as to support S. 1873, the American Mis- meter range, according to Defense North Korea and Iran are aggressively sile Protection Act. This is a simple Week. That publication reported last developing long-range ballistic mis- bill which merely states that due to April that the JL–2 is likely to be de- siles. the increasing ballistic missile threat ployed by the year 2007 and will allow NORTH KOREA we face, ‘‘It is the policy of the United China to target the U.S. from operat- According to the Defense Depart- States to deploy as soon as is techno- ing areas near the Chinese coast. And ment’s November report, since its mis- logically possible an effective National finally, on May 1st, the Washington sile program began in the early 1980’s, S4760 CONGRESSIONAL RECORD — SENATE May 13, 1998 ‘‘North Korea has pursued an aggres- ligence report indicates the Shahab-4 study said was half as long as that for sive program which has steadily pro- could be completed in as little as three America’s Safeguard national missile gressed from producing and exporting years. Israeli intelligence sources re- defense system that was developed be- Scud short range ballistic missiles portedly also told Defense News that tween 1963 and 1975 and deployed at (SRBMs) to work on development of the long-term goals of Iran’s missile Grand Forks, North Dakota. The GAO medium and long range missiles.’’ program are to develop missiles with stated that the acquisition schedule for North Korea has deployed several hun- ranges of 4,500 and 10,000 kilometers. the ‘‘3+3’’ program was ‘‘shorter than dred Scud B and C missiles with suffi- The latter missile could reach the East the average time projected to acquire cient range to target all of South Coast of the United States. and field 59 other major weapon sys- Korea, and has completed development OTHER NATIONS tems that we examined″ and went on to of the 1,000 kilometer range No Dong In addition to North Korea and Iran, note, ‘‘these systems are projected to MRBM, which can reach targets in roughly two dozen other countries, in- take an average of just under 10 years nearly all of Japan, according to the cluding Iraq and Libya either possess from the beginning of their develop- report. In addition, recent press reports or are developing ballistic missiles. ment until they reach an initial oper- indicate North Korea has begun deploy- The clear trend in these missile pro- ating capability date.’’ ing the No Dong missile. grams is toward systems with greater Mr. President, the general approach More ominously, North Korea is de- ranges, and as Iran has demonstrated, underlying the ‘‘3+3’’ program is flawed veloping the Taepo Dong 1 missile with foreign assistance can greatly reduce and due to the delays the program has an estimated range of 2,000 kilometers the time needed to develop a new mis- already encountered I do not think we which will be capable of striking U.S. sile. should stake our future on the premise that the system can be fielded within military bases in Guam and the Taepo RESPONDING TO THE MISSILE THREAT Dong 2 missile, with an estimated The time has come for the United three years after a decision to deploy. range of 4,000 to 6,000 kilometers that States to defend itself from the in- As the GAO said in its study, ‘‘Since could reach Alaska and Hawaii. On creasing missile threat that I have just the 3+3 program was approved, BMDO April 27th, the Washington Post re- described. The Cochran bill is the first [the Ballistic Missile Defense Organiza- tion] has experienced a 7-month delay ported that development of the Taepo step on this path. Dong 2 missile could be completed Some opponents of the bill have in establishing the joint program office ‘‘within the next several years.’’ pointed to the Administration’s so- to manage the acquisition and a 6- month delay in awarding concept defi- IRAN called ‘‘3+3’’ program as a better way Iran has an ambitious missile pro- to deal with the missile threat. I have nition contracts leading to the selec- gram and is currently capable of pro- grave concerns about the basic premise tion of a prime contractor. Also, a sen- ducing both the 300 kilometer range of the ‘‘3+3’’ program, which essen- sor flight-test failure resulted in a 6- Scud B and the 500 kilometer range tially states that the United States month testing delay.’’ As my colleagues know all too well, Scud C missiles. This program is be- should continue to experiment with a unfortunately, it is not uncommon for coming increasingly advanced and less variety of missile defense technologies U.S. weapons development programs to vulnerable to supply disruptions. As indefinitely, and then, at some time experience delays. For example, despite the Defense Department said in its No- after the year 2000, deploy an NMD sys- the best efforts of the Congress and the vember 1997 report, ‘‘Iran has made sig- tem within three years. It is signifi- Administration to quickly field the nificant progress in the last few years cant that the ‘‘3+3’’ program is the THAAD theater missile defense sys- toward its goal of becoming self-suffi- only Major Defense Acquisition Pro- tem, that program is currently pro- cient in ballistic missile production.’’ gram that takes this wait-and-see ap- jected to reach its first unit equipped Tehran has made particularly rapid proach and assumes a deployment can milestone 13 years after development progress over the past year, however, occur within three years of a decision began. Experience tells us that we can- due to the infusion of Russian hard- to deploy. not keep national missile defense tech- ware and know-how which has signifi- The development of a complex weap- nology in a circling pattern and expect cantly accelerated the pace of the Ira- ons system, such as a new fighter air- to snap our fingers and successfully nian program. This Russian assistance craft or an NMD system can be tech- move to deployment in a very short pe- has been well documented in the press. nically challenging, which is why we riod of time. Nothing in our history According to these reports, numerous structure development programs with suggests this is a sensible approach. institutes and companies that once clear goals and milestones. We do not Mr. President, we need to get on with were an integral part of the state- continue to tinker indefinitely with the task of constructing an effective owned military complex of the former the technology needed for the F–22, missile defense system to protect the Soviet Union have provided a variety which will be the next-generation American people. Like other Senators, of equipment and material that can be fighter aircraft for the Air Force, or I have strong views on the disadvan- used to design and manufacture ballis- the technology for the next version of tages of the ABM Treaty and other re- tic missiles. They are also helping Iran the M–1 Abrams tank until some future lated missile defense issues, but unfor- develop two new ballistic missiles, the date awaiting a decision to deploy. tunately those debates will have to Shahab-3 and Shahab-4. The Shahab-3 Why should we adopt this approach for wait for another day. The United is reportedly based on North Korea’s national missile defense? States government has a fundamental No Dong ballistic missile and will have Studies on the ‘‘3+3’’ program have obligation to provide for our citizens a range of 1,300 kilometers with a 700 faulted the Administration’s plan and defense. The bill offered by Senator kilogram payload, sufficient to target its execution. For example, a recent COCHRAN will help ensure that we ful- Israel and U.S. forces in the region. study chaired by retired Air Force Gen- fill this obligation, by committing us Seven months ago, on September 18, eral Larry Welch criticized the ‘‘3+3’’ to deploying a defense against the 1997, Assistant Secretary of State for program stating that a successful NMD growing ballistic missile threat we Near Eastern Affairs Martin Indyk tes- program should have ‘‘a clear set of re- face. I urge my colleagues to support tified to the Senate that Iran could quirements, consistent resource sup- its passage. complete development of the Shahab-3 port (which includes an adequate num- Mr. KERRY. Mr. President, in the in as little as 12 to 18 months. ber of test assets), well-defined mile- early hours yesterday morning on the The Shahab-4 is reportedly based on stones, and a rigorous test plan. The New Mexican desert, there was an the Russian SS–4 medium-range ballis- study group believes that the current event that brought home in a very tic missile and will have a range of NMD program is not characterized by practical way one of the series of con- 2,000 kilometers with a payload over these features and is on a high-risk sidered arguments made against the 1,000 kilograms. When completed, the vector.’’ legislation the Senate is considering Shahab-4’s longer range will enable Last December, the GAO published a this morning. Tehran to reach targets as far away as study that also was critical of the The Army Missile Command, the Central Europe. According to the ‘‘3+3’’ program due to its high risk and prime contractor, and dozens of sub- Washington Times, an Israeli intel- its acquisition schedule, which the contractors had been painstakingly May 13, 1998 CONGRESSIONAL RECORD — SENATE S4761 preparing for the fifth intercept test of launching another missile in its direc- appropriate and adequate to address the Theater High Altitude Area De- tion, guiding that missile also travel- those threats. It also ignores the possi- fense, or THAAD, theater missile de- ing at hypersonic speed to a collision bility that we will rush pell mell to de- fense system. No effort was spared in point in the great expanse just inside ploy a national missile defense system these preparations, because program or outside of the upper reaches of the based on today’s technology when, if officials and Department of Defense of- earth’s atmosphere, and precisely ma- we delay the deployment decision until ficials acknowledged openly that this neuvering the interceptor to collide we believe a real threat is looming, we would be widely viewed as a ‘‘make or with the warhead. can then deploy the latest tech- break’’ test for the system following It should be self evident that this is nology—the most reliable technology its unfortunate string of previous a daunting challenge, given that bil- then available—to meet the threat. intercept failures. lions of dollars, thousands of hours of The urgency that the bill’s pro- To the dismay of all involved, this the most capable scientists and pro- ponents are voicing is a false urgency, fifth test, too, was a failure. gram managers our military and pri- Mr. President. I hope the Senate will Mr. President, we nominally are de- vate sector can focus on this task, and look at this carefully and will choose bating a different matter this morning. the most advanced equipment and the prudent course by rejecting the bill The bill before the Senate involves an technology money can buy have pro- before us. immediate decision to abandon the so- duced five successive failures in the Mr. ALLARD. Mr. President, I rise called ‘‘3 plus 3’’ strategy for national THAAD program. today as a co-sponsor and supporter of missile defense and establish a policy Those who have spoken before me S. 1873, The American Missile Protec- to move as rapidly as possible not only today have identified a host of reasons tion Act of 1998. This important legis- to develop an effective national missile why we should not rush to judgment lation will remove present barriers to defense technology, but to deploy such today to decide we will spend some- the deployment of an effective, reliable a system at the earliest possible time. where between $30 and $60 billion to de- missile defense system, so that our But the White Sands test yesterday ploy a national missile defense system citizens will be free from the threat of morning should be hoisting another red that has neither been developed nor an attack by missiles launched from flag for the Senate to consider as we proven. If the Senate moves to proceed across oceans. Prudence demands that vote on this bill. to the consideration of this legislation, we deploy a domestic missile defense I take a back seat to no one in my I expect to have something to say system as soon as we possess the tech- support for development of effective about many of those other consider- nology to do so. missile defense technology. I have a ations. Missile technology developed during strong record of support for developing But at this moment, I want to men- the Cold War has forever neutralized and fielding theater missile defense tion to the Senate only two of those what was once our greatest domestic systems, for the protection of our considerations. The first is that it security asset—distance. As a result, ground forces, our naval forces, and would be irresponsible to make a deci- today many of our citizens have never other national interests in theater. We sion of this magnitude—which might known a world in which nuclear mis- know—and we hear and read on vir- cost U.S. taxpayers upwards of $50 bil- siles were not pointed at their families. tually a daily basis—of the efforts un- lion—before the Senate knows that It is unconscionable that now, after derway in a number of nations to de- there is a workable technology. That is years of being in the shadow of nuclear velop ever more capable short range even more irresponsible in my judg- threat, the most powerful nation in the ballistic missiles capable of carrying ment when one looks at the intel- world still cannot defend its own soil weapons of mass destruction, nuclear, ligence estimates of the ballistic mis- against even one ballistic missile at- chemical, or biological. Missiles of this sile threat that faces the U.S. The sim- tack. type have been used previously. This ple truth, Mr. President, is that only In the post-Cold War era, a multiple threat is real, it is immediate, and it is Russia and China have such missiles, array of new threats exist. Not only do substantial. and despite the fact that some rogue we still face the possibility of acciden- But this legislation, Mr. President, nations such as North Korea have been tal launch from a nuclear state—a pos- does not address either of these key working to develop more advanced bal- sibility not without precedent—but policy matters. We have in place an es- listic missiles, our intelligence and now the proliferation of missile compo- tablished policy to develop and field as military leaders do not expect those nents and technology compounds the rapidly as possible theater missile de- threats to materialize for a decade or threat beyond even Cold War-levels. fense systems. The Administration and more. The capability of a rogue state to by- the Congress have increased the fund- Let me reiterate, Mr. President, that pass years of development by clandes- ing for this effort again and again. We the choice the Senate will make today tinely obtaining nuclear, chemical, and have in place an established policy to is not about whether we should make a biological materials and long-range develop and perfect as rapidly as pos- herculean effort to develop anti-missile ballistic missile technology poses a sible the technology that would be nec- technology. We are doing that and new, more sinister threat. Procure- essary for a national missile defense spending multi-billions of dollars to do ment by rogue nations—especially by system, and to bring that effort to a it as rapidly and well as our best minds those who have a demonstrated desire stage where, in three years from a can do so. The vote today will not alter to use force outside their own borders— green light, it could be fielded and that mission or our commitment to it. cripples our ability to calculate emerg- operational. The vote today is about whether—at ing strategic threats with any degree As has occurred not infrequently in a time before a real ballistic missile of certainty. the course of human history, our aspi- threat from sources other than Russia Just as a policy of total vulnerability rations are getting ahead of our sci- and China exists, at a time before we will no longer suffice, neither will a entific expertise and our ability to ma- perfect the anti-missile technology on policy characterized by the ‘‘gaps and nipulate the laws of physics to accom- which we have been energetically uncertainty’’ due to the underesti- plish our objectives. Some may mis- working for years so that we know it is mation of the technological capabili- takenly believe, Mr. President, that de- ready to be deployed—we will make a ties of states like North Korea, Iran, veloping effective anti-missile tech- national commitment of scores of bil- Iraq, China, and now India. nology is a simple proposition, and lions of dollars to field the nonexistent Refusing to implement a National that wishing for it is to obtain it. Un- system against nonexistent threats. Missile Defense system as soon as it is fortunately that is not the case. To That, Mr. President, would be an un- technologically possible will render grossly oversimplify this, this is a task wise decision of great magnitude, par- Americans vulnerable to the whims of of spotting a warhead, or fragments of ticularly at a time when we face very any rogue regime that manages to pro- a warhead, hundreds if not thousands real threats to our national security cure ICBM technology. of miles away, and while it moves at and when we are struggling to provide Bearing in mind that this bill itself several thousand miles per hour, deter- the resources to ensure our military violates no treaties, nor seeks to man- mining which is the real target, and intelligence capabilities are both date the particulars of implementing a S4762 CONGRESSIONAL RECORD — SENATE May 13, 1998 missile defense system, S. 1873 is im- Whereas the United States plans to field a The Washington Times reported last portant bipartisan legislation that national missile defense, perhaps as early as week that the Chinese have 13 of 18 should be passed. By eliminating a de- 2003; this national missile defense plan will long-range strategic missiles armed pendence on underestimated capabili- provide only a fragile defense for Alaska, the with nuclear warheads aimed at Amer- state most likely to be threatened by new ties, this bill is a decisive affirmation missile powers that are emerging in North- ican cities. This is incredible, Mr. that our country is indeed committed east Asia; President. Opponents to the motion to to ensuring the security of the Amer- Be it Resolved, That the Alaska State Leg- invoke cloture somehow fail to under- ican people. islature respectfully requests the President stand that this threat is real and that I urge all my colleagues to support S. of the United States to take all actions nec- we have a responsibility to protect the 1873. essary, within the considerable limits of the United States from attack, be it delib- Mr. MURKOWSKI. Mr. President, I resources of the United States, to protect on erate or accidental. Without question, rise today in support of S. 1873, the an equal basis all peoples and resources of this great Union from threat of missile at- the threat of an attack on the United American Missile Protection Act. This States is increasingly real, and we bill is simple; but extremely impor- tack regardless of the physical location of the member state; and be it must act now so that we can construct tant. It makes it clear that it is the Further Resolved, That the Alaska State a national missile defense system with policy of the United States to deploy, Legislature respectfully requests that Alas- the capability of intercepting and de- as soon as technologically possible, a ka be included in every National Intelligence terring an aggressive strike against national missile defense system which Estimate conducted by the United States American soil from all parts of the joint intelligence agencies; and be it is capable of defending the entire terri- United States. tory of the United States against lim- Further Resolved, That the Alaska State Legislature respectfully requests the Presi- Mr. President, I support the motion ited ballistic missile attack. dent of the United States to include Alaska to invoke cloture and hope that my Alaskans have been justifiably con- and Hawaii, not just the contiguous 48 colleagues will vote overwhelmingly in cerned with this issue for some time. I states, in every National Intelligence Esti- favor of this legislation in the near fu- ask unanimous consent to have printed mate of missile threat to the United States; ture. in the RECORD at this time a resolution and be it Mr. KENNEDY. Mr. President, I op- passed by the Alaska State Legislature Further Resolved, That the Alaska State pose this legislation and I urge the Legislature urges the United States govern- which calls on the Administration to Senate not to invoke cloture. include Alaska and Hawaii in all future ment to take necessary measures to ensure that Alaska is protected against foreseeable Star Wars was a bad idea in the 1980s, assessments of the threat of a ballistic threats, nuclear and otherwise, posed by for- and it is a bad idea today. Developing missile attack on the United States. eign aggressors, including deployment of a and deploying a national missile de- More than 20% of our domestic oil ballistic missile defense system to protect fense system has an enormous cost— comes from Alaska, all of it through Alaska; and be it billions of dollars a year to develop the the Trans-Alaska Pipeline. Alaskans Further Resolved, That the Alaska State system, and billions more to deploy it. are concerned, as should the rest of the Legislature conveys to the President of the In addition, it ignores more likely United States expectations that Alaska’s country be concerned, that a strike at threats to our security, especially the the pipeline could have dire con- safety and security take priority over any international treaty or obligation and that danger of terrorist attacks on our ter- sequences to our domestic energy pro- the President take whatever action is nec- ritory and our citizens. duction. essary to ensure that Alaska can be defended Intelligence estimates suggest that There being no objection, the resolu- against limited missile attacks with the there will not be a new, interconti- tion was ordered to be printed in the same degree of assurance as that provided to nental ballistic missile threat from RECORD, as follows: all other states; and be it any rogue nation until at least 2010. At LEGISLATIVE RESOLVE NO. 36 Further Resolved, That the Alaska State a time when we are trying to balance Legislature respectfully requests that the Whereas Alaska is the 49th state to enter the budget and meet the essential read- the federal union of the United States of appropriate Congressional committees hold hearings in Alaska that include defense ex- iness and modernization needs of our America and is entitled to all of the rights, armed forces, it would be a mistake to privileges, and obligations that the union af- perts and administration officials to help fords and requires; and Alaskans understand their risks, their level spend additional billions of dollars on Whereas Alaska possesses natural re- of security, and Alaska’s vulnerability. the proposed missile defense system. sources, including energy, mineral, and Copies of this resolution shall be sent to Throughout the Cold War, when the human resources, vital to the prosperity and the Honorable Bill Clinton, President of the Soviet Union had a far larger nuclear national security of the United States; and United States; the Honorable Al Gore, Jr., arsenal than today, we decided not to Whereas the people of Alaska are conscious Vice-President of the United States and President of the U.S. Senate; the Honorable deploy missile defenses because the of the state’s remote northern location and cost did not justify the protection pro- proximity to Northeast Asia and the Eur- Newt Gingrich, Speaker of the U.S. House of asian land mass, and of how that unique lo- Representatives; the Honorable Ted Stevens, vided. Now, the Cold War is over. We cation places the state in a more vulnerable Chair of the U.S. Senate Committee on Ap- have far more cooperative relations position than other states with regard to propriations; the Honorable Bob Livingston, with Russia and other nations of the missiles that could be launched in Asia and Chair of the U.S. House of Representatives former Soviet Union, and they have a Europe; and Committee on Appropriations; the Honorable much smaller nuclear arsenal. The Sec- Whereas the people of Alaska recognize the Strom Thurmond, Chair of the U.S. Senate retary of Defense and the Joint Chiefs Committee on Armed Services; the Honor- changing nature of the international politi- of Staff tell us that now is not the time cal structure and the evolution and pro- able Floyd Spence, Chair of the U.S. House of liferation of missile delivery systems and Representatives Committee on National Se- to deploy a national missile defense. It weapons of mass destruction as foreign curity; and to the Honorable Frank Murkow- makes no sense to reject that advice states seek the military means to deter the ski, U.S. Senator, and the Honorable Don and push ahead on this costly system. power of the United States in international Young, U.S. Representative, members of the Declaring our intention to deploy a affairs; and Alaska delegation in Congress. missile defense system now will also Whereas there is a growing threat to Alas- Mr. MURKOWSKI. Mr. President, put U.S. policy on a collision course ka by potential aggressors in these nations last year North Korean defectors indi- with the Anti-Ballistic Missile Treaty. and in rogue nations that are seeking nu- cated that the North Korean missile Such a step would send a strong signal clear weapons capability and that have spon- sored international terrorism; and development program already poses a to Russia that cooperation on nuclear Whereas a National Intelligence Estimate verifiable threat to American forces in arms reductions is not a U.S. priority. to assess missile threats to the United Okinawa and seems on track to threat- In fact, members of the Russian Par- States left Alaska and Hawaii out of the as- en parts of Alaska by the turn of the liament have stated that they will op- sessment and estimate; and Century. The Taepodong missile, which pose ratification of the START II Trea- Whereas one of the primary reasons for is under development, would have a ty if the United States begins to de- joining the Union of the United States of range of about 3,100 miles. From cer- velop or deploy ballistic missile de- America was to gain security for the people of Alaska and for the common regulation of tain parts of North Korea, this weapon fenses in violation of the ABM Treaty. foreign affairs on the basis of an equitable could easily target many of the Aleu- By endangering the prospects for membership in the United States federation; tian islands in western Alaska, includ- START II ratification by Russia, this and ing the former Adak Naval Air Base. bill will ensure that we will face many May 13, 1998 CONGRESSIONAL RECORD — SENATE S4763 thousands more Russian nuclear weap- That is the way I understand the ruling formance requirements for ballistic ons in the near future than we will face of the Chair. missile defenses. if arms reductions are implemented. I ask unanimous consent the running This irony is not lost on just this This bill also fails to address the of the time be charged against the op- Senator. In fact, the proponents’ atti- most pressing threats to American se- position, the opponents of the bill. tude is cavalier even by the standards curity. As the World Trade Center The PRESIDING OFFICER. Is there of defense programs. Research by the bombing and the Oklahoma City bomb- objection? Without objection, it is so Department of Defense shows that S. ing make clear, we do face a serious ordered. 1873 would make history. For the first threat of terrorist attacks. But, it is Mr. DASCHLE. Mr. President, I sug- time ever, we would be committing far more likely, for example, that a gest the absence of a quorum. this nation to deploy a weapons system terrorist will use nuclear, chemical or The PRESIDING OFFICER. The before it had even been developed, let biological weapons on American soil clerk will call the roll. alone thoroughly tested. than that we will be the target of an The bill clerk proceeded to call the We need look no further than today’s ICBM attack from a foreign nation. roll. Washington Post to see the folly of this Loose controls on nuclear materials in Mr. DASCHLE. Mr. President, I ask approach. the former Soviet Union raise the seri- unanimous consent that the order for In a story entitled, ‘‘Antimissile Test ous threat that such materials can find the quorum call be rescinded. Yields 5th Failure In a Row,’’ it is their way into the hands of extremists The PRESIDING OFFICER. Without pointed out that the THAAD system, a bent on using them. This bill fails to objection, it is so ordered. high priority theater anti-missile de- Mr. DASCHLE. Mr. President, first of address these far more likely threats. fense effort, failed yet again and is now all, let me compliment the distin- We should continue to do all we can 0 for 5 in tests. guished manager of the bill and the to prevent the spread of nuclear weap- Supporters of national defense may ranking member for the level of debate ons materials. The Nunn-Lugar Cooper- argue that the fifth consecutive failure that has already occurred on this im- ative Threat Reduction Program has of a theater missile defense system is portant piece of legislation. I have ex- removed thousands of nuclear war- not relevant to a debate on national traordinary respect for both Senators heads from former Soviet arsenals, de- missile defenses. stroyed hundreds of missile launchers, and I appreciate the manner in which However, as underscored in the Post and has safeguarded vulnerable stock- they have presented this critical mat- article, ‘‘the repeated inability to dem- piles of nuclear materials. The nuclear ter to the U.S. Senate. onstrate that THAAD’s interceptors In listening to the debate on S. 1873, tests conducted by India earlier this can hit incoming warheads has impli- I am struck by the appearance that week are a wake-up call to the United cations beyond battlefield defense. The rigid adherence to ideology seems to be States and all nations that our efforts same hit-to-kill concept is at the core trumping the sound judgment of this to prevent nuclear proliferation are in- of the even more ambitious national adequate. We should do nothing to un- Nation’s senior military leaders. The proponents of this latest attempt antimissile system.’’ dermine that high priority even fur- to deploy ballistic missile defenses at Moreover, most experts believe that ther. a rush to judgment on ballistic missile This body has also rightly funded any cost have entitled this bill the American Missile Protection Act. But I defenses will not necessarily lead to systems to protect our troops from bal- the deployment of the most effective listic missile threats and cruise missile think it is important that we be clear as to what this really legislation does. system. threats. To deal with the possibility of According to General John The only thing S. 1873 protects, is the future ballistic missile threats to U.S. Shalikashvili, former Chairman of the opportunity for defense contractors to territory, we have worked with the Ad- Joint Chiefs of Staff, ministration to prepare a plan that move far ahead of where we ought to be with regard to a commitment to de- if the decision is made to deploy a national will give us ample time to deploy a missile defense system in the near term, missile defense system if the need is velop and deploy national ballistic mis- then the system fielded would provide a very clear. Our military leaders continue to sile defenses. As stated by the Sec- limited capability. If deploying a system in agree that this plan is the most sen- retary of Defense and the Chairman of the near term can be avoided, the Defense sible way to protect the nation against the Joint Chiefs of Staff in their letters Department can continue to enhance the potential future missile threats. opposing S. 1873, deployment of na- technology base and the commensurate capa- We need a strong defense, but we tional missile defenses at this time is bility of the missile defense system that unnecessary, premature and could end could be fielded on a later deployment sched- must give the highest priority to meet- ule. ing the most serious threats. Failure to our arms control efforts. Not a word in S. 1873, Mr. President, do so will waste billions of taxpayer S. 1873, in spite of my great admira- about the costs of this system. The dollars, and leave the nation less se- tion for its author and the manager of Congressional Budget Office estimates cure. I urge my colleagues to oppose this bill, is the wrong bill at the wrong that deployment of even a very limited this bill. time, and I ask my colleagues, this The PRESIDING OFFICER. Who morning to vote against cloture. system could cost tens of billions of yields time? S. 1873 would commit the United dollars. Mr. COCHRAN. Mr. President, we re- States to deploy national missile de- Given that so much of the technology serve the remainder of our time on this fenses based on a single criterion— necessary remains unproven, history side of the aisle. technical feasibility. tells us the real cost could be much The PRESIDING OFFICER. If nei- Quoting from the bill, the United more. Despite the hefty price tag and ther side yields time, then time will be States should ‘‘deploy as soon as is the technological uncertainty, the pro- charged equally to both sides. technologically possible an effective ponents of this bill essentially say, Mr. COCHRAN. Mr. President, I ap- national missile defense system.’’ ‘‘costs be damned, full speed ahead’’. peal to the Chair for a different ruling In the eyes of the sponsors of this Yet, when it comes to proven propos- on that. We are prepared to use our 5 bill, the only standard that must be als to improve our nations’ schools, in- minutes and then proceed to hear from met in deciding whether to deploy de- crease the quality of health care, or en- the other side. If I speak now, we have fenses is that they be technologically hance our environment, the first ques- used up our 5 minutes and then they possible. tion out of the mouths of many of the have 20 minutes to complete debate. Mr. President, I cannot find a clear proponents of S. 1873 is, ‘‘how much That is not fair. definition of effective defenses in S. does it cost?’’ The PRESIDING OFFICER. The rul- 1873. Not a sentence in this bill, Mr. Presi- ing of the Chair reflects the precedence And yet, many of the same people dent, about the need for this defense of the Senate. who demand that important domestic system or the threats it is designed to Mr. COCHRAN. Mr. President, under programs meet stringent standards be- counter. According to the intelligence the ruling of the Chair, if we do not fore they can receive funding stay community, deployment of defenses is speak, then we are not going to have strangely silent when it comes to es- not justified by the rogue nation ballis- any time to speak in about 10 minutes. tablishing even the most minimal per- tic missile threat. S4764 CONGRESSIONAL RECORD — SENATE May 13, 1998 In his Annual Report to the Presi- from the time accorded the debate on I have long been a strong supporter dent and Congress, Secretary Cohen the motion. of providing Americans here at home, stated that, with one possible excep- The PRESIDING OFFICER. The Sen- and our troops deployed overseas, with tion, ‘‘no country will develop or other- ator has that right. the most effective missile defense sys- wise acquire a ballistic missile in the Mr. DASCHLE. I yield the floor. tems possible. In my view, there is no next 15 years that could threaten the The PRESIDING OFFICER. Who greater obligation of a government United States.’’ yields time? than to provide for the protection of its The only possible exception is North Mr. COCHRAN. Mr. President, may I people. The Persian Gulf War should Korea, a country that is on the verge of inquire how much time remains on have made clear to all Americans our collapsing upon itself. Even here, the each side? vulnerability to the proliferation of The PRESIDING OFFICER. The Sen- intelligence community rightly says ballistic missiles around the world, and ator from Mississippi has 5 minutes the probability of North Korea acquir- the dire need to develop and deploy ef- and the Democratic side has about 12 ing such a missile by 2005 is, ‘‘very fective defenses as soon as possible. minutes remaining. What are the objections to this sim- low.’’ Mr. COCHRAN. I yield 3 minutes to Mr. President, S. 1873 says absolutely the distinguished Senator from Vir- ple, and seemingly obvious goal? The nothing about how a U.S. deployment arguments we have heard from Mem- ginia, Mr. WARNER. of missile defenses would affect exist- The PRESIDING OFFICER. The Sen- bers on the other side of the aisle are ing and future arms control treaties. It ator from Virginia. mainly three-fold: (1) a threat does not is clear from statements made by Rus- Mr. WARNER. Mr. President, I thank currently exist—and may not exist for sian President Yeltsin and other top of- the manager of the bill. the foreseeable future—that would jus- ficials that if the United States unilat- Mr. President, the world has been tify the deployment of an NMD system; erally abrogates the ABM Treaty, the working in a responsible way for years (2) we should not commit ourselves to Russians will effectively end a decades- to try to halt the proliferation of weap- the deployment of such a system when long effort to reduce strategic nuclear ons of mass destruction—nuclear, bio- we do not know what that system weapons. They will back out of START logical and chemical. India’s decision would cost; and (3) we may be locking I. They will not ratify START II. And both yesterday and today to detonate ourselves into a technologically infe- they will not negotiate START III. five underground nuclear explosions rior system by making a deployment In other words, unilateral U.S. de- has blown a hole in the dyke of the decision today. I will respond to these ployment of missile defenses could end world’s nonproliferation efforts. The arguments in turn. the prospect for reducing Russia’s nu- flood waters are now running. This First and foremost, the threat. I re- clear arsenal from its current level of tragic development should bring into spectfully disagree with my Democrat about 9,000 weapons down to as few as sharper focus both the threat that our colleagues. In my view, the threat ex- 2,000. This is much too steep a price to nation, and indeed all nations of the ists today and is growing. Recent pay for a course of action that is world, face from the spread of weapons events in India are but the latest proof. unproven, unaffordable, and unneces- of mass destruction; and the need for In my view, the biggest current sary. defenses to protect us from that threat. threat we face is instability in Russia Finally, Mr. President, I would like The bill before us offers such protec- and the impact that instability could to say a few words about the procedure tion. have on Russian command and control by which this bill is being brought to Mr. President, on April 21, the Senate of the thousands of intercontinental the floor. Armed Services Committee voted to fa- ballistic missiles capable of reaching All too frequently these past few vorably report to the Senate S. 1873, this country. A recent segment on months, we have seen bills taken from the American Missile Protection Act of ABC’s ‘‘World News with Peter Jen- the Republican agenda and imme- 1998. I am proud to be an original co- nings,’’ highlighted this problem. I diately scheduled for floor time under sponsor of this legislation. This bipar- quote one statement: ‘‘A crushing lack parliamentary procedures that severely tisan bill, whose principal sponsors are of funds means Russia’s entire 30-year- limit debate and the opportunity to Senator COCHRAN and Senator INOUYE, old nuclear command and control sys- offer amendments. currently has 50 cosponsors in the Sen- tem is becoming unreliable.’’ When Democrats try to bring up ate. I regret to say that the vote in the I remind my colleagues that with issues important to all Americans—re- Armed Services Committee was along this legislation we are not seeking to ducing school class size and protecting party lines. deploy a Star Wars-type umbrella over patients from insurance company The American Missile Protection Act the U.S. which would protect us from a abuses—we are told there is no time or which is before the Senate today is massive strike by the Russians. We are they resort to these same parliamen- very simple. It states that, ‘‘It is the seeking protection from a very limited, tary tactics to stifle our efforts. policy of the United States to deploy as unauthorized or accidental attack. The decision to bring up S. 1873 is soon as is technologically possible a That scenario, unfortunately, could only the latest manifestation of this National Missile Defense system capa- happen today. practice. Just one day after refusing to ble of defending the territory of the And what of threats beyond Russia? set a date to take up patient protection United States against limited ballistic By the Administration’s our admission, legislation, we find the Senate has missile attack (whether accidental, un- the North Koreans will be able to de- time to vote on a bill that should be authorized or deliberate).’’ ploy—in the near term—a ballistic mis- known as ‘‘Son of Star Wars.’’ This bill is a compromise—a step sile with a range capable of striking Mr. President, I ask my colleagues to back from earlier Republican national Alaska and Hawaii. And other rogue reflect on the advice of the Secretary missile defense (NMD) efforts in that it nations are clamoring to get this type of Defense and the Joint Chiefs of Staff does not specify a date certain for de- of technology. According to a recent and vote against cloture on S. 1873. ployment of an NMD system. As my report by the Air Force, ‘‘Ballistic mis- Let us think carefully and thought- colleagues will recall, the National siles are already in widespread use and fully about its ramifications. Let us Missile Defense Act of 1997, introduced will continue to increase in number recognize the dangerous implications last January by the Majority Leader, and variety. The employment of weap- for arms control, for the federal budg- called for deployment of an NMD sys- ons of mass destruction on many bal- et, and, because of the necessity to tem by 2003. Many Republicans joined listic missiles vastly increases the sig- choose priorities within this budget, the Majority Leader in his effort last nificance of the threat.’’ for what it means to the Defense De- year. Would we still like to see a sys- I believe we have proof enough today partment itself. This is the wrong bill tem deployed by 2003? Of course we that a threat exists which justifies de- at the wrong time, and I hope we will would. But the intent of this year’s leg- ploying an NMD system. But what if— defeat cloture when the opportunity islation is to build a more bipartisan for the sake of argument—we are presents itself, in 10 minutes. consensus for deploying a national mis- wrong? What if a system is not needed Mr. President, I ask that my time be sile defense system capable of defend- for many more years? I would rather taken from my leader time, and not ing the United States. err on the side of deploying defense May 13, 1998 CONGRESSIONAL RECORD — SENATE S4765 sooner than they might be needed, siles targeted on each other. Russia is legislation were to become law in its rather than being caught defenseless if no longer the only threat we face. We current form and unilaterally breach nations move even faster than the Ad- are in a world where an increasing the ABM Treaty, the international ministration expects to develop the ca- number of nations are acquiring the condemnation India is receiving for its pability to attack our shores. means to strike others with ballistic nuclear testing during the last 48 hours Many of my Democrat colleagues missiles. If the Russians would look could quickly shift to the United are—quite properly—very concerned around their borders they would realize States. about what an NMD system might cost. that they have just as much, if not There is no question that an acciden- My reply to that is, what is the cost of more, need for effective missiles de- tal or unauthorized ICBM or SLBM not deploying a system? What if even fenses as we do. Regardless, if the Rus- launch by the Russians or PRC, how- one ballistic missile strikes the United sians do not agree to modifications of ever remote the possibility, would have States? What is the cost in terms of this 26-year old treaty, we should not devastating consequences. Such a loss of life and damage to our nation? let this document stand in the way of threat alone, it could be argued, merits That is a cost which must be factored protecting our people from attack. a limited national defense system. In- into this debate. That is a cost we I urge my colleagues to join us in our deed, there were extensive debates in should never have to pay. effort to provide effective defenses for the late eighties in the Senate regard- Who would we answer to the Amer- our country. ing ALPS, or accidental launch protec- ican people in the aftermath of such an Mr. President, in summary, the Na- tion system, as proposed by Senator attack when they ask why their gov- tion owes a debt of gratitude to the Nunn. ernment failed to provide them with Senator from Mississippi, Mr. COCHRAN, But even in the debate over ALPS, it any defenses? We know the threat ex- and the Senator from Hawaii, Mr. was understood that we should only go ists—it will only grow in the years INOUYE, for, again, showing the leader- forward if it could be made affordable ahead. It is time to stop debating, and ship to bring America closer and closer and cost-effective and deployed within time to deploy systems to protect our to a system which is absolutely essen- the constraints of the ABM Treaty or a people. tial for our defense. variant of this treaty, as agreed to by And finally, the issue of technology. When the tragic news unfolded about the Russians. The argument has been made that we the resumption of testing by India, I Admittedly, the threat situation has should put off a deployment decision think in the hearts of most Americans changed since the late 1980s. A new until we have the best possible tech- two thoughts came about: First, ‘‘Well, ICBM threat, such as a North Korean nology for an NMD system. Well, that that’s far away, no threat to us;’’ sec- capability, could present itself in less is an argument that will result in put- ondly, ‘‘Well, we already have a system than 20 years—a relatively short time- ting off a deployment decision indefi- which will protect us.’’ frame for deploying and refining a sys- nitely. There will always be better Neither is true, and this tragedy tem as complex as a national missile technology down the road. That is true brings into sharper focus the need for defense. Such threats would become for all of our weapons systems. That the U.S. Senate to move forward on even more ominous in the event tech- should not be used as an excuse for not this issue. I hope that sharper focus in- nology were transferred in part or in deploying a system which is needed. duces Senators to support moving this whole to a rogue regime, which is un- Our focus instead should be on design- bill forward. likely but not impossible. ing a system which can incorporate Another argument that is frequently Having a viable national missile de- technological advances as they become brought up is, ‘‘Well, what about Rus- fense system would not only provide a available. sia and the ABM Treaty?’’ The ABM limited capability for meeting these Another point which we must keep in Treaty in 1972 is against a background threats but, far more importantly, it mind as we debate this legislation is of two superpowers who possessed arse- could serve to deter a rogue regime that we are not locking ourselves into nals. That is not the case today. Unfor- from even expending scarce resources a particular architecture or a deploy- tunately, as a consequence of prolifera- on developing a long-range delivery ment decision that will then just go on tion, the arsenals that we find in many system. ‘‘auto-pilot.’’ We are making a broad countries, and with the news in India, And rogue regimes would not be the policy statement that the U.S. should that could even expand now the num- only nations deterred. One of the most deploy a National Missile Defense sys- ber of countries. Why should not Amer- troubling strategic developments of the tem as soon as possible. That is our icans have their prayers answered: Just next century will be the rapid expan- goal. Subsequent Congresses will de- give us what is necessary to protect sion of the PRC’s strategic nuclear cide—through the normal authoriza- against a limited attack from a single force through MIRVing—placing mul- tion and appropriation process—the de- or two or three missiles as a con- tiple warheads on each of its ICBMs— tails of the type of system to be de- sequence of terrorism, as a con- thus multiplying its nuclear strike ca- ployed and the cost of that system. sequence of a miscalculation, as a con- pability many times over. This is not a This bill is not the end of the process— sequence of failure of equipment? To remote possibility. MIRV technology is it is the beginning. me, that is a very reasonable request, over 20 years old, and press reports in- And finally, there has been discus- and that is the essence of this legisla- dicate that, in fact, the Chinese are sion about the impact of this bill on tion. I urge it be supported. testing a MIRV capability. Facing a arms control agreements with the Rus- I yield the floor. limited U.S. missile defense system sians—particularly the 1972 ABM Trea- The PRESIDING OFFICER. Who which could, if necessary, be expanded ty. Dire consequences have been pre- yields time? to meet a potential Chinese threat, dicted if we were to pass this bill Mr. LEVIN. Mr. President, I yield 5 Beijing might choose to abandon any which, according to one of our Commit- minutes to my friend from Virginia. thought of pursuing this destabilizing tee Members, would ‘‘violate the ABM The PRESIDING OFFICER. The Sen- course. Treaty.’’ I would just point out that a ator from Virginia. A limited national missile defense statement of policy does not—in and of Mr. ROBB. Thank you, Mr. President. could also serve to deter a breakout by itself—violate a treaty. Until actual Mr. President, S. 1873 calls for de- signatories, including the United deployment of a system were to take ployment of a limited national missile States, Russia, China, Britain, and place—which would be years in the fu- defense system as soon as is techno- France, to future arms limitation ture—no violation of a treaty would logically possible. agreements, especially those involving occur. In the meantime, the United Although a case can be made for a very low number of offensive systems States should be talking to the Rus- near-term deployment of this type of where temptations could be high for sians about modifying the ABM treaty capability, I do not believe it is a wise rapidly rebuilding capabilities in a cri- to deal with current realities. policy to pursue a limited national sis. We are no longer living in the world missile defense system absent any con- But we cannot simply dictate deploy- envisioned by the ABM Treaty—a siderations of costs, cost-effectiveness, ment of a national missile defense world with two superpowers with mis- or treaty implications. In fact, if this without consideration of costs and S4766 CONGRESSIONAL RECORD — SENATE May 13, 1998 treaty implications. Despite decades of ture of the threat—indeed, before we spect their views—although I respect- multibillion-dollar research and devel- are actually threatened by any strate- fully believe that they are wrong. Oth- opment and testing efforts, we have gic missiles other than Russia’s and ers may be frustrated because they feel not yet demonstrated an ability to ef- China’s, which have posed that threat the President is trying to steal their fectively and consistently hit a bullet for years. That raises the distinct risk issue. ‘‘Life is unfair,’’ as another Dem- with a bullet in either our national or that we would deploy the wrong de- ocrat once said. theater missile defense programs, as fense for the real threats we may some- But frustration and distrust do not was demonstrated even yesterday, even day face. make for good policy. And the policy in controlled settings against rel- Worse yet, we would spend the tax- that this bill would establish is simply atively easy threats. payer’s hard-earned money on the first too much, too soon. Let’s get behind The reality may be that we can get technology, rather than the best tech- 3+3—make it effective, rather than there only with exorbitant expendi- nology. And the first technology may forcing the Defense Department into tures that will siphon funding exces- not stop missiles with penetration aids, an even more unrealistic schedule. sively from U.S. military programs for which Russia and others already have. Sensible policy on ballistic missile other more pressing threats. S. 1873 In addition, by putting pressure on defense is perfectly feasible. But S. 1873 makes no account of costs and is, the Pentagon to deploy the first fea- isn’t it. Let’s stop wasting the Senate’s therefore, not, in my judgment, a pru- sible technology, this bill will very time with it. dent policy. likely worsen what General Welch’s Mr. President, I am confused as the A limited capability could probably panel recently called a ‘‘rush to fail- devil what my friends from Mississippi, be achieved within the confines of the ure.’’ Yesterday’s fifth consecutive test Virginia, and others are doing here. ABM Treaty or a slightly modified failure with one of our theater defense Again, there are good ideas, there are treaty. But to call for a defense system missiles is a reminder of how difficult bad ideas, there are timely ideas and without regard to the arms control it is to develop any middle defense. untimely ideas. This is a bad, untimely consequences is very shortsighted. Opting to deploy the first system that idea. I truly am confused. If our rush to deploy a national mis- looks feasible is simply not a prescrip- No. 1, we don’t have any system that sile defense system undermines Rus- tion for success. works. No. 2, there is no clear analysis sian ratification of START II and, Worst of all, this bill does not re- of what the threat is that we are going worse yet, pushes the Russians to abro- quire—or even permit—consideration to defend against. That usually goes gate START I, the gains of a national of negative consequences resulting hand in hand. We say we are going to from deployment. missile defense system will be offset build a system and here is the threat. Will the march to deployment de- overwhelmingly by a restoration of a My friend, the senior Senator from stroy the Anti-Ballistic Missile Trea- Virginia, says, ‘‘Well, you know, the very costly and destabilizing offensive ty? Too bad. That’s precisely what nuclear arms race. This, again, sup- threat may come from terrorist organi- some of our colleagues want. zations or from specific rogue countries ports the condition that S. 1873 is sim- Will the adoption of this objective and single-warhead systems.’’ Fine, ply not a prudent policy. torpedo implementation of START II that is one kind of system. My friend, Legislation similar to S. 1873, but and block any further reduction of the junior Senator from Virginia, calling for a cost-effective and treaty- strategic missiles or nuclear warheads? stands up and points out, if we come up compliant limited national missile de- Too bad, again. Some people find ‘‘star with a missile defense system for a sin- fense system, would be a much more wars’’ an easier solution than the hard, sensible and responsible approach. patient work of reducing great power gle warhead that is able to be dealt Mr. President, I yield the floor. armaments and stabilizing our forces. with, do you think the Chinese are not Mr. BIDEN addressed the Chair. Will renunciation of the ABM Treaty going to sit there and say, ‘‘You know, The PRESIDING OFFICER. The Sen- and the START process lead to a col- by golly, we’re not going to build any ator from Michigan has 7 minutes re- lapse of the Non-Proliferation Treaty? MIRV’d warheads, we’re not going to maining. That is a real risk. But once again, too do that’’? Mr. LEVIN. I yield 5 minutes to the bad. Right now they may not do that. It is Senator from Delaware. Do not focus on the Non-Prolifera- clearly against their interests. Mr. BIDEN. Mr. President, I thank tion Treaty’s failings, and overlook its We have this treaty with the Rus- the Senator from Michigan. successes. What would the world be sians, the former Soviet Union, to do Mr. President, there are good ideas like if the countries that have stopped away with all multiple warhead mis- and bad ideas. There are timely ideas short of developing nuclear weapons siles because we know they are so per- and untimely ones. Whatever our views were to give up on the commitment of nicious. This will encourage the Chi- on a nation-wide ballistic missile de- the nuclear powers to reduce their nese to move. No. 1, we don’t have an fense, S. 1873 is both bad and untimely. forces? Would we really be safer if all analysis of a threat. No. 2, my conserv- I urge my colleagues—on both sides those other countries were to go nu- ative friends, who are all budget-con- of the aisle—to look closely at this bill clear? scious guys, like we all are here, have and ask whether we should really be That is a real risk, if we march willy- no notion what the cost will be. They spending our time on it. Once they con- nilly to deploy a national missile de- are ready to sign on and say, ‘‘Deploy. sider its implications we can reject clo- fense. Remember: when Egypt devel- As soon as we find it, deploy it. If it ture and get back to real work. oped a better defense against Israeli at- breaks the budget deal, if it causes a What would it mean to make it U.S. tack on its forces, it was able to mount deficit, if it breaks the bank, deploy.’’ policy ‘‘to deploy as soon as is techno- an offensive attack in the Yom Kippur No. 3, the idea that the ABM Treaty logically possible an effective National War. The same thing applies to a na- may or may not be impacted upon by Missile Defense system capable of de- tional missile defense. We may see it as this seems to be of no consequence. fending the territory of the United a defense. But the rest of the world will And No. 4, my friend, the senior Sen- States against limited ballistic missile see it as a second-strike defense that ator from Virginia, and others stood up attack (whether accidental, unauthor- enables us to mount first-strike nu- on the floor when we were dealing with ized, or deliberate)’’? clear attacks. NATO expansion and said, ‘‘JOE, JOE, For starters, we would have to deploy Some day, we may really need a na- JOE, the Russians, let’s worry about a national missile defense even if broke tion-wide ballistic missile defense. how the Russians are going to think the bank, the budget agreement, and That is why the Defense Department is about being isolated; let’s worry about the U.S. economy. And it might do just pursuing the 3+3 policy of finding a how this could impact on Russia. Look, that, especially if the bill is inter- technology that would permit deploy- JOE, if you go ahead and do this and ex- preted as requiring defense of U.S. ter- ment within three years of determining pand, what’s going to happen is that all ritories in addition to every square that there was a serious threat on the arms control agreements are going to inch of the 50 states. horizon. come to a screeching halt.’’ This bill would also require deploy- Some of my colleagues truly believe Well, let me tell you something. You ment before we know the precise na- that we can’t wait for that, and I re- want to make sure they come to a May 13, 1998 CONGRESSIONAL RECORD — SENATE S4767 screeching halt? Pass this, pass this lieve it undermines congressional re- tainty a treaty between us and the beauty. This will be doing it real well. sponsibility. I believe there are com- Russians, and cause them to quit cut- Bang. All of a sudden, the Duma say- mon-sense criteria we need to apply on ting the number of nuclear weapons ing, ‘‘Now look, we are going to com- any decision of what we deploy. We and to start increasing again, we are mit to go to START II, which means need treaty compatibility. The ABM jeopardizing the security of this Nation we have no multiple warhead weapons, and START must not be jeopardized. and contributing to the proliferation of which means we’re only going to go to We need affordability. A balanced nuclear weapons. single warhead weapons, which means budget must be maintained. We should That is one of the big problems of that, by the way, the U.S. Senate’’— have maximum utilization of existing this bill. That is why our top military and they think we are even smarter technology to prevent increased costs. leadership do not support this bill. than we think we are—‘‘the U.S. Sen- Mr. President, S. 1873 gives the Pen- I ask unanimous consent, Mr. Presi- ate just said, ‘Go ahead and deploy as tagon no guidance on all of these dent, that the letters of General soon as you have a feasible system.’ ’’ issues. In addition to that, our military Shelton, General Shalikashvili and Now, what do you think those good leadership is telling us that S. 1873 Secretary Cohen in opposition to this old boys in the Duma are going to do? might undermine our Nation’s secu- bill be printed in the RECORD. They are going to say, ‘‘You know, rity. There being no objection, the mate- let’s continue to destroy our multiple The PRESIDING OFFICER. The Sen- rial was ordered to be printed in the warhead weapons. The only thing we ator has spoken for 1 minute. RECORD, as follows: know for sure, these guys can’t stop.’’ Mr. CONRAD. I ask for an additional CHAIRMAN OF THE Look, what is viewed as good for 30 seconds. JOINT CHIEFS OF STAFF, somebody is viewed as poison for other Mr. LEVIN. I ask unanimous consent Washington, DC, April 21, 1998. people on occasion. And let me point for an additional minute for this side. Hon. CARL M. LEVIN, out to you, we are sitting here think- Mr. COCHRAN. No objection. Ranking Minority Member, Committee on Armed ing—and we mean it—that what we The PRESIDING OFFICER. Without Services, Washington, DC. objection, it is so ordered. DEAR SENATOR LEVIN: Thank you for the want to do is we are going to defend opportunity to comment on the American the American people. And we do. But Mr. CONRAD. Mr. President, let us Missile Protection Act of 1998 (S. 1873). I you sit there on the other side of the listen to our leadership, our military agree that the proliferation of weapons of ocean, the other side of the world, and leadership, General Shelton, the cur- mass destruction (WMD) and their delivery say, ‘‘These guys, these Americans, the rent Chairman of the Joint Chiefs of systems poses a major threat to our forces, only people, by the way, who ever did Staff. allies, and other friendly nations. US missile drop an atomic weapon, these guys are The effect NMD ‘‘deployment would systems play a critical role in our strategy building a system that is going to have on our arms control agreements to deter these threats, and the current Na- and nuclear arms reductions * * * tional Missile Defense (NMD) Deployment render them impervious to being hit by Readiness Program (3+3) is structured to nuclear weapons. We think they are should be included in any bill on na- provide a defense against them when re- building that system for a second- tional missile defense.’’ quired. strike capability. They can affirma- General Shalikashvili, the former The bill and the NMD program are consist- tively strike us knowing they can’t be Chairman of the Joint Chiefs: Efforts ent on many points; however, the following struck back.’’ that imply ‘‘withdrawal in the ABM differences make it difficult to support en- Now, don’t you think the guys that Treaty may jeopardize Russian ratifi- actment. First and most fundamental are don’t like us might think that? Don’t cation of START II and * * * could the conditions necessary for deployment. The bill would establish a policy to deploy as you think that might cross their minds prompt Russia to withdraw from START I. I am concerned that failure soon as technology allows. The NMD pro- as reasonable planners? And what are gram, on the other hand, requires an emerg- we doing this for? What are we doing of either START initiative will result ing ballistic missile threat as well as the this for? We have no technology that in Russian retention of hundreds or achievement of a technological capability works now. We are spending $3 billion a even thousands more nuclear weapons, for an effective defense before deployment of year, which I support, on theater and thereby increasing both costs and risks missile defenses. national missile defense research—$3 we may face.’’ Second, the bill asserts that the United billion a year. I am for it. We should Mr. President, I am in favor of NMD, States has no policy to deploy an NMD sys- tem. In fact, the NMD effort is currently a not get behind the curve so there is a national missile defense. I am opposed to this legislation. robust research and development program breakout. But to deploy as soon as fea- that provides the flexibility to deploy an ini- sible? So I have only come to one con- The PRESIDING OFFICER. The Sen- tial capability within 3 years of a deploy- clusion here, Mr. President. This has to ator from Michigan has 1 minute 30 ment decision. This prudent hedge ensures do with either trying to get rid of seconds remaining. that the United States will be capable of ABM, which is one of the reasons why Mr. LEVIN. Mr. President, this is meeting the need for missile defenses with some of my friends on the right think more of an ‘‘NMC’’ bill than an NMD. the latest technology when a threat emerges. it is a bad idea or, No. 2, the President This is a ‘‘Never Mind the Con- Third, I disagree with the bill’s contention that the US ability to anticipate future bal- stole the march on the missile defense sequence’’ bill. General Shelton, our top military listic missile threats is questionable. It is from them and they are not going to possible, of course, that there could be sur- let it happen. This makes no sense. leader in the uniform of this country, prises, particularly were a rogue state to re- I thank the Chair. has said he cannot support this bill for ceive outside assistance. However, given the The PRESIDING OFFICER. The Sen- a number of reasons. substantial intelligence resources being de- ator’s 5 minutes have expired. The question has been asked, ‘‘How voted to this issue, I am confident that we Who yields time? can anybody oppose this bill?’’ A lot of will have the 3 years’ warning on which our Mr. LEVIN addressed the Chair. people oppose this bill for a lot of rea- strategy is based. The PRESIDING OFFICER. The Sen- sons. But the people who support this Fourth, the bill uses the phrase ‘‘system bill ought to ask themselves, ‘‘How is capable of defending the territory of the ator from Michigan. United States.’’ The NMD program calls for Mr. LEVIN. Does the Senator from it that our top military leadership op- defense of only the 50 states. Expanding per- North Dakota want a minute at this pose it?’’ And General Shelton, for formance coverage to include all US terri- point? I yield a minute to the Senator many reasons, says he cannot support tories would have considerable cost, design, from North Dakota. it. And one of the reasons is the one and location implications. The PRESIDING OFFICER. The Sen- that Senator CONRAD just read. And I Finally, the bill does not consider afford- ator from North Dakota. want to repeat it. Any bill should ‘‘con- ability or the impact a deployment would Mr. CONRAD. Mr. President, I rise as sider affordability [and] the impact a have on arms control agreements and nu- a strong supporter of national missile deployment would have on arms con- clear arms reductions. Both points are ad- dressed in the NMD Deployment Readiness defense. I have introduced legislation trol agreements and nuclear arms re- Program and should be included in any bill on this subject. I strongly believe in it. ductions.’’ on NMD. Just as strongly, I oppose what is be- When you commit to deploy a system Please be assured that I remain committed fore us. I oppose it because, No. 1, I be- which will breach in almost dead cer- to those programs that discourage hostile S4768 CONGRESSIONAL RECORD — SENATE May 13, 1998 nations from the proliferation of WMD and NMD system would be deployed by 2003. If in posing that. We hope the Senate will the missiles that deliver them. In that re- 2000 the threat assessment does not warrant vote cloture. Let us proceed to the con- gard, I am confident that our current NMD a deployment decision, improvements in sideration of the American Missile Pro- program provides a comprehensive policy to NMD system component technology will con- tection Act. If Senators have amend- counter future ballistic missile threats with tinue, while an ability is maintained to de- the best technology when deployment is de- ploy a system within three years of a deci- ments, suggestions, that is when they termined necessary. sion. will be in order. They cannot be consid- Sincerely, The Quadrennial Defense Review re- ered now until we invoke cloture. I HENRY H. SHELTON, affirmed this approach, although it also de- hope the Senate will vote to invoke Chairman, Joint Chiefs of Staff. termined that the ‘‘3+3’’ program was inad- cloture on the motion to proceed to equately funded to meet its objectives. Ac- consider the bill. CHAIRMAN OF THE cordingly, I directed that an additional $2.3 CLOTURE MOTION JOINT CHIEFS OF STAFF, billion be programmed for NMD over the Fu- Washington, DC, May 1, 1996. ture Years Defense Plan. It must be empha- The PRESIDING OFFICER. Under Hon. SAM NUNN, sized, though, that even with this additional the previous order, pursuant to rule U.S. Senate, Committee on Armed Services, funding, NMD remains a high risk program XXII, the Chair lays before the Senate Washington, DC. because the compressed schedule neces- the pending cloture motion, which the DEAR SENATOR NUNN: In response to your sitates a high degree of concurrency. I share with Congress a commitment to en- clerk will state. recent letter on the Defend America Act of The bill clerk read as follows: 1996, I share Congressional concern with re- suring the American people receive protec- gard to the proliferation of ballistic missiles tion from missile threats how and when they CLOTURE MOTION and the potential threat these missiles may need it. S. 1873, however, would alter the We, the undersigned Senators, in accord- present to the United States and our allies. ‘‘3+3’’ strategy so as to eliminate taking into ance with the provisions of rule XXII of the My staff, along with CINCs, Services and the account the nature of the threat when mak- Standing Rules of the Senate, do hereby Ballistic Missile Defense Organization ing a deployment decision. This could lead to move to bring to a close debate on the mo- (BMDO), is actively reviewing proposed sys- the deployment of an inferior system less ca- tion to proceed to Calendar No. 345, S. 1873, tems to ensure we are prepared to field the pable of defending the American people if the missile defense system legislation: most technologically capable systems avail- and when a threat emerges. Because of this, Trent Lott, Thad Cochran, Strom Thur- able. We also need to take into account the I am compelled to oppose the adoption of the mond, Jon Kyl, Conrad Burns, Dirk parallel initiatives ongoing to reduce the bill. Kempthorne, Pat Roberts, Larry Craig, Please be assured, however, that I will con- ballistic missile threat. Ted Stevens, Rick Santorum, Judd tinue to work closely with the Senate and In this regard, efforts which suggest Gregg, Tim Hutchinson, Jim Inhofe, House of Representatives to ensure that our changes to or withdrawal from the ABM Connie Mack, R.F. Bennett, and Jeff NMD program and all of our defense pro- Treaty may jeopardize Russian ratification Sessions. of START II and, as articulated in the Soviet grams are designed and carried out in a man- CALL OF THE ROLL Statement to the United States of 13 June ner that provides the best possible defense of 1991, could prompt Russia to withdraw from our people and interests. The PRESIDING OFFICER. By unan- START I. I am concerned that failure of ei- Sincerely, imous consent, the quorum call has ther START initiative will result in Russian BILL COHEN. been waived. retention of hundreds or even thousands Mr. COCHRAN addressed the Chair. VOTE The PRESIDING OFFICER. The Sen- more nuclear weapons thereby increasing The PRESIDING OFFICER. The both the costs and risks we may face. ator from Mississippi. We can reduce the possibility of facing Mr. COCHRAN. Mr. President, there question is: Is it the sense of the Sen- these increased cost and risks by planning an are two criticisms of this bill that I ate that debate on the motion to pro- NMD system consistent with the ABM trea- have heard during the debate from the ceed to S. 1873, the missile defense bill, ty. The current National Missile Defense De- opponents. The distinguished Senator shall be brought to a close? The yeas ployment Readiness Program (NDRP), which from Michigan says that the bill should and nays are required under the rule. is consistent with the ABM treaty, will help The clerk will call the roll. provide stability in our strategic relation- include the words ‘‘treaty compliant’’ and that it is therefore vulnerable to The bill clerk called the roll. ship with Russia as well as reducing future The PRESIDING OFFICER (Mr. risks from rogue countries. criticism and ought to be rejected. The In closing let me assure you, Senator distinguished Democratic leader says BURNS). Are there any other Senators Nunn, that I will use my office to ensure a the bill uses the phrase ‘‘effective na- in the Chamber desiring to vote? timely national missile defense deployment tional missile defense system.’’ He says The yeas and nays resulted—yeas 59, decision is made when warranted. I have dis- ‘‘effective’’ is not defined in the bill. nays 41, as follows: cussed the above position with the Joint [Rollcall Vote No. 131 Leg.] Chiefs and the appropriate CINCs, and all are Well, my suggestion is, if amend- in agreement. ments ought to be offered to this bill YEAS—59 Sincerely, we should vote for cloture so that we Abraham Frist Mack JOHN M. SHALIKASHVILI, can get to the bill and amendments Akaka Gorton McCain Chairman, Joint Chiefs of Staff. will be in order. Criticizing the bill be- Allard Gramm McConnell Ashcroft Grams Murkowski cause we are not considering amend- Bennett Grassley Nickles THE SECRETARY OF DEFENSE, ments at this time is begging the ques- Bond Gregg Roberts Washington, DC, April 21, 1998. tion. The question is, should the Sen- Brownback Hagel Roth Hon. STROM THURMOND, ate turn to the consideration of the Burns Hatch Santorum Chairman, Committee on Armed Services, U.S. Campbell Helms Sessions Senate, Washington, DC. American Missile Protection Act? We Chafee Hollings Shelby DEAR MR. CHAIRMAN: I am writing in re- are suggesting yes. But the Democrats Coats Hutchinson Smith (NH) sponse to your request for the views of the objected. Cochran Hutchison Smith (OR) Department of Defense on S. 1873, the Amer- It is like when President Clinton, 2 Collins Inhofe Snowe ican Missile Protection Act of 1998. Coverdell Inouye Specter years ago with the authorization bill Craig Jeffords Stevens The Department of Defense is committed before the Congress, held the bill up, to ensuring that we properly protect the D’Amato Kempthorne Thomas held it up arguing over missile defense DeWine Kyl Thompson American people and America’s national se- because there was a provision in it that Domenici Lieberman Thurmond curity interests. This requires that we have Enzi Lott Warner a carefully balanced defense program that suggested we ought to have a national Faircloth Lugar ensures that we are able to meet threats to missile defense, we ought to develop our people and vital interest wherever and and deploy. They changed the words fi- NAYS—41 whenever they arise. A key element of our nally to ‘‘develop for deployment,’’ and Baucus Dodd Kerrey defense program is our National Missile De- then that was taken out of the bill in Biden Dorgan Kerry fense (NMD) program, which as you know Bingaman Durbin Kohl conference. Boxer Feingold Landrieu was restructured under Secretary Perry and The point is this administration is with the support of Congress as a ‘‘3+3’’ de- Breaux Feinstein Lautenberg taking a wait-and-see attitude, wait Bryan Ford Leahy ployment readiness program. Under this ap- until there is a threat. The reality is Bumpers Glenn Levin proach, by 2000 the United States is to be in Byrd Graham Mikulski a position to make a deployment decision if the threat exists now. We need to de- Cleland Harkin Moseley-Braun warranted by the threat, and if a decision to bate this issue. We need to debate this Conrad Johnson Moynihan deploy were made at that time the initial bill. The Democrat leadership are op- Daschle Kennedy Murray May 13, 1998 CONGRESSIONAL RECORD — SENATE S4769 Reed Rockefeller Wellstone (7) by adding at the end the following: Mr. GRASSLEY. Mr. President, I Reid Sarbanes Wyden ‘‘(2) A transfer of a charitable contribution to Robb Torricelli yield myself such time as I might con- a qualified religious or charitable entity or orga- sume. The PRESIDING OFFICER. On this nization shall not be considered to be a transfer The PRESIDING OFFICER. The Sen- covered under paragraph (1)(B) in any case in vote, the yeas are 59, the nays are 41. ator from Iowa is recognized. Three-fifths of the Senators duly cho- which— ‘‘(A) the amount of that contribution does not Mr. GRASSLEY. Mr. President, I rise sen and sworn not having voted in the exceed 15 percent of the gross annual income of in strong support of S. 1244, The Reli- affirmative, the motion is rejected. the debtor for the year in which the transfer of gious Liberty and Charitable Donation Mr. LEVIN. Mr. President, I move to the contribution is made; or Protection Act, which I introduced in reconsider the vote by which the mo- ‘‘(B) the contribution made by a debtor ex- October of last year. tion was rejected. ceeded the percentage amount of gross annual When I held hearings on this bill be- Mr. FORD. I move to lay that motion income specified in subparagraph (A), if the fore my subcommittee, I learned that on the table. transfer was consistent with the practices of the churches and charities around the debtor in making charitable contributions.’’. The motion to lay on the table was (b) TRUSTEE AS LIEN CREDITOR AND AS SUC- country are experiencing a spate of agreed to. CESSOR TO CERTAIN CREDITORS AND PUR- lawsuits by bankruptcy trustees trying Mr. HATCH addressed the Chair. CHASERS.—Section 544(b) of title 11, United to undo tithes or charitable donations. The PRESIDING OFFICER. The Sen- States Code, is amended— Under provisions of the Bankruptcy ator from Utah is recognized. (1) by striking ‘‘(b) The trustee’’ and inserting Code originally designed to fight fraud- Mr. HATCH. Mr. President, let me ‘‘(b)(1) Except as provided in paragraph (2), the ulent transfers of assets or money on trustee’’; and the eve of bankruptcy, bankruptcy yield to my colleague from Iowa. (2) by adding at the end the following: The PRESIDING OFFICER. The Sen- ‘‘(2) Paragraph (1) shall not apply to a trans- trustees have begun to sue churches ator from Iowa is recognized. fer of a charitable contribution (as that term is when one of their parishioners declares Mr. GRASSLEY. Mr. President, I ask defined in section 548(d)(3)) that is not covered bankruptcy, charging that tithes are that the Senate now proceed to the under section 548(a)(1)(B), by reason of section fraud. consideration of S. 1244 under the con- 548(a)(2). Any claim by any person to recover a Of course, this puts the fiscal health sent order. transferred contribution described in the preced- of many churches at serious risk. Most ing sentence under Federal or State law in a f churches and charities don’t have big Federal or State court shall be preempted by the bank accounts. Having to pay back RELIGIOUS LIBERTY AND CHARI- commencement of the case.’’. money that has been received and al- TABLE DONATION PROTECTION (c) CONFORMING AMENDMENTS.—Section 546 of title 11, United States Code, is amended— ready spent is a real hardship for ACT OF 1998 (1) in subsection (e)— churches which often live on a shoe- The PRESIDING OFFICER. The (A) by striking ‘‘548(a)(2)’’ and inserting string budget. S. 1244 will protect clerk will report. ‘‘548(a)(1)(B)’’; and against that. The legislative clerk read as follows: (B) by striking ‘‘548(a)(1)’’ and inserting Protecting churches and charities ‘‘548(a)(1)(A)’’; from baseless bankruptcy lawsuits will A bill (S. 1244) to amend title 11, United (2) in subsection (f)— States Code, to protect certain charitable (A) by striking ‘‘548(a)(2)’’ and inserting protect key players in the delivery of contributions, and for other purposes. ‘‘548(a)(1)(B)’’; and services to the poor. What do churches The Senate proceeded to consider the (B) by striking ‘‘548(a)(1)’’ and inserting do with tithes? What do charities do bill which had been reported from the ‘‘548(a)(1)(A)’’; and with contributions? (3) in subsection (g)— They feed the poor with soup kitch- Committee on the Judiciary, with an (A) by striking ‘‘section 548(a)(1)’’ each place amendment to strike all after the en- ens. They collect used clothing and it appears and inserting ‘‘section 548(a)(1)(A)’’; help provide shelter for the homeless. acting clause and inserting in lieu and thereof the following: (B) by striking ‘‘548(a)(2)’’ and inserting And they do it with a minimal amount ‘‘548(a)(1)(B)’’. of Government assistance. In this day SECTION 1. SHORT TITLE. and age, where Congress is seeking to This Act may be cited as the ‘‘Religious Lib- SEC. 4. TREATMENT OF POST-PETITION CHARI- erty and Charitable Donation Protection Act of TABLE CONTRIBUTIONS. trim the Federal Government to its ap- (a) CONFIRMATION OF PLAN.—Section 1998’’. propriately limited role, we must pro- 1325(b)(2)(A) of title 11, United States Code, is tect the important work of churches SEC. 2. DEFINITIONS. amended by inserting before the semicolon the Section 548(d) of title 11, United States Code, and charities. Mr. President, S. 1244 is following: ‘‘, including charitable contributions a giant step in that direction. is amended by adding at the end the following: (that meet the definition of ‘charitable contribu- ‘‘(3) In this section, the term ‘charitable con- tion’ under section 548(d)(3)) to a qualified reli- This bill doesn’t amend Section tribution’ means a charitable contribution, as gious or charitable entity or organization (as 548(A)(1) of the Bankruptcy Code. This that term is defined in section 170(c) of the In- that term is defined in section 548(d)(4)) in an means that any transfer of assets on ternal Revenue Code of 1986, if that contribu- amount not to exceed 15 percent of the gross in- the eve of bankruptcy which is in- tion— come of the debtor for the year in which the tended to hinder, delay or defraud any- ‘‘(A) is made by a natural person; and contributions are made’’. one is still prohibited. Only genuine ‘‘(B) consists of— (b) DISMISSAL.—Section 707(b) of title 11, charitable contributions and tithes are ‘‘(i) a financial instrument (as that term is de- United States Code, is amended by adding at the fined in section 731(c)(2)(C) of the Internal Rev- protected by S. 1244. Accordingly, a end the following: ‘‘In making a determination transfer of assets which looks like a enue Code of 1986); or whether to dismiss a case under this section, the ‘‘(ii) cash. court may not take into consideration whether a tithe or a charitable donation, but ‘‘(4) In this section, the term ‘qualified reli- debtor has made, or continues to make, chari- which is actually fraud, can still be set gious or charitable entity or organization’ table contributions (that meet the definition of aside. For example, if someone who is means— ‘charitable contribution’ under section 548(d)(3)) about to declare bankruptcy gives ‘‘(A) an entity described in section 170(c)(1) of to any qualified religious or charitable entity or away all of his assets in donations of the Internal Revenue Code of 1986; or organization (as that term is defined in section less than 15 percent of his income, that ‘‘(B) an entity or organization described in 548(d)(4)).’’. section 170(c)(2) of the Internal Revenue Code of would be strong evidence of real fraud SEC. 5. APPLICABILITY. and real fraud can’t be tolerated. 1986.’’. This Act and the amendments made by this SEC. 3. TREATMENT OF PRE-PETITION QUALIFIED Mr. President, my legislation also Act shall apply to any case brought under an permits debtors in chapter 13 repay- CHARITABLE CONTRIBUTIONS. applicable provision of title 11, United States (a) IN GENERAL.—Section 548(a) of title 11, Code, that is pending or commenced on or after ment plans to tithe during the course United States Code, is amended— the date of enactment of this Act. of their repayment plan. Under current (1) by inserting ‘‘(1)’’ after ‘‘(a)’’; SEC. 6. RULE OF CONSTRUCTION. law, people who declare bankruptcy (2) by striking ‘‘(1) made’’ and inserting ‘‘(A) Nothing in the amendments made by this Act under chapter 13 must show that they made’’; is intended to limit the applicability of the Reli- are using all of their disposable income (3) by striking ‘‘(2)(A)’’ and inserting ‘‘(B)(i); gious Freedom Restoration Act of 1993 (42 U.S.C. to repay their creditors. The term dis- (4) by striking ‘‘(B)(i)’’ and inserting ‘‘(ii)(I)’’; 2002bb et seq.). (5) by striking ‘‘(ii) was’’ and inserting ‘‘(II) posable income has been interpreted by was’’; The PRESIDING OFFICER. Under the courts to allow debtors to have a (6) by striking ‘‘(iii)’’ and inserting ‘‘(III)’’; the previous order, there are 10 min- reasonable entertainment budget dur- and utes equally divided on each side. ing their repayment period. But these S4770 CONGRESSIONAL RECORD — SENATE May 13, 1998 same courts won’t let people tithe. So, EXHIBIT 1 that any of these churches has ever had dif- a debtor could budget money for mov- UNIVERSITY OF TEXAS AT AUSTIN, ficulty with tax exemption or tax deductibil- ies or meals at restaurants, but they SCHOOL OF LAW, ity of contributions because of their unincor- Austin, TX, May 6, 1998. porated status. I work with many church couldn’t use that same money to tithe lawyers and religious leaders, and none of to their church. This is a direct and Hon. CHARLES E. GRASSLEY, Hart Senate Office Building, them has ever mentioned such a problem. outrageous assault on religious free- Washington, DC. There are no reported cases indicating litiga- dom. And I think it’s quite clearly con- DEAR SENATOR GRASSLEY: The question has tion over such a problem. If unincorporated trary to Congress’ intent in enacting arisen whether S. 1244 and H.R. 2604 would churches were having this problem, Congress chapter 13. I doubt anyone would have protect unincorporated churches. The answer would have heard demands for constituent is yes; unincorporated churches would be help or corrective legislation. supported the idea that debtors could The fact is that legitimate unincorporated protected. pay money to a gambling casino for en- churches that otherwise qualify for tax de- These bills protect organizations defined in tertainment but could not give the ductibility under § 170 and for tax exemption § 170(c)(2) of the Internal Revenue Code, same money to a church as a tithe. under § 501(c)(3) are not rendered ineligible which includes any ‘‘corporation, trust, or by their failure to incorporate. There is so community chest, fund, or foundation’’ orga- Mr. President, S. 1244 is necessary at little doubt about that that neither Con- nized and operated exclusively for chari- this time because the Supreme Court gress, the IRS, nor the courts has ever had to table, religious, or other listed purposes. The struck down the Religious Freedom expressly elaborate on the rule that every- Internal Revenue Code defines ‘‘corporation’’ Restoration Act as unconstitutional one knows. This is a question that can be to include an ‘‘association.’’ 26 U.S.C. safely dealt with in legislative history af- last summer. A badly-divided panel of § 7701(a)(3). An unincorporated association firming Congress’s understanding that unin- the Eighth Circuit Court of Appeals may also be a ‘‘fund.’’ corporated associations are included in has recently ruled that RFRA protects The language of § 170(c)(2) dates to shortly § 170(c)(2) and Congress’s intention that they tithes, even after the Supreme Court after World War I. Related sections drafted be protected by these bills. case. But that decision is being ap- more recently use the word ‘‘organization,’’ I consulted informally with Deirdre pealed to the Supreme Court. No mat- which more obviously includes unincor- Halloran, the expert on tax exempt organiza- ter what the Court does, we need to porated associations. See, e.g., § 170b and tions at the United States Catholic Con- pass this bill now, and to subject §§ 502–511. The implementing regulations ference, and with tax professors here and under § 170 and § 501(c)(3) also used the word elsewhere, who confirmed these conclusions. churches to uncertainty and harass- ‘‘organization.’’ 26 C.F.R. §§ 1.170 and 1.501. ment by bankruptcy trustees. Ms. Halloran would be happy to respond to ‘‘Organization’’ does not appear to be a de- inquiries from your office if you need a sec- Mr. President, I think it’s important fined term. But Treasury Regulations define ond opinion. to remember that my bill protects do- ‘‘articles of organization’’ in inclusive terms: Very truly yours, ‘‘The term articles of organization or arti- DOUGLAS LAYCOCK. nations to churches as well as other cles includes the trust instrument, the cor- types of nonprofit charities. I did this porate charter, the articles of association, or Mr. GRASSLEY. I yield the floor. because many well-respected constitu- any other written instrument by which an Mr. HATCH. I compliment the distin- tional scholars believe that protecting organization is created.’’ 26 C.F.R. guished Senator from Iowa and the dis- only religiously-motivated donations § 1.501(c)(3)(b)(2) (emphasis added) ‘‘Articles tinguished Senator from Illinois for from the reach of the Bankruptcy Code of association’’ clearly seems designed to in- their work on this bill. would violate the establishment clause clude unincorporated associations. This is called the Religious Liberty The clearest statement from the Internal of the first amendment. and Charitable Donations Act of 1998, Revenue Service appears to be Revenue Pro- and I urge all of my colleagues to vote Now a concern was recently raised cedure 82–2 (attached), which sets out certain for its passage. that S. 1244 doesn’t protect unincor- rules for different categories of tax exempt S. 1244 will help spell out the safe organizations. Section 3.04 provides a rule porated churches. That just isn’t so. harbors for tithe-payers or others who Professor Douglas Laycock, perhaps for ‘‘Unincorporated Nonprofit Associa- tions.’’ This Procedure treats the question as contribute to charitable organizations the leading scholar on religious free- utterly settled and noncontroversial. and then find themselves in bank- dom, has written to me on this topic Tax scholars agree that § 170 includes unin- ruptcy. It will work, together with the and has concluded that unincorporated corporated associations. The conclusion ap- Religious Freedom Restoration Act in churches would in fact be protected. I pears to be so universally accepted that this area, to relieve burdens on often ask unanimous consent that his letter there has been no litigation and no need to strained organizations that provide im- be printed in the RECORD following my elaborate the explanation. The leading trea- portant services to our society. It will remarks. tise on tax-exempt organizations states: ‘‘An unincorporated association or trust can relieve an untenable burden on the reli- The PRESIDING OFFICER. Without qualify under this provision, presumably as a gious rights of tithe-payers throughout objection, it is so ordered. (See exhibit fund or foundation or perhaps, as noted, as a America. 1.) corporation.’’ Bruce R. Hopkins, The Law of Mr. President, the issue of the status Tax-Exempt Organizations § 4.1 at 52 (7th ed. of tithes paid to churches by reli- Mr. GRASSLEY. Mr. President, I 1997). giously motivated Americans who find would like to close on this note. When Borris Bittker of Yale and Lawrence themselves in bankruptcy proceedings I chaired a hearing on tithing and Lokken of NYU says: ‘‘Since the term cor- has vexed tithe-payers and our courts bankruptcy before my subcommittee poration includes associations and fund or for a number of years now. Vigilant, late last year, I heard from the pastor foundation as used in IRC § 501(c)(3) is con- strued to include trusts, the technical form and some might say over-zealous, of Crystal Free Evangelical Church. bankruptcy trustees have tried to re- This church is the one fighting right in which a charitable organization is clothed rarely results in disqualification.’’ Boris I. cover tithes paid to churches as fraudu- now in the Eighth Circuit Court of Ap- Bittker & Lawrence Lokken, 4 Federal Tax- lent conveyances under the bankruptcy peals to keep the bankruptcy court out ation of Income, Estates and Gifts T100.1.2 at code. Hundreds, if not thousands, of of its church coffers. Pastor Goold tes- 100–6 (2d ed. 1989). such claims for recovery against tified in a very compelling way about Closely related provisions of the Code ex- churches have been filed over the last the practical difficulties his church has pressly cover churches. I.R.C. § 170(b)(1) few years. This has imperiled many faced because of the Bankruptcy Code. states special rules for a subset of organiza- tions defined in § 170(c), including ‘‘a church, churches, which operate on the offer- As Pastor Goold put it, when there’s a ings they receive as they come in. By conflict between the bankruptcy laws or a convention or association of churches.’’ I.R.C. § 508(c)(1) provides that ‘‘churches, the time a bankruptcy claim is filed, and the laws of God, we should change their integrated auxiliaries, and conventions the money has been spent feeding the the bankruptcy laws because God’s or associations of churches’’ do not have to poor or otherwise serving the needs of laws aren’t going to change. apply for tax exemption. These provisions the congregation. Many churches find Whether someone believes in tithing plainly contemplate that churches are cov- it very difficult to make up money that or not, it’s clear that many Americans ered; they also prevent the accumulation of has already been spent, and when they IRS decisions granting tax exempt status to feel that tithing is an act of worship, unincorporated churches. These churches are can, it weakens their ability to do the required by divine law. It’s completely simply presumed to be exempt. charitable and spiritual work that is unacceptable to have the bankruptcy There are tens of thousands of unincor- part of the grand tradition of religious code undo an act of worship. porated churches in America. I am not aware charity in America. May 13, 1998 CONGRESSIONAL RECORD — SENATE S4771 Not only are the churches themselves useful and efficacious. So I urge all of Bankruptcy law to ensure that our imperiled, but many believers are told our colleagues to vote for its passage. courts will no longer make the sort of by the government that they can no Mr. SESSIONS addressed the Chair. rulings that I have described. longer pay tithes once they have been The PRESIDING OFFICER. Who Under our bill, contributions of up to in bankruptcy, even if a believing debt- yields time? 15% of a person’s income, or a higher or wishes to forgo allowable entertain- The Senator from Alabama. amount that is consistent with an indi- ment expenses to pay the tithing they Mr. GRASSLEY. I yield to the Sen- vidual’s past practice of giving, will believe God requires of them. This is an ator from Alabama. not be considered fraudulent when unsupportable interposition of Uncle The PRESIDING OFFICER. The Sen- made during the year prior to filing Sam and the bankruptcy system be- ator from Alabama is recognized. bankruptcy. Consequently, innocent Mr. SESSIONS. Mr. President, I rise tween believing Americans and God. churches and charities would not have to speak on behalf of the Religious Lib- I believe we fixed the problem in 1993, to repay such contributions. erty and Charitable Donation Protec- when we passed the Religious Freedom Secondly, our bill will allow debtors tion Act of 1998. It is an honor to work Restoration Act (‘‘RFRA’’), which gave under Chapter 13 repayment plans to with my good friend from Iowa on this greater protections to religious activi- make charitable contributions of up to important piece of legislation, and I ties across the board than the courts 15% of their income. If bankruptcy law thank him for his leadership on this were affording at that time. An early allows for spending on recreational ex- issue. bankruptcy case under that law, how- penses while under a Chapter 13 repay- ever, and the position the Clinton Jus- In an important 1970 Supreme Court case upholding tax exemptions for ment plan, it should also allow an indi- tice Department took in that case, vidual to tithe to their church or make risked undermining those protections. churches, Chief Justice Burger spoke of the Government’s relationship with re- reasonable charitable contributions. Under pressure from me and others in Mr. President, this is an important Congress, the Justice Department re- ligion as being a relationship of ‘‘be- nevolent neutrality’’. It seems more bill which will help to restore the Gov- versed itself on direct orders from the and more that the Government’s ‘‘be- ernment to its rightful position of be- President. And, luckily, the 8th Circuit nevolent neutrality’’ is becoming hard- nevolent neutrality toward religion. It Court of Appeals applied RFRA‘s er to discern, often being replaced with will provide necessary legislative guid- stronger protections to the case. When what appears to be ‘‘outright hos- ance in an area of bankruptcy law that that decision was appealed to the Su- tility’’. has gotten off track. I urge my col- preme Court, however, it was vacated A good example of this is found in leagues to join with me in support of and remanded by the Supreme Court Federal bankruptcy law. In the 1995 this legislation. for further proceedings in light of the case of ‘‘In re Tessier,’’ a couple filed Mr. President, I am honored to sup- Court’s decision in City of Boerne v. Flo- for bankruptcy under Chapter 13. Out port this legislation. Senator GRASS- res,—U.S.—,117 S. Ct. 2157 (1997), in of their net monthly income of $1,610, LEY has done an excellent job in identi- which it held that RFRA was unconsti- they proposed to continue making con- fying an unfair component of the Bank- tutional as applied to the states. Upon tributions to their church in the ruptcy Act. If an individual pays the review of the Young case, I filed an amount of $100 per month. This couple money to a nightclub, a casino, or to amicus brief in the 8th Circuit, arguing had deeply-held religious convictions any other recreational activity whatso- with others that Boerne had no effect about donating to the church as part of ever, that person who received the on questions of federal law such as the exercise of their religious faith. money does not have to give it back to bankruptcy, and so RFRA was con- They proposed spending only $200 per the bankruptcy court. If they had stitutional and should apply in the month on food, and nothing on enter- given money to a charitable enterprise bankruptcy context. I am pleased to re- tainment, recreation, health insurance, or a church, they could be required to port that the case of Christians v. Crys- life insurance, cable television, tele- give it back. And in chapter 13 where tal Evangelical Free Church, 1998 WL phone, or even electrical utility serv- an individual pays out their debts on a 166642 (8th Cir. (Minn.)), decided last ice. Nevertheless, the Bankruptcy regular basis, the courts have denied month, held RFRA to be constitutional Court ruled that during the 5 year du- them the right to give money to chari- for federal law purposes and protective ration of their Chapter 13 plan, this table institutions as part of their regu- of tithes in bankruptcy proceedings. couple could not make the proposed lar payments while at the same time The uncertainty caused by Boerne contributions to their church. This was allowing them substantial amounts of accelerated the challenging of tithes as in spite of the fact that the Court money for recreational expenditures. fraudulent conveyances, and in turn would probably have allowed them to We think that is unfair. We think this spurred our efforts to clarify the law. I spend that sum of money on entertain- bill is a sound way to correct that am glad that RFRA will continue to be ment or recreational expenses. problem. of service in this area, but I am also The matter of pre-bankruptcy con- I am honored to work with Senator pleased that we will have targeted leg- tributions to a church or charity is GRASSLEY and support him in this ef- islation to clear up any remaining con- also a matter of much concern. Several fort. fusion without undue confusion during courts have actually interpreted the Mr. DURBIN. Mr. President, it is a further litigation. S. 1244 will help spell bankruptcy law to require churches to pleasure to stand in support of this leg- out the safe harbors or tithe payers or refund donations made to them in the islation. Senator GRASSLEY and I have others who contribute to charitable or- year prior to a debtor filing bank- worked on it, but I want to give him ganizations and then find themselves ruptcy. In making such rulings, the the lion’s share of the credit because in bankruptcy. It will relieve burdens courts hold that donations to the this was his notion, his concept, and he on often-strained organizations that church are ‘‘fraudulent conveyances’’— has developed it into a very good piece provide important services in our soci- that is, by giving the money to the of legislation. ety, and relieve an untenable burden on church without (according to the We work closely together on these the religious rights of tithe payers courts) receiving something economi- bankruptcy issues, and for those who across America. cally valuable in return, they are de- are interested in bankruptcy stay Let me thank all of those who frauding their creditors. In reality, tuned; there is more to follow. But I worked on this legislation, especially there is no fraud involved. And of think you will find this bill non- Senator GRASSLEY and Senator DURBIN, course you can imagine the potential controversial and certainly one every- who are leaders on bankruptcy issues burden on small churches that may be one should be able to support. on the Judiciary Committee, and, in just getting by financially—churches The bottom line here is whether or the case of at least Senator GRASSLEY that have done nothing wrong—to find not you are dealing with a fraudulent and I believe Senator DURBIN, are that they are required to repay a year’s conveyance. Someone in anticipation strong supporters of the religious worth of contributions received from a of bankruptcy may give away money rights of our people. I thank both of faithful contributor. and it is said by the court that you them for the work in this area. We The Grassley-Sessions bill is a com- cannot do that; if you are going to give have worked to make this legislation monsense bill that would clarify the money away for nothing, then we are S4772 CONGRESSIONAL RECORD — SENATE May 13, 1998 going to come back later on in the Mr. GRAMS. Mr. President, I rise in Mr. DOMENICI addressed the Chair. bankruptcy court and recover it. But strong support of Senator GRASSLEY’s The PRESIDING OFFICER. The Sen- Senator GRASSLEY has pointed out, I bill, S. 1244, which exempts individual ator from New Mexico. think appropriately, the situation tithes to churches from bankruptcy f where people give money to a charity proceedings. The exemption is up to 15 MORNING BUSINESS or a church, and he says that should be percent of income to prevent abuse. considered in a different category. And This problem was brought to my at- Mr. DOMENICI. Mr. President, I ask I agree. As he has mentioned in the tention by the Crystal Evangelical unanimous consent that there now be a opening statement, there is a limita- Free Church in Minnesota, which period for the transaction of morning tion in the law of 15 percent of your an- prompted my cosponsor of this impor- business until the hour of 2 p.m. today, nual income that can be given in this tant legislation. The Church was sued with Senators permitted to speak for fashion. So we don’t anticipate any and required to repay tithes given to it up to 10 minutes each. type of abuse in this area. by individuals who had declared bank- The PRESIDING OFFICER. Without I thank Senator GRASSLEY. It is a ruptcy. Churches depend on tithes for objection, it is so ordered. pleasure to serve with him and work their income to operate effectively. f with him. We have more to follow on They should not be liable for debt re- UNANIMOUS CONSENT the bankruptcy issue, but I am anxious payment of their parishioners. AGREEMENT—S. 1260 to encourage my Democratic col- This legislation is needed to protect Mr. DOMENICI. Mr. President, I ask leagues today to join with us in voting churches from this kind of abuse. It is unanimous consent that at 2 o’clock, for this legislation. the right thing to do. I commend the Mr. SARBANES. Will the Senator Senator from Iowa for his effective the Senate begin consideration of S. yield? leadership on this issue. 1260 under the consent agreement. Mr. DURBIN. I will be happy to yield Mr. HATCH. Mr. President, I ask for The PRESIDING OFFICER. Without to the Senator from Maryland. the yeas and nays on the bill. objection, it is so ordered. Mr. DOMENICI addressed the Chair. Mr. SARBANES. I am prompted by The PRESIDING OFFICER. The yeas The PRESIDING OFFICER. The Sen- something the ranking member of the and nays have been requested. Is there ator from New Mexico. subcommittee said which leads me to a sufficient second? There seems to be a sufficient second. (The remarks of Mr. DOMENICI per- put an inquiry to him and to Senator taining to the introduction of S. 2072 GRASSLEY. The yeas and nays were ordered. are located in today’s RECORD under There are a number of bankruptcy The PRESIDING OFFICER. Under ‘‘Statements on Introduced Bills and districts in the country that are facing the previous order, the committee Joint Resolutions.’’) very serious problems in handling their amendment is agreed to and the bill is read the third time. The question is, Mr. DOMENICI. I yield the floor. caseload. I have been in frequent com- Mr. REID addressed the Chair. munication with the subcommittee Shall the bill pass? The yeas and nays have been ordered. The clerk will call The PRESIDING OFFICER. The Sen- about this, and obviously my district is ator from Nevada. one of them. It has consistently now, the roll. The legislative clerk called the roll. f for 4 or 5 years, ranked at the very top The result was announced—yeas 99, of case overload of all bankruptcy dis- EQUITY IN PRESCRIPTION AND nays 1, as follows: tricts in the United States. Every CONTRACEPTION COVERAGE ACT [Rollcall Vote No. 132 Leg.] study that has been made has rec- YEAS—99 Mr. REID. Mr. President, yesterday’s ommended additional bankruptcy USA Today headline: ‘‘Viagra height- judges, and I note for a fact that the Abraham Faircloth Lott Akaka Feingold Lugar ens insurance hopes for comfort care.’’ existing bankruptcy judges in my dis- Allard Feinstein Mack The first paragraph says: trict are severely overworked. This is Ashcroft Ford McCain While health insurers try to decide wheth- denying economic justice to both credi- Baucus Frist McConnell er to pay for the impotence drug Viagra, a Bennett Glenn Mikulski tors and debtors. It is a matter which Biden Gorton Moseley-Braun poll shows half of Americans think men needs to be addressed. It is a pressing Bingaman Graham Moynihan should pay for it themselves. crisis. Bond Gramm Murkowski Mr. President, I will bet those half Now, the House sent over to us some Boxer Grams Murray are women. Women have really been Breaux Grassley Nickles time ago legislation providing for some Brownback Gregg Reed treated unfairly in this. Senator OLYM- additional judges based on comprehen- Bryan Hagel Reid PIA SNOWE and I introduced legislation sive studies undertaken by the Admin- Bumpers Harkin Robb last May, the Equity in Prescription Burns Hatch Roberts istrative Office of the Courts and by Byrd Helms Rockefeller and Contraception Coverage Act, which others. This session is moving along. If Campbell Hollings Roth in effect said that health care providers we don’t get some relief, we are going Chafee Hutchinson Santorum that provide prescription drugs should to continue to have this extraordinary Cleland Hutchison Sarbanes also provide contraceptives. Coats Inhofe Sessions situation which exists in quite a num- Cochran Inouye Shelby We have waited a year. We have not ber of districts across the country in Collins Jeffords Smith (NH) been able to even get a hearing on this. terms of reducing their backlog. It is a Conrad Johnson Smith (OR) The reason I am here today is to speak Coverdell Kempthorne Snowe very severe problem in a number of dis- Craig Kennedy Specter for American women who have been tricts. D’Amato Kerrey Stevens treated so unfairly by male-dominated I am prompted by Senator DURBIN’s Daschle Kerry Thomas legislatures for the last many decades. reference, and Senator GRASSLEY’s as- DeWine Kyl Thompson Women pay about 70 percent more for Dodd Landrieu Thurmond sent to it, as I understood it, there is Domenici Lautenberg Torricelli their health care than do men, mostly more to follow. So I just put the in- Dorgan Leahy Warner related to reproductive problems. We quiry whether this is one of the mat- Durbin Levin Wellstone have a situation where we have 3.6 mil- ters to follow. I would certainly hope Enzi Lieberman Wyden lion unintended pregnancies in this so. NAYS—1 country every year. And 45 percent of Mr. DURBIN. Mr. President, if I Kohl them wind up in abortions. We find might say in response to my friend, the The bill (S. 1244), as amended, was these insurance companies, these Senator from Maryland, I agree with passed. health care providers, will pay for a him completely. We now know that the Mr. SESSIONS. Mr. President, I tubal ligation, they will pay for abor- caseload in bankruptcy courts has been move to reconsider the vote by which tions, they will pay for a vasectomy, growing every single year. It really the bill passed. but they will not provide money for the taxes the system, and if not in this leg- Mr. DOMENICI. I move to lay that pill. islation, in the following bill I hope we motion on the table. An average pregnancy, unintended will provide the resources to make sure The motion to lay on the table was pregnancy, in this country costs an av- the bankruptcy courts can respond. agreed to. erage of about $1,700. I say, why can’t May 13, 1998 CONGRESSIONAL RECORD — SENATE S4773 we talk about something other than lupus—these diseases, for research, are same course in completing a series of what helps men? Viagra is in all the basically ignored because they are dis- tests and then agreeing to the test ban newspapers, trying to make a decision eases basically related to women prin- treaty. as to whether or not insurance compa- cipally. Just now the press is reporting all nies should pay for this. Why don’t we I am saying here, this is really unfair manner of administration officials are talk about why insurance companies what is going on here. We are spending distressed that the Central Intelligence shouldn’t pay for contraceptives, so much time with all kinds of jokes on Agency did not report indications that health care providers shouldn’t pay for all the talk radio programs, all the TV these tests were about to take place contraceptives? It seems that would be programs, about Viagra. But it is not a and that somehow we were taken off a step in the right direction. Over half joke that we have over 3.6 million un- guard. But I repeat a comment I made of the insurance companies, health intended pregnancies, with 44 percent to Tim Weiner of the New York Times care providers, do not cover this. ending in abortion, in this country. yesterday that it might help if the Our legislation, that of the senior And a lot of them are caused simply— American foreign relations community Senator from Maine and me, would re- in fact, the majority of them—simply would learn to read. quire insurers, HMOs, and employee because women cannot afford things The BJP Party, the Bharatiya health benefit plans that offer prescrip- like the pill. Janata Party—now in office for essen- tion drug benefits to cover contracep- We have to do something. Not only tially the first time—leads the ruling tive drugs approved by the FDA. This does it affect that, Mr. President, but a coalition and has long been militantly is long overdue. reduction in unintended pregnancies asserting that India was going to be a I am just telling everyone here that will lead to a reduction in infant mor- nuclear power like the other great pow- if we do not have the benefit of some tality, low-birth-weight babies, and ers of the world. It is the second most hearings on this—the senior Senator maternal morbidity. In fact, the Na- populous nation. In the election plat- from Maine and I have written letters, tional Commission to Prevent Infant form—technically, a manifesto in the and we have asked people, and we can- Mortality determined that, ‘‘Infant Indian-English usage—issued before the not get the benefit of a hearing. This mortality could be reduced by [more last election, the BJP had this to say: should not be. It would seem to me we than] 10 percent if all women not desir- ‘‘The BJP rejects the notion of nuclear should have a hearing with the Labor ing pregnancy used contraception.’’ apartheid and will actively oppose at- and Human Resources Committee. So I think it is, again, unfair that tempts to impose a hegemonistic nu- I have had the benefit of speaking to tubal ligation, abortion, vasectomies, clear regime. . . We will not be dic- the senior Senator from Pennsylvania, are covered and the pill, contracep- tated to by anybody in matters of secu- who has been very concerned about tives, and contraceptive devices are not rity requirements and in the exercise issues like this in the past. And at last covered. In my opinion, we need to of the nuclear option.’’ resort, we will go to the Appropriations move this forward. We have the sup- This is hugely important, as is indi- Committee and have a hearing there. port of approximately 35 Senators in cated by the enormous ground swell of We should not have it there, but at last this body. We need a hearing, and we support in India itself in the aftermath resort we will have it there. I do not need to have this legislation passed. of Monday’s explosion. think it is appropriate that we have to I express my appreciation to the Sen- In the platform put together by the legislate on appropriations bills, but as ator from New York for allowing me to coalition that now governs in India, a member of the Appropriations Com- go before him. there is a statement, not quite as as- mittee, on this, I am going to offer an The PRESIDING OFFICER. The Sen- sertive, but not less so. This is the Na- amendment on the appropriate bill if ator from New York is recognized. tional Agenda for Governance, issued we do not get some action by the prop- f 18 March 1998. It says, ‘‘To ensure the er authorizing committee. This is sim- security, territorial integrity and ply unfair—unfair—what is going on. NUCLEAR TESTING IN INDIA unity of India we will take all nec- The same newspaper yesterday, in a Mr. MOYNIHAN. Mr. President, as essary steps and exercise all available different article, said: the Senate will know, the Government options. Toward that end we will re- Health insurers that cover the new impo- of India has announced that two fur- evaluate the nuclear policy and exer- tence drug Viagra but don’t pay for female ther underground nuclear tests oc- cise the option to induct nuclear weap- contraception are guilty of ‘‘gender bias,’’ curred at 3:51, eastern daylight time, ons.’’ That is an Indian-English term, says the American College of Obstetricians this morning. These follow the three ‘‘induct,’’ as in induction into the mili- and Gynecologists today. ‘‘Pregnancy is a medical condition, just underground explosions announced on tary. It means to bring them into an like impotence. And the cost benefit of pre- Monday. active place in the Nation’s military venting pregnancy is much greater than Now, this might at first seem a reck- arsenal. treating impotence,’’ says ACOG spokes- less act on the part of the Government Now, the President, who is in Ger- woman Luella Klein of Emory University. of India. But, sir, I would call attention many, announced today that we would Mr. President, it simply is unfair. to a statement in an Associated Press impose the sanctions required under Over this last decade, we have moved report which reads, ‘‘The Government law, the Glenn amendment of 1994, di- forward a little bit with the help of the said its testing was now complete and rected against non-declared nuclear na- junior Senator from Maryland, Senator it was prepared to consider a ban on tions that begin nuclear testing. This MIKULSKI. She and I have worked to- such nuclear testing.’’ is the law and the Indians knew it per- gether. We now have a program at the Sir, this could be a statement of fectly well, even if we have, perhaps, National Institutes of Health that transcendent importance. It would be been insufficiently attentive to bring- deals with women’s conditions. useful at this time, when tempers—and ing to their minds the implications of But, Mr. President, over the years I use the word ‘‘temper’’—are rising in the law. Chancellor Kohl—Germany diseases that afflict women have been the West, to recall the outrage when being a large supplier of aid to India ignored. Interstitial cystitis—it is a France carried out a series of under- —was with President Clinton when this disease that afflicts 500,000 women in water tests in the South Pacific in was said. We should not underestimate America, a very serious disease of the Mururoa Atoll on September 5, 1995, to the degree to which this might just bladder—until 8 years ago, there was the indignation of many other nations, arouse further resentment in India. not a penny spent on it for research. but thereupon signed the Comprehen- The law is there, but also the resent- They said it was in a woman’s head. sive Test Ban Treaty the following ment is there. In this National Agenda They learned that is not the case. Now, year. And, sir, it has not only signed for Governance that I just recited, as a result of work done at the Na- that treaty, it has ratified it. there are a number of platform tional Institutes of Health, they have a The United States was among the ‘‘planks,’’ you might say principles. drug that cures the effects of this on 40 convening nations in 1996 that signed The second on economy reads: ‘‘We will percent of the women. the treaty, but this Senate has not continue with the reform process to Multiple sclerosis, intercervical and ratified the treaty. The People’s Re- give a strong Swadeshi thrust to en- ovarian cancer, and breast cancer, and public of China followed much the sure that the national economy grows S4774 CONGRESSIONAL RECORD — SENATE May 13, 1998 on the principle that India shall be It seems to me we should blame our- if you like, then you go down to the built by Indians.’’ Swadeshi is a turn of selves for not paying attention to what Maldives, Bangladesh, and Sri Lanka; the century term of the independence is going on there and blame ourselves but in 25 years time there would be a movement meaning self-reliance, use for not giving enough consideration or Mongol general in Islamabad with a indigenous materials, sweep imports concern about the direction of the larg- nuclear capacity, saying, I have got out. est democracy on Earth. four bombs and I want the Punjab back They are not going to be as intimi- The PRESIDING OFFICER. The and I want this region or that region, dated by sanctions as we may suppose. Chair advises the Senator his 10 min- the Kashmir, or else I will drop them This is the first Hindu government in utes has expired. on what was then Bombay, New Delhi, India in perhaps 800 years. We tend to Mr. MOYNIHAN. I ask for an addi- Madras and Calcutta. forget that. When we go to visit India, tional 5 minutes. Well, something like that is happen- distinguished persons are taken to view The PRESIDING OFFICER. Without ing and we better see that it doesn’t go the Taj Mahal, the Red Fort, the India objection, it is so ordered. forward. So to explore the Indian offer Gate. All those are monuments by con- Mr. KERREY. I am at the end of my here, suggesting the offer, seems to me, querors —Islamic, then English. It is question, Mr. President. a matter of huge importance. We could something we don’t notice. They do. I just wanted, in addition to making see the end of the cold war, followed by And after 50 years of Indian independ- the point that the distinguished Sen- a nuclear proliferation of a kind we ence, founded by a secular government ator has been very critical of the CIA— never conceived. We can see China, which denied all those things, there is and I think he is quite right in this North Korea, and Pakistan arming in now a Hindu government and its sen- particular instance to say though we nuclear modes against India and Russia sibilities need to be attended to if only may need some questions answered, the and us looking at an Armageddonic fu- as a matter of common sense. biggest question is why didn’t anybody ture that we had felt was behind us. Do we want India in a system of nu- in either the administration or in this Mr. KERREY. Mr. President, I know clear arms control or don’t we? I think Congress notice that the Hindu nation- the distinguished Senator from Penn- we do. I think we ought to encourage alist party had campaigned on a prom- sylvania has come here for other rea- them and explore the implications of ise to make India a nuclear power. sons. He used to be chairman of the In- the statement reported by the Associ- What does the distinguished Senator telligence Committee. I know from lis- ated Press. And while we are at it, it from New York think this Congress tening to him that he has an active in- would do no great harm to ratify the needs to do to make certain that we terest in this issue as well. I have Comprehensive Test Ban Treaty our- are paying attention in the aftermath heard him comment many times. In selves. of these sanctions to what India is fact, he asked the administration offi- I see my friend from Nebraska is on doing, to make certain that, first, we cials why they don’t attempt to resolve the floor. I look forward to a comment don’t miss an opportunity to get them the conflicts between India and Paki- he might make. to ratify this treaty, and in addition, stan and India and China, and why do Mr. KERREY. Mr. President, I want to get them to do a number of other we not pay more attention to it. I sus- to ask the Senator a question. First of things that not only would be in their pect the Senator from Pennsylvania all, I don’t think there is anybody in best interests, but to be in our best in- would rather not spend too much time the Senate who has been more consist- terests, as well, since a third of the commenting on it, but by coincidence, ently critical of the Central Intel- Earth’s population lives between India we have another individual on the floor ligence Agency and has been more dili- and China in this very, very volatile re- who has an active interest in this gent in trying to change the way we gion to which we obviously have not issue. classify documents. I find both of them paid a sufficient amount of attention. Mr. MOYNIHAN. Mr. President, I to be a bit connected to his comments. Mr. MOYNIHAN. Well, I would say to thank my friend. I ask unanimous con- One of the concerns I have in all this my gallant, able friend that the Intel- sent that the time from 1:45 p.m. to 2 is that we look for a scapegoat. Now, ligence Committee could do worse than o’clock be reserved for the Senator one of the things that citizens need to inviting some of the administration of- from Minnesota, Mr. WELLSTONE. understand is that increasingly we are ficials who are so indignant that the The PRESIDING OFFICER (Mr. getting our intelligence through open CIA didn’t tell them what was going to GREGG). Is there objection? sources. That is good because when you happen up to say: have you read any Without objection, it is so ordered. get your information through open Indian newspaper recently? Do you Mr. MOYNIHAN. I thank the Chair sources there is a debate. Is what some- happen to know what the largest de- and yield the floor. body said true or not true—and you de- mocracy in the world is and who they Mr. SPECTER addressed the Chair. bate such things. elected in the last election? Have you The PRESIDING OFFICER. The Sen- I quite agree with what the Senator looked into their party platforms. ator from Pennsylvania. said earlier that for us to be going at Mr. KERREY. Personally, I think it f the CIA right now because they didn’t would be a waste of money to direct report this is a little ridiculous. All we the CIA to read the New York Times NUCLEAR PROLIFERATION have to do is read articles of John and report to us what is contained in Mr. SPECTER. Mr. President, I com- Burns over a half dozen months. there relevant to any part of the world, mend my colleague from New York for Mr. MOYNIHAN. Of the New York let alone in India. his comments about the problems with Times. Mr. MOYNIHAN. I much agree. May I nuclear proliferation. I thank my col- Mr. KERREY. If we head in the direc- say to my friend that I was Ambas- league from Nebraska for commenting tion of finding a scapegoat here what sador to India on May 18, 1974, when about discussions that we have had we will miss is an opportunity to de- the Indians exploded a ‘‘peaceful’’ nu- over the years about the issues of pro- bate what our policy ought to be to- clear explosion, as they said, in India liferation of weapons of mass destruc- ward the largest democracy on Earth. on the same testing grounds used this tion. In addition to the other things that the time. It fell on me to call on then I intend to speak directly to a sub- Senator said about India, this is also Prime Minister Gandhi to express our ject that I had talked to the Senator the largest democracy. A billion people concerns. I have to say that Secretary from Nebraska about, and that is the live in India. Not an easy country to Kissinger was mild; he toned down the need to have activism by the President govern. indignation that came from the De- of the United States in trying to deal They have a Hindu nationalist party partment of State in his draft state- with nuclear proliferation on the sub- that campaigned on a platform, and ment. I did say to Mr. Gandhi on that continent. In fact, Senator Hank that platform was that nuclear testing occasion, speaking for myself, without Brown and I had visited with Indian would resume. They were not secretive instructions, that India had made a Prime Minister Rao in August of 1995 about that. They did not operate in the great mistake, that it was the No. 1 and also with Pakistani Prime Min- shadows on that. They were upfront country in south Asia, the hegemonic ister Benazir Bhutto. I then wrote to and they followed through. country in South Asia, Pakistan No. 3, the President on this precise subject. I May 13, 1998 CONGRESSIONAL RECORD — SENATE S4775 intend to discuss that at some length When the news broke about the ac- ices held a hearing on this subject on during the course of the remarks that tion by the government of India in det- October 27, of last year and March 18, I am about to make. onating the nuclear weapon, I wrote to of this year, and the Senate Appropria- I believe that the nuclear detonation the President yesterday as follows: tions Subcommittee on Energy and in India makes it more important than With this letter, I am enclosing a copy of Water Development held a similar ever that the United States move a letter I sent to you on August 28, 1995, con- hearing on October 29 of last year. But ahead with leadership to try to defuse cerning the United States brokering arrange- as yet, there has been no action by the the proliferation of weapons of mass ments between India and Pakistan to make Foreign Relations Committee. It seems destruction, and that the Senate their subcontinent nuclear free. to me imperative that the matter be You may recall that I have discussed this should act promptly to ratify the Com- brought to the Senate floor as early as issue with you on several occasions after I possible and whatever hearings are prehensive Test Ban Treaty. sent you that letter. In light of the news re- We have had, already, in the course ports today that India has set off nuclear de- deemed necessary be held so that the of the last 24 hours, indications of a vices, I again urge you to act to try to head Senate may consider this matter. chain reaction. We have had a response off or otherwise deal with the India-Pakistan There are some considerations as to from Pakistan that they may well, too, nuclear arms race. objections to the treaty as to whether test nuclear weapons. We have had a I continue to believe that an invitation we can know in a comprehensive way from you to the Prime Ministers of India and report from North Korea, which ap- the adequacy of our nuclear weapons. Pakistan to meet in the Oval Office, after ap- But it seems to me that whatever the pears in this morning’s press, that propriate preparations, could ameliorate this arguments may be, they ought to be ‘‘North Korean officials have an- very serious problem. aired in a hearing process before the nounced that they are suspending their I am taking the liberty of sending a copy Foreign Relations Committee and on efforts to carry out the 1994 nuclear of this letter to Secretary Albright. the floor of this Senate and then freeze agreement that was intended to Sincerely. When I discussed the meeting which brought for a vote by the U.S. Senate. dismantle North Korea’s nuclear pro- This is a matter of life and death. Senator Brown and I had with both gram. United States officials said the When we talk about nuclear weapons, Prime Ministers in late 1995, the Presi- program was intended to produce weap- we are talking about the force and the dent said that was an item which he ons in North Korea.’’ power which can destroy civilization as would put on his agenda following the So we see what is happening on the we know it. During the tenure that I 1996 elections. Since those elections, I international scene. There needs to be had as chairman of the Senate Intel- have had occasion again to talk to the a very positive response by the United ligence Committee, I took a look at States to the likes of these very, very President about this subject, and he ex- the governmental structure in the threatening developments. pressed concern as to what the re- United States on weapons of mass de- As I started to comment earlier, Mr. sponse of the Senate would be and what struction, saw that some 96 separate President, Senator Hank Brown and I would happen with respect to the con- agencies had operations, and, in con- had occasion to meet with both the In- cerns of China. I expressed the opinion junction with the then-Director John dian Prime Minister and the Pakistani to President Clinton that I thought our Deutch, inserted the provision to es- Prime Minister back on August 26 and colleagues in the Senate would be very tablish the commission to consider the 27 of 1995. It is summarized best in a interested in moving ahead to try to governmental structure of the United letter that I wrote to the President diffuse the obvious tension between States in dealing with weapons of mass from Damascus, dated August 28, 1995, India and Pakistan on nuclear weap- destruction. That commission is now in which reads as follows: ons. operation. John Deutch is the chair- That is all prolog. What we have now I think it important to call to your per- man and I serve as vice chairman. sonal attention the substance of meetings is a testing of a nuclear device by India But it is certainly necessary that which Senator Hank Brown and I have had in as a matter of national pride. And I matters of this magnitude receive the last two days with Indian Prime Minister think that is what it is. early attention at all levels of the gov- Rao and Pakistan Prime Minister Benazir The new Government of India did ernment, including the President and Bhutto. give adequate notice, although, here the U.S. Senate. Where there is con- Prime Minister Rao stated that he would again, I believe there might have been be very interested in negotiations which cern in the Senate on the subject of some sharp focus of attention by the testing to know the capabilities of our would lead to the elimination of any nuclear CIA. Perhaps it is necessary to talk to weapons on his subcontinent within ten or weapons, it should be noted that arti- fifteen years including renouncing first use the White House even about columns cle X of the Comprehensive Test Ban of such weapons. His interest in such nego- which appear in the New York Times, Treaty does provide for the right to tiations with Pakistan would cover bilateral or some formal way to warn of this withdraw if the Government decides talks or a regional conference which would threat in a more precise and focused that extraordinary events relating to include the United States, China and Russia manner, although I quite agree with the subject matter of this treaty would in addition to India and Pakistan. what the Senator from Nebraska, Sen- When we mentioned this conversation to jeopardize the supreme interests, refer- ator KERREY, said—that it was obvious ring to the supreme interests of any Prime Minister Bhutto this morning, she ex- what the Government of India had in- pressed great interest in such negotiations. nation. President Clinton has stated When we told her of our conversation with tended to do. that he would consider withdrawing if Prime Minister Rao, she asked if we could But as I say, that is prolog. Now I we came to that kind of a situation. get him to put that in writing. think there is an urgent necessity for President Clinton signed the Com- When we asked Prime Minister Bhutto leadership from the President to try to prehensive Test Ban Treaty on Septem- when she had last talked to Prime Minister diffuse this situation. At the same ber 24, 1996. Now we are more than a Rao, she said that she had no conversations time, Mr. President, I think there is an year and a half later without any real with him during her tenure as Prime Min- urgent need that the Senate of the significant action having been taken ister. Prime Minister Bhutto did say that United States proceed to the consider- she had initiated a contact through an inter- by the U.S. Senate. mediary but that was terminated when a ation and ratification of the Com- The 149 states have signed the treaty, new controversy arose between Pakistan and prehensive Test Ban Treaty. The es- and 13 have ratified it as of April of India. sence of that treaty provides that it is 1998. There is obviously a problem with From our conversations with Prime Min- an obligation not to carry out any nu- what is going to happen with Iraq, ister Rao and Prime Minister Bhutto, it is clear weapon test explosion or any Iran, or other countries which seek to my sense that both would be very receptive other nuclear explosion. That treaty develop nuclear weapons. There is obvi- to discussions initiated and brokered by the has been considered by a number of ously a problem with other nations United States as to nuclear weapons and also countries, has been ratified by many which have nuclear weapons. But the delivery missile systems. I am dictating this letter to you by tele- countries, but it is still awaiting ac- ban on nuclear testing would certainly phone from Damascus so that you will have tion by the United States. be a significant step forward in diffus- it at the earliest moment. I am also The Senate Governmental Affairs ing the situation and in acting to try telefaxing a copy of this letter to Secretary Subcommittee on International Secu- to have comprehensive arms control on of State Warren Christopher. rity, Proliferation and Federal Serv- this very, very important subject. S4776 CONGRESSIONAL RECORD — SENATE May 13, 1998 I urge the President to take action, the Israelis and their Government. The I think it is mandatory that the Pal- to use his good offices with sufficient view from the Potomac is a lot dif- estinian Authority give such a red preparation, as noted in my letter to ferent than the view from the Jordan light. They cannot be guarantors, but a him of yesterday, for a meeting in the River as it has been said on many, red light and their maximum effort to Oval Office. Very few foreign leaders many occasions. And Israel has been stop terrorism is required. Under the decline meetings in the Oval Office. fighting more than 100 million Arabs provisions of an amendment introduced That should be of the highest priority for more than 50 years. They have won by Senator SHELBY and myself, that on the President’s agenda, and simi- quite a number of wars, but they only kind of a maximum effort against ter- larly on the Senate agenda. Consider- have to lose one war before it is all rorism is a precondition for getting ation and ratification of the Com- over. any aid from the United States. prehensive Test Ban Treaty ought to Secretary of Defense William Cohen So, these matters are obviously deli- be a very high priority on the Senate’s appeared today before the Defense Ap- cate. They require a lot of diplomatic agenda. propriations Subcommittee, and I tact. It is my hope that the current Mr. President, in the absence of any asked the Secretary of Defense whether stalemate can be surmounted, but I other Senator on the floor, I suggest he or anybody in his department had think it can be surmounted only if the absence of a quorum. carried out an analysis as to the ade- there is a recognition, as former Sec- The PRESIDING OFFICER. The quacy of security for Israel if Israel retary of State Warren Christopher clerk will call the roll. agreed to the proposal of the adminis- had, that security is a matter for the The assistant legislative clerk pro- tration. I commented in the course of discretion of Israel—it is Israel’s secu- that question that I would not think, ceeded to call the roll. rity—and that no ultimatum be issued, even if the United States had made Mr. SPECTER. Mr. President, I ask or at least no precondition be issued, that kind of a determination, it would unanimous consent that the order for before the Prime Minister of Israel can be binding and might not even be rel- the quorum call be rescinded. proceed to have a meeting or negotia- evant as to what Israel thought was The PRESIDING OFFICER. Without tions with the United States. objection, it is so ordered. necessary for its own security. Sec- retary of Defense Cohen said that no In the absence of any other Senator f such analysis had been made on his on the floor seeking recognition, I sug- SECURITY OF ISRAEL part. But it would seem to me that as gest the absence of a quorum. The PRESIDING OFFICER (Mr. Mr. SPECTER. Mr. President, I have an indispensable prerequisite for the U.S. Government to take a position COATS). The clerk will call the roll. again sought recognition to comment The assistant legislative clerk pro- on the issue relating to the conditions that Israel ought to have certain with- drawal at least there ought to be a pro- ceeded to call the roll. which have been set by the U.S. Gov- Mr. WELLSTONE. Mr. President, I fessional determination that the with- ernment on a further meeting with ask unanimous consent that the order Israeli Prime Minister Netanyahu and drawal would be consistent with Israel’s security interests. But as I say, for the quorum call be rescinded. the difference of opinion of what is ade- The PRESIDING OFFICER. Without the Secretary of Defense had not un- quate to handle the security interests objection, it is so ordered. of the State of Israel. It is my view dertaken that kind of an analysis. I submit that the issue of Israel’s se- f that it was inappropriate and counter- curity is something that has to be productive for the U.S. Government to NATIONAL URBAN LEAGUES judged by the Government of Israel. deliver what I consider to be an ulti- ENDORSES FAIR MINIMUM WAGE There is no doubt about the friendship matum to Prime Minister Netanyahu Mr. KENNEDY. Mr. President, Presi- and support of President Clinton’s ad- dent Clinton and Democrats in Con- that he accept the further redeploy- ministration for Israel. I do not ques- gress strongly support a fair increase ment of Israeli forces as a precondition tion that for a minute. But where you in the minimum wage. The economy is to come to Washington to meet with have the negotiations at a very, very in a period of record growth. The stock the President on last Monday, May 11. critical point and public statements Secretary of State Albright briefed a are made as a precondition which is re- markets are at an all time high. Unem- number of Senators yesterday in a alistically viewed an ultimatum, pure ployment continues to fall to its lowest room, S. 407, where we have secret dis- and simple, that is totally wholly inap- level in a quarter century. Yet, too cussions, and at that time the Sec- propriate. It is my hope that these many workers on the bottom rungs of retary of State said that she had not peace negotiations can be put back on the economic ladder are not receiving delivered an ultimatum but instead track. I know that the Secretary of their fare share of this prosperity. had stated conditions which would State is going to be meeting with Most Americans recognize that the have to be met before the United Prime Minister Netanyahu later today. minimum wage is not yet a living States would continue to carry forward The Appropriations Committee has a wage. According to an April NBC/Wall with the peace process on the current meeting scheduled with Prime Minister Street Journal Poll, 79 percent of those track. Netanyahu tomorrow. I hope we can questioned support an increase. I responded to the Secretary of State find our way through these negotia- Time and again, opponents state that that I thought it wasn’t even a dif- tions and put the peace negotiations increases in the minimum wage are ference of semantics to say that a con- back on track. harmful to the economy, and especially dition on further discussions did not I think it is a very difficult matter harmful to minority communities. But constitute an ultimatum, that in fact because while the administration is such statements have no basis in fact, it was clearly an ultimatum in those pressing Israel for a certain level of as the current evidence makes clear. discussions. withdrawal, there are many items In his recent ‘‘To Be Equal’’ column If the diplomacy is carried out in a which are not being taken care of by published in over 300 African-American quiet way, so be it. But when diplo- the Palestinian authority. newspapers across the country, Hugh macy is carried out publicly and where Last year, Prime Minister Netanyahu Price, President of the National Urban the Prime Minister of another country had said that Arafat had given a green League, strongly endorses the increase is put in the position where the Prime light to certain terrorist activities by in the minimum wage that many of us Minister has to back down, it seems to the Palestinian Authority. And when have proposed, from its current level of me totally counterproductive and un- Secretary of State Albright was before $5.15 an hour to $5.65 an hour on Janu- likely to produce a result where there the Foreign Operations Subcommittee, ary 1, 1999 and to $6.15 an hour on Janu- will be agreement or compliance even I asked the question as to whether ary 1, 2000. The National Urban League if Prime Minister Netanyahu had want- there had been, in fact, a green light has played a prominent role in the civil ed to do that. given by Chairman Arafat, as charged rights community for over 80 years. Its When it comes to the question of the by Prime Minister Netanyahu. Sec- 114 affiliates in 34 states and the Dis- security interests of Israel, I do not be- retary of State Albright made the trict of Columbia are at the forefront lieve that anybody can second-guess statement that it wasn’t a green light, of the battle for economic and social the security interests of Israel except but there wasn’t a red light either. justice for all Americans. May 13, 1998 CONGRESSIONAL RECORD — SENATE S4777 Raising the minimum wage is a cen- the wages of 10 million workers. Since then, 20 minutes, up to 2, to speak as in tral part of the civil rights agenda to the economy has created new jobs at the morning business. improve the economic condition of the very rapid pace of 250,000 per month, infla- The PRESIDING OFFICER. Without working poor. I am proud that our leg- tion has declined from 2.9 percent to 1.6 per- objection, it is so ordered. cent, and the unemployment rate has fallen islation has the strong support of this to 4.6 percent—its lowest level in nearly 25 Mr. WELLSTONE. Mr. President, renowned organization, and I ask unan- years. there are two topics that I would like imous consent that Hugh Price’s col- Some have expressed concern that raising to cover. I have been trying to get to umn be printed in the RECORD. the minimum wage will make it even harder the floor for 2 days. I will not give ei- There being no objection, the column than it routinely is for young black males to ther one of them the justice they de- was ordered to be printed in the find work. Of course, the unemployment rate serve, but I shall do my best. RECORD, as follows: of black males 16 to 19 years of age remains The PRESIDING OFFICER. The Sen- dangerously high: for 1997 it was 36.5 percent. A DECENT INCOME FOR LOW-WAGE WORKERS ator is recognized. But the minimum wage itself is hardly a sig- (By Hugh B. Price) nificant cause of this decades-old problem, as f With all the hurrahs over the astonishing we’ve noted before. Keeping the wages of all current performance of the American econ- low-income workers at subsistence levels THE MIDDLE EAST PEACE omy—the so-called Long Boom—it’s easy to will likely only exacerbate the employment PROCESS forget that portion of the nation’s workforce problems of young black males—and of the which has hardly shared in the general pros- communities they live in. Mr. WELLSTONE. Mr. President, as perity: the 12 million Americans who wages Increasing the minimum wage now would a long-time supporter of Israel and her range from the current minimum wage of restore its real value to the level it last held security, and as a fierce advocate of $5.15 an hour up to $6.14 an hour. in 1981, before the inflation of the 1980s drove the Middle East peace process, I com- That sum, earned by people who work in it down. We further recommend that Con- mend President Clinton, Secretary such low-skill positions as fast-food worker gress index the minimum wage to inflation and teacher’s aide, adds up to a paltry an- Albright, Ambassador Ross, and Assist- starting in the year 2001 to prevent a further ant Secretary Indyk for their ongoing nual income indeed. The average American erosion of its value. Low-wage workers worker’s hourly wage is $12.64 an hour. But should be treated no differently than other, efforts to preserve and even reinvigo- an individual working at the minimum wage higher-income workers who annually receive rate the stalled peace process. As a for 40 hours a week, 52 weeks a year, earns at least cost-of-living increases in their sala- member of the Foreign Relations Com- only $10,712 annually—an income that is ries. With our economy in such glowing mittee, as a Jewish Senator, as some- $2,600 below the federal government’s pov- health, there could be no better time to raise one who loves Israel, I have followed erty line for a family of three. the minimum wage. As President Clinton this latest round of negotiations care- That fact, coupled with recent cuts in wel- urged in his State of the Union Address: ‘‘In fare and Food Stamps programs, has driven fully. I care fiercely about what hap- an economy that honors opportunity, all pens. And I thank the administration increasing numbers of the working poor to Americans must be able to reap the rewards emergency food banks and pantries: A 1996 of prosperity. Because these times are good, for staying engaged and for making a U.S. Conference of Mayors survey found that we can afford to take one simple, sensible commitment to a peace process that 38 percent of those seeking emergency food step to help millions of workers struggling Prime Minister Rabin gave his life for. aid hold jobs, up from 23 percent in 1994; and to provide for their families: We should raise I will never forget my visit to Israel for more and more private charities are saying the minimum wage.’’ his funeral service. It was so moving to they can’t meet the greater demand on their resources. f hear his granddaughter speak about We must help Americans who work but him. I really hope and pray that we often endure great privation move closer to THE VERY BAD DEBT BOXSCORE will have a peaceful resolution in the a decent, livable wage. We can do that by Mr. HELMS. Mr. President, at the Middle East. I think it will be impor- supporting legislation in Congress raising close of business yesterday, Tuesday, tant for the Israeli children and the the minimum wage to a threshold of $6.15 an May 12, 1998, the federal debt stood at Palestinian children, and the children hour. Senator Ted Kennedy (D.-Mass.) will $5,491,841,497,777.68 (Five trillion, four of other Middle Eastern countries as try to bring the measure, which has Presi- dent Clinton’s backing, before the Senate hundred ninety-one billion, eight hun- well. after Memorial Day Congressional recess. dred forty-one million, four hundred I have watched with growing con- Representative David Bonior (D.-Mich.) will ninety-seven thousand, seven hundred cern, over the past several weeks, as lead the effort for it in the House. The pro- seventy-seven dollars and sixty-eight some critics of the administration’s posed law would raise the minimum wage by cents). policy toward Israel here in the Con- 50 cents each year for 1999 and 2000. One year ago, May 12, 1997, the fed- gress have launched fierce partisan at- We should raise the minimum wage be- eral debt stood at $5,334,445,000,000 tacks on the policy. Speaker GINGRICH cause it’s only fair: hard work deserves just (Five trillion, three hundred thirty- last week was even quoted as saying, in compensation at the bottom as well as the top of the salary ladder. four billion, four hundred forty-five a press conference in which he criti- We know from the experience of the 90- million). cized the administration’s recent han- cents minimum-wage hike President Clinton Five years ago, May 12, 1993, the fed- dling of the peace process, ‘‘America’s signed into law in 1996 that minimum-wage eral debt stood at $4,245,570,000,000 strong-arm tactics would send a clear increases benefit the people who need it (Four trillion, two hundred forty-five signal to the supporters of terrorism most—hardworking adults in low-income billion, five hundred seventy million). that their murderous actions are an ef- families. Based on federal labor department Ten years ago, May 12, 1988, the fed- fective tool in forcing concessions from statistics, the Economic Policy Institute, a Washington think tank, found that nearly 60 eral debt stood at $2,510,382,000,000 (Two Israel.’’ percent of the gains from that minimum trillion, five hundred ten billion, three Mr. President, I think that is a dema- wage hike has gone to workers in the bottom hundred eighty-two million). gogic accusation leveled at the Presi- 40 percent of the income ladder. Raising the Fifteen years ago, May 12, 1983, the dent. I believe that the administration minimum wage by $1 will help insure that federal debt stood at $1,258,875,000,000 is trying to do the right thing. I point parents who work hard and play by the rules, (One trillion, two hundred fifty-eight out that public opinion polls show that and who utilize the Earned Income Tax Cred- billion, eight hundred seventy-five mil- the majority of the people in our coun- it, can bring up their children out of poverty. Contrary to a widespread view, federal sta- lion) which reflects a debt increase of try believe that the administration is tistics show that most workers earning the more than $4 trillion— doing the right thing by continuing to minimum wage are adults, not teenagers. $4,232,966,497,777.68 (Four trillion, two put proposals out there, by trying to Half of them work full time, and another hundred thirty-two billion, nine hun- get this peace process going. third work at least 20 hours a week. Sixty dred sixty-six million, four hundred The administration has presented no percent of those earning the minimum wage ninety-seven thousand, seven hundred ultimatums. It cannot force either are women; 15 percent are African-American, seventy-seven dollars and sixty-eight party to do what it has no intention of and 14 percent are Hispanic. cents) during the past 15 years. doing. But I think this is courageous Our recent experience has shown that rais- ing the minimum wage in an era of strong Mr. WELLSTONE. Mr. President, I on the part of the administration. and balanced economic expansion won’t un- believe that I have reserved 15 minutes, Quite often I am critical of this Presi- dermine job growth. The hike President Clin- up to 2 o’clock, to speak. I ask unani- dent, but I believe they are doing the ton signed into law in August 1996 increased mous consent that I be able to use this right thing. The majority of the people S4778 CONGRESSIONAL RECORD — SENATE May 13, 1998 in the country believe so, and the ma- lasting peace which has by then em- consent that there be 2 hours of gen- jority of the American-Jewish commu- braced the entire region and all the eral debate on the bill, equally divided nity, of which I am proud to be a mem- peoples. That is a vision worthy of in the usual form. ber, also believe they are doing the Israel’s founder and of all of us who I further ask consent that the follow- right thing. come after. It is a vision for which we ing be the only first-degree amend- President Netanyahu is meeting with should and we must be willing to strug- ments in order, other than the commit- Secretary Albright. It is my hope that gle, to fight for and for which all of us tee-reported substitute, that the first- they will have fruitful discussions. I must take risks. degree amendments be subject to rel- think it is terribly important that this I come to the floor to say that I do evant second-degree amendments; that happen. not believe there would be anything with respect to any time limit on the Let me make three points by way of more important than to forge a just first-degree amendment, any second- conclusion: First of all, the administra- and lasting peace for the region. This degree thereto be limited to the same tion, as I mentioned a moment ago, is would truly be worthy of the dream of time limits: not issuing threats. However, the Bush Israel’s founder. Bingaman, relevant; administration—and I don’t mean this Mr. President, I speak out on the Bumpers, EB5 visas, 90 minutes as a partisan point, but the Bush ad- Middle East peace process, again, be- equally divided; ministration in connection with policy cause I think there has been entirely Kennedy, layoffs, 40 minutes equally on settlements did threaten to cut off too much personal attack and I believe divided; recruit home, 40 minutes aid to Israel. There have been no condi- it is terribly important that all of us equally divided; whistle-blower protec- tions of this kind, putting aside wheth- who are committed to the peace proc- tion; er the Bush administration was right ess not be silent. Reed of Rhode Island, strike SSIG or wrong to do that. (The remarks of Mr. WELLSTONE per- provision; I also remind colleagues that this taining to the introduction of S. 2074 Reid of Nevada, international child abduction; peace process is critically important, are located in today’s RECORD under that it is important that we bridge the Wellstone, job training; ‘‘Statements on Introduced Bills and McCain, relevant; gaps, that the United States be a neu- Joint Resolutions.’’) Warner relevant; tral mediator, that we continue to be a Mr. WELLSTONE. Mr. President, That upon disposition of all amend- third party to which both parties can how much time do I have left? ments the committee substitute be speak. The PRESIDING OFFICER. The Sen- agreed to, the bill be read a third time, Finally, I will simply say that all of ator has approximately 2 minutes left. and the Senate then proceed to vote on us ought to contemplate for a moment Mr. WELLSTONE. In the 2 minutes I passage without intervening action or what will happen if the administration have left, I am going to take advantage debate. does not press to preserve this process of being on the floor of the Senate. The PRESIDING OFFICER. Is there and if this peace process collapses. I After all, I always say to my family, objection? think the alternative scenario, which I you know, I get to speak on the floor of Without objection, it is so ordered. shudder to think about, would be an es- the Senate. That is a huge honor. f calation of terrorist attacks, with f Israel facing newly hostile Arab neigh- SECURITIES LITIGATION UNIFORM bors on all sides and increased pressure PERSECUTION IN INDONESIA STANDARDS ACT OF 1998 from the Arab street for violent action Mr. WELLSTONE. Mr. President, let The PRESIDING OFFICER. Under against her. It is frightening to con- me just point out to colleagues that six the previous order, the clerk will re- sider. I don’t think that stalemate or students were murdered by the Suharto port S. 1260. the status quo is acceptable—I believe regime. I came out on the floor 2 days The assistant legislative clerk read it is unthinkable. I think it is terribly ago and talked about the fact that this as follows: important the United States continues could happen. These students commit- A bill (S. 1260) to amend the Securities Act to show leadership in this process. ted no crime except to courageously of 1933 and the Securities Exchange Act of Mr. President, this recent crisis in say there ought to be freedom in that 1934 to limit the conduct of securities class the peace negotiations coincides with country. They have had the courage to actions under State law, and for other pur- Israel’s celebration of her 50-year jubi- challenge this government and to poses. lee, an occasion of great joy for all of speak up for freedom for citizens in In- The Senate proceeded to consider the us who love Israel. donesia and for democracy, and to end bill, which had been reported from the With the founding of modern Israel, the persecution against people. And for Committee on Banking, Housing, and the children of Abraham and Sarah, that, they now have been murdered. Urban Affairs, with an amendment to survivors of over 2,000 years of persecu- I believe that our Government ought strike all after the enacting clause and tion and exile, were home at last and to—we ought to use our maximum le- inserting in lieu thereof the following: they were free at last. But the dream of verage with international institutions, SECTION 1. SHORT TITLE. Israel’s founder, David Ben-Gurion, and the International Monetary Fund, the This Act may be cited as the ‘‘Securities Liti- that of his allies was not simply to pro- World Bank, to make it clear to gation Uniform Standards Act of 1998’’. vide a safe haven from centuries of Suharto that he does not get financial SEC. 2. FINDINGS. The Congress finds that— Jewish suffering, it was also about ful- assistance when he murders his citi- (1) the Private Securities Litigation Reform filling Isaiah’s prophecy of making zens. Act of 1995 sought to prevent abuses in private Israel ‘‘a light unto the nations,’’ a We ought to, as a government, speak securities fraud lawsuits; powerful sign and symbol of justice and up on this. We should not be silent. (2) since enactment of that legislation, consid- compassion to all people of the world. And we should support these coura- erable evidence has been presented to Congress Although it is fitting to pause to cel- geous students in Indonesia. I want that a number of securities class action lawsuits ebrate what all the people of Israel those students to know they have my have shifted from Federal to State courts; have accomplished over the last 50 (3) this shift has prevented that Act from fully full support as a Senator from Min- achieving its objectives; years, we must also look forward to the nesota. (4) State securities regulation is of continuing tasks which face her in the next mil- I yield the floor. importance, together with Federal regulation of lennium, chief among them the task of f securities, to protect investors and promote building a just, secure and lasting strong financial markets; and peace. UNANIMOUS CONSENT (5) in order to prevent certain State private se- It is my deepest prayer that our chil- AGREEMENT—S. 1723 curities class action lawsuits alleging fraud from dren and grandchildren, 50 years from Mr. ABRAHAM. Mr. President, I ask being used to frustrate the objectives of the Pri- vate Securities Litigation Reform Act of 1995, it this year, will be able to say with grat- unanimous consent that the majority is appropriate to enact national standards for itude that we were the generation leader, after consultation with the securities class action lawsuits involving nation- which overcame ancient hatreds and Democratic leader, may proceed to the ally traded securities, while preserving the ap- enabled them to achieve a just and consideration of S. 1723. I further ask propriate enforcement powers of State securities May 13, 1998 CONGRESSIONAL RECORD — SENATE S4779 regulators and not changing the current treat- situated, and questions of law or fact common to response to a tender or exchange offer, or exer- ment of individual lawsuits. those persons or members of the prospective cising dissenters’ or appraisal rights. SEC. 3. LIMITATION ON REMEDIES. class predominate over any questions affecting ‘‘(4) PRESERVATION OF STATE JURISDICTION.— (a) AMENDMENTS TO THE SECURITIES ACT OF only individual persons or members; or The securities commission (or any agency or of- 1933.— ‘‘(ii) any group of lawsuits (other than deriva- fice performing like functions) of any State shall (1) AMENDMENT.—Section 16 of the Securities tive suits brought by 1 or more shareholders on retain jurisdiction under the laws of such State Act of 1933 (15 U.S.C. 77p) is amended to read as behalf of a corporation) filed in or pending in to investigate and bring enforcement actions. follows: the same court and involving common questions ‘‘(5) DEFINITIONS.—For purposes of this sub- of law or fact, in which— section the following definitions shall apply: ‘‘SEC. 16. ADDITIONAL REMEDIES; LIMITATION ON ‘‘(A) AFFILIATE OF THE ISSUER.—The term ‘af- REMEDIES. ‘‘(I) damages are sought on behalf of more than 50 persons; and filiate of the issuer’ means a person that directly ‘‘(a) REMEDIES ADDITIONAL.—Except as pro- or indirectly, through 1 or more intermediaries, vided in subsection (b), the rights and remedies ‘‘(II) the lawsuits are joined, consolidated, or otherwise proceed as a single action for any controls or is controlled by or is under common provided by this title shall be in addition to any control with, the issuer. and all other rights and remedies that may exist purpose. ‘‘(B) COUNTING OF CERTAIN CLASS MEMBERS.— ‘‘(B) CLASS ACTION.—The term ‘class action’ at law or in equity. For purposes of this paragraph, a corporation, means— ‘‘(b) CLASS ACTION LIMITATIONS.—No class ac- investment company, pension plan, partnership, ‘‘(i) any single lawsuit (other than a deriva- tion based upon the statutory or common law of or other entity, shall be treated as 1 person or tive action brought by 1 or more shareholders on any State or subdivision thereof may be main- prospective class member, but only if the entity behalf of a corporation) in which— tained in any State or Federal court by any pri- ‘‘(I) damages are sought on behalf of more is not established for the purpose of participat- vate party alleging— than 50 persons or prospective class members, ing in the action. ‘‘(1) an untrue statement or omission of a ma- and questions of law or fact common to those ‘‘(3) COVERED SECURITY.—The term ‘covered terial fact in connection with the purchase or security’ means a security that satisfies the persons or members of the prospective class, sale of a covered security; or standards for a covered security specified in without reference to issues of individualized re- ‘‘(2) that the defendant used or employed any paragraph (1) or (2) of section 18(b) at the time liance on an alleged misstatement or omission, manipulative or deceptive device or contrivance during which it is alleged that the misrepresen- predominate over any questions affecting only in connection with the purchase or sale of a tation, omission, or manipulative or deceptive individual persons or members; or covered security. ‘‘(II) 1 or more named parties seek to recover conduct occurred.’’. ‘‘(c) REMOVAL OF CLASS ACTIONS.—Any class damages on a representative basis on behalf of (2) CONFORMING AMENDMENTS.—Section 22(a) action brought in any State court involving a themselves and other unnamed parties similarly of the Securities Act of 1933 (15 U.S.C. 77v(a)) is covered security, as set forth in subsection (b), situated, and questions of law or fact common to amended— shall be removable to the Federal district court (A) by inserting ‘‘except as provided in section those persons or members of the prospective for the district in which the action is pending, 16 with respect to class actions,’’ after ‘‘Terri- class predominate over any questions affecting and shall be subject to subsection (b). torial courts,’’; and only individual persons or members; or ‘‘(d) PRESERVATION OF CERTAIN ACTIONS.— ‘‘(ii) any group of lawsuits (other than deriva- (B) by striking ‘‘No case’’ and inserting ‘‘Ex- ‘‘(1) IN GENERAL.—Notwithstanding subsection tive suits brought by 1 or more shareholders on cept as provided in section 16(c), no case’’. (b), a class action described in paragraph (2) of behalf of a corporation) filed in or pending in (b) AMENDMENTS TO THE SECURITIES EX- this subsection that is based upon the statutory the same court and involving common questions CHANGE ACT OF 1934.—Section 28 of the Securi- of law or fact, in which— or common law of the State in which the issuer ties Exchange Act of 1934 (15 U.S.C. 78bb) is ‘‘(I) damages are sought on behalf of more is incorporated (in the case of a corporation) or amended— organized (in the case of any other entity) may than 50 persons; and (1) in subsection (a), by striking ‘‘The rights ‘‘(II) the lawsuits are joined, consolidated, or be maintained in a State or Federal court by a and remedies’’ and inserting ‘‘Except as pro- private party. otherwise proceed as a single action for any vided in subsection (f), the rights and rem- purpose. ‘‘(2) PERMISSIBLE ACTIONS.—A class action is edies’’; and described in this paragraph if it involves— ‘‘(C) COUNTING OF CERTAIN CLASS MEMBERS.— (2) by adding at the end the following new For purposes of this paragraph, a corporation, ‘‘(A) the purchase or sale of securities by the subsection: issuer or an affiliate of the issuer exclusively investment company, pension plan, partnership, ‘‘(f) LIMITATIONS ON REMEDIES.— or other entity, shall be treated as 1 person or from or to holders of equity securities of the ‘‘(1) CLASS ACTION LIMITATIONS.—No class ac- issuer; or prospective class member, but only if the entity tion based upon the statutory or common law of is not established for the purpose of participat- ‘‘(B) any recommendation, position, or other any State or subdivision thereof may be main- communication with respect to the sale of secu- ing in the action. tained in any State or Federal court by any pri- ‘‘(D) COVERED SECURITY.—The term ‘covered rities of the issuer that— vate party alleging— security’ means a security that satisfies the ‘‘(i) is made by or on behalf of the issuer or an ‘‘(A) a misrepresentation or omission of a ma- standards for a covered security specified in affiliate of the issuer to holders of equity securi- terial fact in connection with the purchase or paragraph (1) or (2) of section 18(b) of the Secu- ties of the issuer; and sale of a covered security; or rities Act of 1933, at the time during which it is ‘‘(ii) concerns decisions of those equity holders ‘‘(B) that the defendant used or employed any alleged that the misrepresentation, omission, or with respect to voting their securities, acting in manipulative or deceptive device or contrivance manipulative or deceptive conduct occurred.’’. response to a tender or exchange offer, or exer- in connection with the purchase or sale of a cising dissenters’ or appraisal rights. SEC. 4. APPLICABILITY. covered security. The amendments made by this Act shall not ‘‘(e) PRESERVATION OF STATE JURISDICTION.— ‘‘(2) REMOVAL OF CLASS ACTIONS.—Any class affect or apply to any action commenced before The securities commission (or any agency or of- action brought in any State court involving a fice performing like functions) of any State shall and pending on the date of enactment of this covered security, as set forth in paragraph (1), Act. retain jurisdiction under the laws of such State shall be removable to the Federal district court to investigate and bring enforcement actions. for the district in which the action is pending, The PRESIDING OFFICER. The Sen- ‘‘(f) DEFINITIONS.—For purposes of this sec- and shall be subject to paragraph (1). ator from New York is recognized. tion the following definitions shall apply: ‘‘(3) PRESERVATION OF CERTAIN ACTIONS.— Mr. D’AMATO. Mr. President, today ‘‘(1) AFFILIATE OF THE ISSUER.—The term ‘af- ‘‘(A) IN GENERAL.—Notwithstanding para- we begin consideration of S. 1260, the filiate of the issuer’ means a person that directly graph (1), a class action described in subpara- Securities Litigation Uniform Stand- or indirectly, through 1 or more intermediaries, graph (B) of this paragraph that is based upon ards Act of 1998. controls or is controlled by or is under common the statutory or common law of the State in The Banking Committee reported control with, the issuer. which the issuer is incorporated (in the case of this bill on April 29 by an overwhelm- ‘‘(2) CLASS ACTION.— a corporation) or organized (in the case of any ing vote of 14–4. This bill has strong bi- ‘‘(A) IN GENERAL.—The term ‘class action’ other entity) may be maintained in a State or partisan support. It comes as no sur- means— Federal court by a private party. ‘‘(i) any single lawsuit (other than a deriva- ‘‘(B) PERMISSIBLE ACTIONS.—A class action is prise to anybody who has followed the tive action brought by 1 or more shareholders on described in this subparagraph if it involves— progress of this legislation. This bill is behalf of a corporation) in which— ‘‘(i) the purchase or sale of securities by the the product of a great deal of hard ‘‘(I) damages are sought on behalf of more issuer or an affiliate of the issuer exclusively work. It has been refined through the than 50 persons or prospective class members, from or to holders of equity securities of the incorporation of comments from many and questions of law or fact common to those issuer; or sources, including the Securities and persons or members of the prospective class, ‘‘(ii) any recommendation, position, or other Exchange Commission. As a result of without reference to issues of individualized re- communication with respect to the sale of secu- this process, this bill not only has been liance on an alleged misstatement or omission, rities of an issuer that— predominate over any questions affecting only ‘‘(I) is made by or on behalf of the issuer or improved, but it actually enjoys the individual persons or members; or an affiliate of the issuer to holders of equity se- support of the Securities Exchange ‘‘(II) 1 or more named parties seek to recover curities of the issuer; and Commission and the White House. damages on a representative basis on behalf of ‘‘(II) concerns decisions of such equity holders Mr. President, I am not going to ask themselves and other unnamed parties similarly with respect to voting their securities, acting in unanimous consent now that letters S4780 CONGRESSIONAL RECORD — SENATE May 13, 1998 from the SEC and the White House be expressed concern that S. 1260’s defini- 1260. In particular, we stated that a uniform printed in the RECORD as if read, which tion of class action appeared to be un- standard for securities fraud class actions is something we generally do. I think it necessarily broad. We are grateful for that did not permit investors to recover losses attributable to reckless misconduct is so important that I am going to take your responsiveness to these concerns would jeopardize the integrity of the securi- the time to refer to both letters and and believe that the amendments you ties markets. In light of this profound con- read what has been said, so that my propose to offer at the Banking Com- cern, we were gratified by the language in colleagues can hear, and those who are mittee markup, as attached to your your letter of today agreeing to restate in S. interested in this debate can follow. letter, will successfully resolve these 1260’s legislative history, and in the expected This is a letter, dated March 24, from issues. debate on the Senate floor, that the Private the Securities and Exchange Commis- So I think it is obvious that there Securities Litigation Reform Act of 1995 did sion, addressed to me as Chairman of has been considerable ongoing dialog not, and was not intended to, alter the well- recognized and critically important scienter the Banking Committee; Senator and work between the Chairman of the standard. GRAMM, Chairman of the Subcommit- Subcommittee, Senator GRAMM of Our October 1997 testimony also pointed tee; and Senator DODD, who is the Texas, the ranking member, Senator out that S. 1260 could be interpreted to pre- ranking member. DODD, the Banking Committee staff empt certain state corporate governance Let me read it: and the SEC, to look and to deal with claims, a consequence that we believed was Dear Chairman D’AMATO, Chairman what is not only the proposals that we neither intended nor desirable. In addition, we expressed concern that S. 1260’s definition GRAMM, and Senator DODD: put forth for the first time, but to deal You have requested our views on S. 1260, with some of the imperfections and of class action appeared to be unnecessarily the Securities Litigation Uniform Standards broad. We are grateful for your responsive- some of the unintended consequences ness to these concerns and believe that the Act of 1997, and amendments to the legisla- that may have evolved as a result of tion which you intend to offer when the bill amendments you propose to offer at the is marked up by the Banking Committee. the 1995 act. Banking Committee mark-up, as attached to This letter will present the Commission’s po- The ongoing dialog between our your letter, will successfully resolve these sition on the bill and proposed amendments. staffs has been constructive. The result issues. The purpose of this bill is to help ensure of this dialogue, we believe, is an im- The ongoing dialogue between our staffs that securities fraud class actions involving proved bill with legislative history has been constructive. The result of this dia- certain securities traded on national mar- logue, we believe, is an improved bill with that makes clear, by reference to the legislative history that makes clear, by ref- kets are governed by a single set of uniform legislative debate in 1995, that Con- standards.’’ erence to the legislative debate in 1995, that gress did not alter in any way the reck- Congress did not alter in any way the reck- I think that is important, Mr. Presi- lessness standard when it enacted the lessness standard when it enacted the Re- dent. We should understand that those Reform Act. This will help to diminish form Act. This will help to diminish confu- securities traded on national exchanges confusion in the courts about the prop- sion in the courts about the proper interpre- are governed by a uniform standard. I er interpretation of that Act and add tation of that Act and add important assur- think that makes ample sense. important assurances that the uniform ances that the uniform standards provided by S. 1260 will contain this vital investor While preserving the right of individual in- standards provided by S. 1260 will con- vestors to bring securities lawsuits wherever protection. tain this vital investor protection. We support enactment of S. 1260 with these they choose. . . We support enactment of S. 1260 with changes and with this important legislative So we should underscore that, as a these changes and with its important history. premise, the SEC says, we are going to legislative history. We appreciate the opportunity to comment look for a single standard, but we will We appreciate the opportunity to on the legislation, and of course remain com- preserve the rights of individuals to comment on the legislation, and of mitted to working with the Committee as S. bring securities lawsuits wherever they course remain committed to working 1260 moves through the legislative process. Sincerely, choose. with the Committee as S. 1260 moves ARTHUR LEVITT, . . . the bill generally provides that class through the legislative process. Chairman. actions can be brought only in Federal Court Sincerely, Arthur Levitt, Chairman; ISSAC C. HUNT, JR., where they will be governed by federal law. Isaac C. Hunt, Commissioner; Laura S. Commissioner. As you know, when the Commission testi- Unger, Commissioner. LAURA S. UNGER, fied before the Securities Subcommittee of At this time, I ask unanimous con- Commissioner. the Senate Banking Committee in October sent that the letter be printed in the 1997, we identified several concerns about S. Mr. D’AMATO. Mr. President, I took 1260. In particular, we stated that a uniform RECORD so that it can be viewed in its the time to go through this because I standard for securities fraud class actions entirety. think it is important that we under- that did not permit investors to recover There being no objection, the letter stand that this has not been the prod- losses attributable to reckless misconduct was ordered to be printed in the uct of one staff or two staffs. This has would jeopardize the integrity of the securi- RECORD, as follows: not been the product of just the Bank- ties market. In light of this profound con- DEAR CHAIRMAN D’AMATO, CHAIRMAN ing Committee and those in industry cern, we were gratified by the language in GRAMM, AND SENATOR DODD: You have re- who have come to express their con- your letter of today agreeing to restate in S. quested our views on S. 1260, the Securities 1260’s legislative history, and in the expected cern as to how it is that their class ac- Litigation Uniform Standards Act of 1997, tions are being brought in a frivolous debate on the Senate floor, that the Private and amendments to the legislation which Securities Litigation Reform Act of 1995 did you intend to offer when the bill is marked manner, using the State courts to get not, and was not intended to, alter the well- up by the Banking Committee. This letter around what Congress debated and recognized and critically important scienter will present the Commission’s position on what Congress voted overwhelmingly standard. the bill and proposed amendments.* to bring, which is a standard of con- So, Mr. President, we have a concern The purpose of the bill is to help ensure duct that will discourage a race to the that was expressed as it existed in the that securities fraud class actions involving courthouse, simply to bring a suit and 1995 law, and what the Securities and certain securities traded on national mar- simply to extort moneys from those Exchange Commission said is, look, we kets are governed by a single set of uniform standards. While preserving the right of indi- who have deep pockets, because these want in the new proposal, as it relates vidual investors to bring securities lawsuits suits can be long, they can be frivolous, to uniform standards, to clearly iden- wherever they choose, the bill generally pro- and they can be dragged out. The cost tify that you did not do away with, but vides that class actions can be brought only factor to the people being sued is enor- will recognize the scienter standards. in federal court where they will be governed mous—the time, the distraction, par- That has been accomplished. And I will by federal law. ticularly to startup companies, and go back to that. As you know, when the Commission testi- particularly those who want to let peo- Our October 1997 testimony also fied before the Securities Subcommittee of ple know what they are doing, but who the Senate Banking Committee in October pointed out that S. 1260 could be inter- 1997, we identified several concerns about S. felt restricted as a result of the suits preted to preempt certain state cor- that were brought. porate governance claims, a con- I am not going to bother going into * We understand that Commissioner Johnson will sequence that we believe was neither write separately to express his differing views. Com- the history and the comments that intended nor desirable. In addition, we missioner Carey is not participating. have been made by many. But indeed May 13, 1998 CONGRESSIONAL RECORD — SENATE S4781 there have been many, which clearly and the Subcommittee Chairman and with legitimate claims deserve their are a stain on the rightful practice of ranking member on March 24. It was day in court. And we preserve that in law to ensure the rights of those who fully a month thereafter, on April 28, this bill. But what we have seen in our have been aggrieved and would hold that again the President reaffirmed his Federal courts, and what we are now people responsible for actions that are support for this action, and in so doing seeing in our State courts is little not tortious, malicious, malevolent, went out of his way to point out that more than a judicially sanctioned and indeed when there are no actions we, indeed, will improve the present shakedown that only benefits the law- that should be sustained under any state of the law because of the colloquy yers. We are talking about lawsuits in court, but because of the cost involved that will take place and because of the which we have nominal plaintiffs, and would have insurance carriers, ac- manner in which the law was written. the lawyers are the only real winners. countants firms, securities firms, man- So here the President of the United One of these strike lawyers drove this ufacturers, and others, be held to a sit- States and the SEC and his Commis- point home best, one of the biggest and uation where they have to settle. Who sioner are saying you are improving one of the largest, when he bragged do they settle with? They settle with upon the law as it stands now, in addi- that he had ‘‘the perfect practice’’. the moneys that come from the little tion—we will talk about that—to clos- Why did he say that? He bragged about guy—their stockholders. So while we ing a loophole that has been used by it. He said he has the ‘‘perfect prac- say ‘‘stockholder derivative actions,’’ those who rush to the courts to bring tice.’’ This is the fellow who has the the people hurt are indeed the stock- suits because they are looking to en- largest, has brought more suits, hun- holders. rich themselves, not to protect the lit- dreds of millions of dollars, who said he Mr. President, I mentioned two let- tle guy or the small investors. They has ‘‘the perfect practice’’ because he ters. Let me read a second letter. are costing the little guy and small in- has ‘‘no clients.’’ The second letter is dated a month vestors money. I think the broad-based Isn’t that incredible? He has no cli- later to myself as Chairman of the support that this bill enjoys is a trib- ents. He recovers hundreds of millions Banking Committee, Senator GRAMM ute to Senator GRAMM. I want to say of dollars. When it is recovered, who as Chairman of the Subcommittee on that for the record. He is here. He gets most of it? The lawyers do. The Securities, Senator DODD as ranking worked hard. His staff has worked so-called clients get hurt because the Member of that Committee, from the hard. They have been reasonable. The company which they have stock in White House, dated April 28, 1998. chief sponsors of this legislation, Sen- loses value. It loses time. It pays mil- DEAR CHAIRMAN D’AMATO, CHAIRMAN ators GRAMM and DODD have put to- lions of dollars. It has higher insurance GRAMM, AND SENATOR DODD: We understand gether a tight bill intended to address costs, higher costs for auditing. The that you have had productive discussions with the Securities and Exchange Commis- a specific serious problem. auditors have to charge more because sion (SEC) about S. 1260, the Securities Liti- The problem to which I refer is a they get sued. The insurance compa- gation Uniform Standards Act of 1997. The loophole that strike lawyers have nies have to charge more for their pre- Administration applauds the constructive found in the 1995 Private Securities miums because they wind up paying approach that you have taken to resolve the Litigation Reform Bill which was fash- more. Who do you think gets hurt? The SEC’s concerns. ioned again on the most part by Sen- little guy. Who benefits? The fellow We support the amendments to clarify that ators GRAMM, DODD, and DOMENICI. who says ‘‘I have got the perfect prac- the bill will not preempt certain corporate Mr. President, the 1995 Act was tice.’’ governance claims and to narrow the defini- passed in the last Congress in response tion of class action. More importantly, we Now, let me say this to you. This is are pleased to see your commitment, by let- to a wave of harassment litigation that a very, very, very small part of the law ter dated March 24, 1998, to Chairman Levitt threatened the efficiency and the in- practice, is very specialized, relatively and members of the Commission, to restate tegrity of our national stock markets, a handful of attorneys who have this, in S. 1260’s legislative history, and in the ex- as well as the value of stock portfolios but let me tell you they hold hostage pected debate on the Senate floor, that the of individual investors. That is what is the companies of America, the private Private Securities Litigation Reform Act of being hurt—the little guy, the small sector of America, as a result of what 1995 did not, and was not intended to, alter individual investor in whose companies they can do by bringing these suits, the Scienter standard for securities fraud ac- they had a share in were diminished in tions. suits that have no merit. As you know, uncertainty about the im- value as a result of these suits. This As I have previously mentioned, har- pact of the Reform Act on the scienter threat was particularly debilitating to assment lawyers found a loophole in standard was one of the President’s greatest the so-called high-tech companies who which to ply their trade—the State concerns. The legislative history and floor desperately needed access to our cap- court system. In the time since the 1995 statements that you have promised the SEC ital markets to raise the money needed Act was passed, we have seen these and will accompany S. 1260 should reduce for research, development, and produc- class-action lawyers rush to State confusion in the courts about the proper in- tion of cutting-edge technology. These courthouses. One witness before the Se- terpretation of the Reform Act. Since the uniform standards provided by S. 1260 will companies, which have spearheaded our curities Subcommittee summarized provide that class actions generally can be economy’s resurgence, are particularly this phenomenon well when he testified brought only in federal court, where they susceptible to strike suits because of that the single fact is that State court will be governed by federal law, it is particu- the volatility of the price of their class actions involving nationally trad- larly important to the President that you be stock. Strike lawyers thrive on stock ed securities were virtually unknown. clear that the federal law to be applied in- price fluctuations regardless of wheth- In other words, prior to our 1995 Act, cludes recklessness as a basis for pleading er there is even a shred of evidence of they just were not known. Now they and liability in securities fraud class actions. So long as the amendments designed to ad- fraud. are brought with some frequency. dress the SEC’s concerns are added to the Mr. President, this is the crux of the This is a national problem. Regard- legislation and the appropriate legislative matter: That ultimately the cost of less of where class actions are brought, history and floor statements on the subject strike suits are borne by shareholders, they impact on the national stock mar- of legislative intent are included in the legis- including ordinary people saving for kets. Money is moved away from job- lative record, the Administration would sup- their children’s education, or for their creating, high-tech firms. Money is port enactment of S. 1260. retirement. The average American goes taken from shareholders in the form of Sincerely, into the stock market for long-term stock price decline as a result of litiga- BRUCE LINDSEY, appreciation—i.e., to earn solid rates of tion. And where does this money go? It Assistant to the President and Dep- return. They do not buy a stock simply goes into the pockets of a very select uty Counsel. to be positioned for a class action when cadre of these attorneys. GENE SPERLING, the stock’s price drops. It is those peo- In addition, these lawsuits have a Assistant to the ple, the ordinary investors, who foot chilling, a chilling effect on one of the President for Eco- the bill for high-priced settlements of most important provisions in the 1995 nomic Policy. harassment litigation. Act and that is called the safe harbor Mr. President, I make note that the We are not talking about preventing provision. Until this loophole is closed, SEC informed the Banking Committee legitimate litigation. Real plaintiffs no company can safely risk issuing any S4782 CONGRESSIONAL RECORD — SENATE May 13, 1998 forecast, even though the market des- cials, senior citizen groups, labor search of a problem. And when you perately wants it. So you cannot get a unions, academics, and consumer look at the facts, when you look at the company to say: ‘‘This is what we pre- groups oppose this bill. They oppose it numbers, the problem is not there. dict; this is what we see,’’ because they because it goes too far. It will deprive Now let me turn to the notion that are subject to litigation. To do so is to defrauded investors of remedies. this bill addresses only class-action invite a class action and a high-dollar Once again, we have this classic ex- lawsuits. I think most people under- settlement. ample of being able to sort of try to ad- stand a class-action lawsuit to refer to If someone makes a prediction and he dress a problem and, instead of nar- lawsuits brought by one person on be- is off by a little bit, he is sued. If some- rowly dealing with the problem, swing- half of himself and all other people one makes a prediction, he says: ‘‘We ing the pendulum well beyond the prob- similarly situated, an anonymous and think we are going to increase profits lem and taking the so-called corrective potentially large group of people. For or sales by one-third,’’ and he doesn’t legislation so far out that in and of class actions to be certified in Federal hit that target, he has a smaller than itself it creates additional problems. court, the Federal Rules of Civil Proce- anticipated increase, that company is Let me turn to the first dure require that the class be so nu- going to be sued. And so you cannot get misperception, the notion that securi- merous that joinder of all members is the kind of advice that investors are ties fraud class actions are being impracticable. In Federal court, a looking for. brought in State court in order to judge normally must find that common That is not what we want today. The avoid the provisions of the Litigation questions of law and fact predominate bill’s detractors are wrong. It will not Act of 1995. over questions only affecting individ- prevent shareholder derivative actions It is correct that the number of such ual members. or individual lawsuits or lawsuits by cases went up in 1996, the first year the Class actions are a tool that allow school districts or municipalities or Litigation Act was effective, but every plaintiffs to share the cost of a lawsuit State securities regulator enforcement available study shows that the number when it might not be economical for actions or lawsuits relating to declined in 1997. For example, a study any one of them to bring an action. ‘‘microcap’’ or ‘‘penny’’ stock fraud. done by the National Economic Re- But, because they can be brought on Those actions will still be permitted. search Associates, a consulting firm, behalf of potentially an enormous This is important legislation, and it found that the number of securities class, they also carry with them the is narrowly drawn to address a specific class-action suits filed in State courts possibility of being misused to coerce and serious problem. Time is short. during the first 10 months of 1996 in- defendants into settlement. There are very few legislative days re- creased to 79 from 48 filed during the This is the sort of situation that is maining in the session, and I encourage same period in 1995. ordinarily described by the proponents my colleagues on both sides of the aisle In an update released in the summer of such legislation as requiring a legis- not only to support this bill and to sup- of 1997, however, NERA found that the lative enactment. But when you exam- port the sponsors of this bill, but also number of securities class actions filed ine the legislation that comes in be- that we move forward in a manner in State courts during the first 4 hind that assertion, you invariably find which can see that it is speedily en- months of 1997 declined to 19, down that the breadth of the legislation far acted. Every day that we delay occa- from 40 in the same period in 1996. So exceeds this problem which they have sions more of these suits which need- the number actually declined very sig- identified, and which they constantly lessly cost consumers and stockholders nificantly by more than half the first 4 use in the discussion and the debate as and the American public millions and months of 1997. the example of what they are trying to millions of dollars. These numbers are cited in a report deal with. If we could limit the legisla- Again, I commend the architects of that was prepared by the Congressional tion to the examples that are cited, we this legislation, Senators DODD, Research Service. In July 1997, Profes- might really come close to obtaining a GRAMM, and DOMENICI, and I also, sors Joseph Grundfest and Michael consensus in this body about corrective again, would point out that we have Perino of Stanford University Law measures. But the legislation goes far worked very closely with the Securi- School testified before the Securities beyond the examples that are ordi- ties and Exchange Commission and Subcommittee, and in their testimony narily used as constituting the basis with the White House in coming to this they show that the number of issuers for legislative enactment, and it is that point. sued only in State class actions de- expanded application of the legislative I yield the floor. clined from 33 in 1996 to an annualized language, not the specific examples Mr. SARBANES. Mr. President, I rate of 18 in 1997. A Price Waterhouse that are generally used, which creates think it is important at the outset of securities litigation study posted by the problem. this debate to try to dispel three mis- that accounting firm on its Internet This bill is another example of that. conceptions that surround S. 1260. The site corroborated NERA’s findings. It addresses more than the type of first is that class-action lawsuits alleg- Using data compiled by Securities class-action case which is ordinarily ing securities fraud have migrated Class Action Alert, based on the num- cited as constituting a potential abuse from Federal court to State court since ber of defendants sued, Price of the legal process. This bill contains 1995 and the enactment of the earlier Waterhouse reported that the number a definition of class action broad legislation. of State court actions increased from enough to pick up individual investors In fact, as I will describe in some de- 52 in 1995 to 66 in 1996 but then declined against their will. The bill would tail shortly, every study indicates that to 44 in 1997. That was lower than the amend the Federal Securities laws to the number of securities fraud class ac- number of such actions in 1991 or 1993. include a new definition of class ac- tions brought in State courts, while it The study went on to find that the tion. It would include as class action increased in 1996, then declined in 1997. total number of cases filed in 1997 any group of lawsuits in which dam- So the numbers do not support that as- showed little or no change—little or no ages are sought on behalf of more than sertion. change—from the average number of 50 persons if those lawsuits are pending The next misconception is that this lawsuits filed in the period 1991 in the same court, involve common bill would preempt only class-action through 1995. questions of law or fact, and have been lawsuits from being brought in State Data provided to the committee by consolidated as a single action for any court. In fact, this bill likely will de- Price Waterhouse on February 20, 1998, purpose. prive individual investors of their own also demonstrated that State court fil- Even if the lawsuits are brought by opportunities to bring their actions in ings declined in 1997. Measured by the separate lawyers without coordina- State courts separate and apart from number of cases filed, the number of tion—in other words, you have 50 dif- class actions. State securities class actions declined ferent investors who feel they have The final misperception about this from 71 in 1996 to 39 in 1997. So much been cheated and want to bring a law- bill, which is suggested, is that it en- for this assertion of a rising number of suit—there is no interplay or inter- joys widespread support. In reality, a suits being brought in the State courts. action amongst them, even if the com- broad coalition of State and local offi- This really is a piece of legislation in mon questions do not predominate— May 13, 1998 CONGRESSIONAL RECORD — SENATE S4783 which is a requirement in class-action If someone misuses your credit card, you law. Now it’s 1998, and guess what’s happen- suits, but weakened in this legisla- also know what to do. You call MasterCard ing: congress is racing toward passage of a tion—those lawsuits, under this legis- or Visa or whoever it is, and the company law proposed by Chris Dodd, senator for takes the fraudulent charge off your card. Hartford, Conn., insurance capital of the lation, may qualify as a class action But what if you open the newspaper one world. The bill, which Congress is to vote on and thus be preempted. day to find you have been defrauded about before summer, would spring the trap opened So if an individual investor chooses the stocks and bonds you own? Who do you in 1995: It would bar all state class-action se- to bring his own lawsuit in State court, call for help if management of a company in curities cases. to bear the expenses of litigation him- which you hold stock has lied to the world The state remedies that were supposed to self, he can be forced into Federal about a product or its prospects, induced you remain in place would simply vanish, and court. He can be made to abide by the to buy stock, and then fled with your anyone who wanted to sue would have to go Federal Rules if 50 other investors money? into federal court, where those same impos- You can file a report with the Securities sible standards exist. The excuse of the ac- make the same decision about bringing and Exchange Commission, but we all know countants and high-tech pooh-bahs is that a lawsuit, 50 other separate investors. how slowly even the best bureaucracies there has been a huge upsurge in state class- Indeed, the bill provides an incentive work. You can go to your state securities action cases since the 1995 law went into ef- for defendants to collude with parties commission. They might be great people, but fect. The uncontroverted fact, however, is to ensure that the preemption thresh- they also work slowly—in general taking that the number of state court cases of class- old is reached. Such a result goes well years or decades—and they often are geared action suits has fallen—not risen—since 1995 beyond ending abuses associated with more to punishing the wrongdoer than to in the nation and has fallen in all but three class-action lawsuits. It deprives indi- getting a recovery for the victims. states since 1995. Also, both the feds and state bureaucracies Of course, if you have money in Congress, vidual investors of their remedies. will be totally overwhelmed and understaffed you don’t need no stinking facts. And, the The definition of class action in the as a matter of course. You could sue the juggernaut of the accountants in Congress is bill would preempt other types of law- fraudmeisters yourself, but that kind of suit powerful, indeed. They have even managed to suits as well. It includes as a class ac- costs a fortune, literally millions of dollars, get the chairman of the Securities and Ex- tion any lawsuit in which damages are and that exceeds most people’s losses, not to change Commission, Arthur Levitt, to sought on behalf of more than 50 per- mention their life savings. change his mind. Levitt in recent weeks was sons and common questions of law or So, who will possibly stand up for you and saying that state remedies should stay in sue to get your money back? The private fact predominate. The bill specifies place until he saw how the 1995 law worked class-action securities bar. out. He now endorses closing the state court- that the predomination inquiry be These people are not Matt Dillon or Wyatt house door to small class-action litigants if made without reference to issues of in- Earp, but their livelihood is wholly depend- some changes in the standard of reckless dividualized reliance on an alleged ent upon getting results for defrauded inves- misconduct required for liability are altered misstatement or omission. This would tors. They aggregate claims by all of the slightly. ensure that the investor receives the cheated investors in a corporation and sue to This is not abstruse stuff for law teachers. worst of both worlds. While the inves- get redress. They almost never make any This is serious business for the whole invest- money unless they get a chunk for the de- tor could not bring a class action under ing public. The goal of the accountants and frauded little guy. They are not angels, and their pals in Hartford is to simply kill the State law, because each investor must they are not saints. They do it for the class-action bar. They’re gambling that their prove his or her reliance, they nonethe- money. But they get money when you do, so contributions, plus a general resentment less constitute a class action under the they have to be persistent, aggressive and against lawyers, will do the trick. But if it bill and their suit is preempted. ruthless against the cheaters. does, next time you’re defrauded, you’ll be Finally, let me turn to the assertion The people who have done the fraud hate plumb out of luck. You can call, but the that there is little or no opposition to class-action lawyers. So, even more, do ac- phone will just ring and ring and ring, and this bill. In fact, the bill is opposed by countants and insurance companies. Ac- you’ll be all alone at 3 a.m., wondering how countants have often been involved in the you can possibly have such a bitter loss State and local officials very vigor- fraud or at least ignored it or missed it. ously, as a matter of fact. I note there without anyone to help. They’re still around when the business man- Mr. SARBANES. A number of groups that Orange County has just begun the agement has gone, so they—the account- first of its recoveries, in terms of being ants—often get sued successfully. Likewise, representing State and Government of- defrauded. Senior citizens groups, labor the companies that insure accountants for ficials, including the National League unions, consumer groups, columnists malpractice totally hate the class-action bar of Cities, the National Association of and editors, legal practitioners and for the same reason. Counties, the Government Finance Of- In the 1980’s, there was a national upheaval ficers Association, and the U.S. Con- academics have all weighed in on this in fraud—junk bonds, S&Ls high-tech fraud. debate. The headline of a column by ference of Mayors, oppose this bill, as There were some large federal class-action do the National League of Cities Na- Ben Stein in USA Today on April 28, suits under decades-old consumer protection summarizes this opposition: ‘‘Inves- laws from New Deal days. Naturally, these tional Association of Counties, Govern- tors, beware: Last door to fight fraud upset the accountants, the insurers and the ment Finance Officers Association, and could close.’’ high-tech firms. There were some large re- the U.S. Conference of Mayors. I ask ‘‘Investors, beware: Last door to coveries. unanimous consent that a May 11, 1998, No surprise, then, that the accountants, letter from these and other groups be fight fraud could close.’’ He wrote of high-tech firms and insurance companies did this bill, the legislation before us: printed in the RECORD. what any smart and government-wise group There being no objection, the letter State remedies would simply vanish, and of rich, unhappy people would do. They lob- was ordered to be printed in the anyone who wanted to sue would have to go bied Congress, giving immense contributions into Federal court where impossible stand- to representatives and senators. And they RECORD, as follows: ards exist. got the federal law changed drastically so GOVERNMENT FINANCE OFFICERS AS- He warns: that it became extremely hard to sue for se- SOCIATION (GFOA), MUNICIPAL TREASURERS’ ASSOCIATION (MTA), This is serious business for the whole in- curities fraud as a class. There was a bar on NATIONAL ASSOCIATION OF COUN- vesting public. suits against accountants except in very rare cases, stringent limits on discovering evi- TIES (NACO), NATIONAL ASSOCIA- Mr. President, I ask unanimous con- dence of fraud, and an almost totally impos- TION OF COUNTY TREASURERS AND sent that this entire column be printed sible level of pleading about how much de- FINANCE OFFICERS (NACTFO), NA- in the RECORD. fendants had to have known. TIONAL ASSOCIATION OF STATE RE- There being no objection, the article When those who wanted to protect the TIREMENT ADMINISTRATORS was ordered to be printed in the small investor—and there were such prin- (NASRA), NATIONAL CONFERENCE RECORD, as follows: cipled men and women in Congress—com- ON PUBLIC EMPLOYEE RETIREMENT plained, the friends of the accountants and SYSTEMS (NCPERS), NATIONAL [From USA Today, Apr. 28, 1998] fraud makers said, ‘‘Hey, maybe the federal LEAGUE OF CITIES (NLC), U.S. INVESTORS, BEWARE: LAST DOOR TO FIGHT law is a bit harsh, but no problem. You can CONFERENCE OF MAYORS (USCM), FRAUD COULD CLOSE still sue in state court. You still have state May 11, 1998. (By Ben Stein) remedies.’’ President Clinton vetoed the bill, Hon. PAUL S. SARBANES, If you come home from vacation and find but it was passed, over his veto, by a Repub- U.S. Senate, Hart Senate Office Building, that your house has been broken into, you lican Congress that I generally love but that Re: S. 1260, Securities Litigation Uniform know who to call. You call the police and sold out totally here. That was in 1995. Standards Act of 1998. then your insurance agent to make up the There has yet to be a single recovery for DEAR SENATOR SARBANES: The state and loss. investors in a suit brought under the 1995 local government organizations listed above S4784 CONGRESSIONAL RECORD — SENATE May 13, 1998 write in opposition to S. 1260, the Securities strike an appropriate balance, and this legis- tion Reform Act of 1995 (the ‘‘1995 Act’’), Litigation Uniform Standards Act of 1998, as lation extends that mistake to state courts. which made it more difficult for investors to reported by the Senate Committee on Bank- As both issuers of debt and investors of pub- recover for securities fraud in federal court. ing, Housing and Urban Affairs, which we un- lic funds, state and local governments seek Defendants in securities fraud suits now derstand will be considered by the full Sen- to not only reduce frivolous lawsuits but to argue that the 1995 Act contained a ‘‘loop- ate this week. We urge you to support protect state and local government investors hole’’ because it did not overturn Congress’s amendments to the bill which would (1) nar- who are defrauded in securities transactions. decision in 1933 and 1934 to leave state fraud row the definition of class action to follow The full impact of that statute on investor remedies intact.2 the Federal Rules of Civil Procedure; (2) rights and remedies remains unsettled be- Arthur Levitt, the Chairman of the Securi- allow plaintiffs to carry state statute of lim- cause even now many parts of the PSLRA ties and Exchange Commission, however, has itations laws with them in cases filed in have not been fully litigated; however, this strongly urged Congress to wait until more state court which are removed to federal untested law would now be extended to state is known about the impact of the 1995 Act on court; and (3) provide an exemption for class- courts. litigation in federal and state courts before es comprised of state and local governments. The above organizations believe that considering legislation preempting state 3 We also ask that you oppose this legislation states must be able to protect state and local rights of action. We also believe that Con- if the final version too closely resembles the government funds and their taxpayers and gress should wait to ascertain the effects of current version of S. 1260. Our most signifi- that S. 1260 inhibits these protections. We the 1995 Act, as well as the direction of state cant concerns are the following: urge you to oppose preemption efforts which law, before enacting any legislation that would undercut the longstanding role that The consequences for public pension funds interfere with the ability of states to protect state law has had in protecting investors and state and local governments which are their public investors and to maintain inves- from securities fraud. The complex relation- unable to recover losses in state courts will tor protections for both public investors and ship between federal and state securities be significant. If defrauded state or local their citizens. pension funds are barred from recovering laws needs to be more fully understood be- from corporate wrongdoers in state court Mr. SARBANES. Why are these pub- fore investors are denied the protection of ei- (having already had many remedies fore- lic officials concerned about this bill? ther body of law. closed in federal court), the state or local Why are these associations that rep- We therefore urge you and your colleagues government and its taxpayers may be re- resent public officials all across our at this time not to support S. 1260, HR 1689, quired to make up losses in the fund. Not Nation concerned about this bill? Be- or any other legislation that would deny in- only would this jeopardize general revenue, vestors their right to sue for securities fraud cause these public officials invest tax- under state law. leading to a likely loss of jobs and services payers’ funds and public employees’ to the public, but it could also severely dam- Very truly yours, age a jurisdiction’s credit rating. This could pension funds in securities. And they Ian Ayres, Yale University; Stephen M. result in a higher cost of borrowing in the fear they will be left without remedies Bainbridge, University of California at debt market to fund capital and operating if they are defrauded. Los Angeles; Douglas M. Branson, Uni- expenses. Testifying before the Senate Banking versity of Pittsburgh; William W. S. 1260 fails to reinstate liability for sec- Committee, Mayor Harry Smith of Bratton, Rutgers University; John C. Coffee, Jr., Columbia University; ondary wrongdoers who aid and abet securi- Greenwood, MS, warned: ties fraud. Despite two opportunities to do so James D. Cox, Duke University; since the Supreme Court struck down for pri- The most potent protection investors have Charles M. Elson, Stetson University; vate actions aiding and abetting liability for is the private right of action. To remove that Merritt B. Fox, University of Michigan; wrongdoers who assist in perpetrating secu- protection could have grave consequences. Tamar Frankel, Boston University; rities fraud, the current version of S. 1260 We oppose taking such a risk. We oppose pre- Theresa A. Gabaldon, George Washing- does not reinstate such liability. An amend- emption of traditional State and local rights ton University; Nicholas L ment offered in the Banking Committee created to protect our citizens and tax- Georgakopoulos, University of Con- which would have allowed defrauded inves- payers. This bill is inconsistent with Con- necticut; James J. Hanks, Jr., Cornell tors to carry with their federal claim the gress’ renewed commitment to the preserva- Law School; Kimberly D. Krawiec, Uni- state law regarding aiding and abetting was tion of federalism, and reduces protections versity of Tulsa; Fred S. McChesney, defeated. for our retirees, employees, and taxpayers. Cornell Law School; Lawrence E. S. 1260 fails to reinstate more a reasonable Over two dozen law professors, in- Mitchell, George Washington, Univer- statute of limitations for defrauded investors cluding such nationally recognized se- sity; Donna M. Nagy, University of Cin- to file a claim. As in the case of aiding and curities law experts as John Coffee, Jr., cinnati; Jennifer O’Hare, University of Missouri, Kansas City; Richard W. abetting, Congress has now had two opportu- Joel Seligman and Marc Steinberg, ex- nities to reinstate a longer, more reasonable Painter, University of Illinois; William statute of limitations for defrauded investors pressed their opposition in a letter ear- H. Painter, George Washington Univer- to bring suit. Many frauds are not discovered lier this year. I ask unanimous consent sity; Margaret V. Sachs, University of within this shortened time period, but the that letter be printed in the RECORD. Georgia; Joel Seligman, University of Banking Committee again missed an oppor- There being no objection, the letter Arizona; D. Gordon Smith, Lewis and tunity to make wronged investors whole by was ordered to be printed in the Clark; Marc I. Steinberg, Southern defeating an amendment that would have al- RECORD, as follows: Methodist University; Celia R. Taylor, lowed defrauded investors to carry with University of Denver; Robert B. JANUARY 23, 1998. them in federal suits the state statute of Thompson, Washington University; DEAR SENATORS AND MEMBERS OF CON- limitations. Manning G. Warren III, University of GRESS: We are professors of securities regula- The definition of ‘‘class action’’ contained Louisville; Cynthia A. Williams, Uni- tion and corporate law at law schools in S. 1260 is overly broad. The definition of versity of Illinois. throughout the United States. Our teaching class action in S. 1260 would allow single 1 and scholarship focus on the coexistent fed- See S. 1260, 105th Congress, 1st Sess. (1997) (the suits filed in the same or different state Securities Litigation Uniform Standards Act of 1997) courts to be rolled into a larger class action eral and state systems for the regulation of (the ‘‘Gramm-Dodd bill’’); and HR 1689, 105th Con- that was never contemplated or desired by securities, an extraordinary example of co- gress, 1st Sess. (1997) (the ‘‘White-Eshoo bill’’). individual plaintiffs and have it removed to operation between the public and private 2 See Section 16 of the 1933 Act, 15 U.S.C. § 77p federal court. Claims by the bill’s proponents sectors that has created for American busi- (1996), and Section 28(a) of the 1934 Act, 15 U.S.C. § 78bb(a) (1996). that individual plaintiffs would still be able nesses the largest capital market in the 3 Prepared Statement of Arthur Levitt, Chairman, to bring suit in federal court are belied by world, and for investors one of the safest. As events elsewhere in the world over the past U.S. Securities and Exchange Commission Before this provision. the Senate Committee on Banking, Housing and There have been few state securities class few weeks so aptly demonstrate, the stabil- Urban Affairs Subcommittee on Securities Concern- actions filed since the Private Securities ity and integrity of our capital markets is ing the Impact of the Private Securities Litigation Litigation Act (PSLRA) passed. Despite the one of our most important national accom- Reform Act of 1995, July 24, 1997. claims of the bill’s proponents, tracking by plishments. Mr. SARBANES. These distinguished the Price Waterhouse accounting firm shows We are very concerned about legislation law professors stated: that only 44 securities class actions were now pending in Congress that would preempt We . . . believe that Congress should wait filed in state court for all of 1997, compared private rights of action for securities fraud to ascertain the effects of the 1995 Act, as with 67 in 1994 and 52 in 1995. Most of these in class actions brought under the statutes well as the direction of state law, before en- 1 cases were filed in California, indicating and common law of all fifty states. This acting any legislation that would undercut that, if there is a problem in that state, it is sweeping federal preemption of state law is the longstanding role that state law has had one which should be dealt with at the state being proposed less than one year after the in protecting investors from securities fraud. National Securities Markets Improvement level. Citizens of the other 49 states should These distinguished academics op- not be penalized as a result of a unique situa- Act of 1996 preempted state ‘‘merit review’’ tion in a single state. of most securities offerings, and two years pose any legislation that would deny The PSLRA was opposed by state and local after the federal litigation system itself was governments because the legislation did not overhauled by the Private Securities Litiga- 2 Footnoes at end of letter May 13, 1998 CONGRESSIONAL RECORD — SENATE S4785 investors their right to sue for securi- A ruling in one of the first cases filed under class action litigation is the only economi- ties fraud under State law. the new law, a class action that Mr. Lerach cally feasible way in which shareholders can Similarly, the New York State Bar brought against Mountain View, Calif.’s Sili- bring security fraud claims. Generally, even Association opposes this bill. A report con Graphics Inc., threatens to wipe out the largest institutional shareholders will ‘‘recklessness’’ as a sufficient standard of in- not pursue a valid claim individually, be- prepared by the Bar Association Sec- tent in securities fraud cases. cause their possible individual benefit will tion on Commercial and Federal Liti- The Securities and Exchange Commission not compensate for the costs incurred in gation concluded: ‘‘The existing data is supporting Mr. Lerach’s appeal of this rul- bringing such litigation. In light of the does not establish a need for the legis- ing to the 9th U.S. Circuit Court of Appeals, SEC’s limited resources, private class action lation,’’ and, ‘‘the proposed solution far but the court won’t hear arguments until litigation has always been the primary exceeds any appropriate level of rem- next year. By then, Congress may have al- means for both institutions and individual shareholders to recoup losses from securities edy for the perceived problem.’’ ready blocked state court suits, leaving plaintiffs in investor suits without a forum fraud and has been a powerful deterrent to Let me repeat that quote from the managerial impropriety. report prepared by the New York State to assert reckless conduct and, ergo, leaving corporate wrongdoers free to behave irre- Tampering with the state’s antifraud au- thority would place at risk the retirement Bar Association Section on Commer- sponsibly. savings of tens of millions of Americans. cial and Federal Litigation: Other protections available in state court Aside from the obvious flaws, the proposed The proposed solution far exceeds any ap- would also be lost. In 33 states, the statutes legislation also disturbs the state/federal propriate level of remedy for the perceived of limitation on filing suit are longer than balance by removing an important state role problem. the one-year federal limit. Liability for ‘‘aid- in the antifraud field without any sound jus- ing and abetting’’ a securities fraud—which The opposition goes on. As additional tification. The AFL–CIO asks you to oppose was eliminated in federal court actions by a examples, I cite a March 30, 1998, edi- this bill. 1994 U.S. Supreme Court ruling—also exists Sincerely, torial from the National Law Journal in most states. PEGGY TAYLOR, entitled ‘‘What’s the Rush?’’ This edi- Before the Senate rushes to wipe out state Director, torial concludes: fraud actions, it should recall the words of Department of Legislation. The Senate should pause before it neutral- Sen. Pete V. Domenici, R-N.M., who co-spon- sored the 1995 act. Addressing criticisms that izes State laws that still stand as a bulwark CONSUMER FEDERATION the new law would allow financiers like Lin- protecting investors against flimflam art- OF AMERICA, ists. coln Savings & Loan’s Charles V. Keating to Washington, May 7, 1998. Mr. President, I ask unanimous con- escape liability, Senator Domenici pointed DEAR SENATOR: It is our understanding sent that this editorial from the Na- out that Mr. Keating had been sued under that the Senate will vote next week on S. many provisions of state law—‘‘laws un- 1260, ‘‘The Securities Litigation Uniform tional Law Journal entitled ‘‘What’s touched’’ by his proposed reforms. the Rush?’’ and concluding by saying, Standards Act of 1997.’’ I am writing on be- The Senate should pause before it neutral- half of Consumer Federation of America to ‘‘The Senate should pause before it izes state laws that still stand as a bulwark, reiterate our strong opposition to this anti- neutralizes State laws that still stand protecting investors against flimflam art- investor legislation and to urge you to op- as a bulwark protecting investors ists. pose it. against flimflam artists,’’ be printed in Mr. SARBANES. Mr. President, I Our opposition is based on a simple prin- the RECORD. would like to point out also the opposi- ciple: Congress should not extend federal There being no objection, the edi- tion of the American Association of standards to securities fraud class action torial was ordered to be printed in the lawsuits being brought in state court until Retired Persons, the Consumer Federa- we know whether those federal standards are RECORD, as follows: tion of America, the AFL–CIO, the preventing meritorious cases from being [From the National Law Journal, Mar. 30, American Federation of State, County brought or reducing victims’ recoveries. Cau- 1998] and Municipal Employees, and the tion is particularly warranted in this case WHAT’S THE RUSH? United Mine Workers. I ask unanimous since both the Securities and Exchange Com- You would expect Congress to think long consent that letters from these groups mission and the state securities regulators and hard before passing laws that foreclose expressing their opposition to this bill opposed the Private Securities Litigation the right of potential litigants to bring their Reform Act on the grounds that it would tip be printed in the RECORD. the balance too far in favor of fraud defend- complaints in the courts. But Capitol Hill is There being no objection, the letters moving swiftly on legislation that would ants. were ordered to be printed in the The jury is still out on the PSLRA, since block investor class actions in the state its major provisions have yet to be defined in courts, though principles of federalism are in RECORD, as follows: court and there has yet to be a single recov- themselves reasons for Congress to proceed AFL–CIO, ery for investors under the 1995 law. It would with caution. Washington, DC, May 11, 1998. be nothing short of irresponsible, in our Bills to amend the Private Securities Liti- DEAR SENATOR: Labor unions have an enor- view, for Congress to preempt state laws gation Reform Act of 1995, which put strict mous stake in protecting workers’ hard- without first knowing the full effects of the limits on federal class actions, have enor- earned retirement savings from securities federal law on meritorious lawsuits. mous support: The Senate bill, S. 1260, al- fraud. Over $300 billion in union members’ Supporters have made much of the fact ready has 30 sponsors, and a virtually iden- pension assets are invested in the stock mar- that Securities and Exchange Commission tical bill in the House, H.R. 1689, has 193 ket. Thus, as shareholders and investors, Arthur Levitt now supports S. 1260, having sponsors. The Senate Banking Committee is unions and employees count on the protec- announced his change of heart at his con- expected to mark up the bill this month, and tion of both state and federal laws and regu- firmation hearing in April. It is important to Senate Majority Leader Trent Lott, R-Miss., lations to protect their investments and to understand that nothing in the few cosmetic has promised to bring the bill to a floor vote preserve the integrity of the market. For changes negotiated by Chairman Levitt al- before the Easter recess, which begins April this reason, the AFL–CIO urges you to op- ters the fundamentally anti-investor nature 3. pose S. 1260, the Securities Litigation Uni- of this bill. The Senate should slow down—and take a form Standards Act. Furthermore, even as he made his unfortu- careful look at the evidence. Lobbyists for State laws can and do provide even greater nate decision to endorse the legislation, the high-technology companies that have protection for small investors than is pro- Chairman Levitt did not withdraw earlier been pushing for pre-emption claim that vided by the federal securities laws. Until statements that the current federal law tilts plaintiffs’ lawyers such as San Diego’s Wil- now, it has been up to each state to decide the balance too far in favor of securities liam S. Lerach, of New York’s Milberg Weiss whether and how to offer enhanced antifraud fraud defendants. Nor did he withdraw state- Bershad Hynes & Lerach L.L.P., are making protections to its citizens. ments that this legislation is premature an ‘‘end run’’ around the federal law by This well established, dual system of state based on the limited data now available. bringing their lawsuits in state court. But and federal protection is now threatened, Most importantly, he did not withdraw his data collected by Price Waterhouse Inc., a however, S. 1260 preempts investor-friendly assessment, expressed in October testimony key supporter of pre-emption, show a steep state laws and substitutes the federal Pri- before the Senate Banking Committee ‘‘. . . drop in the number of suits brought in state vate Securities Litigation Reform Act that the bill would deprive investors of im- court: In 1996, 71 class actions were filed; in (PSLRA), which would significantly limit portant protections, such as aiding and abet- 1997, the number dropped to 39. the liability of fraud defendants. ting liability and longer statutes of limita- But this is more than a numbers story. The In particular, the bill would hurt individ- tion, that are only available under state federal courts have just begun to interpret ual investors, including workers and pen- law’’ and that ‘‘great care should be taken to the 1995 law, which passed after rancorous sioners, by denying them the ability to pur- safeguard the benefits of our dual system of debate in the House and Senate, and only sue effective redress through a class action. federal and state law, which has served in- after Congress overrode a presidential veto. In broadly held publicly traded companies, vestors well for over 60 years.’’ S4786 CONGRESSIONAL RECORD — SENATE May 13, 1998 During the Banking Committee’s mark-up lieve that there has been inadequate time to antifraud standard for securities traded of the bill, amendments were offered that determine the overall effects of the Private on national securities exchanges, but would have allowed defrauded investors to Securities Litigation Reform Act of 1995, and they fail to address directly the ques- rely on longer statutes of limitations and that the proponents of further litigation re- aiding and abetting liability where they were form have not demonstrated the need for tion which we need to ask, whether the available in state law and would have pre- preemption of state remedies or causes of ac- current Federal antifraud standard, as vented state courts from consolidating indi- tion at this time. reflected by the 1995 act, deserves to be vidual lawsuits brought against a common In the last few years, we have experienced the uniform standard. Is the current defendant for the purposes of forcing the a sustained bull market virtually unmatched antifraud standard, which they are now case into federal court. While these amend- at any time during this nation’s history. I going to use to bring cases up from the ments alone cannot alter the fundamental therefore question the necessity of the dis- State courts and deny investors the placement of state law in favor of a single flaws in this legislation, they would amelio- remedies under the State systems, is rate some of the bill’s most onerous effects. set of uniform federal standards for securi- CFA believes these pro-investor changes are ties class action litigation. The Commission that standard adequate to protect in- the minimum necessary to provide a modi- is the federal agency charged with protecting vestors? cum of balance to the bill. Should similar the rights of investors. In my opinion, S. I voted against the 1995 act because I amendments be offered on the Senate floor, 1260, the Securities Litigation Uniform was concerned that it did not establish we urge you to support them. Standards Act of 1997, does not promote in- an appropriate standard. I was worried As you consider this legislation, keep in vestors’ rights. I share in the views of 27 of that it did not strike the proper bal- mind that just under half of all American this country’s most respected securities and ance between deterring frivolous secu- households now invest in the stock market corporate law scholars who have urged you directly or through mutual funds. Their pri- and your colleagues not to support S. 1260 or rities suits and protecting investors mary reason for investing is to provide a de- any other legislation that would deny inves- who are victimized by securities fraud. cent standard of living for themselves in re- tors their right to sue for securities fraud None of us is in favor of frivolous secu- tirement. When the current bull market under state law. rities suits, these so-called strike suits. comes to its inevitable end, and the frauds In addition, data amassed by the Commis- But at the same time, I, for one, at that have been perpetrated under its cover sion’s staff, compiled in unbiased external least, do not want to go so far in trying are exposed, investors who find their retire- studies, indicate that the number of state se- to deal with that problem that I cease ment savings decimated by fraud should not curities class actions has declined during the be left without any means of recovering last year to pre-Reform Act levels. Indeed, a to protect investors who are victimized those losses. report by the National Economic Research by securities fraud. There is a line in Because it threatens to further restrict de- Associates concluded that the number of between, actually, I have asserted frauded investors’ access to justice, CFA state court filings in 1996 was ‘‘transient.’’ many times, I think, on which a con- urges you to vote against S. 1260. Under these circumstances, S. 1260 seems sensus can be reached, but the legisla- Respectfully submitted, premature at the least. tion that keeps coming forward This country has a distinguished history of BARBARA ROPER, always overreaches—it overreaches— Director of Investor Protection. concurrent federal and state securities regu- lation that dates back well over 60 years. and therefore, I think, jeopardizes the Mr. SARBANES. Mr. President, protections that are available to inves- much will be made during the debate Given that history, as well as the strong fed- eralism concerns that S. 1260 raises, I believe tors who are innocent victims of secu- on this bill of the support it is asserted that much more conclusive evidence than rities frauds. it enjoys from the Securities and Ex- currently exists should be required before A number of securities law experts change Commission. But it seems to state courthouse doors are closed to small warn that the safe harbor for forward- me that citing the support of the SEC investors through the preclusion of state looking statements enacted by that act tells only part of the story—only part class actions for securities fraud. Sincerely, could protect fraud. In addition, the of the story. proportionate liability provisions leave First, SEC Commissioner Norman NORMAN S. JOHNSON, innocent victims suffering a loss while Johnson has written to express his op- Commissioner. shielding those who participate in se- position to the bill. His March 24, 1998, Mr. SARBANES. Secondly, the SEC curities fraud. Of course, the 1995 act letter concludes: supports changes to the Federal anti- omitted the statute of limitations in I believe that much more conclusive evi- fraud standard to make it more protec- dence than currently exists should be re- tive of investors. In other words, if the aiding and abetting provisions rec- quired before state courthouse doors are SEC is going to be cited, as the pro- ommended by the SEC, still rec- closed to small investors through the pre- ponents of this legislation have done, ommended by the SEC, and, of course, clusion of state class actions for securities in support of their position, surely not included in this legislation. fraud. then they ought to pay attention to Since the reform act was enacted, an- I ask unanimous consent to have the SEC position which has been as- other concern has developed. Some dis- Commissioner Johnson’s letter printed serted seeking changes in the Federal trict courts have relied on the legisla- in the RECORD. antifraud standard to make it more tive history of that act in concluding There being no objection, the letter protective. Let me give you a few ex- that the act’s pleading standards elimi- was ordered to be printed in the amples. nated liability for reckless conduct. RECORD as follows: The SEC supports a longer statute of Imagine, eliminating liability for reck- SECURITIES AND limitations so that fraud artists do not less conduct. EXCHANGE COMMISSION, escape liability by successfully con- If that view prevails in the circuit Washington, DC, March 24, 1998. cealing their frauds. The SEC supports courts, and if the Congress preempts, Hon. ALFONSE M. D’AMATO, the restoration of liability for aiders as this legislation proposes to do, Chairman, Committee on Banking, Housing and and abetters of securities fraud so that causes of action under State laws, in- Urban Affairs, U.S. Senate, Senate Hart Of- vestors will be left with no remedies— fice Building, Washington, DC. those who give substantial assistance to fraud artists do not escape liability. I underscore that, with no remedies— Hon. PHIL GRAMM, The SEC supports codification of li- against those whose reckless conduct Chairman, Subcommittee on Securities, U.S. makes a securities fraud possible. Senate, Senate Russell Office Building, ability—codification of liability—for Washington, DC. reckless conduct to ensure that profes- It is for these reasons that the asso- sionals, such as accountants and under- ciations and various commentators I Hon. CHRISTOPHER J. DODD, Ranking Member, Subcommittee on Securities, writers, carry out their responsibilities have cited are opposing this bill. They U.S. Senate, Senate Russell Office Building, under the Federal securities laws. In oppose this bill both because of its Washington, DC. fact, Chairman Levitt reiterated his overly broad reach—clearly because of DEAR CHAIRMAN D’AMATO, CHAIRMAN support for these provisions as recently its overly broad reach—and because its GRAMM, AND SENATOR DODD: It is with regret as 6 weeks ago when he appeared before sponsors fail to take this opportunity that I find myself unable to join in the views the Banking Committee for his renomi- to correct the flaws of the earlier legis- expressed by my esteemed colleagues in nation hearing. Nonetheless, these pro- lation. If the sponsors are going to their letter of today’s date. For that reason eliminate recourse in the State courts, I feel compelled to write separately to ex- visions are nowhere to be found in this press my own differing views. bill. it becomes even more incumbent upon Consistent with the opinion the Commis- The supporters of this legislation them to correct the Federal standard sion and its staff have repeatedly taken, I be- argue the desirability of a uniform with respect to the shortcomings which May 13, 1998 CONGRESSIONAL RECORD — SENATE S4787 have been identified in it and continue judgment against those offenders. They get swept up the way this bill permits. to be identified by the Securities and are all things which I understand cur- And so all of a sudden they are over in Exchange Commission. rently exist to the benefit of small in- Federal court, and they say to them Mr. BRYAN. Will the Senator yield vestors as class actions at the State ‘‘It’s too bad. The statute of limita- for a question? level in most States, if I am not mis- tions has run. And you don’t have an Mr. SARBANES. I yield to my col- taken. action. You don’t have a cause of ac- league. Mr. SARBANES. The Senator is cor- tion.’’ You are shut out of the court- Mr. BRYAN. The question I have is rect. Currently, what happened is we house. with reference to the Senator’s obser- set a Federal standard in the 1995 act Now, where is the fairness in that? I vation about standard for reckless mis- in the Federal courts. That still left to defy anyone to show me the fairness in conduct. an investor the option of going into a that process. As I understand, we have actual State court to seek remedy. Mr. BRYAN. Is the Senator also sug- knowledge, we can have simple or ordi- Now the proponents of this bill said, gesting that a remedy available at the nary negligence, we can have gross ‘‘Well, everyone who is going into Fed- State court level against an accom- negligence, and then we can have a eral court bringing the so-called frivo- plice, whether it be a lawyer or an ac- standard of reckless conduct which is lous suits are now going to migrate countant, that would be available to an utter disregard of the facts. Is the into the State courts.’’ The numbers the investor under State law, if re- Senator saying that the legislation show that has not happened. You have moved under the process of the Federal that we are processing today does not a little increase in 1996. The numbers court, which the Senator has just de- clarify in the findings of this commit- came back down in 1997. The projected scribed, would preclude that small in- tee that we want to reaffirm that reck- numbers are down. So you do not have vestor from a recovery against an ac- less misconduct ought to be a cause of that flood of litigation into the State complice who had participated in the action for those who are defrauded by courts, and yet investors had available fraud that resulted in the investor’s investors? to them State court remedies. loss? Mr. SARBANES. I say to my col- Well, now what they are going to do Mr. SARBANES. The Senator is ex- league, as I understand it, this is what is they are going to preempt the ability actly on point. That is exactly what transpired. The 1995 act was being in- to bring the action in the State courts. would happen, which would be exactly terpreted at the district court level, Well, then, the proponents will say, what would be permitted to take place the Federal district court level—the ‘‘Well, we are just preempting it for under this legislation. legislative history of it—that the act’s these class actions. If you are an indi- When the 1995 bill was passed, people pleading standards eliminated liability vidual investor and you want to hire said, ‘‘Well, we are defining this Fed- for reckless conduct. your lawyer, you will still be able to go eral standard. People can still go into Now, the SEC has come to us and into State court.’’ But they define a the State court, the individual inves- said we should codify a reckless con- class action in this bill in such a way, tor, and get a remedy.’’ duct right of action into the Federal so broadly that it will sweep up indi- Now they come along and they say, standard. The legislation before us does vidual investors who are really not ‘‘Well, we’re going to preempt the not have such a codification. part of a class-action suit. State courts in quote, ‘class actions,’’’ Now, there is language in the report, Those individual investors will then but then they define class actions so but we do not have a codification. So discover—I mean, what is going to hap- broadly that it will sweep up individual you have the problem about the legis- pen here, my prediction on this is that investors. It can sweep up people who lative history for the 1998 act. And it is what is going to come before the Con- are not bringing what we traditionally not quite clear to me how it will sup- gress down the road, if this legislation recognize and know as a class action. plant the legislative history for the passes, is small investors showing up in So it is once again an example of 1995 act. A codification would do that the Congress and saying, ‘‘This hap- overreaching, as this mayor indicated but that is not in this bill. pened to me. And now I discover, be- from Greenwood, MS, that removing Mr. BRYAN. We are talking about, if cause of the legislation which you all these protections would have grave I understand, conduct that is more enacted, I can’t get any remedy. And consequences. This thing goes beyond egregious even than gross negligence. this isn’t right.’’ And Members are anything that is required to deal We are talking about an utter dis- going to be looking at that, and they with—the New York State Bar Associa- regard of the facts and the con- are going to say it is not right. tion quote, I think, is the best on this sequences that flow from that? That is why we are urging Members very point when they said, ‘‘The pro- Mr. SARBANES. That is right. If you to pause and take a careful look at this posed solution far exceeds any appro- want to talk about where you put the before they put it into law. You can priate level of remedy for the perceived balance, how in the world would you have a situation in which an individual problem.’’ drive the balance so far over that an investor goes in under State law within I am saying to the opponents, look, investor who was the victim of reckless the statute of limitations. Often you do let us examine what you assert as the conduct would not have a remedy? It not discover these things. They are problem. And we will hear examples of just defies any equitable striking of the concealed. That is what fraud is all a problem that will be cited. Most of balances with respect to, quote, ‘‘frivo- about. So he is within the statute of those examples, I am sure I would lous’’ lawsuits on the one hand, and in- limitations. Other investors do the think something needs to be done vestor protection on the other. same thing. about them. But the solution, the pro- Mr. BRYAN. So if I understand the So let us say it is New York or Cali- posed solution here will far exceed the Senator’s position, if S. 1260 is passed, fornia or Illinois, and a whole wide examples. What is going to happen is we preempt State class actions so that group of people have been defrauded by eventually—and that is why I think small investors would not have the ad- some fraud artist. Well, if 50 of them these people are opposing this legisla- vantage of a longer statute of limita- come in and bring some kind of suit tion I have cited. tions that a number of States—I be- against this artist, they can be swept I think Senators need to be cautious. lieve 33 out of the 50—provide to inves- up into a class action, removed into This, in effect, is an investor’s beware tors suing at the State level class ac- the Federal court. They will go over to legislation—investors beware. I think tions. the Federal court, and then they say to in the future we are going to be peti- We would deprive the small investor them, ‘‘Well, our statute of limitations tioned or importuned in the Congress of his or her opportunity to go against is shorter than your State statute of to correct this overreaching because the accomplices, the lawyers, the ac- limitations under which you filed this innocent people will have been denied countants, and others who conspired action,’’ which was timely filed in the their remedy against fraud artists who with the primary perpetrator of fraud. State court. have cheated them out of their life sav- That protection is taken away. And we They acted on their rights within the ings. also eliminate the ability to move and time limitation of the State court. Let me just note that we are at a to obtain a joint and several liability They had no idea they were going to time of record high in our Nation’s S4788 CONGRESSIONAL RECORD — SENATE May 13, 1998 stock market. The current bull market with regard to the recklessness stand- the intent of the committee in this leg- is the longest in history. Stocks are ard. We received a letter of endorse- islation is today. trading at a price-earnings ratio that ment and support from the Securities In the absence of that, I think you exceed even those reported in the 1920s. and Exchange Commission, signed by might have courts ruling otherwise, The level of participation in the stock Chairman Arthur Levitt, Isaac Hunt, even though we may have not drawn market by America’s families is also at and Laura Unger, March 24. This letter, that conclusion in the earlier legisla- a record level, both directly through I believe, has been introduced in the tion. ownership of stocks and indirectly RECORD by Chairman D’AMATO, but I Mr. SARBANES. Will the Senator through pension funds and mutual am, at this juncture, going to highlight yield? funds. History suggests that at some two paragraphs of this letter because Mr. DODD. I will make my com- point the bull market will end, and his- they go right to the heart of what was ments, and then I will be glad to yield tory also suggests that when that oc- raised a few moments ago when it for a debate, but I want to finish my curs is when securities fraud will be ex- comes to the recklessness standard. I opening statement. posed. You don’t get that much expo- will address this more directly in my Mr. SARBANES. Would the Senator sure in a rising market. remarks. Let me quote two paragraphs have any objection to codifying this Should this bill be enacted, at that in this letter. standard? time many investors will find their As you know, when the Commission testi- Mr. DODD. I will do that in my re- State court remedies eliminated. In fied before the Securities Subcommittee of marks. too many cases investors will be left the Senate Banking Committee in October There is a very difficult problem without any effective remedies at all. 1997, we identified several concerns about S. codifying the standard on recklessness. Such a result can only harm innocent 1260. In particular, we stated that a uniform Congress has wrestled with this over investors, undermine public confidence standard for securities fraud class actions the years. We were not the first com- that did not permit investors to cover losses mittee to try. We thought leaving the in the securities market, and ulti- attributable to reckless misconduct would mately raise the cost of capital for de- jeopardize the integrity of the securities standard as it has been in the courts, serving American businesses. markets. In light of this profound concern, making sure we are not trying to make I urge my colleagues to think long we are gratified by the language in your let- any change to that standard here, any and hard about this legislation, to be ter of today agreeing to restate in S. 1260’s way other than what has been an ac- very careful about it. It far exceeds legislative history, and in the expected de- cepted standard, was a better way to what needs to be done in terms of ad- bate on the Senate floor, that the Private proceed, based on the advice we re- dressing any perceived problem. I think Securities Litigation Reform Act of 1995 did ceived. not, and was not intended to, alter the well- We certainly did not change that we need to be extremely sensitive to it. recognized and critically important scienter I expect a number of amendments to standard. standard, as has been the suggestion, be offered to this bill as we proceed either with this act or the act of 1995 Jumping down another paragraph, with its consideration. I look forward despite the fact that some courts may to discussing those at the appropriate The ongoing dialog between our staffs has have read it otherwise. I can’t preclude been constructive. The result of this dialog, time as we seek to correct what I think we believe, is an improved bill with legisla- a court from misinterpreting the deci- are some of the more obvious and egre- tive history that makes clear, by reference sions of a Congress. gious flaws in this legislation. to the legislative debate in 1995, that Con- But the recklessness standard has I yield the floor. gress did not alter in any way the reckless- been a good standard over the years The PRESIDING OFFICER (Ms. COL- ness standard when it enacted the Reform and ought not to be tampered with, in LINS). The Senator from Connecticut is Act. my opinion. recognized. Then it goes on to complete the para- Mr. BRYAN. Will the Senator yield? Mr. DODD. Madam President, let me graph. I don’t want to interrupt his presen- begin by thanking my chairman of the I don’t know if anything can be more tation. I am always happy to wait, but committee, Senator D’AMATO, and Sen- clear in this letter. Certainly the in- we are talking of the reckless standard. ator GRAMM with whom I authored this tent, stated in committee, stated on If I might inquire of the Senator, the particular proposal. the floor previously, stated in this let- SEC, as I understand it, has sent over Senator DOMENICI has been very in- ter, and we stated again here on the a definition of ‘‘reckless.’’ If that could volved in this issue, going back a num- floor today as to what the intentions be included in the findings of fact as ber of years when the issue first arose, were of those of us who crafted this opposed to the report language, I think trying to deal with this sinister prac- legislation when it comes to ‘‘reckless- it would strengthen what we all seek to tice going on of strike lawsuits and ness.’’ do, and that is to retain the reckless predator law firms. I will share briefly Now I agree. I mentioned earlier, standard, which I know is the objective some news out this morning as to how some courts, a few district courts, have of the Senator from Connecticut. the law firms that we are trying to read otherwise. That happens. But we As the Senator knows far better than deal with operate, where the issue of will try to make it clear that was aber- I, report language is fairly thin gruel fraudulent behavior is hardly their mo- rational behavior, erroneous behavior, compared to the findings of fact which tivation; it has to do with simple stock in my view, rather than what we in- are included or other issues which the fluctuation. Some Internet activity tended. sponsors of the legislation—I wonder if today will highlight that in categorical I see my colleague from New York is the Senator would consider including terms, as early as about 4 or 5 hours rising. that definition. ago. This is a pervasive problem that Mr. D’AMATO. If the Senator will Mr. DODD. The problem has been, as needs to be addressed. yield for a question, is it not true, if we you start trying to codify, we—I will We passed this bill out of our com- were to set aside this legislation and take a look at what the Senator has. I mittee 14–4 on a strong bipartisan vote. not go forward, there might be a ques- haven’t seen it. The bill is endorsed by the Securities tion and that, indeed, what both the The suggestion has been made—what and Exchange Commission, supported White House and the SEC are saying, I was trying to respond to, prior to ris- by this administration, the Clinton ad- as a result of our coming forward, we ing here, was that the suggestion was ministration. We will be happy to en- may be eliminating that question, that made that somehow this piece of legis- tertain the amendments as they are of- ambiguity, by moving forward in the lation and ’95 Act had undone the fered that come up that were raised in way that we proposed in this legisla- standard of recklessness that had been committee. We had hearings on this tion? used. matter—not a lengthy markup, but an Mr. DODD. I think the chairman of We made it quite clear—at least I extensive markup—with an oppor- committee raises an excellent point, thought we did—in 1995 that we were tunity to vote a lot of the issues. that in fact our legislative history in- not altering the standard. Certainly I will pick up on some of the conclud- cluded with S. 1260, the debate we have the SEC believes that was what we in- ing comments and remarks of my two had, makes it quite clear what the in- tend. This legislative history and this colleagues from Maryland and Nevada tent of the committee was in 1995, what debate on today’s bill makes it clear it May 13, 1998 CONGRESSIONAL RECORD — SENATE S4789 was not the intent. What I objected to action against those who commit John Olson, the noted securities law was the suggestion that somehow we fraud. America’s markets are the envy expert, testified in February before the had changed the scienter standard. We of the world because of the tremendous subcommittee on securities that: had not done that. And the letter from confidence that American and foreign In the years 1992 through 1994, only six the three members of the Securities investors have in the regulatory sys- issuers of publicly traded securities were and Exchange Commission, I think, re- tem that supports those markets. sued for fraud in State court class actions. In inforces the point—not whether or not But it is precisely because of the contrast, at least 77 publicly traded issuers you add something in the statement of vital importance of the private litiga- were sued in State court class actions be- tween January 1, 1996, and June 30, 1997. In- facts or whether or not you have it in tion system that the depths to which it deed, the increase in State court filings may the legislative history where I believe had sunk by 1995 had become so damag- even be greater than indicated by these dra- it is most appropriate—about address- ing. The system was no longer an ave- matic statistics. Obtaining an accurate ing the underlying concern and issue. nue for aggrieved investors to seek jus- count of State court class actions is extraor- And that is whether or not this legisla- tice and restitution, but it had become, dinarily difficult, because there is no central tion in any way, or the 1995 Reform Act instead, a pathway for a few enterpris- repository of such data and plaintiffs are in any way, tried to fool around with ing attorneys to manipulate its proce- under no obligation to provide notice of the the standard of recklessness. We didn’t dures for their own considerable profit, filing of such suits. then, and we aren’t now. to the detriment of legitimate compa- In April, 1997, the Securities and Ex- So what I am saying here today, nies and investors all across our Na- change Commission staff reported to what the chairman of the committee tion. the Congress, and the President found has said, and others, this is raising a If we needed a reminder about how that: red herring. It doesn’t exist. It is dif- abusive that system had become, we re- Many of the State cases are filed parallel ficult enough to debate where there is ceived yet another example of it last to a Federal court case in an apparent at- a legitimate disagreement, and there tempt to avoid some of the procedures im- week, with the conclusion of one of the posed by the reform act, particularly the will be amendments offered where last lawsuits filed under that old sys- stay of discovery pending a motion to dis- clearly there are provisions in the bill tem. This litigation against a Massa- miss. This may be the most significant de- which my colleagues, including my dis- chusetts biotech company called velopment in securities litigation post-re- tinguished friend from Nevada, dis- Biogen, lasted more than 3 years, cost form act. agree with. It is a fundamental dif- that company, in direct litigation ex- Even though the number of State ference here. Recklessness, as a matter penses alone, more than $3 million. class actions filed in 1997 was down of this legislation, is not a problem. It But even more than the direct costs, from the high of 1996, it was still 50 is trying to raise an issue that really the lawsuit enacted an untold loss on percent higher than the average num- does not exist. That is the reason I felt the company because of the time and ber filed in the 5 years prior to the re- I should address that issue prior to resources devoted by its top manage- form act, and it represented a signifi- making my general comments and ment and their scientists to defending cant jump in the number of parallel statements about what I think is a val- themselves. cases filed. uable piece of legislation. The conclusion to this litigation on So there was a significant increase. Now, Madam President, let me, if I May 6 came in swift contrast to the It did drop in 1997. But if you are going may, proceed here. It has been said, in lengthy and expensive lawsuit itself, as to use the bar of when the reform act the sense that we get the pendulum reported by Reuters: was passed, it was still substantially swings and the proposals are offered, in A Federal jury has ruled as baseless a higher. It was a rare occasion indeed a sense, this is a very narrow bill. It is class-action shareholder lawsuit accusing when people ran to State courts. We not designed to be all-encompassing Biogen, Inc. and its chairman of misleading didn’t think we would need this bill. and all-sweeping, yet it is being re- investors . . . The 10-member jury took less We honestly thought that dealing with ceived by certain quarters as if it were than three hours to reach their verdict. . . . this problem at the Federal level would a wide, sweeping piece of legislation. It So this week’s debate marks not only work. That is where the cases were is dealing with an underlying problem the opening of Congress’ effort to es- brought. Why are we here today? We that still exists. The facts bear out the tablish strong national standards of li- are here because these enterprising at- necessity of us trying to move with na- ability for nationally-traded securities, torneys, as the chairman of the com- tionally traded securities on the na- but also allows us to mark the close of mittee pointed out—many without cli- tional exchanges to see to it that we an era in securities litigation that per- ents, by the way—discovered that if can set some standards here so we versely offered more comfort to those they ran into a State court here, they don’t continue to end up with a pro- filing abusive and frivolous lawsuits could avoid the legislation that we liferation of lawsuits chasing forums than it offered to redress to those who adopted and passed so overwhelmingly all over this country to satisfy a trial had been legitimately defrauded. here in 1995. But there are other rea- bar at the expense of jobs, investors in But the very success of the 1995 re- sons as well. It isn’t just an increase in these companies out there. That is form act in shutting down avenues of the caseload. That would not, in my what has been happening. That is what abuse on the Federal level has created view, necessarily warrant moving we try to address with this bill. a new home for such kinds of litigation today. There are other issues. At the beginning of the debate today in State courts. This change in the number and na- on S. 1260, the securities litigation re- Throughout 1996, the first year of the ture of the cases filed has had two form standards, marks, in a sense, an reform act, reports were coming to measurable, negative impacts that I anniversary, Madam President. It was Congress that there was a dramatic in- think our colleagues ought to take almost 3 years ago that we took the crease in the number of cases filed in very good note of. floor of this body, many of my col- State courts. Prior to enactment of the First, for those companies hit with leagues, in support of the Private Secu- ’95 reform act, it was extremely un- potentially frivolous or abusive State rities Litigation Reform Act of 1995. usual, extremely unusual, for a securi- court class actions, all of the cost and That bill, overwhelmingly enacted into ties fraud class action case to be expense that the ’95 reform act sought law by Congress, was designed to curb brought in a State court anywhere in to prevent are once again incurred. So, abuses in the field of private securities this country. in effect, we did nothing. Today, all of class action lawsuits. But by the end of 1996, it had become that cost and discovery, and so forth, Let me pause, if I can, to note just clear from both the number of cases before a motion to dismiss could be how important the private litigation filed in State court, and the nature of filed—today you have to go do it all system has been in maintaining integ- those claims, that a significant shift over again. It is as if the ‘95 act were rity of our capital markets. It is highly was underfoot, as some attorneys never passed. That is what happened questionable whether our markets sought to evade the provisions of the here. would be as deep, as liquid, as strong, reform act that made it more difficult Some might question whether a or as transparent were it not for our to coerce a settlement, which was what State class action can carry with it the system of maintaining private rights of was going on. same type of incentives to settle even S4790 CONGRESSIONAL RECORD — SENATE May 13, 1998 frivolous lawsuits that existed on the need the safe harbor provisions are not tiffs’ counsel will file suit in state Federal level prior to 1995. writing the safe harbor provisions be- court.’’ The plain English translation Allow me to provide one example of cause they know they don’t have the of that is that any plaintiffs’ lawyer how this is so. Adobe Systems, Inc. same protection in State court, which worth his salt is going to file in state wrote to the Banking Committee on is where these cases are running. court if he feels it advantageous for his April 23, 1998, this year, about its expe- So after all the encouragement of the case; since most state courts do not rience with State class action lawsuits. 1995 act to have the safe harbor, com- provide the stay of discovery or a safe One of the key components of the panies haven’t been putting it in. So harbor, we’re confronted with a likeli- 1995 reform act was to allow judges to investors out there trying to make de- hood of continued state court class ac- rule on a motion to dismiss prior to the cisions of where to put their hard- tions. commencement of the discovery proc- earned dollars don’t have the benefit of While the frustration of the objec- ess. This is not precedent-setting pro- that safe harbor language, which may tives of the 1995 Reform Act provide cedure. That is normally, in many give them a better idea in which com- compelling reasons for congressional cases, how you deal with it, a motion panies to make those investments. action, it is equally important to con- to dismiss coming up early. Under the The California Public Employees sider whether the proposition of creat- old system, Adobe had won a motion Pension System, one of the biggest in- ing a national standard of liability for for summary dismissal, but only after stitutional investors in the Nation nationally-traded securities makes months of discovery by the plaintiffs stated that ‘‘forward-looking state- sense in it’s own right. that cost the company more than $2 ments provide extremely valuable and I certainly believe it does. million in legal expenses and untold relevant information to investors.’’ In 1996, Congress passed the ‘‘Na- time and energy by officials to produce SEC Chairman Arthur Levitt also tional Securities Markets Improve- the tens of thousands of documents and noted the importance of such informa- ment Act’’ which established a prece- numerous depositions. tion in the marketplace in 1995: dent of national treatment for securi- With the 1995 act in place, those Our capital markets are built on the foun- ties that are nationally-traded. kinds of expenses are far less likely to dation of full and fair disclosure. . . . The In that act, Congress clearly and ex- occur at the Federal level. more investors know and understand man- plicitly recognized that our securities But in an ongoing securities class ac- agement’s future plans and views, the sound- markets were national in scope and tion suit filed in California state court er the valuation is of the company’s securi- that requiring that the securities that since 1995, Adobe has had to spend ties and the more efficient the capital allo- cation process. trade on those national markets com- more than $1 million in legal expenses ply with 52 separate jurisdictional re- In recent years, the Securities and and has had to produce more than quirements both afforded little extra Exchange Commission, in recognition 44,000 pages of documents, all before protection to investors and imposed of this fact, sought to find ways to en- the state judge is even able to enter- unnecessarily steep costs on raising courage companies to put such for- tain a motion for summary dismissal. capital. ward-looking statements into the mar- In fact, in an April 23rd, letter to Last July, then-Securities Commis- ketplace. Congress too sought to en- Chairman D’AMATO, Colleen Pouliot, sioner Steven Wallman submitted tes- courage this and this effort ultimately Adobe’s General Counsel, noted that: timony to the Securities Subcommit- culminated in the creation of a statu- There are a number of California judicial tee in which he said: decisions which permit a plaintiff to obtain tory safe harbor, so that companies need not fear a lawsuit if they did not Disparate, and shifting, state litigation discovery for the very purpose of amending a procedures may expose issuers to the poten- complaint to cure its legal insufficiencies. meet their good-faith projections about tial for significant liability that cannot be This one example makes clear that future performance. easily evaluated in advance, or assessed while Adobe, which has the resources Unfortunately, the simple fact is when a statement is made. At a time when for a costly and lengthy legal battle, that the fear of State court litigation we are increasingly experiencing and encour- might fight a meritless suit, these is preventing companies from effec- aging national and international securities costs provide a powerful incentive for tively using the safe harbor. offerings and listing, and expending great ef- Again, the SEC’s April 1997 study fort to rationalize and streamline our securi- most companies without that kind of ties markets, this fragmentation of investor wherewithal to settle these suits rath- found that ‘‘companies have been re- luctant to provide significantly more remedies potentially imposes costs that out- er than incur such expenses. weigh the benefits. Rather than permit or The second clear impact of the mi- forward looking disclosure than they foster fragmentation of our national system gration of class action suits to state had prior to enactment of the safe har- of securities litigation, we should give due court is that it has caused companies bor.’’ (p. 24); the report went on to cite consideration to the benefits flowing to in- to continue to avoid using the safe har- the fear of State court litigation as one vestors from a uniform national approach. bor for forward looking statements of the principal reasons for this failure. That is what we are trying to do with that was a critical component of the ‘95 Stanford Law School lecturer Mi- this bill. reform act. chael Perino stated the case very well At that same hearing, Keith Paul In this increasingly competitive mar- in a forthcoming law review article: Bishop, then-California’s top state se- ket, investors are demanding more and If one or more states do not have similar curities regulator testified along the more information from company offi- safe harbors, then issuers face potential same lines that: state court lawsuits and liability for actions cials about where it thinks that the California believes in the federal system that do not violate federal standards. . . . for and the primary role of the states within company is going, and what is likely to disclosures that are . . . released to market that system. However, California does not happen. participants nationwide, the state with the believe that federal standards are improper In fact, today we have more investors most plaintiff-favorable rules for forward when dealing with truly national markets. in our markets than ever before. Peo- looking disclosures, rather than the Federal California businesses, their stockholders and ple want more information. The safe Government, is likely to set the standard to their employees are all hurt by inordinate which corporations will conform. harbor provisions which we crafted burdens on national markets. Our businesses were designed to encourage companies If the migration of cases to state must compete in a world market and they to step forward and to tell us where court were just a temporary phenome- will be disadvantaged if they must continue they were going. Clearly, there can be non, then perhaps it would be appro- to contend with 51 or more litigation stand- some who decide it would be deceitful. priate for Congress to tell these compa- ards. In no way do we try to protect anybody nies and their millions of investors to SEC Chairman Arthur Levitt, at his who is lying or cheating in the process. simply grin and bear it, that it will all reconfirmation hearing before the We are trying to encourage companies be over soon. Banking Committee on March 26, 1998, to tell us more about where they are But the SEC report contains the said that the legislation we are debat- going so those investors can make good warning that this is no temporary ing today: decisions. But what has happened as a trend: ‘‘If state law provides advan- Addresses an issue that . . . deals with a result of this rush to State courts is tages to plaintiffs in a particular case, certain level of irrationality. That to have to that the very companies that said they it is reasonable to expect that plain- two separate standards is not unlike if you May 13, 1998 CONGRESSIONAL RECORD — SENATE S4791 had, in the state of Virginia, two speed lim- an extreme departure from the stand- cipal author of the bill, of which I am its, one for 60 miles an hour and one for 40 ards of ordinary care; a departure that proud to be a cosponsor. miles an hour. I think the havoc that would is so blatant that the danger it pre- While he is in the Chamber, let me create with drivers is not dissimilar from the sents to investors is either known to commend and congratulate my col- kind of disruption created by two separate standards [of litigation] and I have long felt the defendant or is so obvious that he league from Texas on this issue. This is that in some areas a single standard is desir- or she must have been aware of it. a strong bipartisan bill, 14 to 4, coming able. The notion that Congress would con- out of this committee. It took a long which is all we are trying to do here done such behavior by closing off pri- time to go through all of this. We have with this bill, to set one speed limit, if vate lawsuits against those who fall had extensive hearings on it. We have you will, on a national debate on trad- within that definition is just ludicrous. listened to an awful lot of people. This ing securities and on markets. That is And if, by some process of mischance is a good piece of legislation. It is need- all, one speed limit, not two, to live up and misunderstanding, investors lost ed out there, if we are going to in this to the fact of what we tried to do with their ability to bring suits based on day and age, with so many people the 1995 bill. that kind of scienter standard, I would wanting to get into this market, get The message from all of these sources be the first, though certainly not the more information to them, having a is clear and unequivocal: A uniform, last, Senator to introduce legislation single standard here. Jobs and inves- national standard of litigation is both to restore that standard. tors are affected when you have a sensible and appropriate. As I mentioned a moment ago, Mr. handful of attorneys out there deciding The legislation under consideration President, S.1260 is a moderate, bal- they are going to act in a way that today accomplishes that goal in the anced and common sense approach to really brings great danger to our mar- narrowest, most balanced way possible. establishing a uniform national stand- kets. And so I urge adoption of the leg- Before I discuss what the legislation ard of litigation that will end the prac- islation. will do, let me point out a few things tice of meritless class action suits I yield the floor at this point. that it won’t do: being brought in state court. Mr. D’AMATO. Madam President, I It will not affect the ability of any This legislation keeps a very tight yield up to 3 minutes to the Senator state agency to bring any kind of en- definition of class action and applies from Texas and ask unanimous consent forcement action against any player in it’s standards only to those securities that Senator FEINGOLD from Wisconsin the securities markets; that have been previously defined in be recognized thereafter for the pur- It will not affect the ability of any law as trading on a national exchange. poses of introducing an amendment. individual, or even a small group of in- That is why the Securities and Ex- The PRESIDING OFFICER. Is there dividuals, to bring a suit in state court change Commission has stated that objection? against any security, nationally traded ‘‘We support enactment of S. 1260;’’ Mr. BRYAN. Reserving my right to or not; That is why the Clinton administration object. It will not affect any suit, class ac- has also indicated it’s support for the The PRESIDING OFFICER. The Sen- tion or otherwise, against penny stocks legislation. ator from Nevada. or any stock that is not traded on a na- In the final analysis, it is both the Mr. BRYAN. I certainly do not want tional exchange. millions of Americans who have in- in any way to interfere with the pres- It will not affect any suits based vested their hard-earned dollars in entation of the amendment of the Sen- upon corporate disclosure to existing these nationally-traded companies and ator from Wisconsin, but we are in a shareholders required by state fidu- the men and women who will hold the time limit where we have an hour on ciary duty laws; new jobs that will be created as a re- each side and I want to make sure that And it will not alter the national sult of newly available resources, I do not lose my—— scienter requirement to prevent share- whom we hope will be the real bene- Mr. D’AMATO. It was never the Sen- holders from bringing suits against ficiaries of the action that we take ator’s intent nor would this impinge on issuers or others who act recklessly. here today. the Senator’s time. It was an effort to There has been a lot of talk about I strongly urge my colleagues to join accommodate one of our colleagues. this last point, so let me address it the Securities and Exchange Commis- Mr. BRYAN. I am happy to do that. head-on. sion, dozens of our colleagues, the Clin- Can we include one proviso in the pro- It is true that in 1995, Congress wres- ton administration, dozens of gov- posed unanimous consent that after tled with the idea of trying to establish ernors, state legislators and state secu- the Senator from Texas is allowed the a uniform definition of recklessness; rities regulators in supporting passage time as requested by my friend, the but ultimately, the 1995 Private Securi- of the Securities Litigation Uniform distinguished chairman, and after the ties Litigation Reform Act was silent Standards Act of 1998. Senator from Wisconsin is recognized on the question of recklessness. While Madam President, I see my col- for purposes of an amendment, will the the act requires that plaintiffs plead league. Senator from Nevada then be next rec- ‘‘Facts giving rise to a strong inference How much time remains? ognized, if that would be agreeable? that the defendant acted with the req- The PRESIDING OFFICER. The Sen- The PRESIDING OFFICER. Is there uisite state of mind . . .’’ ator from New York controls the time. objection? Without objection, it is so The act at no point attempts to de- There are 10 minutes 30 seconds re- ordered. fine that state of mind. Congress left maining. The Senator from Texas. that to courts to apply, just as they Mr. D’AMATO. I wonder if I might Mr. GRAMM. Madam President, I had been applying their definition of ask my friend and colleague. I know we often find myself having to speak at state of mind prior to 1995. are going to have some extended debate length in the Chamber when I do not Unfortunately, a minority of district with some of the amendments. Senator have the votes. On this bill, I am in the courts have tried to read into some of GRAMM, who has worked with the Sen- happy position that we have the votes. the legislative history of the reform ator from Connecticut, would like to be We are going to win. We are going to act an intent to do away with reckless- heard, and Senator FEINGOLD has been defeat all of the amendments, because ness as an actionable standard. waiting. He has an amendment that I we have a good bill, and we have a very I believe that these decisions are er- believe is a very substantive amend- broad base of support. So I have often roneous and cannot be supported by ei- ment, and is one that might take hours found that when you have the votes, it ther the black letter of the statute nor to debate. But I believe we can dispose is best not to speak at length. by any meaningful examination of the of it in a relatively short period of time However, as the author of the legisla- legislative history. if we were to permit the Senator to tion, I wanted to say just a couple of There are several definitions of reck- proceed. things. First, I thank Chairman lessness that operate in our courts Mr. DODD. I didn’t realize how much D’AMATO for his leadership. I want peo- today, and some of them are looser time had already gone on. My col- ple to know that without his principal than others. But I agree with those league from Texas is chairman of the leadership on this bill, we would not be who believe that reckless behavior is Securities Subcommittee and the prin- here. He was instrumental in helping S4792 CONGRESSIONAL RECORD — SENATE May 13, 1998 us pull the coalition together. He set a real, substantive liability. Finally, cable to a right or claim arising under this time schedule on bringing the bill be- where it was clear that the lawsuit was title, such powers and procedures shall be fore the full committee, and I thank frivolous, we gave the judge the respon- the exclusive powers and procedures applica- ble to such right or such claim unless after him for his leadership. sibility to require that the people who such right or such claim arises the claimant I believe this legislation will benefit filed the lawsuit paid the legal ex- voluntarily enters into an agreement to en- the country. I think we will create penses of those who found themselves force such right or resolve such claim jobs, growth, and opportunity from en- pulled into court. through arbitration or another procedure.’’. actment of the bill, and I think that It was a good bill, and it is beginning (c) AMENDMENT TO THE AGE DISCRIMINATION Chairman D’AMATO IS DUE A LION’S to have an impact. Our problem is that IN EMPLOYMENT ACT OF 1967.—The Age Dis- crimination in Employment Act of 1967 (29 SHARE OF THE CREDIT. in trying to circumvent it, the same U.S.C. 621 et seq.) is amended— I thank Senator DODD. I don’t think people filing the same lawsuits started (1) by redesignating sections 16 and 17 as anybody in the Senate has a better, to move into State court. So we have sections 17 and 18, respectively; and more cooperative ranking member written a bill that tries to set uniform (2) by inserting after section 15 the follow- than I do as chairman of the Securities national standards. It applies only to ing new section 16: Subcommittee. I thank Senator DODD class-action suits. It applies only to ‘‘SEC. 16. EXCLUSIVITY OF POWERS AND PROCE- for his leadership. stocks that are traded nationally. DURES. The bottom line on this bill is that in It is eminently reasonable. It is ‘‘Notwithstanding any Federal law (other 1995 we sought to act to deal with the than a Federal law that expressly refers to clearly within the purview of the inter- this Act) that would otherwise modify any of problem of economic piracy through state commerce clause of the Constitu- the powers and procedures expressly applica- the courts. We had found ourselves in a tion. This is a bill that needs to be ble to a right or claim arising under this position where lawsuits were being passed. I thank everybody who has Act, such powers and procedures shall be the filed against companies if their stock been involved in it for their leadership. exclusive powers and procedures applicable price went up, if their stock price went We will have a series of amendments. to such right or such claim unless after such down, if their stock price did not We voted on every one of them in com- right or such claim arises the claimant vol- change. New, emerging companies were mittee. Every one of these amendments untarily enters into an agreement to enforce such right or resolve such claim through ar- the special targets of these lawsuits. is aimed at killing the bill by under- bitration or another procedure.’’. These are the companies that had great cutting the basic premise of the bill, (d) AMENDMENT TO THE REHABILITATION ACT technical ideas but did not have a which is when you are dealing with na- OF 1973.—Section 505 of the Rehabilitation whole bevy of lawyers on their payroll, tionally traded securities, you need na- Act of 1973 (29 U.S.C. 795) is amended by add- and they were finding themselves basi- tional standards. So I hope our col- ing at the end the following new subsection: cally being extorted, as people filed leagues will join us in the process of ‘‘(c) Notwithstanding any Federal law (other than a Federal law that expressly re- lawsuits that often were just defeating these amendments and ap- fers to this title) that would otherwise mod- boilerplate documents. These suits proving the bill. ify any of the powers and procedures ex- were so boilerplate that at times the I thank the Chair. pressly applicable to a right or claim arising name of the company being sued was The PRESIDING OFFICER. The Sen- under section 501, such powers and proce- confused in the documents filed in the ator from Wisconsin is recognized. dures shall be the exclusive powers and pro- court. Mr. FEINGOLD. I thank the Chair. I cedures applicable to such right or such And so we stepped in to try to do thank the manager, the Senator from claim unless after such right or such claim something about it, and we passed a New York. arises the claimant voluntarily enters into an agreement to enforce such right or re- bill called the Private Securities Liti- AMENDMENT NO. 2394 solve such claim through arbitration or an- gation Reform Act, Public Law 104–67. (Purpose: To amend certain Federal civil other procedure.’’. That legislation basically did five rights statutes to prevent the involuntary (e) AMENDMENT TO THE AMERICANS WITH things. No. 1, it said that you had to application of arbitration to claims that DISABILITIES ACT OF 1990.—Section 107 of the have a client; that you could not have arise from unlawful employment discrimi- Americans with Disabilities Act of 1990 (42 a lawyer who filed a bunch of motions nation based on race, color, religion, sex, U.S.C. 12117) is amended by adding at the end representing nobody in reality and just national origin, age, or disability, and for the following new subsection: other purposes) ‘‘(c) Notwithstanding any Federal law collecting a whole bunch of money. The Mr. FEINGOLD. At this point I send (other than a Federal law that expressly re- legislation said that there had to be an amendment to the desk. fers to this Act) that would otherwise modify genuine clients, and the client that any of the powers and procedures expressly The PRESIDING OFFICER. The stood the most to gain could be the applicable to a right or claim based on a vio- clerk will report the amendment. lead client and had the privilege to lation described in subsection (a), such pow- The assistant legislative clerk read choose the lawyer, and the lawyer had ers and procedures shall be the exclusive as follows: powers and procedures applicable to such to be accountable to the people who right or such claim unless after such right or were filing the lawsuit. The Senator from Wisconsin [Mr. FEIN- GOLD] proposes an amendment numbered such claim arises the claimant voluntarily You all heard the statement that our 2394. enters into an agreement to enforce such chairman quoted, about the bragging of right or resolve such claim through arbitra- Mr. FEINGOLD. Mr. President, I ask the lead lawyer in this area. tion or another procedure.’’. Are my 3 minutes up? unanimous consent that reading of the (f) AMENDMENT TO SECTION 1977 OF THE RE- The PRESIDING OFFICER. The Sen- amendment be dispensed with. VISED STATUTES.—Section 1977 of the Revised ator’s 3 minutes have expired. The PRESIDING OFFICER. Without Statutes (42 U.S.C. 1981) is amended by add- ing at the end the following new subsection: Mr. D’AMATO. I request an addi- objection, it is so ordered. The amendment is as follows: ‘‘(d) Notwithstanding any Federal law tional 2 minutes. (other than a Federal law that expressly re- The PRESIDING OFFICER. Without At the appropriate place, add the follow- fers to this section) that would otherwise objection, it is so ordered. ing: modify any of the powers and procedures ex- Mr. GRAMM. So we required that SEC. ll. CIVIL RIGHTS PROCEDURES PROTEC- pressly applicable to a right or claim con- TIONS. you have real people filing a real law- cerning making and enforcing a contract of (a) SHORT TITLE.—This section may be employment under this section, such powers suit. We also required that if you are cited as the ‘‘Civil Rights Procedures Protec- going to file a lawsuit, you have to say and procedures shall be the exclusive powers tion Act of 1998’’. and procedures applicable to such right or specifically what the company did (b) AMENDMENT TO TITLE VII OF THE CIVIL such claim unless after such right or such wrong. We further established a proce- RIGHTS ACT OF 1964.—Title VII of the Civil claim arises the claimant voluntarily enters dure whereby you did not have to go Rights Act of 1964 (42 U.S.C. 2000e et seq.) is into an agreement to enforce such right or through this lengthy and expensive dis- amended by adding at the end the following resolve such claim through arbitration or covery process while the court was con- new section: another procedure.’’. sidering whether there was even ‘‘SEC. 719. EXCLUSIVITY OF POWERS AND PROCE- (g) AMENDMENT TO THE EQUAL PAY RE- DURES. QUIREMENT UNDER THE FAIR LABOR STAND- enough merit in the case to proceed ‘‘Notwithstanding any Federal law (other ARDS ACT OF 1938.—Section 6(d) of the Fair further with it. We also eliminated the than a Federal law that expressly refers to Labor Standards Act of 1938 (29 U.S.C. 206(d)) ability to go after the people that had this title) that would otherwise modify any is amended by adding at the end the follow- deep pockets, even though they had no of the powers and procedures expressly appli- ing new paragraph: May 13, 1998 CONGRESSIONAL RECORD — SENATE S4793 ‘‘(5) Notwithstanding any Federal law to, in effect, capitulate to an agree- all avenues of redress provided for by (other than a Federal law that expressly re- ment which diminishes their civil the laws of this Nation. This amend- fers to this Act) that would otherwise modify rights protection. ment will help restore integrity and any of the powers and procedures expressly To be specific, this legislation affects balance in relations between hard- applicable to a right or claim arising under civil rights claims brought under title this subsection, such powers and procedures working employees and their employ- shall be the exclusive powers and procedures VII of the Civil Rights Act of 1964, sec- ers. But I think more important, this applicable to such right or such claim unless tion 505 of the Rehabilitation Act of amendment will ensure that the civil after such right or such claim arises the 1973, the Americans With Disabilities rights laws this Congress passes will claimant voluntarily enters into an agree- Act, section 1977 of the revised stat- continue to protect all Americans. ment to enforce such right or resolve such utes, the Equal Pay Act, the Family I urge my colleagues to support this claim through arbitration or another proce- and Medical Leave Act, and the Fed- amendment. dure.’’. eral Arbitration Act. In the context of The PRESIDING OFFICER. The Sen- (h) AMENDMENT TO THE FAMILY AND MEDI- the Federal Arbitration Act, the pro- ator from New York. CAL LEAVE ACT OF 1993.—Title IV of the Fam- ily and Medical Leave Act of 1993 (29 U.S.C. tections in this legislation are ex- Mr. D’AMATO. Madam President, I 2601 et seq.) is amended— tended to claims of unlawful discrimi- commend the Senator from Wisconsin (1) by redesignating section 405 as section nation arising under State or local law, for coming forth with this proposal. It 406; and and other Federal laws that prohibit is an amendment that he has been (2) by inserting after section 404 the follow- job discrimination. working on, for quite a period of time. ing new section: Madam President, I want to be clear, As a matter of fact, it has been referred ‘‘SEC. 405. EXCLUSIVITY OF REMEDIES. because it is important that we pro- to the Judiciary Committee. ‘‘Notwithstanding any Federal law (other mote voluntary arbitration in this Having said that, I think at the very than a Federal law that expressly refers to country, that this is in no way in- least it should have, and requires, a this Act) that would modify any of the pow- thorough hearing. It is important, and ers and procedures expressly applicable to a tended to hinder or discourage or bar right or claim arising under this Act or the use of arbitration on conciliation it is important we understand the nu- under an amendment made by this Act, such or mediation or any other form of al- ances. It is important that we get the powers and procedures shall be the exclusive ternative dispute resolution short of case-by-case documentation as relates powers and procedures applicable to such litigation resolving those claims. I to those people who have suffered as a right or such claim unless after such right or think it is tremendous that we try to result of this area of the law. It is an such claim arises the claimant voluntarily encourage people to voluntarily avoid area of great concern in terms of enters into an agreement to enforce such litigation. whether or not a person has to sign an right or resolve such claim through arbitra- I have long been a strong proponent agreement—and they do now—prior to tion or another procedure.’’. (i) AMENDMENT TO TITLE 9, UNITED STATES of voluntary forms of alternative dis- employment, that they give away or CODE.—Section 14 of title 9, United States pute resolution. The key, however, is they agree that all matters will be set- Code, is amended— that, in those cases that I can support tled by way of arbitration. (1) by inserting ‘‘(a)’’ before ‘‘This’’; and alternative dispute resolution, it is Maybe it should not be ‘‘all mat- (2) by adding at the end the following new truly voluntary. That is not what we ters.’’ Maybe there are certain matters subsection: are talking about here. What is hap- that no one should ever be required to ‘‘(b) This chapter shall not apply with re- pening here is that these agreements to forfeit. I think we should look at that, spect to a claim of unlawful discrimination because I think there are some very in employment if such claim arises from dis- go to arbitration are mandatory, they crimination based on race, color, religion, are imposed upon working men and real questions. If there is a question of sex, national origin, age, or disability.’’. women, and they are required prior to sexual harassment, do you mean to tell (j) APPLICATION OF AMENDMENTS.—The employment or prior to a promotion. me that a person in that case should amendments made by this section shall Mandatory binding arbitration al- have to give up his or her right to apply with respect to claims arising on and lows employers to tell all current and bring a claim and that it will be settled after the date of enactment of this Act. prospective employees, in effect, if you in camera, behind the scenes, by way of Mr. FEINGOLD. Madam President, I want to work for us, you will have to arbitration? And there may be other rise today to offer an amendment, check your rights as a working Amer- areas where, indeed, the arbitration which is actually a bill I have worked ican citizen at the door. Indeed, these procedure should be the methodology on for some time, the Civil Rights Pro- requirements have been referred to re- of resolving a dispute. cedures Protection Act, S. 63, a meas- cently as front-door contracts; that is, But I believe the Senator is correct, ure cosponsored by Senators KENNEDY, employers require that employees sur- that there are some areas that really LEAHY, and TORRICELLI. render certain rights right up front in call into question whether or not a per- What this legislation does is address order to get in the front door. Working son must sign this agreement, other- the rapidly growing and troubling prac- men and women all across the country wise he or she doesn’t get the job. They tice of employers conditioning employ- are faced with a very dubious choice, just never get the job. They never get ment or professional advancement then, of either accepting these manda- the promotion. So what do you think upon their employees’ willingness to tory limitations of their right to re- they are going to do? Of course they submit claims of discrimination or har- dress in the face of discrimination or are going to sign. So this is serious. assment to arbitration, mandatory ar- harassment, or being placed at risk of I believe we have an obligation to bitration, rather than still having the losing an employment opportunity or have a thorough, thoughtful analysis, right to pursue their claims in the professional advancement. and, indeed, the Judiciary Committee courts. In other words, in too many As a nation that values work and de- may want to look at certain aspects. cases employers are forcing their em- plores discrimination, I don’t think we But I believe since, indeed, the finan- ployees to ex ante agree to submit can allow this situation to continue. cial services community, the banking their civil rights claims to mandatory The way I like to describe it is, what community, the securities community binding arbitration irrespective of this expects a person to do is to sign an has to deal with this day in and day what other remedies may exist under agreement that they will not go to out, the proper jurisdiction does lie be- the laws of this Nation. court even before they feel the sting of fore the Banking Committee. So to address this growing trend of discrimination. They have to sign this With that in mind, I have indicated mandatory binding arbitration, this deal before they even sit down to their to the Senator that, before we leave, measure, the Civil Rights Procedures desk and do their first work for an em- during the month of July or prior, it Protection Act, amends seven civil ployer. will be my intent to hold at least a full rights statutes to guarantee that a So, in conclusion, allow me to stress hearing, where witnesses to both sides, civil rights plaintiff can still seek the that this practice of mandatory bind- including the Securities and Exchange protection of the U.S. courts. The ing arbitration should be stopped now. Commission—which I understand is measure ensures that an employer can- If people believe they are being dis- studying this matter very carefully— not use his or her superior bargaining criminated against or sexually har- will appear so we could have the bene- power to coerce her or his employees assed, they should continue to retain fit of their review, of their testimony, S4794 CONGRESSIONAL RECORD — SENATE May 13, 1998 of people who have written and people support this legislation after he has small investors at the State court level who have been involved in this, those had a chance to review it. will no longer—no longer—be available who have been aggrieved as well as Given all that, at this point, Madam to those small investors, as a practical those who can testify to the merits of President, I withdraw the amendment. matter. So we continue a process which certain aspects of having arbitration in The PRESIDING OFFICER. Without alarmed my good friend, the distin- some limited cases. objection, the amendment is with- guished ranking member of this com- But I must say for the record, I be- drawn. mittee, the distinguished Senator from lieve the Senator has touched on some- The amendment (No. 2394) was with- Maryland, that began with the Private thing that is very important and I drawn. Securities Litigation Reform Act of would not like to move to table at this Mr. D’AMATO. I thank my colleague 1995 and, in our view, simply goes too time. I think it would be unfair to the and tell him that we look forward to far. importance of this legislation. working together in a cooperative way Those of us who express strong res- With that in view, I have indicated to in helping to craft a package that will ervations about this bill find no com- the Senator that I will call these hear- address the true abuses yet maintain fort with those who are filing strike ings, so we can fully explore this and the importance of arbitration where it suits, those who are involved in liti- then bring it to this floor as legislation is deemed appropriate, because I think giousness for the sake of litigiousness. that has had the benefit of the totality in certain cases it is absolutely appro- I believe it would be possible to craft a of the input from the SEC, from our priate and I think in others it is abso- narrow provision that addresses the os- staffs, after listening and hearing and lutely indefensible. tensible concerns that have been raised getting the kind of in-depth review The PRESIDING OFFICER. Under and yet not deprive small investors in that I know that not only I feel should the previous order, the Senator from this country of their rights under the take place, but that most of the mem- Nevada is recognized. law. bers of my committee would support. Mr. BRYAN. I thank the Presiding The system for private enforcement The PRESIDING OFFICER. The Sen- Officer. of remedies has existed now for more ator from Wisconsin. Just to be clear, in terms of the sta- than six decades. It is a dual system in- Mr. FEINGOLD. Madam President, I tus, the 22 minutes that are reserved to volving the State courts and the Fed- thank the Senator from New York who, the Senators in opposition is not af- eral courts. It has worked exception- I think, has given a very sympathetic fected by the colloquy between my two ally well. The SEC has repeatedly tes- listen to what we are trying to accom- friends from New York and Wisconsin? tified as to the importance of private plish here. This issue, in fact, emanates The PRESIDING OFFICER. The Sen- rights of actions as being absolutely es- in large part originally from his State ator is correct. sential to augment their own enforce- and from some of the practices in his Mr. BRYAN. Madam President, this ment efforts. Indeed, they have said State that are now becoming nation- legislation that we are debating today, they have not the ability nor the re- wide. as I have said on previous occasions, is sources to deal with the vast panoply I think he has shown here, in his somewhat arcane and esoteric. It is not of investor fraud, and they view the comments, already a keen understand- the sort of thing where, for people who private cause of action as essential. ing of what is involved here. Even are at home watching this debate, it Indeed, States were the first to enact though this issue has not been pre- causes them to move to the edge of these protections against fraud in the sented formally to his committee, he their chairs and to hang on every word. early 1900s, and when, in the mid-1930s, clearly understands that what is being It is, however, terribly important for the statutes that essentially provided requested of some of these individuals the tens of millions of small investors the framework for Federal securities is simply unreasonable in light of who, in recent years, have invested in regulation were put in place, it was ex- American traditions of protection from the future of America, and for their pressly intended to supplement, not to discrimination and sexual harassment. confidence in the market system that supersede, to complement, not to wipe So, even though I think this bill is a we have created, because they are the out, and the language of this legisla- very appropriate vehicle to offer this small investors, they are the ones who tion today specifically preempts the amendment, I am grateful the chair- will be impacted by this legislation. State cause of action for class actions. man of the Banking Committee has The large investors, the large institu- These State remedies are vitally im- agreed to hold a hearing in which he tions, will still have options that here- portant, and States have responded in will be personally involved, in which I tofore the small investors have had but a number of different ways by provid- will have the opportunity to testify, the small investors will be deprived of ing protections. I am going to talk prior to the end of July, on this bill. as a result of this legislation. So it is about three primarily. I look forward to being able to par- the view of the Senator from Nevada The statute of limitations. Why is ticipate in helping to select some of that this legislation plunges a dagger that important? Those who perpetrate the witnesses. I agree with the Senator into the heart of every small investor fraud on small investors don’t do so very strongly that there are people on in America. openly and nakedly; they try to con- both sides, as well as those in the mid- What we are talking about is not ceal it to protect that activity. So the dle such as the SEC, who are seriously whether a case can be brought in State unfortunate decision of the court in looking at this. This would be a useful court or Federal court. We are talking the Lampf decision, which limits at the hearing to move this issue along. I hap- about a system, which currently exists, Federal level the right of an investor pen to be a member of the Judiciary that allows a private small investor to who has been defrauded 1 year from the Committee as well, so I certainly re- be part of a class action, and other point of discovery of the fraud, 3 years gard this as an appropriate forum as small investors who have been de- even though the investor never be- well. But I think this committee, in frauded as a result of the misconduct of comes aware of that fraud, is viewed by light of the fact these agreements others, to come together and file an ac- the Securities Commission as unrea- started in securities firms, is a place tion in State court and to avail them- sonable because it takes them, with all where a hearing would be appropriate. selves of statutes of limitations that of their resources, a minimum of 31⁄2 I also understand the Senator does are longer than are available to those years. not expect in any way I would be pre- of us who file in Federal court to pro- The statute of limitation is not just vented from offering this to other bills vide, for joint and several liability, the an arcane debate about how long one at any point. ability to recover from accomplices— should have, it is the ability of a small But, in light of all that and his assur- particularly important if the primary investor who has been defrauded with- ances—which have always been ex- offender has bankrupted himself or her- out his knowledge and, never having tremely secure whenever I have dealt self or itself or has taken leave—and to learned of it within the 3-year period of with him in the past, for the last 51⁄2 avail himself or herself of triple dam- time, is now precluded. Thirty-three years—in light of all that, I look for- ages under RICO. States in this country, including my ward to the hearing, I look forward to So this has a very practical impact. own in Nevada, provide for a longer working with him. I hope that he can Actions that would be available to statute of limitation. Some provide 2 May 13, 1998 CONGRESSIONAL RECORD — SENATE S4795 years from the time of discovery of by binding together with other inves- Why are we reducing the investor fraud, or 5 or 6 or even 10 years, and tors, small investors who are similarly protections at a time when the stock some provide no bar at all. situated, as the law says, that those market is surging and consumer con- In the vast majority of States in costs can be spread and a recovery can fidence is growing? America, small investors filing class be possible. Investor confidence is crucial, and it actions who do not discover the fraud When we say, as proponents of this is threatened by increasing fraud. I be- until after 3 years are currently, under legislation, ‘‘Well, the small investor lieve it was President Kennedy who existing law, protected in at least 33 can still file in State court,’’ that is made the observation, that, ‘‘A rising States. This legislation cuts off that true, but it is a hollow and transparent tide’’—referring to the economy— right, and even though we all agree or, remedy because, as a practical matter, ‘‘raises all boats.’’ And I think that is as the lawyers say, stipulate to the small investors simply do not have the true. But it is equally true it also hides merit of the claim, it is barred— ability to pay for the lawyer’s fees and the shoals. barred—by the 3 years even though the the costs that are involved in process- Newsweek, in its October 6, 1997, edi- small investor never became aware of ing these kind of cases. tion: ‘‘Scam Scuttling: The Bull Mar- the fraud. That is what we are talking That was the situation that 23,000 ket is Drawing Con Artists. SEC Chair- about. senior citizens who joined in a class ac- man Levitt summarized, ‘‘In a market Forty-nine of the 50 States provide li- tion against Charlie Keating and Lin- like this, parasites crowd in to feast on ability for the accomplices—those who coln Savings and Loan found them- the bull’s success.’’ conspired with the primary perpetrator selves in a few years ago. It was a class Business Week, December 15: ‘‘Ripoff! of the fraud, whether they be lawyers, action, and they were ultimately able Secret World of Chop Stocks—And How whether they be accountants, whether to recover 65 cents on the dollar of Small Investors—[and that is what we they be other investment advisers—to their losses. are talking about] Are Getting provide a cause of action—49 out of 50. Had those plaintiffs been involved Fleeced.’’ The article focuses on small- Unfortunately, at the Federal level, today with a shorter cause of action at cap equities manipulated to enrich there is no remedy for plaintiffs the Federal level, with the cause of ac- promotors and defraud thousands of against aiders and abetters. So that tion unavailable at the State level for small investors—a $10 billion-a-year means that if the primary offender, the class actions, those plaintiffs would business that regulators and law en- perpetrator, becomes bankrupt, leaves have not been able to recover that kind forcement have barely dented. the country, or is otherwise unable to of money. The examples of these kinds The New York Times of November 26 respond in damages, historically at the of groups are not just small individ- of last year: ‘‘Lessons of Boesky and State court level, the class-action uals, but they include school districts, Milken Go Unheeded in Fraud Case.’’ plaintiffs could recover against those municipalities, special improvement In one case, 1,600 investors were swin- who conspired and aided in that fraud. districts, pension funds at the State dled out of $95 million. The action that we take with S. 1260 and municipal level. All of these are Yet Federal and State enforcement deprives small investors filing class ac- going to be affected by this legislation. resources are shrinking as these fraud- tions from this recovery. So now, if we As a practical matter, a class action ulent schemes are perpetrated upon the pass this legislation, they are pre- provides the only realistic hope of re- innocent small investors. cluded from moving against those who covery. Now is not the time, I would respect- conspired and actively participated in As I pointed out, the SEC, with all its fully argue, to in effect rip from the in- the fraud. resources, says it takes them up to 3 vestor his or her opportunity to re- Moreover, States, as a matter of pro- years to compile the data to bring cover that which has been lost as a re- viding protection to their own citizens, these securities fraud suits. So in ef- sult of being victimized by fraud. Our have provided in a number of jurisdic- fect, what we are doing now is we are securities markets run on trust, tions for joint and several liability. providing for two classes of investors: Madam President—on trust—not That means if five or six are guilty of Those who have been defrauded who money. There will be much less trust, I the fraud and only one has the ability are people of means, of wealth, so they fear, if this legislation occurs. to respond in damages, States have can hire their own lawyers, they can Look what has happened in countries made the determination that as be- still file at the State court level and around the world: ‘‘Albania tries to re- tween the innocent investor, utterly take advantage of the longer statute of gain control [of the Ponzi scheme].’’ blameless, that the innocent investor limitations, can take advantage of the That can’t happen in America with the ought to be satisfied against the per- provisions that provide liability system that we have created. ‘‘Shang- petrator of that fraud, even though against accomplices, can take advan- hai Stock Market Cited for Scandal.’’ there may have been several involved. tage against the joint and several li- ‘‘10,000 Stampede as Russian Stock That is wiped out. ability protections available at the [Market] Collapses.’’ ‘‘Scandal Besets We have, in effect, a piece of legisla- State level. But if you are a small in- Chinese Markets.’’ tion before us that dramatically limits vestor—and that is what most of those My point being that we have devised the right of a small investor to pursue who are defrauded are, small inves- a system to protect investors. And I a class action in State court and to tors—that remedy is no longer avail- fear, by reason of overly broad legisla- avail himself or herself of a whole host able to you. tion, we are depriving small investors of remedies which States have provided So the question arises: Why are we of the very opportunity to recover that on their own. doing this? What is the problem? Well, which has provided the confidence in I must say, the irony of this course of frankly, to the great credit of our regu- the market that has encouraged such a action by a Republican Congress that latory framework, we have the safest massive investment by small investors. has proclaimed its devotion to State and the most efficient securities mar- Why? We are led to believe there is a rights and has raged against preemp- kets in the world. massive influx of cases that must be tion by a Congress at the Federal level In 1990, there were 158 IPOs, totaling preempted because everybody is going of essentially State rights does not go $4.6 billion. In 1997, 7 years later, there to the State court to bypass the provi- unnoticed by this Senator. were 619 IPOs, totaling $39 billion. The sions of the 1995 law. Why are class actions important? stock market has recently set record Price Waterhouse, in January of 1998, Again, it is pretty esoteric. Think for a highs. The Dow is over 9,000. And indi- made a report, an evaluation. Forty- moment. Tens of millions of small in- viduals confident in these markets are four State cases—44—were filed in all vestors who may have been victimized pouring in $40 billion a month in mu- of 1997, a one-third decrease since by a fraud don’t have the ability to tual funds. In 1980, 1 in every 18 house- 1996—I want to emphasize that, a de- hire a lawyer on their own to fight holds in America invested in the stock crease—when 66 were filed, and less against entrenched special interests market. Less than 20 years later, it is than in the 3 years before the 1995 leg- who have the ability to provide legal more than one in three. That is a great islation. A followup Price Waterhouse defenses and delays and delays. That is tribute to the security and safety of study, in February, tells us 39 cases practically no remedy at all. It is only this market. were filed. S4796 CONGRESSIONAL RECORD — SENATE May 13, 1998 My point being, whether it is 39 or 44, In 1998, we are here with S. 1260, had addressed the issue and had con- I would not argue that with my col- which I think is the coup de grace in cluded that there was a cause of action leagues, but that is, out of 15 million terms of small investor protection. So for those who are guilty of reckless cases, civil cases—not criminal, not I must say that I am greatly disturbed misconduct. The 1995 legislation, be- traffic, not domestic relations—we are by this threat. I believe that small in- cause it talked about a specific plead- talking about 44 cases or 39 cases out of vestors ultimately will pay the price. ing standard, has created some confu- 15 million filed. That is a very, very It is often said that those of us who sion. Following the 1995 enactment, small number. And although there are oppose this legislation must be work- several district courts have concluded some problems, as has been pointed out ing for those nefarious trial lawyers. that no longer is there liability for by the proponents, none of the prob- Let’s take a look at the groups who reckless misconduct. lems justifies the sweeping emascula- support the position that the senior Now, the proponents of this legisla- tion of investor protections that this Senator from Maryland and I take. The tion say that they do not intend that legislation provides for. American Association of Retired Per- as a consequence. And I accept their Now, what are the problems specifi- sons. When I attend one of their meet- representation. However, we have tried cally in the act itself? ings, I haven’t seen a single retired to get into this bill a provision crafted If one believes that uniform stand- lawyer in attendance. The AFL-CIO, by the SEC defining ‘‘reckless’’ to ards are an essential public policy in the American Federation of State make it absolutely sure that ‘‘reck- the country—and, I must say, I have County and Municipal Workers, Con- less’’ is protected. Their response? If not been persuaded—then I think we sumer Federation of America, Consum- the courts strike down ‘‘reckless’’ we would agree that a uniform standard ers Union, and many, many others, as will remedy it. that provides strong investor protec- you can see, particularly those in- I never impugn anyone’s good faith, tions ought to be a part of that uni- volved with the State retirement asso- but I am a product of the experience form standard. ciations, including the Public Employ- that I have had in this legislation. We Unfortunately, what we have done, in ees Retirement System, the League of were told back in the 1990s that we each and every case, is opted for the Cities, the National Association of would address the statute of limitation lowest common denominator of protec- Counties and Municipal Treasuries. problem when we looked at comprehen- tion. If the statute of limitations is Let me read a paragraph from a let- sive legislation to correct that. It did longer at the State level, we have pre- ter that the able Senator from Mary- not occur. We were told after the Cen- empted it and limited the statute of land introduced, coming from the Gov- tral Bank case that we will address the limitations. If the State provides for li- ernment Finance Officers Association, problem in which aiders and accom- ability against those who are accom- the Municipal Treasurers’Association, plices are no longer liable under the plices, we take that cause of action National Association of Counties, Na- law. We were rejected in that effort. So away from the small investor. If the tional Association of County Treasur- I must say I find my comfort level not State allows for joint and several re- ers, National Association of State Re- very high if the courts intend that. It covery against each and every one of tirement Administrators, National seems to me if we are in earnest in those involved in the fraud, we take Conference on Public Employee Retire- wanting to protect that ‘‘reckless’’ that away from the small investor. ment System, National League of Cit- standard, it is terribly important we So it is my view that this is part of ies, U.S. Conference of Mayors. They use a definition which the SEC has pro- an ongoing process in which we have, raise many of the same objections that vided. Let’s make it part of this legis- in my judgment, left the small investor I have outlined today, as has my col- lation. high and dry in many cases if this leg- league from Maryland. I am not unmindful of the fact that islation passes. Here is their comment: this bill is a train that is leaving the I must say that when you look at the The Private Securities Litigation Reform station. It will pass and it will be trend line following the 1995 legislative Act was opposed by state and local govern- signed into law. But it would be a trag- enactments, you can see that pattern ments because the legislation did not strike ic mistake not to make absolutely sure unfold. The Lampf decision, which an appropriate balance, and this legislation that ‘‘reckless’’ is included. I believe a shocked the SEC and others, limited extends that mistake to state courts. As fair reading of the 1995 legislation the statute of limitations to 1 year both users of debt and investors of public should not give rise to an inference from the time of discovery of the fraud funds, state and local governments seek to not only reduce frivolous lawsuits but to that ‘‘reckless’’ has somehow been to 3 years. The SEC recognized that protect state and local government investors changed. I don’t believe that was the that is an unreasonable period of time. who are defrauded in securities trans- intent. The authors of this legislation And those who argued several years actions. . . . say it is not true, but even when we try ago for comprehensive reforms said, The above organizations believe that to get it moved into the findings of the ‘‘Look, we’ll address the statute of lim- States must be able to protect State and legislation, we get resistance, so I have itations at that point.’’ We tried, local government funds. concern. Madam President, in 1995 to address We are talking about taxpayer dol- Let me conclude by saying this is a the statute of limitations, but we were lars. We are not talking about litigious piece of legislation which is a solution rebuffed. Now this legislation takes the plaintiffs. We are talking about pen- in search of a problem, overly broad longer statute of limitations, available sion funds, municipal State funds in and dangerous to millions of small in- in 33 out of 50 States, away from those which those entities have been de- vestors in America. small investors. frauded and now will be provided much I yield the floor and reserve whatever The Supreme Court, in the Central less protection to recover tax dollars— time remains. Bank case, held that there is no ability dollars belonging to each and every cit- (Mr. FAIRCLOTH assumed the to hold accomplices liable. We tried to izen who is a part of that group. chair.) provide for aider and abetter coverage. Let me address one final point here Mrs. FEINSTEIN. Mr. President, I The SEC strongly supports that. We as we conclude this discussion. One of rise today to lend my support to S. were told that when we redid the Fed- the concerns that has been expressed is 1260, the Securities Litigation Uniform eral securities laws that that would be that there is no adequate assurance Standards Act. This legislation, intro- included. My colleague from Maryland that liability will continue to exist duced by Senator GRAMM and Senator and I tried, and we were rebuffed in against those who are reckless in their DODD, is essential to my state of Cali- that effort. conduct. Now, that is a standard more fornia, providing needed uniform na- Joint and several liability, elimi- egregious than simple negligence, more tional standards in securities fraud nated in the 1995 act. Civil RICO, elimi- egregious than gross negligence. We class actions. nated. Discovery provisions, limited. In are talking about conduct that is reck- In 1995, with my support, Congress 1996, we made a determination to di- less in nature. successfully passed the Securities Liti- vide some of the regulatory respon- Prior to 1995, when the Private Secu- gation Reform Act. The 1995 Act pro- sibility between State and Federal au- rities Litigation Reform Act was en- vided relief to American companies hit thorities. acted, 11 of 13 circuits in this country with frivolous, or nuisance, lawsuits. May 13, 1998 CONGRESSIONAL RECORD — SENATE S4797 Specifically, the legislation adopted effect require that every large securi- solely under the federal standards pro- federal provisions to discourage nui- ties class action be brought into fed- mulgated in 1995—could leave investors sance securities lawsuits and increase eral court. with severely limited ability to protect the level of information provided for The creation of effective national themselves against fraud. We should investors. standards will make it easier to pro- permit the 1995 Private Securities Liti- This is very important to my state of tect companies from so-called nuisance gation Reform Act to be interpreted by California, where hundreds of burden- shareholder lawsuits. Specifically, the the courts before we embark on this ef- some lawsuits are filed each and every legislation would provide for the shift- fort to anticipate future problems with year. More than 60% of all California ing of securities lawsuits filed in a the PSLRA that have not yet arisen. high tech firms have been sued at least state court into the more appropriate Several federal district courts have once. Apple Computers executives stat- federal court, a process called ‘‘re- issued rulings on the 1995 law that are ed they expect to be sued every two moval.’’ The removal authority would so restrictive that they threaten al- years. These lawsuits levy a heavy cost only apply for class action suits involv- most all private enforcement of securi- on businesses who have to pay for ex- ing nationally-traded securities, such ties law—including holding that reck- pensive legal battles, draining com- as the New York Stock Exchange. less wrongdoers are no longer liable to pany resources which might otherwise Without removal authority, these com- their victims under the PSLRA. be spent on growing and improving the panies, whose securities are traded The SEC has warned in briefs filed in health of the company. Securities liti- throughout the fifty states, could face these cases that such a result would es- gation, as several high tech executives liability under federal securities laws sentially end private enforcement of have described, is truly ‘‘an uncon- in fifty state courts. This widespread the federal securities laws. By elimi- trolled tax on innovation.’’ liability would undermine the reforms nating state remedies for fraud before The high-tech industry has been cen- enacted in the 1995 Securities Litiga- knowing whether the courts will fi- tral to the successful economic recov- tion Reform Act. nally interpret the PSLRA in a way ery in California. As thousands of Further, this legislation would pre- that provides victims with a viable workers in the aerospace industry lost vent ‘‘forum shopping,’’ a method for means to recover their losses, S. 1260 their jobs, and as the recession of the nuisance lawsuits to be initiated in the risks not only harming innocent inves- ’90s stalled the economy, it was Cali- most sympathetic state jurisdiction. tors but undermining public confidence fornia’s entrepreneurial spirit, the in- This is a very real concern for Califor- in our securities markets. vestment in new ideas, research and nia. According to a recent study by There is no need for any federal ac- new technology which resulted in a re- former Securities and Exchange Com- tion inasmuch as there have been few bounding economy. missioner Joseph A. Grundfest, ap- state securities class actions filed since In California, there are over 20,000 es- proximately 26% of litigation activity the PSLRA passed, and most have been tablished high-tech companies. With has moved from federal to state court in one state. Preemption proponents roughly 670,000 workers, California since the passage of the 1995 law. The cite an imaginary ‘‘explosion’’ of state ranks 1st in the nation in high-tech study elaborates: suits filed to ‘‘circumvent’’ the PSLRA employment. To put it in another way, This increase in state court litigation is in the two years since its enactment. for every 1,000 workers in my state, 62 likely the result of a ‘substitution effect’ But the mere handful of state securi- whereby plaintiffs’ counsel file state court ties class actions filed in 1997—only 44 are high-tech. That is significant when complaints when the underlying fact appear one considers that as the 7th largest not to be sufficient to satisfy new, more nationwide—represents a one-third de- economy in the world, California sup- stringent federal pleading requirements. crease since 1996 and is less than in the ports almost every kind of industry California is the home to one-third of three years before the PSLRA was and business known to commerce. the nation’s biotechnology companies passed. It also is an infinitesimally Start-up companies in the high-tech and medical device companies. These small percentage of the roughly 15 mil- and biotech industries are most di- firms have been the source of tremen- lion civil cases filed in state courts rectly affected by securities lawsuits. dous growth. Yet these high tech firms each year. No state other than Califor- These high-tech and biotech companies are the very ones who face one of every nia has had more than seven securities dedicate a large percentage of company four strike suits and who have had to class actions filed in the two years funds for research and development. pay hundreds of millions of dollars in since enactment of the PSLRA. Given The average high tech firm invests be- settlements. National standards will these small numbers, there is no reason tween 16–20% of company revenues in address this problem effectively and why states should not be left free to de- research, with biotech firms often as fairly. cide how best to protect their own citi- high as 60%. This level of investment is By establishing a uniform system for zens from fraud. integral to their business success. How- the movement of cases from state to State laws against securities fraud ever, with the burden of frivolous law- federal court, Congress can limit abu- are part of a dual enforcement system suits, California companies are not sive lawsuits that inhibit economic and that has served the country exception- able to use their resource on develop- job growth. The Securities Litigation ally well since the Depression. States ing innovative technologies and new Uniform Standards Act of 1997 will enacted protections against financial products for the market place. offer important protection for Amer- schemes in the early 1900s. Congress The 1995 Securities Litigation Re- ican companies from nuisance lawsuits. passed federal securities laws in 1933 form moved in the right direction. I appreciate the efforts of the Bank- and 1934 to complement—not replace— However, the 1995 legislation did not ing Committee and the sponsors, Sen- state laws and to stop abuses that address recent actions by plaintiffs to ator GRAMM and Senator DODD, for caused the 1929 crash. Many states file frivolous cases in state courts. their work on this issue and encourage have chosen to provide more expansive Since the passage of the 1995 legisla- my fellow Senate colleagues to support investor protections than federal law tion, suits traditionally filed in federal this legislation. currently provides—through account- courts are now being placed in state Mr. JOHNSON. Mr. President, I rise ability for aiders and abettors, realistic courts. The current law does not pro- today in opposition to S. 1260, the Se- time limits for filing a fraud claim, and tect companies from this threat. curities Litigation Uniform Standards the ability to recover fully from profes- The bill, which I have been pleased to Act. This bill seeks to prevent states sionals who help perpetrate frauds (like support, will protect companies from from protecting their own citizens lawyers and accountants) when the this side-door tactic. The Securities from unscrupulous actions by a small main wrongdoer is bankrupt, in jail, or Litigation Uniform Standards Act of minority in the securities industry. We has fled the country. For example, ac- 1997 establishes uniform national must allow states to protect their own cording to the SEC, 49 of the 50 states standards in securities fraud class ac- investors, and this further intrusion provide liability for aiders and abettors tion suits. It would permit a defendant, into states rights is unwarranted by now unavailable under federal law and whether a company or individual, who the evidence. 33 states provide longer statutes of lim- is sued in state court to proceed into Preempting state remedies now—and itations for securities fraud actions federal court. This legislation would in requiring fraud victims to seek relief than current federal law. S. 1260 would S4798 CONGRESSIONAL RECORD — SENATE May 13, 1998 take away these important state rem- feast on the bull’s success.’’ In light of define that state of mind. In addition, edies. all this, Congress should strengthen, it was my intent in 1995, and it is my This effort has been underway vir- not weaken, existing deterrents. understanding today, that the ’95 Re- tually since the PSLRA passed. It is This premption of state law is op- form Act adopted the pleading stand- not based on the new realities created posed by a broad coalition, including ard applied in the Second Circuit. by the PSLRA, but rather to eliminate the American Association of Retired Mr. DODD. I agree with the com- another form of protection for inves- Persons; American Federation of State ments of my colleague from New York. tors. The SEC has repeatedly expressed County and Municipal Workers; Con- I too, did not intend for the PSLRA to concern that federal legislation to pre- sumer Federation of America; Consum- alter the state of mind requirement in empt state laws is premature. In an ers Union; Gray Panthers; Government securities fraud lawsuits or to adopt a April 1997 letter to the President for- Finance Officers Association; Munici- pleading standard more stringent than warding a lengthy SEC report on the pal Treasurers’ Association; National that of the Second Circuit. In fact, I operation of the PSLRA, Chairman Ar- League of Cities; National Association specifically stated during the legisla- thur Levitt stated, ‘‘The Commission of Counties; National Association of tive debates preceding and following endorses the ultimate conclusion of County Treasurers and Finance Offi- the President’s veto that the ’95 Re- this report: it is too early to assess cers and many, many others. form Act adopted the Second Circuit’s with great confidence many important Mr. President, I urge my colleagues pleading standard. This continues to be effects of the [PSLRA] and therefore, to join me in opposing this unnecessary my understanding and intent today. on this basis, it is premature to pro- and unwarranted federal intrusion into Ensuring that the scienter standard in- pose legislative changes. . . The one- what should appropriately be state law. cludes reckless misconduct is critical year time frame has not allowed for Mr. DODD. Mr. President, S. 1260, the to investor protection. Creating a high- sufficient practical experience with the Securities Litigation Uniform Stand- er scienter standard would lessen the Reform Act’s provisions, or for many ards Act of 1998, is intended to create a incentives for issuers of securities to court decisions (particularly appellate uniform national standard for securi- conduct a full inquiry into potentially court decisions) interpreting those pro- ties fraud class actions involving na- troublesome areas and could therefore visions.’’ The SEC reiterated this view tionally-traded securities. In advocat- damage the disclosure process that has in October 1997 testimony before both ing enactment of uniform national made our markets a model for other the House and Senate and has specifi- standards for such actions, I firmly be- nations. The U.S. securities markets cally criticized the pending preemption lieve that the national standards must are the envy of the world precisely be- legislation, stating that it ‘‘would de- be fair ones that adequately protect in- cause investors at home and abroad prive investors of important protec- vestors. I hope that Senator D’AMATO, have enormous confidence in the way tions.’’ SEC Commissioner Norman one of the architects of the Banking our markets operate. Altering the Johnson, a Republican, has been espe- Committee’s substitute, would engage scienter standard in the way envi- cially critical: ‘‘Given the possible ad- in a colloquy with me on this point? sioned by some of these district court verse affect on investor confidence, as Mr. D’AMATO. I would be happy to. decisions could be very damaging to well as the long history of effective and Mr. DODD. At a hearing on S. 1260 that confidence. concurrent federal and state securities last October, the Securities and Ex- Mr. D’AMATO. My friend from Con- regulation, and the strong federalism change Commission (SEC) voiced con- necticut is correct. The federal securi- concerns raised by preemption . . . ex- cern over some recent federal district ties laws must include a scienter re- treme caution should be exercised be- court decisions on the state of mind— quirement that adequately protects in- fore state courthouse doors are closed or scienter—requirement for pleading vestors. I was surprised and dismayed to small investors through the pre- fraud was adopted in the Private Secu- to learn that some district court deci- clusion of state class actions for securi- rities Litigation Reform Act of 1995 (’95 sions had not followed the clear lan- ties fraud.’’ While three of the five SEC Reform Act or PSLRA). According to guage of the ’95 Reform Act, which is Commissioners no longer oppose S. the SEC, some federal district courts the basis upon which the uniform na- 1260, there has been no change in any of have concluded that the ’96 Reform Act tional standard in today’s legislation the underlying facts that led to the adopted a pleading standard that was will be created. SEC’s earlier report and testimony. more rigorous than the Second Court’s, Mr. DODD. It appears that these dis- Commissioner JOHNSON continues to which, at the time of enactment of the trict courts have misread the language oppose S. 1260. PSLRA, had the toughest pleading of the ’95 Reform Act’s ‘‘Statement of With more and more Americans par- standards in the nation. Some of these Managers.’’ As I made clear in the leg- ticipating in the stock market boom, it courts have also suggested that the 95 islative debate following the Presi- is more imperative that we maintain Reform Act changed not only the dent’s veto, however, the disputed lan- these investor protections, not weaken pleading standard but also the stand- guage in the Statement of Managers them. According to a front-page article ard for proving the scienter require- was simply meant to explain that the in the November 30, 1997, New York ment. At the time we enacted the Conference Committee omitted the Times, ‘‘Investment Fraud Is Soaring PSLRA, every federal court of appeals Specter amendment because that Along with the Stock Market.’’ This in the nation—ten in number—con- amendment did not adequately reflect was only one in a long line of recent ar- cluded that the scienter requirement existing Second Circuit caselaw on the ticles reporting on widespread fraud in could be met by proof of recklessness. pleading standard. I can only hope that the financial markets—a fact acknowl- Mr. D’AMATO. I am sympathetic to when the issue reaches the federal edged by federal and state enforcement the SEC’s concerns. In acting now to courts of appeals, these courts will un- officials nationwide. The National establish uniform national standards, dertake a more thorough review of the White Collar Crime Center reports that it is important that we make clear our legislative history and correct these corporate financial crime costs $565 bil- understanding of the standards created decisions. While I trust that the courts lion annually, nearly 12 times the by the ’95 Reform Act because those will ultimately honor Congress’ clear amount of street crime. The New York are the standards that will apply if S. intent, should the Supreme Court even- Attorney General has reported that in- 1260 is enacted into law. My clear in- tually find that recklessness no longer vestor complaints have risen 40% per tent in 1995, and my understanding suffices to meet the scienter standard, year in the past two years; the U.S. At- today, is that the PSLRA did not in it is my intent to introduce legislation torney in New York City has stated any way alter the scienter standard in that would explicitly restore reckless- that she has witnessed an ‘‘explosion’’ federal securities fraud lawsuits. The ness as the pleading and liability of securities fraud; and the mob has ’95 Reform Act requires plaintiffs, and standard for federal securities fraud now infiltrated Wall Street. Yet, fed- I quote, ‘‘to the state with particular- lawsuits. I imagine that I would not be eral and state enforcement resources ity facts giving rise to a strong infer- alone in this endeavor, and I ask my are shrinking. As SEC Chairman Levitt ence that the defendant acted with the good friend from New York whether he observed in December 1997: ‘‘In a mar- required state of mind.’’ The ’95 Re- would join me in introducing such leg- ket like this, parasites crowd in to form Act makes no attempt to alter or islation? May 13, 1998 CONGRESSIONAL RECORD — SENATE S4799 Mr. D’AMATO. I say to the Senator sue a significant number of state cases in ing federal securities litigation. That from Connecticut that I would be order to decrease the apparent necessity for bill set specific standards for federal pleased to work with him to introduce Congress to pass a federal preemption stat- private class actions alleging securities such legislation under those cir- ute. Past experience * * * indicates that plaintiffs respond strategically to legislative fraud, so that those deserving of com- cumstances. I agree that investors initiatives that might alter the costs and pensation received it, while those seek- must be allowed a means to recover benefits of securities litigation. ing only to profit from the filing of an losses caused by reckless misconduct. The State court litigation is a loop- abusive suit did not. Unfortunately, in Should the court deprive investors of hole around the PSLRA. This is under- the wake of that Act, some enterpris- this important protection, such legisla- mining the bipartisan efforts we made ing plaintiffs’ attorneys have turned to tion would be in order. in passing the PSLRA to give compa- State courts to file abusive suits. Mr. DODD. I want to thank the Sen- nies the ability to disclose more infor- Through these State court actions, ator from New York, the Chairman of mation to investors without the fear of plaintiffs’ attorneys have effectively the Banking Committee, for his leader- being sued. But the threat of being circumvented the reforms the 1995 Act ship on this bill and for engaging in sued in 50 states chills the disclosure of put in place, reforms we in Congress this colloquy with me. In proceeding to company information to investors. overwhelmingly embraced in the 1995 create uniform national standards People are understandably reluctant Act. while some issues concerning the ’95 to make disclosures under the Federal Were the regulation of nationally Reform Act are still being decided by law’s ‘‘safe harbor’’ provision when traded securities a matter of purely the courts, we must act based on what their statements can be used against local concern, I might agree with those we intended and understand the ’95 Re- them in state court. According to the who see nothing wrong with this phe- form Act to mean. As a sponsor of both SEC, fear of state court liability for nomenon—who argue that each State the Senate bill that became the ’95 Re- forward looking statements was inhib- should be free to set for itself the laws form Act and the bill, S. 1260, that we iting the use of the PSLRA’s safe har- governing actions in its courts. But we are debating today, I am glad that we bor. clearly are not dealing here with some- have had this opportunity to clarify The time to act on this is now. Delay thing of only local concern. To the con- how the PSLRA’s pleading standards undermines one of the main policy trary, the securities governed by this will function as the uniform national goals of the PSLRA—greater informa- bill—and it is important to emphasize standards to be created in S. 1260, the tion flow to investors. Delays will this point—are by definition trading on Securities Litigation Uniform Stand- cause a proliferation of litigation in national exchanges. As we all know, se- ards Act of 1998. state courts. Delay forces all parties to curities traded on national exchanges Mr. REID. Mr. President, in 1995, we spend millions of dollars arguing about are bought and sold by investors in passed the Private Securities Litiga- matters that uniform standards legis- every State, and those investors rely tion Reform Act or PSLRA, as it be- lation can put to rest. on information distributed on a na- came known. Our intent was to prevent As time goes on, states will reach dif- tional basis. It simply makes no sense abusive filings by a group of trial at- ferent legislative and judicial results— to open those who make statements torneys who were using a loophole in this just furthers the confusion. As about national securities on a national our laws. These lawsuits were often en- President Clinton wrote last year, ‘‘the basis to class actions brought under 50 tirely without merit and really proliferation of multiple and inconsist- separate State regulatory regimes—not amounted to strong-arm efforts to get ent standards could undermine na- if we want efficient and well-function- money out of small start-up compa- tional law.’’ ing securities markets, that is. In nies. Our legislation was aimed at put- We need to prevent this confusion by short, not only is a uniform standard ting an end to these strike suits and to putting a stop to this end run around appropriate in this case; it provides a large extent it has succeeded. Congress. A patchwork system of secu- Many of these companies could take perhaps the quintessential example of rities laws undermines America’s cap- the capital they were expending on liti- something that should be subject to ital markets. Capital formation is in- gation and settlement costs and invest one set of standards nationwide. in research in development. They could hibited by overlapping the duplicative For this reason, it is not surprising provide greater returns to their share- legal rules governing securities litiga- that this bill has the support, not only holders. They could create more jobs. tion. Uniform standards legislation en- of a significant portion of the Congress, Unfortunately, the small group of at- sures that purchasers and sellers of na- but also of both the SEC and the Ad- torneys who were involved in this loop- tionally traded securities have similar ministration. As someone involved for hole found another way to get their remedies in securities lawsuits regard- many years in efforts to reform our na- frivolous strike suits heard in court. less of their state of residence. tion’s litigation system, I can say with They shifted their efforts to state It is time to close this loophole and confidence that the fact that both the courts. put an end to this high priced extortion SEC and the Administration support The SEC has noted this development that seems to be benefitting only a few this bill speaks volumes to the merits saying that this ‘‘apparent shift to trial attorneys. of this bill. state court may be the most signifi- Mr. LIEBERMAN. Mr. President, I Let me close, Mr. President, by cant development in securities litiga- rise today to say a few brief words of thanking the principal sponsors of this tion’’ since the ’95 legislation was en- support for the bill we are now consid- bill, particularly Senators DODD, acted. Before the ’95 Act, few, if any, ering, the Securities Litigation Uni- D’AMATO, GRAMM and DOMENICI. They securities class actions were filed in form Standards Act of 1998. I was an have worked hard to accommodate all state court. Since it’s enactment, the original co-sponsor of this important legitimate concerns raised about this number of state claims has exploded. legislation. Through its passage, we in bill, working particularly closely with A study by Price Waterhouse found Congress can continue to send the both the SEC and the Administration, that the average number of state court strong message to the nation’s securi- and making significant changes to the securities class actions filed in 1996 ties markets and the country’s inves- bill as it moved to the floor. I join with grew 355 percent over the 1991–1995 av- tors that we first articulated in 1995 them in urging my colleagues to pass erage. In 1997, filings were 150 percent with the enactment of the Private Se- this important legislation today. greater than the 1991–1995 average. curities Litigation Reform Act: we will Mr. WELLSTONE. Mr. President, I While the number of state court filings not let frivolous lawsuits disrupt our rise today to oppose S. 1260, the ‘‘Secu- dropped slightly in 1997 compared to nation’s securities markets, devalue rities Litigation Uniform Standards 1996 it is believed this is due to a stra- our citizens’ investments or cut off the Act of 1997.’’ tegic desire by plaintiffs’ lawyers to free flow of information we all need to Mr. President, we are considering undercut the underlying legislation. make reasoned and well-informed in- legislation that would risk imperiling According to Stanford Law School of- vestment decisions. the financial security of those individ- ficial Michael Perino: I was a proud supporter of the 1995 uals most susceptible to fraud. The It is possible that plaintiffs’ attorneys may Act, which restored some rationality American Association of Retired Per- simply have strategically chosen not to pur- and common sense to the laws regulat- sons opposes this legislation based on S4800 CONGRESSIONAL RECORD — SENATE May 13, 1998 the bill’s anti-investment character ing nationally traded securities. I favor generally. However, the PSLRA’s and the heightened dependence of sen- this legislation because it recognizes heightened standard was specifically ior citizens on investment. I find it the national nature of our securities linked to the most stringent pleading very odd that in a time when the stock markets, provides for more efficient standard at the time, that of the Sec- market is doing so well that some of capital formation, and protects inves- ond Circuit. That standard allows a my colleagues are considering exposing tors. plaintiff to establish a case by either Social Security to the vagaries of the However, Mr. President, it is essen- pleading motive and opportunity or booms and busts of Wall Street, we are tial to recognize that preemption recklessness. preventing the states from protecting marks a significant change concerning Mr. President, I believe that SEC their citizens from securities fraud. In the obligations of Congress. Chairman Levitt, who has a lifetime of a time when more Americans are rely- When federal legislation was enacted experience as both an investor and reg- ing on investments for financial secu- to combat securities fraud in 1933 and ulator of markets, has been the most rity—especially retirees—we are roll- 1934, federal law augmented existing articulate concerning the need for a ing back protections. state statutes. States were free to pro- recklessness standard concerning the Many states, my own included, have vide greater protections from fraud to scienter requirement. laws which provide for increased pen- their citizens, and many have. In October 21, 1997 testimony before alties for fraud perpetrated against The Chairman of the Securities and the Subcommittee on Finance and Haz- ardous Materials of the House’s Com- Seniors and the disabled—the Min- Exchange Commission has testified mittee on Commerce, Chairman Levitt nesota statute mentions securities spe- concerning the traditional system by said: cifically—and Congress has always which securities have been regulated: through both public and private law- In my judgment, eliminating recklessness given the states great leeway in pro- from the securities anti-fraud laws would be tecting their consumers. In Minnesota, suits in both state and federal courts. tantamount to eliminating manslaughter there is an additional civil penalty of Many of my colleagues voted for the from the criminal laws. It would be like say- $10,000 for each violation where decep- 1995 legislation knowing that if federal ing you have to prove intentional murder or tive trade practices, false advertising, standards failed to provide adequate in- the defendants gets off scot free. . . . If we or consumer fraud are perpetrated vestor protections, state suits would were to lose the reckless standard, in my against elderly and disabled persons. provide a necessary backup. judgement, we would leave substantial num- Not only are seniors and the disabled With passage of this legislation, my bers of the investing public naked to attacks by fraudsters and schemers. at great risk for fraud, they are in- colleagues and I have now accepted full In testimony before the Banking creasingly becoming investors and they and sole responsibility to ensure that Subcommittee Chair by Senator are least able to recoup the income fraud standards allow victimized inves- GRAMM, on October 29, 1997, Chairman lost. It is devastating for anyone to tors to recoup lost funds. Levitt further articulated his position lose their life savings through a lie, to Only a meaningful right of action regarding the impact a loss of reckless- have their pension wiped out, but for against those that defraud guarantees ness would have. He said: Americans on a fixed income—it will investor confidence in our national destroy them, Mr. President. markets. A uniform federal standard that did not in- A uniform national standard con- clude recklessness as a basis for liability I cannot support this legislation. It is would jeopardize the integrity of the securi- bad for investors, it is terrible for sen- cerning fraud provides no benefit to ties markets, and would deal a crippling iors and the disabled, and it addresses markets if issuers can, with impunity, blow to defrauded investors with meritorious a problem which does not exist at the fail to ensure that consumers receive claims. A higher scienter standard would expense of consumers. truthful, complete information on lessen the incentives for corporations to con- I urge its rejection. which to base investment decisions. duct a full inquiry into potentially trouble- Mr. REED. Mr. President, as a sup- Specifically, my support rests on the some or embarrassing areas, and thus would porter of the Private Securities Litiga- presumption that the liability standard threaten the disclosure process that has made our markets a model for nations tion Reform Act of 1995 I am pleased to was not altered by either the 1995 Act around the world. or this legislation. support S. 1260, the Securities Litiga- I think the danger that a loss of I strongly endorse the Report which tion Uniform Standards Act of 1998. recklessness posses to our citizens and The bill will create a uniform stand- accompanies this legislation, which our markets is clear. ard for securities class action lawsuits states clearly that nothing in the 1995 Mr. President, equally important is a against corporations listed on the legislation changed either the scienter pleading standard that allows victim- three largest national exchanges. standard or the previous pleading ized investors to recover their losses. Class action suits are frequently the standards associated with the most The reason for allowing a plaintiff to only financially feasible means for stringent rules, those of the Second establish scienter through a pleading of small investors to recover damages. Circuit. motive and opportunity or recklessness Yet, such lawsuits have also been The reason such standards were not is clear. As one New York Federal Dis- subject to abuse, draining resources changed in 1995 is that they are essen- trict Court has stated, ‘‘a plaintiff real- from corporations while inadequately tial to providing adequate investor pro- istically cannot be expected to plead a representing the interests of investor tection from fraud. defendant’s actual state of mind.’’ plaintiffs. I have been deeply troubled by the Since the 1995 Act allows for a stay of Mr. President, in 1995, I voted to cur- ruling of several federal district courts discovery pending a defendant’s motion tail such abusive litigation. It was ob- which, ignoring the clear legislative to dismiss, requiring a plaintiff to es- vious then that some class action suits history of the 1995 Act, have either tablish actual knowledge of fraud or an were being filed after a precipitous changed the requirements of scienter intent to defraud in a complaint raises drop in the value of a corporation’s in a fraud case or have invalidated the the bar far higher than most legiti- stock, without citing specific evidence proper pleading standard for a 10b-5 ac- mately defrauded investors can meet. of fraud. tion. The SEC has been clear on this point These lawsuits inflict substantial Mr. President, let me be clear: noth- and it has been well recognized by the costs upon corporations, harming the ing in the act addressed the scienter supporters of both the 1995 and 1998 business and its shareholders. Unfortu- standard: which has quite rightly been Acts that neither changed the preexist- nately, since passage of federal proce- held by every Circuit to rule on the ing standards. dures protecting corporations from issue to include recklessness. Mr. President, I am pleased that the such suits there has been some attempt With regard to proper pleadings: the Chairman of the Committee and the by class action plaintiffs to circumvent PSLRA requires plaintiffs to plead spe- Ranking Member of the Subcommittee, these safeguards by filing similar law- cific facts ‘‘giving rise to a strong in- a prime sponsor of this legislation, suits in state courts. ference’’ that the defendants acted have today articulated their belief that Mr. President, this Act will preempt with the required state of mind. Prior including reckless behavior in the defi- this circumvention, creating a national to the 1995 legislation, some circuit nition of fraud is essential to the pro- standard for class action suits involv- courts allowed scienter to be averred tection of our markets. I join them in May 13, 1998 CONGRESSIONAL RECORD — SENATE S4801 their pledge to sponsor legislation 18. Zeid v. Kimberley, 930 F. Supp. 431 (N.D. Finally, I have appreciated the ex- should such protections be threatened. Cal. 1996). pert analysis that the Chair, Commis- As a result, the legislative history of II. Cases Applying a Stricter Pleading sioners, and staff of the Securities and Standard than the Second Circuit: both bills well establishes that the A. Cases Holding that Motive and Oppor- Exchange Commission have provided scienter standard, as well as the plead- tunity and Recklessness do not Meet Plead- on this issue. I thank them for their as- ing standard of the Second Circuit ing Standard. sistance. Court of Appeals, remains totally in- 1. Mark v. Fleming Cos., Inc., No. CIV–96– Ms. MIKULSKI. Mr. President, I rise tact. Therefore, it is now clear that 0506–M (W.D. Okla. Mar. 27, 1998). to support the Securities Litigation federal district court rulings that have 2. In re Silicon Graphics Sec. Lit., 970 F. Uniform Standards Act. I supported held otherwise are clearly in error. Supp. 746 (N.D. Cal. 1997). the 1995 Private Securities Litigation Mr. President, I ask unanimous con- 3. In re Comshare, Inc. Sec. Litig., Case No. Reform Act for three reasons: to stop 96–73711–DT, 1997 U.S. Dist. LEXIS 17262 (E.D. sent to have printed in the RECORD an Mich. Sept. 18, 1997). the bounty hunters, to put the person analysis, preformed for me by the staff 4. Voit v. Wonderware Corp., No. 96–CV. who had lost the most money in charge of the SEC, of cases adjudicated under 7883, 1997 U.S. Dist. LEXIS 13856 (E.D. Pa. of class action suits, and to penalize the 1995 Act. Sept. 8, 1997). people who commit fraud. There being no objection, the mate- 5. Powers v. Eichen, No. 96–1431–B (AJB), I have been very disturbed and dis- rial was ordered to be printed in the 1997 U.S. Dist. LEXIS 11074 (S.D. Cal. Mar. 13, appointed to hear from many Maryland 1997). RECORD, as follows: biotechnology and high technology 6. Norwood Venture Corp. v. Converse Inc., U.S. SECURITIES AND 959 F. Supp. 205, 208 (S.D.N.Y. 1997). companies that the 1995 reforms are EXCHANGE COMMISSION, 7. Friedberg v. Discreet Logic, Inc., 959 F. being circumvented and, that in some Washington, DC, April 20, 1998. Supp. 42, 48–49 (D. Mass. 1997). respects, nothing has changed. TED LONG, 8. In re Glenayre Technologies, Inc., 1997 Why has nothing changed even Legislative Counsel, Offices of Senator Jack WL 691425 (S.D.N.Y. Nov. 5, 1997). though we enacted those important re- Reed, Hart Senate Office Building, Wash- 9. Havenick v. Network Express, Inc., 1997 forms? Because some have refused to ington, DC. WL 626539 (E.D. Mich. Sep. 30, 1997). accept the law of the land. Rather than DEAR MR. LONG: The attached responds to 10. Chan v. Orthologic Corp., et al., No. your request for staff technical assistance CIV–96–1514–PHX–RCB (D. Ariz. Feb. 5, 1998) abide by congressional efforts to pro- with respect to S. 1260, the ‘‘Securities Liti- (dicta). tect small companies that create jobs gation Uniform Standards Act of 1997.’’ This B. Cases Holding only that Motive and Op- and help to maintain our robust econ- technical assistance is the work of the staff portunity do not Meet Reform Act’s Plead- omy, a small group of specialized law- of the Securities and Exchange Commission; ing Standard: yers have simply shifted their filings to the Securities and Exchange Commission 1. Novak v. Kasaks, No. 96 Civ. 3073 (AGS), state courts. itself expresses no views on this assistance. 1998 WL 107033 (S.D.N.Y. Mar. 10, 1998). Enacting this uniform standards leg- I hope the attached is responsive to your 2. Myles v. MidCom Communications, Inc, islation would close this loophole and request. No. C96–614D (W.D. Wash. Nov. 19, 1996). Sincerely, 3. In re Baesa Securities Litig., 969 F. Supp. enable Congress to finish the job of RICHARD H. WALKER, 238 (S.D.N.Y. 1997). eliminating abusive securities litiga- General Counsel. 4. Press v. Quick & Reilly Group, Inc., No. tion that hampers and harms our eco- Attachment. 96 Civ. 4278 (RPP), 1997 U.S. Dist. LEXIS nomic future PLEADING STANDARD SCORECARD 11609, at *5 (S.D.N.Y. Aug. 8, 1997). Uniform standards would only in- (As of April 17, 1998) III. Examples of Cases with Language volve class action suits with at least 50 Questioning Recklessness as a Basis of Li- plaintiffs involving nationally traded I. Cases Applying the Second Circuit ability (All Cases Previously Listed Above): Pleading Standard: 1. In re Silicon Graphics Sec. Lit., 970 F. securities. These claims were rarely 1. City of Painesville v. First Montauk Fi- Supp. 746 (N.D. Cal. 1997). filed in state courts until federal re- nancial Corp., 1998 WL 59358 (N.D. Ohio Feb. 2. Friedberg v. Discreet Logic, Inc., 959 F. form became law in December 1995. 8, 1998). Supp. 42, 49 n.2 (D. Mass. 1997). This exposure of national companies 2. Epstein v. Itron, Inc., No. CS–97–214 3. Norwood Venture Corp. v. Converse Inc., and their shareholders to lawsuits by 50 (RHW), 1998 WL 54944 (E.D. Wash. Jan. 22, 959 F. Supp. 205, 208 (S.D.N.Y. 1997). 1998). different sets of rules amounts to a bal- 3. In re Wellcare Mgmt. Group, Inc. Sec. Mr. REED. Mr. President, as this leg- kanization of securities law that boosts Lit., 964 F. Supp. 632 (N.D.N.Y. 1997). islation makes clear, those rulings that legal fees, distracts companies from 4. In re FAC Realty Sec. Lit., 1997 WL reject the reckless standard, or the creating jobs, and erodes the value of 810511 (E.D.N.C. Nov. 5, 1997). Second Circuit’s pleading standard are shareholder investments. 5. Page v. Derrickson, No. 96–842–CIV–T– clearly wrong and a threat to the secu- I have heard from Maryland CPAs, 17C, 1997 U.S. Dist. LEXIS 3673 (M.D. Fla. rity of our markets. venture capitalists, and Maryland com- Mar. 25, 1997). 6. Weikel v. Tower Semiconductor Ltd., Mr. President, with assurances that panies along the I–270 High-Tech High- No. 96–3711 (D.N.J. Oct. 2, 1997). proper protections for investors will re- way that these uniform standards are 7. Gilford Ptnrs. L.P. v. Sensormatic Elec. main in place, I am pleased to support needed. Corp., 1997 WL 757495 (N.D. Ill. Nov. 24, 1997). the 1998 Act, thus moving toward an ef- I believe that much of our economic 8. Galaxy Inv. Fund, Ltd. v. Fenchurch ficient, national uniform standard for future is in new and developing indus- Capital Management, Ltd., 1997 U.S. Dist. securities class action lawsuits. tries such as high technology and bio- LEXIS 13207 (N.D. Ill. Aug. 29, 1997). I trust that higher courts will adhere technology. New, high-tech jobs are 9. Pilarczyk v. Morrison Knudsen Corp., 965 to current principles of legislative his- F. Supp. 311, 320 (N.D.N.Y. 1997). created only when companies generate 10. OnBank & Trust Co. v. FDIC, 967 F. tory and case law to rule that the capital to allow them to move into new Supp. 81, 88 & n.4 (W.D.N.Y. 1997). pleading and scienter standards con- fields. Without a balanced and uniform 11. Fugman v. Aprogenex, Inc., 961 F. Supp. tinue to protect investors and that we legal system free of loopholes, these 1190, 1195 (N.D. Ill. 1997). will remain true to our commitment companies must spend too much on 12. Shahzad v. H.J. Meyers & Co., Inc., No. and fix any error. frivolous litigation and not enough on 95 Civ. 6196 (DAB), 1997 U.S. Dist. LEXIS 1128 Additionally, as expressed in votes investments to generate jobs. (S.D.N.Y. Feb. 6, 1997). during the mark-up of this legislation, Mr. President, this legislation is 13. Rehm v. Eagle Fin. Corp., 954 F. Supp. 1246, 1252 (N.D. Ill. 1997). I am concerned that the definition of about perfecting the important reforms 14. In re Health Management Inc., 970 F. class action, as currently included in we passed in 1995 to protect our emerg- Supp. 192, 201 (E.D.N.Y. 1997). the bill, is too broad. ing industries as they strive to inno- 15. Marksman Partners, L.P. v. Chantal Specifically, by defining a class as vate and create jobs. Promoting job Pharmaceutical Corp., 927 F. Supp. 1297, 1309– those whose claims have been consoli- creation is one of my economic prin- 10, 1309 n.9 (C.D. Cal. 1996). dated by a state court judge, the bill ciples, and I am pleased to support this 16. Fischler v. AmSouth Bancorporation, infringes upon the rights of individual legislation today. 1996 U.S. Dist. LEXIS 17670 (M.D. Fla. Nov. 14, 1996). investors to bring suit; a situation Mr. HATCH. Mr. President, I rise 17. STI Classic Fund v. Bollinger Indus- sponsors have sought to avoid. I hope today to speak about S. 1260, the Secu- tries, Inc., No. CA 3:96–CV–0823–R, 1996 WL that this issue can be resolved today on rities Litigation Uniform Standards 866699 (N.D. Tex. Nov. 12, 1996). the floor. Act of 1998. I am pleased that this bill S4802 CONGRESSIONAL RECORD — SENATE May 13, 1998 is being acted upon today. Enactment I urge my colleagues to support this nies makes it more difficult for inves- of this bill will implement the underly- legislation and hope that it will be ap- tors to make informed judgments ing purpose of the Private Securities proved expeditiously so as to preserve about their future. Reducing suits to Litigation Reform Act of 1995 by estab- the intent of the 1995 Act. those that can meet federal court lishing uniform standards governing Mr. KERRY. Mr. President, I would standards should give these companies private securities litigation. like to thank the Senators DODD and the confidence to release voluntarily The Private Securities Litigation Re- GRAMM for their work in bringing this their future earnings estimates, which form Act of 1995 provided a ‘‘safe har- legislation before us today. I support should increase the efficiency of cap- bor’’ for forward-looking statements in this effort to reestablish the reasonable ital and reduce future stock volatility order to encourage companies to make limitations the Congress established in in our markets. voluntary disclosures regarding future 1995 with respect to class action law- Finally, the Securities Litigation Re- business developments. This objective suits alleging the commission of secu- form Act included important provi- was important to provide an environ- rities fraud in connection with the pur- sions which restrict the use of ‘‘profes- ment in which companies could provide chase or sale of a covered security. sional plaintiffs,’’ eliminate bounty more information to potential inves- This was a warranted and important payments, limit attorneys’ fees, assure tors without undue risk of litigation. step, and the efforts to effectively nul- class action lawsuit members receive Since passage of the 1995 Act, how- lify it by bringing such suits in state notice of settlement terms, and re- ever, actions are often filed in state courts must be halted, which this legis- strict secret agreements under seal. courts in order to circumvent these lation does by requiring all class action None of these protections is available very protections. The resulting threat suits of this type be brought in federal for class action suits brought in state of frivolous lawsuits and liability courts. courts. under state law discourages corporate While fraudulent actions by a compa- Moving all class action securities disclosure of forward-looking informa- ny’s management can destroy an indi- lawsuits to federal court should lead to tion to investors, eroding investor pro- vidual investor’s retirement nest egg, a the creation of a more favorable, stable tection and jeopardizing the capital frivolous suit filed against a start-up climate for businesses while preserving markets that are so important to the high-technology company can stop important remedial means for share- productivity of the fast-growing sec- that business dead in its tracks. We holders with legitimate complaints tors of our economy. need to protect the rights and interests about inappropriate corporate activi- Uniform liability standards elimi- of both shareholders and entre- ties. Investors should gain better infor- nate this threat and the drag on our preneurs. Although no law can do that mation about the marketplace. A di- economy which it causes. The enact- perfectly, I believe this legislation will minished threat of abusive strike suits ment of this bill will, I believe, be a bring us as close as possible to the cor- will strengthen the ability of busi- great impetus for new businesses, espe- rect balance. nesses to provide investors with more cially those in the rapidly growing The high technology sector has information. high-tech and bio-tech fields of our played an important part in the eco- I believe this helps to restore the bal- economy. This bill thereby creates a nomic development of Massachusetts ance we seek on behalf of all Ameri- business atmosphere that encourages, and the nation. This sector, which has cans, both those who are investors and rather than inhibits economic growth. been the most frequent target of secu- those who are entrepreneurs and man- I hope my colleagues will join me in rities strike suits, is critical to our fu- agers. I will support its passage and supporting passage of S. 1260, the Secu- ture economic growth and the creation complement those who have brought it rities Litigation Uniform Standards of highly skilled, family-wage jobs. to passage. Act of 1968. Frivolous strike suits have had a The PRESIDING OFFICER. The time Mr. GRAMS. Mr. President, I rise in chilling effect on start-up high-tech- of the Senator from Maryland has ex- strong support of S. 1260, the Securities nology, biotechnology, and other pired. Litigation Uniform Standards Act, growth businesses. The Senator from New York. which is necessary to preserve the in- After the growth of frivolous strike Mr. D’AMATO. Mr. President, I know tent of the Public Securities Litigation suits during the first part of this dec- there are a number of amendments. I Reform Act of 1995. This bipartisan leg- ade, passage of the Securities Litiga- ask my colleagues, in the interest of islation is narrowly drafted to correct tion Reform Act in 1995 was successful moving forward if they would submit an unexpected consequence of the Pub- to a large degree in limiting strike those amendments so we can start lic Securities Litigation Reform Act suits in federal court. But litigants are working on them. and is supported by the White House too often circumvented its impedi- The PRESIDING OFFICER. The Sen- and the Securities and Exchange Com- ments to frivolous lawsuits by bringing ator from New York has 2 minutes 36 mission (SEC). actions in state court, reinvigorating seconds remaining. The time has ex- Following enactment of the 1995 Act, the threat to emerging companies. pired on the side of the Senator from it became apparent that trial lawyers The Securities Litigation Reform Maryland. were up to their old tricks by cir- Act’s limits on discovery fishing expe- Mr. SARBANES. Once an amendment cumventing the intent of the law by ditions, until a court rules on the mer- is sent to the desk we can have time to bringing frivolous class action law its of a case, does not apply in state proceed; is that correct? suits in state courts, rather than in court, and plaintiffs have begun to file The PRESIDING OFFICER. That is Federal court. Although brought in a state lawsuits in order to gain access correct. different forum, this action yields the to important company information— AMENDMENT NO. 2395 same result—namely raising the cost too often this has permitted ‘‘fishing (Purpose: To provide that the appropriate to investors, workers, and customers. expeditions’’ into corporate files to try State statute of limitations shall apply to As a member of the conference com- to find evidence of fraud. Actions such certain actions removed to Federal court) mittee on the 1995 Act, I can assure you as these frustrate the intent of the re- Mr. SARBANES. I send an amend- that this is not the intent of Congress. form law. Moving these cases to federal ment to the desk for myself, Senator As its name implies, S. 1260 preserves court should eliminate these meritless BRYAN and Senator JOHNSON. the 1995 Act by establishing uniform ‘‘fishing expeditions.’’ The PRESIDING OFFICER. The standards governing private class ac- Strike suits in state courts also have clerk will report. tions involving nationally traded secu- had a chilling effect on the number of The legislative clerk read as follows: rities. This bill does not interfere with companies which have released for- The Senator from Maryland [Mr. SAR- the ability to bring criminal suits in ward-looking statements on earnings. BANES], for himself, Mr. BRYAN and Mr. state courts or for individuals to seek Companies fear that if the information JOHNSON, proposes an amendment numbered relief in state courts. Rather, this Act on earnings that they release proves to 2395. simply requires that class action law- be inaccurate, they will be held liable Mr. SARBANES. Mr. President, I ask suits against nationally traded securi- in state court. The lack of accurate, unanimous consent reading of the ties be filed in Federal court. forward-looking information on compa- amendment be dispensed with. May 13, 1998 CONGRESSIONAL RECORD — SENATE S4803 The PRESIDING OFFICER. Without selves from fraud. At a town meeting primary wrongdoer is bankrupt, in jail, objection, it is so ordered. in Los Angeles, SEC Chairman Levitt or has fled the country. The amendment is as follows: cautioned that investors are ‘‘more In the late 1980s as Secretary of On page 9, between lines 9 and 10, insert vulnerable than ever to fraud.’’ This State, I conducted a series of public the following: concern has been echoed by others who hearings to focus on securities fraud ‘‘(d) APPLICABILITY OF STATE STATUTE OF point to a disturbing rise in the level of taking place in Georgia. This led me to LIMITATIONS.—Notwithstanding subsection securities fraud and there are many al- recommend a number of changes to (b), an action that is removed to Federal strengthen Georgia’s securities laws. court under subsection (c) shall be subject to legations that organized crime is seek- the State statute of limitations that would ing a foothold in certain sectors of the These changes established significant have applied in the action but for such re- securities marketplace. disclosure requirements for those deal- moval. It is unclear whether there is any ers offering and selling certain stocks On page 9, line 10, strike ‘‘(d)’’ and insert means for defrauded investors to re- within or from the state of Georgia. ‘‘(e)’’. cover stolen money under federal law These recommendations were unani- On page 10, line 12, strike ‘‘(e)’’ and insert following the passage of the 1995 mously enacted as amendments to the ‘‘(f)’’. PSLRA, which severely limits the Georgia Securities Act, and gave my On page 10, line 17, strike ‘‘(f)’’ and insert rights of defrauded investors. Preemp- staff more tools to effectively deal ‘‘(g)’’. with securities fraud. The Georgia leg- On page 14, between lines 10 and 11, insert tion of state remedies under S. 1260 the following: could lead investors with no ability to islature also installed securities fraud ‘‘(3) APPLICABILITY OF STATE STATUTE OF protect themselves against fraud. Sev- as a predicate offense for purposes of li- LIMITATIONS.—Notwithstanding paragraph eral federal district courts have issued ability under the RICO statute. I am (1), an action that is removed to Federal rulings on the 1995 law that are so re- pleased to report that the efforts of the court under paragraph (2) shall be subject to strictive that they threaten almost all Georgia General Assembly are the rule the State statute of limitations that would private enforcement—including hold- rather than the exception. According have applied in the action but for such re- to the SEC, 49 of the 50 states provide moval. ing that reckless wrongdoers are no longer liable to their victims under the liability for aiders and abettors now On page 14, line 11, strike ‘‘(3)’’ and insert unavailable under federal law, and 33 PSLRA. I strongly disagree with this ‘‘(4)’’. states provide longer statutes of limi- On page 15, line 15, strike ‘‘(4)’’ and insert interpretation because Congress, when tations for securities fraud actions ‘‘(5)’’. it crafted the PSLRA, it did not intend than current federal law. Mr. Presi- On page 15, line 20, strike ‘‘(5)’’ and insert to eliminate recklessness as a standard dent, S. 1260 would undermine these ‘‘(6)’’. of liability. On the contrary, it is my Mr. SARBANES. Mr. President, Sen- important state remedies. understanding that the PSLRA did not, Simply put, S. 1260 is an affront to ator CLELAND has been here for some in any way, alter the scienter standard the efforts of state governments across time on the floor. I know he wishes to in federal securities fraud suits. the country to locally protect their speak to the bill, and in the course of Let us be clear about who suffers in public investors from fraudulent secu- those remarks would be speaking to the cases of securities fraud—it is re- rities transactions. For example, this this amendment, so I yield the floor. I tirees living on fixed incomes, young bill reinforces the unduly short statute hope that Senator CLELAND will be rec- families struggling to make ends meet of limitations in federal law. In effect, ognized. and save for their children’s education, federal law rewards those perpetrators The PRESIDING OFFICER. The teachers, and factory workers. Each of fraud who successfully conceal the Chair recognizes the distinguished Sen- day, devastating cases are brought to fraud for more than three years. A ma- ator from Georgia. the attention of securities regulators Mr. CLELAND. Mr. President, I rise jority of states have statutes of limita- and law enforcement officers. Indeed, tions that are longer than the federal today to express my reservations about financial fraud is a serious and growing the merits of S. 1260. statute. As currently written, S. 1260 problem. No discussion about securities would preempt those state laws. Fur- I served as Georgia’s Secretary of litigation reform is complete without State and Commissioner of Securities thermore, the definition of ‘‘class ac- serious consideration of the potential tion’’ contained in this bill is overly for many years. I was responsible for impact on small investors across the administering Georgia’s securities laws broad. I have been informed that the country. The elimination of state rem- definition of ‘‘class action’’ in S. 1260 and providing investor protection for edies against fraud could be cata- Georgia residents. would allow single suits filed in the strophic for millions of Americans. The same or different state courts to be We are all aware that the securities fundamental purpose of securities law markets are an integral part of our na- rolled into a larger federal class action, is to protect investors, something that and this was never contemplated or de- tion’s economy and that we have expe- S. 1260 does not adequately address. In rienced tremendous growth in these sired by individual plaintiffs. fact, S. 1260 is designed merely to pro- Another cause for concern is that markets. Nearly half of all American tect big business. under S. 1260, defrauded state and local households now invest in the stock The confidence in our securities mar- pension funds are barred from recover- market either directly or through mu- kets results, in part, because of the co- ing from corporate wrongdoers in state tual funds. These are not just rich peo- operative enforcement system that has court. Since many remedies have al- ple trying to become richer. These are served the United States exceptionally ready been foreclosed in federal court, primarily middle class Americans seek- well since the Depression. Substantive the state or local government and its ing to fund their children’s education, securities regulation in this country taxpayers may be required to make up to save up for a down payment on a began at the state level. In 1911, the losses in the pension fund resulting home, and to provide a decent standard State of Kansas enacted the nation’s from fraudulent securities trans- of living for themselves in retirement. first Blue Sky Law. Other states quick- actions. If state and local governments In 1990, only 17.8 percent of all Ameri- ly adopted their own version of such are creatures of state law, shouldn’t cans invested in equities but that fig- legislation. Congress passed federal se- they be entitled to pursue state rem- ure has grown dramatically, and one in curities laws in 1933 and 1934 to com- edies? three households now own securities. plement—not replace—state laws and State and local government rep- Unfortunately, these successes have to stop abuses that caused the 1929 resentatives are unequivocal in their led to a tremendous increase in fraud crash. opposition to S. 1260. The National and abuse. Recently, top securities Many states have chosen to provide League of Cities, the U.S. Conference of watchdogs in the United States have more expansive investor protections Mayors, the Government Finance Offi- warned that the explosion in the stock than federal law currently provides— cers Association, and the National As- market has led to a sharp rise in secu- through accountability for aiders and sociation of State Retirement Admin- rities sales fraud and stock price ma- abettors, realistic time limits for filing istrators all reject the bill in its cur- nipulation. Several studies have shown a fraud claim, and the ability of inves- rent form. that many Americans lack the finan- tors to recover fully from professionals Mr. President, I am not convinced cial sophistication to protect them- who help perpetrate frauds when the that the federal preemption of state S4804 CONGRESSIONAL RECORD — SENATE May 13, 1998 anti-fraud protections is a necessary ferred to, the Supreme Court signifi- Mr. SARBANES. I yield to my col- step. Preemption supporters emphasize cantly shortened the period of time in league. an ‘‘explosion’’ of state suits filed to which investors may bring securities Mr. BRYAN. Is the Senator indicat- circumvent the PSLRA in the two fraud actions. On a 5 to 4 vote—in other ing that an investor who files in a years since its enactment. Yet the words, in a very closely divided Court— State court in a timely fashion after number of state securities class actions the Supreme Court held that the appli- having consulted with legal counsel filed in 1997—only 44 nationwide—rep- cable statute of limitations is 1 year that said, yes, this is a timely action— resents a 33 percent decrease since 1996 after the plaintiff knew of a violation, and we shall assume for the sake of the and is lower than the number filed in and in no event more than 3 years after discussion meritorious—can have his any of the three years before the the violation occurred. In other words, action, in effect, dismissed by having it PSLRA was passed. In addition, most once the violation occurs, if the plain- removed to the Federal court and the of the state court cases have been filed tiff never finds out about it and 3 years shorter statute of limitations of 1 to 3 in California. No state other than Cali- pass, you can’t do anything about it, years as is required under Federal law? fornia has had more than seven securi- even though, of course, one of the hall- Mr. SARBANES. Exactly. ties class actions filed in the two years marks of securities fraud is conceal- Mr. BRYAN. It will wipe them out. since the enactment of the PSLRA. Mr. ment and deception specifically de- Mr. SARBANES. Investors who file President, if a problem exists, then it signed to keep them from finding it in a timely fashion under State law out. should be addressed in Sacramento, not may find their lawsuits dismissed be- The other aspect was 1 year after the Washington, and I understand that cause, contrary to their intention, and plaintiff knew of the violation. Now, California has already established a in many instances unbeknownst to legislative commission to study its this is shorter—this statute of limita- tions —than those that exist in private them that this would happen, they find laws and make changes if necessary. themselves lifted out of a State court, Other states should be free to decide securities actions in the law in 33 of the 50 States, as my distinguished col- put into the Federal court, and at that how to protect their own citizens from point the shorter statutes of limita- fraud. league illustrated earlier with his map. Testifying before the Banking Com- tions apply. So their suit is dismissed Mr. President, I support the right of for failure to meet a shorter time re- investors to seek legal remedies mittee in 1991, SEC Chairman Richard Breeden stated: quirement that they couldn’t have against those persons selling fraudu- known was going to be applied to them. lent securities. I have supported an in- The timeframe set forth in the Court’s de- cision is unrealistically short and will do This problem is created in part be- vestor’s right to seek redress through undue damage to the ability of private liti- cause of the broad definition of what is mediation, arbitration, and civil litiga- gants to sue. a class action that is in this legisla- tion. While I worked to streamline the Chairman Breeden went on to point tion. So you could have an individual regulatory process in Georgia, I op- out that many cases come to light only investor who finds himself classified as posed amendments to federal regula- after the original distribution of secu- part of a group, although he was not tions that would have impaired the rities. The Lampf cases could well part a group. He filed it on his own. He ability of a state to protect its inves- mean that, by the time investors dis- had his own lawyer, and he wasn’t in tors. Here in the Senate, my focus re- cover they have a case, they are al- collusion with anybody else in doing mains the same. For this reason, I op- ready barred from the courthouse. The this. Or you could have 50 identified in- pose S. 1260. FDIC and the State securities regu- vestors—say, school districts, or water Thank you Mr. President. I yield the lators joined the SEC in 1991 in favor of and sewer districts—that get de- floor. overturning the Lampf decision. In frauded. If there are more than 50, they Mr. D’AMATO addressed the Chair. fact, Chairman Levitt testified before can be lifted out of the State court and The PRESIDING OFFICER. The dis- the Securities Subcommittee of our put into the Federal court. When they tinguished Senator from New York is committee in April of 1995: went into the State court, they met recognized. Extending the statute of limitations is the statute of limitations. But when Mr. D’AMATO. Mr. President, I be- warranted because many securities frauds they get lifted out of the State court lieve that my colleague, the Senator are inherently complex and the law should and put in the Federal court, they then from Maryland, is going to speak to not reward the perpetrator of a fraud who have to comply with this shorter stat- this amendment. This amendment successfully conceals its existence for more ute of limitations, and they find them- would indeed promote forum shopping than 3 years. selves dismissed for failure to meet the for those lawyers to look for the State Chairman Levitt reaffirmed his sup- shorter time requirement. that had the longest statute of limita- port for a longer statute of limitations tions. before the committee as recently as Mr. BRYAN. So the perpetrator of I point out the Lampf decision, which March 25, 1998. I continue to believe the fraud, if I understand what the will be referred to. After that decision, that this time period in the Federal Senator from Maryland is saying, has in a sample of actions brought in the legislation does not allow individual the ability to wipe out the small inves- State courts, 43 of them were filed investors adequate time to discover tor by removing the cause of action to within the 4-year period of time—43 out and pursue violations of securities law, the Federal court, even though that of a total of 44. So we do not believe but we raised that issue before and case was filed timely under State law this amendment will do anything other that issue was decided. and even though the small investor than to promote forum shopping for So this amendment isn’t trying to says, Look, I want to have this action the longest period of time, and that it change the time period for securities continued at the State level. So the really counteracts the Supreme Court’s fraud actions brought in Federal court. Senator is saying, if I understand the decision, which has not worked a hard- This amendment seeks to fix a related Senator from Maryland correctly, that ship on plaintiffs who have a legiti- problem that will be created by this the power to wipe out this cause of ac- mate suit or seek to bring it. bill. Because of the overly broad defini- tion, to wipe out any possibility for re- Mr. SARBANES addressed the Chair. tion of a class action, this bill creates lief, are now providing that to the per- The PRESIDING OFFICER. The a flaw; namely, that the Federal stat- petrator of the fraud? Chair recognizes the Senator from ute of limitations will now apply in an Mr. SARBANES. That is correct. Maryland. unfair manner to State cases. Cases Mr. BRYAN. The perpetrator of the Mr. SARBANES. Mr. President, this that were timely filed under State fraud is allowed to do that under this? amendment, as the Senator from New statute of limitations may now be re- Mr. SARBANES. That is right. What York has indicated, goes to the ques- moved to Federal court and then dis- this amendment does, very simply, is it tion of the statute of limitations, and missed under the shorter Federal stat- provides that when the investors are it seeks to preserve the State statutes ute of limitations. removed from the State court to the of limitations. Mr. BRYAN. Mr. President, will the Federal court, they can bring their Let me quickly review the history. In Senator from Maryland yield for a State statute of limitations with them. the Lampf case, which my colleague re- question? If they filed in the State court, and May 13, 1998 CONGRESSIONAL RECORD — SENATE S4805 they complied with the statute of limi- If you are going to allow 50 different its face. Three suits were filed against tations, they ought not to find them- jurisdictions to apply 50 different stat- Intel Corporation within 48 hours of an selves taken into Federal court and utes of limitations, you have just de- adverse earnings announcement—48 then being told they do not comply stroyed the very purpose of the legisla- hours; three lawsuits were filed within with the shorter statute of limitations tion. Vote against the bill if you want. 48 hours. One in 3 years. It is ridicu- and they are out of the courthouse But you can’t very well vote for this lous; these lawsuits are being filed al- when they, in fact, complied at the amendment and then vote for the bill. most momentarily in many cases. State level with the State statute of It doesn’t make any sense at all. We have a second case of the EMC limitations. Of course, this idea that this has corporation. A case was filed within 20 This is to deal with this unfairness been a great disadvantage, let me share hours of an adverse announcement. The whereby an investor can file a timely some hard facts with my colleagues notion somehow that this a great effort suit under State rules and without ad- about what has happened, because in to discover fraud in these cases—the vance warning later be dismissed under order to make this amendment a Fed- notion somehow that those of us in a different set of rules. Anyone who eral limit, you have to have informa- support of this bill in any way want to wished to bring the suit in the Federal tion backing it, supporting it, underly- discourage investors from bringing le- court would have to abide by the 1- and ing it, which indicates there is a prob- gitimate lawsuits as plaintiffs is to- 3-year limitation of Lampf. But this is lem here. tally wrong. clearly unfair to an investor who is The evidence since 1991, when the And part of what we rest our case on, acting in a reasonable manner. Lampf decision was rendered, clearly Mr. President—let me share with my This amendment is supported by a refutes the contention that State colleagues what you could find on your broad coalition of government officials courts are necessarily a safety net for Internet this morning, not a year ago and consumer groups. The National meritorious claims. The evidence of or 5 years ago or 6 months ago. It is en- League of Cities, the National Associa- that would lead one to the opposite titled ‘‘Stock Disasters.’’ ‘‘Stock Dis- tion of Counties, the U.S. Conference of conclusion. The statute of limitations asters’’ it is called. That might suggest Mayors, and others have written to ex- was shortened, as my colleague from we have had some real fraud going on— press their support for an amendment Nevada and the Senator from Maryland ‘‘Stock Disasters.’’ You hit on your lit- to allow plaintiffs to carry State stat- pointed out, by a Supreme Court deci- tle mouse here, and you hit on ‘‘Top ute of limitations with them in cases sion in 1991. That was 4 years, between Stock Losers of the Day.’’ Boom, this filed in State court which are removed 1991 and 1995, before we passed the 1995 page pops up. You have to get this one, to Federal court. The Consumer Fed- litigation reform bill. and then you get this one. eration of America has joined as well. So it is kind of an interesting 4 years What does it show you? It lists stock I hope my colleagues will support to look at. You have the Lampf deci- fluctuations, stocks that lost money, this amendment. It is an effort to deal sion in 1991. We passed in 1995 the liti- stocks that gained money. That is all. with what, I think, is a very specific gation reform bill. What happened be- Mr. D’AMATO. Will the Senator yield and definable flaw in this legislation. I tween 1991 and 1995? There is almost no for a question? don’t think investors going into a evidence, none, that plaintiffs brought Mr. DODD. I am happy to yield to my State court, timely under State law— securities fraud cases in class actions colleague. and I refer back to the comments of against nationally traded securities in Mr. D’AMATO. Let me ask the Sen- Chairman Breeden and others about State courts during 1991 and 1995—no ator, does the underlying legislation in the complexities of these cases, the dif- evidence of it at all. That would be the any way limit the Securities and Ex- ficulty of discovering the fraud, the time you might do it because there the change Commission from bringing any difficulty of bringing the suit once the law said, of course, you could go into action to recover for disgorgement fraud is discovered—that they then State courts and use the State statute where there is fraud? ought to find themselves foreclosed al- of limitations. If you want to take ad- Mr. DODD. None whatsoever. together from any equitable relief sim- vantage of it, that period of time would Mr. D’AMATO. There is no statute of ply by removal to the Federal court certainly be an indication of what was limitations? and the application of the shorter stat- going on. Mr. DODD. Absolutely none. ute of limitations. There is evidence that many of the Mr. D’AMATO. So the SEC can bring Mr. DODD addressed the Chair. suits brought in State courts since the these actions but the strike lawyers The PRESIDING OFFICER. The Sen- 1995 act are well within the 1 to 3 years. can’t wait indefinitely and pick a ator from Connecticut. Again, let me emphasize that I don’t forum. That is what the Senator is say- Mr. DODD. Mr. President, I rise in have any difficulty with the notion of ing. But certainly the SEC can still opposition to the amendment. The pur- having a longer period. I agree with my bring these actions at any time that it pose of this amendment is, obviously, colleague on that. discovers fraud. to thwart the underlying rationale for But he knows and I know we have Mr. DODD. My colleague from New the legislation. been through that. We haven’t been York is absolutely correct. The point My colleagues have already pointed successful in extending it. Now, maybe we have been trying to make here is out that there are 50 jurisdictions with someday we can. Maybe we can con- that if you go here —and ‘‘Stock Disas- different statutes of limitations in vince others. But that is a different de- ters’’ is the title of this, Mr. Presi- them. My colleague from Nevada has bate—an important debate but a dif- dent—and then you switch on ‘‘Stock worked long and hard on the issue of ferent debate. The debate here raised Disasters’’—and the stocks decline in a trying to extend the statute of limita- by this amendment is, do we allow the couple cases, some stocks going up— tions at the Federal level, which is an 50 different jurisdictions, 33 States there is no allegation here of fraud or effort that I applaud and support. After which do better, 17 which do worse—by mismanagement, merely stock fluctua- the Lampf decision, I thought it is the way, in 17 States you would be dis- tions. worthwhile. I don’t disagree with him advantaged between what the Federal Stock disasters? That is not a disas- on that. I disagree with my colleague law provides and what the State courts ter. It is 10:52 this morning. That is from Maryland. That is not the issue. do. So you get a mixed bag on this. how these suits are filed. It is ludicrous The issue, of course, is not whether But since 1995, most of the actions to somehow suggest we are talking or not there is a statute of limitations that have been brought in the statute about deep fraud in these cases. All we at the Federal level but whether or not of limitations were brought well within are trying to do is slow this down so you are going to allow 50 different indi- the 1 year of the discovery or 3 years of that legitimate plaintiffs can bring viduals to apply State statute of limi- when the fraud was committed, which lawsuits, and also legitimate investors tations on nationally traded securities is what the Lampf decision allowed and particularly—and a lot of these compa- accounts on national markets. The provided for. In fact, it is worthwhile nies, by the way, I point out, Mr. Presi- purpose of this bill is a uniform stand- to note that in some of these cases the dent, a lot of these companies, if you ard for which nationally traded securi- suggestion somehow that the statute of look at the losers as of 10:52 this morn- ties are traded on national markets. limitations is a problem is ludicrous on ing, are your small high-tech firms. S4806 CONGRESSIONAL RECORD — SENATE May 13, 1998 That is the future of our economy, by been discovered, but in no instance side. That is what we have in Nevada the way. That is the knowledge-based after more than three years have as well. economy of our country for the 21st elapsed. The testimony beyond refutation is century. Let some predator law firm go I served for five years as the head of that a 3-year statute is simply too out there because they get a slight the Maine department that regulates short. The Securities and Exchange stock fluctuation and bring a lawsuit financial institutions, and I can tell Commission, which has all of the re- against them, having to spend millions you from personal experience that a sources available to the Federal Gov- of dollars to defend the company, you three-year limitations period is too ernment, much more so than any indi- lose the company. Who benefits from short. The reality is that, even with vidual investor, tells us that on aver- that? I tell you who does. The law firm. due diligence, some frauds are not dis- age it takes more than 3 years to do That is who does. That is all this is covered within that time frame. In- the investigation, to bring the cause of about, the bottom line. That is all this deed, the very object of a fraud is to de- action. Certainly the small investor is is about. ceive the other party to the trans- seriously disadvantaged here, so I So we talk here about the statute of action for as long as possible. thank her for her comment and her limitations. Again, I am all for extend- The limited partnership cases of the leadership. ing it. I think there is a case to be last decade illustrate my point. The Let me just make a couple of com- made on that. But to say here with na- victims of those frauds were largely el- ments. I know we have talked about tionally traded securities on national derly, largely trusting, and largely this in the context of the debate on the markets, these exchanges, that you are lacking in financial sophistication. It bill, but the unfairness of this legisla- going to have to go through 50 different is no wonder that in many of those in- tion to the small consumer can best be jurisdictions is to defeat the very pur- stances, they did not, and even within described: Heads the perpetrator of the pose of what we are trying to do here. reasonable care, could not have, discov- fraud wins; tails the small investor And that is, with nationally traded se- ered the fraud within three years of its loses. This is a ‘‘no win’’ proposition curities and national exchanges, we commission. for the small investor. ought to have a uniform standard. I It is not just my opinion that the The thrust of this legislation is to would have it be a bit longer, but that Federal limitations period is inad- say that the traditional class action is not the issue before us. What is be- equate. The Securities and Exchange lawsuit should no longer be available fore us is whether or not we are going Commission has taken the position at the State court level. And, by ‘‘tra- to have one standard here so that we that the period is too short. ditional class actions’’ we mean indi- can try to have some predictability and This is an instance in which the vidual plaintiffs who are bound to- a little fairness in this process. Maine Legislature has shown more wis- gether by a common lawyer who files Certainly what we have seen, of dom than the Federal Government. on behalf of a lot of people who have course, is a rush to the courthouse, and Under the law of my state, the limita- been victimized by the identical fraud. that is why I think this amendment is tion period is two years from the date That is really what a class action tra- unnecessary. And if its adoption were the fraud was, or with reasonable care, ditionally has been. to occur, it would destroy the very pur- should have been discovered, with no Our friends on the other side say pose which has brought us here at this outside limit. That gives innocent in- there have been some abuses. I ac- point in our debate. vestors the opportunity to obtain re- knowledge that there may have been For those reasons, Mr. President, I dress for fraud as long as they act with some abuses there. I would be willing urge rejection of the amendment. reasonable diligence. to work with them in dealing with the The PRESIDING OFFICER. The I can understand the argument for a abuses. But here is the ingenious and Chair recognizes the distinguished Sen- single, Federal standard in this area, unfair part of this. The proponents say, ator from Maine. but I cannot accept preempting a state ‘‘The individual has a right to file an Ms. COLLINS. Mr. President, I rise in standard that is far more consistent action at the State court level, would support of the amendment to preserve with reality. While the best remedy have all the rights currently available the state statute of limitations for would be to change the Federal limita- under State law—the longer statute of cases removed to Federal court under tions period for all securities fraud limitations, the accomplice liability, this legislation. cases, that issue is not before us today. the joint and several, the RICO provi- I intend to vote for this bill. But in Thus, we should take the next best sions.’’ OK, that sounds somewhat fair, doing so, I think it important to be step, which is to preserve the state although as we have pointed out, most straightforward about what S. 1260 statutes for cases that are removed to small investors simply don’t have the does. This is a bill that preempts state Federal court under this legislation. resources to bring such a case. But law. Specifically, it preempts securi- What this amendment will not do is let’s suppose that your teachers’ pen- ties antifraud statutes for certain harm high-tech companies. What it sion fund, or what we have in Nevada, types of class action cases. will do—maybe not this year or next, the public employee retirement sys- I generally oppose preemption, as I but at some point—is to protect inno- tem—suppose they bring an action at think it overlooks the considerable cent, unsuspecting investors, who are the State level: One plaintiff, one law- wisdom that exists at the local level. victimized by a securities scam that yer, and, lo and behold, they have dis- Not without some measure of discom- could not reasonably have been discov- covered 4 years after the fact of fraud fort, I am nonetheless inclined to vote ered within three years. Thus, I urge that the public employee retirement for this bill, because I find considerable my colleagues not to wait until we system fund has been ripped off by a merit to the contention that large have such victims, but to stop the monstrous fraud. They file suit in class-action cases against companies problem before it occurs by supporting State court. whose securities are sold in the na- this amendment. Surely you would think it would be tional marketplace may well belong in I thank you, Mr. President. I yield possible for that one plaintiff to pursue the Federal courts. Otherwise, Con- the floor. a remedy under State law. But here is gress’ ability to regulate our national The PRESIDING OFFICER. The how the bill is crafted. Without the securities markets in an era of inter- Chair recognizes the distinguished Sen- permission or consent of that public national investing is arguably im- ator from Nevada. employee retirement system, if there peded. Mr. BRYAN. Mr. President, I com- are 49 other plaintiffs who file against I feel strongly, however, that if we mend the Senator from Maine for her, the perpetrator of the fraud, then in- are going to preempt state law and im- I think, most illuminating statement voluntarily, without the permission of pose a single federal standard, it must in terms of the problem that we face the public employee retirement sys- be a fair one, and that is not the case with the shorter statute of limitations. tem, they can be forcibly removed from with the federal statute of limitations. She is absolutely correct. Her State— the State court and those rights that Under federal law, a securities fraud and my own—apparently, if I under- exist under State law are effectively suit must be brought within one year stood the distinguished Senator, has a divested from them. So in the hypo- of when the fraud was or should have 1- and 5-year statute; 5 years is the out- thetical that I cite, a monstrous fraud, May 13, 1998 CONGRESSIONAL RECORD — SENATE S4807 which may have cost the public em- don’t understand the public policy ar- If the Senator wishes to make his re- ployee retirement system literally mil- gument that says that is somehow quest on the basis that we will proceed lions and millions of dollars, discov- meritorious. I concede that maybe you to our first vote at 5:40 on the pending ered sometime after 3 years for the could argue preemption if you develop amendment and that thereafter, imme- first time and filed timely under the a broader statute of limitations at the diately after that vote, take up the sec- law—it would be possible for the per- Federal level to protect them. Maybe ond amendment and seek a vote on petrator of the fraud to actually get that is a possibility. Maybe we could that, I will certainly join in that re- other plaintiffs to file to build up a reach a compromise there. Then maybe quest. number of 50, thereby removing the you could argue preemption. Mr. SARBANES. For ordering votes, case from State jurisdiction. And once But the proponents of this measure— we should not have any second degree. it gets to the Federal court, lo and be- with due respect to my colleague from Mr. D’AMATO. Yes. hold, what happens: the hammer falls Connecticut, he does support a longer Mr. SARBANES. Just to sketch it because at the Federal level, because of statute of limitation—but the primary out, it was my assumption then in the the Lampf decision, the statute of limi- thrust of getting this legislation, the morning we will have one other amend- tations is 3 years, the outside bar. folks who have opposed and resist this, ment to offer. We will do that amend- So here you can have literally tens of have resisted the longer statute of lim- ment and then final passage is my ex- thousands of public employees or itations. So, in effect, we take two pectation. teacher retirement funds or an Orange weapons away from the small investor: Mr. D’AMATO. That is my expecta- County type of investment in which The right at the Federal level to a tion, and I will make that rec- you may have a million or more tax- longer statute of limitations—Lampf ommendation to the leader. Subject to payers who are unable to recover sim- took that weapon away from the small the concurrence of the leaders, I imag- ply because the perpetrator of the investor—and now we are going to go ine we then will have debate, hopefully fraud is allowed to remove the single one step further and take it away from limited to, let’s say, an hour equally case from State court jurisdiction. that small investor who is filing at the divided on the third amendment, and What is the fairness of that? State level, not as part of a class ac- then go to final passage. How much The able and distinguished chairman tion but as an individual. And I must time does the Senator want in between of the committee says the SEC can say I think the unfairness of that is the third vote and final passage? bring the action. That is true. But we —all of this is being done in the name Mr. SARBANES. Of course, we have have been told on many, many occa- of, whether it is 39 cases or 44 cases out used up all the debate time. What sions that the SEC simply does not of 15 million, filed annually. should we have, 10 minutes on each have the resources; that both the cur- I come from a part of the country side before final passage, or 30 minutes rent chairman and previous chairman, where we understand what ‘‘rush’’ is. equally divided before final passage? in the time I served with the distin- The gold rush. There was an exodus of Mr. D’AMATO. We can work that out guished chairman of the committee people coming out West. But 44 people? and make that request later, but I cer- and my colleague and good friend from I wouldn’t call that a gold rush. That tainly will not be opposed to 30 min- Connecticut, have repeatedly told us would be a trickle. utes equally divided before final pas- that the SEC simply does not have the So I must say, this is a terribly, ter- sage. resources to pursue all of the fraud out ribly important investor protection. Mr. SARBANES. Mr. President, I ask there, and therefore the private cause My colleague from Maryland and I, we unanimous consent to set aside the of action is an absolutely essential and know how to count the votes. We know current amendment, and I will send an critical part of the regulatory struc- this legislation is going to pass. But amendment to the desk, and that no ture, the structure that has created the even if you are for this legislation, second-degree amendments be in order safest and most efficient market in the please, please, I implore you to con- to either, and that the vote begin on world. sider what you do to the small investor the amendment to be set aside at 5:40, Why are we making these changes? who is filing in State court. He or she to be followed by a vote on the amend- Because we are told that we must wor- gets involuntarily wiped out by the ment which will be sent to the desk. ship at the shrine of uniformity, that perpetrator of fraud by removing that Mr. D’AMATO. Mr. President, before there is a rush to the courthouse door; case to the Federal court system where that amendment is set aside, I ask for 44 cases out of 15 million is a rush to the shorter statute of limitations pre- the yeas and nays and indicate that I the courthouse door? Many, many vails. will move to table at the appropriate States have had no cause of action filed I yield the floor. time. at all, at all. I think in my own State Mr. SARBANES. Mr. President, I un- The PRESIDING OFFICER (Mr. of Nevada there has been one. A rush? derstand that the leadership doesn’t in- COATS). Is there a sufficient second on I must say, I do not think that makes tend to have votes much beyond 6 the request for the yeas and nays? the argument. o’clock or thereabouts, and I suggest to Mr. DODD. Mr. President, I suggest If uniformity is an end to itself, isn’t my colleague that we set aside this the absence of a quorum. it a fairly persuasive argument to say amendment and do the next amend- The PRESIDING OFFICER. The 49 of the 50 States have laws that hold ment, which I will send to the desk, clerk will call the roll. aiders and abettors liable? These are which actually is interrelated in con- The bill clerk proceeded to call the the accomplices, these are the lawyers, cept with this amendment, and that we roll. the accountants, the investment advis- have a vote on the two amendments be- Mr. SARBANES. Mr. President, I ask ers who participated with the primary ginning about 5:40. unanimous consent that the order for individual involved in the fraud to cre- Mr. D’AMATO. Mr. President, we the quorum call be rescinded. ate the loss to the innocent investor— cannot confirm that it is the intention The PRESIDING OFFICER. Without 49 out of 50 States say those people of the leadership on both sides to cur- objection, it is so ordered. ought to be liable, too. They are not, tail votes as of any specific time. How- Mr. SARBANES. Mr. President, I under the 1995 legislation. So if uni- ever, it would seem to me to be appro- withdraw the request. formity is to be the standard by which priate, notwithstanding that, to move The PRESIDING OFFICER. The Sen- this debate is to be judged, what is to support the Senator’s request that ator’s request is withdrawn. wrong with that uniformity? we stack the two amendments with a AMENDMENT NO. 2396 What we have here, and I regret to vote starting at 5:40 for the first one, (Purpose: To make amendments with respect say this, it is a systematic attempt to and thereafter undertake a vote on the to the definition of a class action, and for close the courtroom door to innocent second one. Then, of course, if the lead- other purposes) investors, small investors in this par- ership has decided no further votes, we Mr. SARBANES. Mr. President, I ticular instance that we are debating can put that matter over. send an amendment to the desk. here. We are talking about an institu- We are looking to shop that right The PRESIDING OFFICER. If there tional investor who could be taken in- now. I believe that will be the case, but is no objection, the pending amend- voluntarily to the Federal court. I we are waiting for final confirmation. ment is set aside. S4808 CONGRESSIONAL RECORD — SENATE May 13, 1998 Mr. SARBANES. I apologize to the the cost of a lawsuit when they are in- The definition of ‘‘class action’’ contained Chair. I ask unanimous consent that jured. in S. 1260 is overly broad. The definition of the pending amendment be set aside. Because they can be brought on be- ‘‘class action’’ in S. 1260 would allow single The PRESIDING OFFICER. Without half of a potentially enormous class, on suits filed in the same or different courts to be rolled into a larger class action that was objection, it is so ordered. The clerk occasion they can be misused to coerce never contemplated or desired by individual will report. defendants into settlement. This is the plaintiffs and have it removed to Federal The bill clerk read as follows: abuse about which the sponsors of the court. Claims by the bill’s proponents that The Senator from Maryland [Mr. SAR- legislation complain. They argue that individual plaintiffs would still be able to BANES], for himself, Mr. BRYAN and Mr. companies are coerced by flimsy secu- bring suit in Federal court are belied by this JOHNSON, proposes an amendment numbered rities fraud class-action suits, that it is provision. 2396. cheaper for the company to settle rath- If we can narrow the definition of Mr. SARBANES. Mr. President, I ask er than to fight them, and that these ‘‘class action’’ to a proper class action, unanimous consent that the reading of class actions are being misused. and then that is taken into Federal the amendment be dispensed with. I share the view that frivolous securi- court, then the statute of limitations The PRESIDING OFFICER. Without ties fraud class-action suits should not will apply, if that prevails. objection, it is so ordered. be tolerated, either in Federal court or On the other hand, if you are going to The amendment is as follows: in State court, and lawyers who file have a definition of ‘‘class action’’ that On page 10, strike line 24 and all that fol- worthless suits hoping to extort a set- is so broad that individual investors lows through page 12, line 11 and insert the tlement should not be able to pursue can be covered, they ought not be sub- following: that practice. But this bill reaches be- jected to the risk of losing their suit ‘‘(2) CLASS ACTION.— yond the frivolous class action. altogether because it is removed in a ‘‘(A) IN GENERAL.—The term ‘class action’ means any single lawsuit (other than a de- Here is the problem. The definition of Federal court and they are bound by a rivative action brought by 1 or more share- class action in this bill is too broad. statute of limitations that they had no holders on behalf of a corporation) in It will prevent investors from bring- idea was going to come into play in which— ing individual actions solely on their their instance. ‘‘(i) 1 or more named parties seek to re- own behalf in State court. Since they So, Mr. President, I very strongly cover damages on a representative basis on were enacted over 60 years ago, the urge this amendment. I think it cor- behalf of themselves and other unnamed par- Federal securities laws have preserved rects a very important weakness in ties similarly situated; and the right of individual investors to this legislation. We can narrow the def- ‘‘(ii) questions of law or fact common to those persons or members of the prospective bring securities fraud suits under State inition of who is covered by the class class predominate over any questions affect- law. This system has worked well. action so we no longer have to worry ing only individual persons or members. State remedies offer important protec- about the individual investor being On page 16, strike line 3 and all that fol- tions to investors where Federal rem- shut out unfairly. I think we ought to lows through page 17, line 13 and insert the edies fall short. significantly improve this legislation following: But the definition that is contained and narrow it so it applies to what it is ‘‘(B) CLASS ACTION.— in this bill for ‘‘class action’’ is too asserted it is meant to apply to, and ‘‘(i) IN GENERAL.—The term ‘class action’ broad. The bill has a three-pronged def- means any single lawsuit (other than a de- does not apply to individual investors rivative action brought by 1 or more share- inition of ‘‘class action.’’ And these who I think need to have their rem- holders on behalf of a corporation) in prongs permit individual investors to edies preserved in the State courts. which— be brought into Federal court against Mr. D’AMATO addressed the Chair. ‘‘(I) 1 or more named parties seek to re- their will. The bill includes, as a class The PRESIDING OFFICER. The Sen- cover damages on a representative basis on action, any group of lawsuits in which ator from New York. behalf of themselves and other unnamed par- damages are sought on behalf of more Mr. D’AMATO. Mr. President, let me ties similarly situated; and than 50 persons, even if the suits are tell you basically what this amend- ‘‘(II) questions of law or fact common to brought by separate lawyers without ment would do. This amendment would those persons or members of the prospective have the unintended effect—and I can- class predominate over any questions affect- coordination. ing only individual persons or members. So to tie it into the previous amend- not believe that my colleague would On page 17, line 14, strike ‘‘(C)’’ and insert ment, what happens is an investor goes want for that to happen—of opening up ‘‘(ii)’’ and move the margin 2 ems to the into State court, in a timely fashion, the whole question of the class-action right. he files an individual suit, and if 50 suits being able to be moved to State On page 17, line 21, strike ‘‘(D)’’ and insert others do the same thing, they can be courts. It would effectively allow law- ‘‘(C)’’. removed to Federal court as, quote, a yers to circumvent the purpose, the Mr. SARBANES. Mr. President, this ‘‘class action,’’ although it is not a very purpose of this bill since so-called amendment interrelates with the other class action as a class action is ordi- ‘‘huge’’ mass actions could still be amendment that has been set aside on narily considered or ordinarily defined. brought in the State court. which a vote will occur later. They lift them out of the State court So what we have is the problem of The sponsors of this bill say their and put them into the Federal court, high-growth companies, small high- goal is to wipe out frivolous class-ac- and they are shut out because of the growth companies that traditional tion lawsuits alleging securities fraud. statute of limitations. class actions may be brought against What are class-action lawsuits? They Individual investors ought not to by the strike lawyers; namely, they are are lawsuits brought by a single per- have to lose their remedies under State expensive and timely to defend, and the son, not just on his own behalf, but on law in order to deal with the problem plaintiffs are often forced to settle, re- behalf of other persons similarly situ- of frivolous class actions. And so the gardless of the merits, to avoid exces- ated. In other words, one person can amendment that is offered narrows the sive litigation costs. That is exactly bring a lawsuit on behalf of an anony- bill’s definition of ‘‘class action’’ to a what we are trying to deal with. There mous and potentially enormous group suit brought on behalf of unnamed par- should be a uniform standard, and of people. ties similarly situated. We do not use there should be a uniform procedure. Why do we allow someone to bring this ‘‘50 investor’’ definition which And that is why we moved these na- such a lawsuit? Because in many situa- means unwary people are going to be tionally traded securities. tions, it is the only economical way trapped and lose their remedy. Senator DODD spoke to this, the na- people can pursue remedies. If a large Now a broad coalition of State and tionally traded securities going to a number of people have each suffered a local government associations have Federal forum. This amendment relatively small loss, it may not be ec- written to us supporting this amend- changes the predominance require- onomical for any one of them to pay ment—the National Association of ments in the bill’s class action defini- the costs of a lawsuit. There are many State Retirement Administrators as tion. This effectively would gut the bill examples of class-action suits by inves- well. Here is what they have to say by encouraging State actions which tors who have been defrauded. It is a about the definition of ‘‘class action’’ would not qualify as a class action con- tool that allows individuals to share in the bill. tained in the act. As a result, these May 13, 1998 CONGRESSIONAL RECORD — SENATE S4809 class actions would not be able to be I yield the floor. For those reasons, I urge the defeat removed to the Federal court. And so The PRESIDING OFFICER. The Sen- of this amendment. you have mass action lawyers rep- ator from Connecticut. Mr. BIDEN. Mr. President, I opposed resenting a large number of plaintiffs Mr. DODD. Mr. President, this is a the 1995 Securities Litigation Act for on an individual basis in either a single very complicated area of law. I know several reasons—including the prece- action or a group action. our colleagues are going to come to the dent-setting changes to this country’s The ‘‘class action’’ definition in the floor and want to know what this is all judicial system without the input of bill was worked out with the SEC. We about. the Judiciary Committee. have worked that out, and it is com- In effect, this amendment would have I support the Sarbanes amendment prehensive enough to close the loop- the impact of creating even further un- for similar reasons—relating both to hole. But it also provides State courts certainty in the definition of a class procedure, and to substance. with guidance. It says ‘‘up to 50 peo- action. It does not provide more cer- In the past, bills that made changes ple.’’ That is the bright line. When you tainty; it is less certainty. I think it to the rules that govern citizen’s ac- get over 50 people, OK, that is the class would upset the very carefully crafted cess to State courts were referred to action. And so this bill does not pre- and very balanced definition worked the Judiciary Committee, to enable the vent individual investors from pursu- out with the Securities and Exchange committee with expertise to review ing State court remedies, nor will it Commission. and work on the legislation. prevent a small group of investors from The reason it took us a little time to While my colleagues on the Banking pooling their resources to pursue a get this bill to our colleagues was be- Committee had the opportunity to ex- claim under State law, but it will stop cause we took so much time working amine the specific, substantive changes the strike action suits, the forum shop- with the SEC to try and define these this bill would make to our Nation’s ping that we have attempted to limit, areas. What our colleagues are offering securities laws, it seems to me that we because we have seen that dramatic in- is an amendment that would disrupt have once again skipped a very impor- crease. the definition worked out with the SEC tant step in the process. I think Senator DODD, when he point- in this area. The securities litigation bill we are ed out what the record was, I think it Clearly, with all due respect, the tre- considering on the floor today pre- was a handful, what, five or six cases in mendous amount of expertise in empts State court statutes of limita- a period of years, in all of the years, crafting it—I am not going to suggest tions in securities fraud cases—and yet ballooning up to 40-plus in 1 year. What to my colleagues that we have a per- again the Judiciary Committee was not was that? fect definition in the bill. But certainly given the opportunity to examine the Mr. DODD. If my colleague would this one is not perfect either. But if issue. yield. you are going to trust one or the other, In 1991, the Supreme Court signifi- Mr. D’AMATO. Yes. it seems to me the one worked out with Mr. DODD. Our colleagues have made cantly shortened the statute of limita- the Securities and Exchange Commis- much of this notion that there has not tions for Federal securities fraud ac- sion, I urge my colleagues, makes a lot been this great degree of activity. Try, tions—to the shorter of 3 years after more sense. if you will, to just keep these numbers the fraud occurs or 1 year after it is Neither of these definitions tracks in mind. These are the actions filed in discovered. word for word what is in rule 23. Rule State court for fraud in class actions Then-SEC Chairman Richard Breeden 23—trust me when I tell you this rule against publicly traded companies. called the new time limit ‘‘unrealisti- In 1992, there were four cases filed all 23 goes on for pages, pages. It is one of cally short.’’ But, S. 1260 would com- across the country. In 1993, there was the more lengthy definitions of class pound the problem by applying the one case filed all across the country. In actions that there is. So, we are not Federal time limit to State actions re- 1994, there was one case filed all across tracking that word for word. We are moved to Federal court—even though the country. I do not have numbers for trying to pick up the essence of it. It is it is shorter than the time limit appli- 1995. But they are four, one, and one. tremendously complicated. cable to actions in 33 of the 50 States. Mr. D’AMATO. Six cases. We think this definition we have This bill would not only leave inves- Mr. DODD. Then in 1996—we passed a worked out with the Securities and Ex- tors without State court remedies law in 1995—59 cases were filed in State change Commission provides the right when brokers and dealers make fraudu- court; and in 1997, 1998, the number did kind of balance. lent statements when selling corporate drop down to about 38. But you com- The bill originally had a limit of 25 stock—but it would also tell them that pare that—they want to talk about plaintiffs, now raised to 50 for a single they need only conceal their fraud for how the number fell off to 38 from 59. lawsuit. This is by no means an exact 3 years before being absolved of respon- What they do not want to mention to science. I am the first to say that if we sibility in Federal court as well. you is, in 1994 and 1993 and 1992 you had find shortly that number is not work- And the new time limit will apply a total of six cases; in 1993 and 1994, one ing as well as we would like, we would even though the 1995 Securities Litiga- case—one case. And then it jumps, as change it. Anybody who claims they tion Act raised the standard investors we see in these other examples of have a word on high as to what is the must meet to win a class action suit— where it moves to. perfect number here is deluding them- you now have to prove a falsehood was So I say to my colleague and the selves. It is a number we chose because made with clear intent to deceive. chairman of the committee, this is we thought it made sense based, again, That’s incredibly tough to prove. quite clear. And if they wanted to get on our discussions with the SEC. I will admit, some frivolous lawsuits to statute of limitations problems, why With all due respect to the authors of are filed. And some lawyers do make didn’t they file more of those cases in this amendment, it does undercut what too much from a suit—leaving de- that period? we have tried to achieve here. I want to frauded investors too little. Mr. D’AMATO. Mr. President, I think emphasize to our colleagues, you don’t But, immunizing Wall Street profes- my colleague, by answering the ques- have to agree with every agency and sionals who can successfully hide their tion, points out quite clearly—it was what it suggests and does. But on this lies for 3 years is not the answer. my impression heretofore that he had definition worked out with the Securi- I support the Sarbanes amendment mentioned a number of cases, but six ties and Exchange Commission, if you and urge my colleagues to do the same. cases in 3 years, jumping to 10 times want some predictability and some We should protect the small investor— that, 59—slightly less than 10 times knowledge-based definition, the one we not let white collar criminals go that in 1 year—in 1 year—I think it have in the bill is the way to go. To unpunished. proves the point. And that is why the come up all of a sudden with a new one Mr. D’AMATO. Mr. President, I know necessity of seeing to it that we have a here that I don’t think enjoys the kind my colleague from Nevada is going to uniform standard, that you cannot go of expertise that we have been able to speak to this issue, and I ask unani- forum shopping. And that is why this achieve through working with the SEC mous consent at 5:30 today the Senate Senator, at the appropriate time, will would be unfortunate and could create proceed to a vote on or in relation to move to table the pending amendment. a lot more problems. the Sarbanes amendment 2395, to be S4810 CONGRESSIONAL RECORD — SENATE May 13, 1998 immediately followed by a vote on or I yield the floor. Bond Grams McConnell Boxer Grassley Mikulski in relation to amendment 2396, the The PRESIDING OFFICER. The Sen- Brownback Gregg Moseley-Braun matter we are now considering, with no ator from Connecticut. Burns Hagel Murkowski amendments in order to the amend- Mr. DODD. Very briefly, the essence Campbell Harkin Murray ments. I finally ask that the time until of this comes down to this, because Chafee Hatch Nickles Coats Helms Reid 5:30 be equally divided between the pro- this is very complicated. Cochran Hutchinson Robb ponents and opponents. I have no in- How does this work? It is a State Coverdell Hutchison Roberts tention of using any of the time, but court judge that has to make this de- Craig Inhofe Roth that all the time be yielded to my col- D’Amato Jeffords Santorum termination as to whether or not these Daschle Kempthorne Sessions league. individual suits get consolidated. It is DeWine Kerry Smith (NH) Mr. SARBANES. Reserving the right not a Federal judge; it is a State court Dodd Kohl Smith (OR) to object, and I do not object, subse- judge. Obviously, a State court judge Domenici Kyl Stevens quent to that, then, I take it what the Enzi Landrieu Thomas has broad discretion in making that de- Faircloth Leahy Thompson leadership would like to do is try to termination. Even if he does do that, if Feinstein Lieberman Thurmond finish, so we will offer a third amend- an individual feels he does not belong Frist Lott Torricelli ment and debate that. We hope the Gorton Lugar Warner in that grouping—obviously, we are Gramm Mack Wyden time will not be too long on that. Then trying to avoid a case where there are we would be able to vote on that 50 or more individual actions that ef- NAYS—30 amendment and then on final passage. fectively operate as a single action, Akaka Durbin Lautenberg Mr. D’AMATO. That is correct. which would thus gut the bill and the Biden Feingold Levin Mr. SARBANES. I have no objection. Breaux Ford Moynihan The PRESIDING OFFICER. Is there uniform way in which we are attempt- Bryan Glenn Reed Bumpers Graham Rockefeller objection to the request of the Senator ing to deal with litigation issues. As I said, the decision to consolidate Byrd Hollings Sarbanes from New York? Cleland Inouye Shelby Without objection, it is so ordered. these individual actions must be with a Collins Johnson Snowe The Senator from Nevada. State court judge, and then if the indi- Conrad Kennedy Specter Mr. BRYAN. I don’t want to prolong vidual feels as though they really don’t Dorgan Kerrey Wellstone this debate unnecessarily. I realize sev- belong in that case, the State court The motion to lay on the table the eral of my colleagues have time con- judge has broad discretion to take that amendment (No. 2395) was agreed to. straints. individual out. VOTE ON AMENDMENT NO. 2396 — MOTION TO Let me say I think the Senator from There are a lot of protections here. TABLE Maryland has crafted an amendment This is not heavy handed at all. It is a Mr. D’AMATO. Mr. President, what is that is eminently fair. He is using the way to try and avoid exactly creating the pending business? definition of the Federal Rules of Civil new loopholes where plaintiffs seek to The PRESIDING OFFICER. The Procedure. The notion that we get in- consolidate individual cases and thus question is on agreeing to Amendment volved in describing what is a class ac- evade the provisions of this legislation. No. 2396 offered by Mr. SARBANES. tion based upon an arbitrary number of But that decision is the State court Mr. D’AMATO. Mr. President, I move individual plaintiffs—some of whom judges’ decision and to their broad dis- to table and ask for the yeas and nays. could be private citizens, some could be cretion. And secondly, the individual The PRESIDING OFFICER. Is there a pension funds, and could be State agen- has the opportunity to go to that State sufficient second? cies—makes no sense to me. court judge and make the case that There is a sufficient second. So I believe, in trying to provide they don’t really belong in that class The yeas and nays were ordered. some sense of balance and fairness—so action. That State court judge has the The PRESIDING OFFICER. The we do not get a situation where we broad discretion of keeping that person question is on agreeing to the motion have discussed throughout a good part out of that class. to lay on the table the amendment. of the afternoon that an individual who I yield the floor. The yeas and nays have been ordered. files an action by himself or herself The PRESIDING OFFICER. The Sen- The clerk will call the roll. with his or her lawyer alone, no other ator from New York. The legislative clerk called the roll. coplaintiffs involved, immediately Mr. D’AMATO. Mr. President, I don’t Mr. MCCAIN (when his name was after the discovery of a fraud, that know if it is appropriate at this time, called). Present. would be 3 to 3 years and 2 months if all time is yielded back, and I know The result was announced—yeas 72, after the fraud occurred—should be al- at 5:30 we will vote. nays 27, as follows: lowed to pursue that cause of action and not be involuntarily sucked up VOTE ON AMENDMENT NO. 2395—MOTION TO [Rollcall Vote No. 134 Leg.] into Federal court because 49 other TABLE YEAS—72 people may have filed similar action, Mr. D’AMATO. Mr. President, if it is Abraham Faircloth Lott and to give to the errant defendant, the appropriate now, I move to table the Allard Feinstein Lugar Sarbanes amendment and I ask for the Ashcroft Ford Mack perpetrator of the fraud, the ability to Baucus Frist McConnell manipulate the process so that the per- yeas and nays. Bennett Gorton Mikulski petrator of the fraud can file some The PRESIDING OFFICER. Is there a Bingaman Gramm Moseley-Braun phony plaintiff’s actions, getting up to sufficient second? There is a sufficient Bond Grams Murkowski second. Boxer Grassley Murray the threshold of 50, and then have the Breaux Gregg Nickles case removed, the individual plaintiff, The yeas and nays were ordered. Brownback Hagel Reid the individual pension fund, the indi- The PRESIDING OFFICER. The Burns Harkin Robb question is on agreeing to the motion Campbell Hatch Roberts vidual retirement fund, then having Chafee Helms Roth been effectively deprived of pursuing a to lay on the table the amendment of Coats Hutchinson Santorum cause of action that may be meritori- the Senator from Maryland. The yeas Cochran Hutchison Sessions ous without question. and nays have been ordered. Collins Inhofe Smith (NH) The clerk will call the roll. Coverdell Jeffords Smith (OR) I certainly urge my colleagues to Craig Kempthorne Snowe thoughtfully reflect. This is the Fed- The assistant legislative clerk called D’Amato Kerrey Specter eral Rules of Civil Procedure. They the roll. Daschle Kohl Stevens Mr. MCCAIN (when his name was DeWine Kyl Thomas have been around since 1939. Why Dodd Landrieu Thurmond should we craft some kind of a special called). Present. Domenici Leahy Warner rule as to what constitutes a class ac- The result was announced—yeas 69, Enzi Lieberman Wyden tion, the effect of which deprives indi- nays 30, as follows: NAYS—27 viduals—not people filing on behalf of a [Rollcall Vote No. 133 Leg.] Akaka Byrd Durbin similarly situated class, but individ- YEAS—69 Biden Cleland Feingold uals—their opportunity to recover on a Abraham Ashcroft Bennett Bryan Conrad Glenn fraud perpetrated upon them. Allard Baucus Bingaman Bumpers Dorgan Graham May 13, 1998 CONGRESSIONAL RECORD — SENATE S4811 Hollings Lautenberg Sarbanes lic and the taxpayers, and it seems to alties, including triple damages for Inouye Levin Shelby Johnson Moynihan Thompson me a reasonable exemption from the racketeering behavior in furtherance of Kennedy Reed Torricelli provisions of this bill as it applies to a criminal enterprise engaged in cer- Kerry Rockefeller Wellstone these governmental units. tain, what they call predicate offenses, The motion to lay on the table the Mr. D’AMATO addressed the Chair. including murder, arson, bribery, wire amendment (No. 2396) was agreed to. The PRESIDING OFFICER. The Sen- fraud, bankruptcy fraud, and securities Mr. SARBANES addressed the Chair. ator from New York. fraud—securities fraud. The PRESIDING OFFICER (Mr. Mr. D’AMATO. Mr. President, we At the request of the Securities and HAGEL). The Senator from Maryland. have no objection. As the Senator has Exchange Commission and the indus- indicated, these classes are comprised AMENDMENT NO. 2397 try, though against the wishes of law solely of States, counties, and other enforcement and State regulators, in (Purpose: To preserve the right of a State or a political subdivision thereof or a State public entities. There is no record of 1995, the Securities Litigation Act ef- pension plan from bringing actions under such class-action suits being brought. I fectively eliminated securities fraud as the securities laws) might add, local governments, for the a grounds for private civil RICO pro- Mr. SARBANES. Mr. President, I most part, school districts in particu- ceedings. Many of us disagreed with send an amendment to the desk and lar, are typically precluded from in- carving out the securities fraud for spe- ask for its immediate consideration. vesting in stocks, particularly in these cial status, Mr. President, and protec- The PRESIDING OFFICER. The stocks. We accept the amendment. tion from application of the civil RICO clerk will report. The PRESIDING OFFICER. Without statute. In fact, my amendment was in- The legislative clerk read as follows: objection, the amendment is agreed to. tended to preserve many civil RICO se- The amendment (No. 2397) was agreed The Senator from Maryland [Mr. SAR- curities fraud claims and was accepted BANES], for himself, Mr. BRYAN, Mr. JOHNSON to. last time by the full Senate. Unfortu- and Mr. BIDEN, proposes an amendment num- Mr. D’AMATO. Mr. President, I am nately, it was dropped in committee. bered 2397. aware of no further amendments, but I Last November, the Federal grand The amendment is as follows: ask unanimous consent that the Sen- jury in Manhattan indicted 19 individ- On page 10, between lines 16 and 17, insert ator from Oklahoma be recognized for uals, including two reputed mob chief- the following: the purpose of propounding a unani- tains known as ‘‘Rossi’’ and ‘‘Curly,’’ ‘‘(f) STATE ACTIONS.— mous-consent request, and that the for their role in the alleged plot to ma- ‘‘(1) IN GENERAL.—Notwithstanding any Senator from California—I think I have nipulate a thinly traded stock, so- other provision of this section, nothing in 21⁄2 minutes left. I yield 1 minute to the called penny stocks, and for threaten- this section may be construed to preclude a Senator from California. ing brokers to drive up the prices. State or political subdivision thereof or a Mr. BIDEN. Will the Senator yield? I There is an article that was pub- State pension plan from bringing an action believe a unanimous-consent agree- lished that says ‘‘The Mob on Wall involving a covered security on its own be- half, or as a member of a class comprised ment had room for me to offer an Street.’’ I ask unanimous consent that solely of other States, political subdivisions, amendment at sometime, and I intend an except from this article be printed or State pension plans similarly situated. on doing that, although I will not ask in the RECORD. ‘‘(2) STATE PENSION PLAN DEFINED.—For for a rollcall vote. I will be a very good There being no objection, the excerpt purposes of this paragraph, the term ‘State boy if you listen for 5 minutes, and was ordered to be printed in the pension plan’ means a pension plan estab- then I will withdraw the amendment. RECORD, as follows: lished and maintained for its employees by Mr. D’AMATO. I have no objection. I [From Business Week, Dec. 16, 1996] the government of the State or political sub- ask that the Senator be recognized to THE MOB ON WALL STREET division thereof, or by any agency or instru- offer an amendment. mentality thereof. (By Gary Weiss) On page 10, line 17, strike ‘‘(f)’’ and insert AMENDMENT NO. 2398 In the world of multimedia, Phoenix-based ‘‘(g)’’. (Purpose: To amend the bill with respect to SC&T International Inc. has carved out a On page 15, between lines 19 and 20, insert title 18, United States Code) small but significant niche. SC&T’s products the following: Mr. BIDEN. Mr. President, I send an have won raves in the trade press, but work- ‘‘(5) STATE ACTIONS.— amendment to the desk. ing capital has not always been easy to come ‘‘(A) IN GENERAL.—Notwithstanding any The PRESIDING OFFICER. The by. So in December, 1995, the company other provision of this subsection, nothing in clerk will report. brought in Sovereign Equity Management this subsection may be construed to preclude Corp., a Boca Raton (Fla.) brokerage, to a State or political subdivision thereof or a The legislative clerk read as follows: manage an initial public offering. ‘‘We State pension plan from bringing an action The Senator from Delaware [Mr. thought they were a solid second- or third- involving a covered security on its own be- BIDEN] proposes an amendment num- tier investment bank,’’ says SC&T Chief Ex- half, or as a member of a class comprised bered 2398. ecutive James L. Copeland. solely of other States, political subdivisions, Mr. BIDEN. Mr. President, I ask But there was much about Sovereign that or State pension plans similarly situated. unanimous consent that the reading of was known to only a very few. There were, ‘‘(B) STATE PENSION PLAN DEFINED.—For the amendment be dispensed with. for example, the early investors, introduced purposes of this paragraph, the term ‘State The PRESIDING OFFICER. Without by Sovereign, who had provided inventory fi- nancing for SC&T. Most shared the same pension plan’ means a pension plan estab- objection, it is so ordered. lished and maintained for its employees by post office box in the Bahamas. ‘‘I had abso- the government of a State or political sub- The amendment is as follows: lutely no idea of who those people were,’’ division thereof, or by any agency or instru- At the appropriate place, insert the follow- says Copeland. He asked Sovereign. ‘‘I was mentality thereof. ing new section: told, ‘Who gives a s—. It’s clean money.’ ’’ On page 15, line 20, strike ‘‘(5)’’ and insert SEC. . FRAUD AS PREDICATE OFFENSE. The early investors cashed out, at the offer- ‘‘(6)’’. Section 1964(c) of title 18, United States ing price of $5, some 1,575 million shares that Mr. SARBANES. Mr. President, I Code, is amended by striking ‘‘, except’’ and they acquired at about $1.33 share—a gain of offer this amendment on behalf of my- all that follows through ‘‘final’’. some $5.8 million. By mid-June, SC&T was trading at $8 or self, Senator BRYAN, Senator JOHNSON, Mr. BIDEN. Mr. President, I will be better. But for SC&T shareholders who did and Senator BIDEN. I will be very necessarily brief because I have over not sell by then, the stock was an unmiti- quick, because the manager has indi- the years learned to count, and I do not gated disaster. Sovereign, which had handled cated he will accept this amendment. believe I have the votes for this amend- over 60% of SC&T’s trades early in the year, This amendment preserves the right ment, but I want to make two rel- sharply reduced its support of the stock. of State and local governments and atively brief points. Without the backing of Sovereign and its 75- their pension plans to bring securities First of all, in 1970, the Congress odd brokers, SC&T’s shares plummeted—to fraud suits under State law. They have greatly assisted the fight against orga- $2 in July, $1 in September, and lately, pen- never been professional plaintiffs. They nized crime by adopting the Racketeer- nies. The company’s capital-raising ability is in tatters. Laments Copeland: ‘‘We’re in the have never abused the system. They ing Influence and Corruption Organiza- crapper.’’ have to go through an elaborate proc- tions Act. We know it as RICO. A routine case of a hot stock that went ess to even bring suit. They obviously RICO included a private civil enforce- frigid. Or was it? Copeland didn’t know it, are concerned with protecting the pub- ment provision with enhanced pen- but there was a man who kept a very close S4812 CONGRESSIONAL RECORD — SENATE May 13, 1998 eye on SC&T and is alleged by Wall Street and traders are believed to pay extortion stocks were allegedly run up by Mob-linked sources to have profited handsomely in the money or ‘‘tribute’’ to the Mob as just an- brokers, who sometimes used force or IPO—allegedly by being one of the lucky few other cost of doing business on the Street. threats to curtail short-selling in the stocks. who sold shares through a Bahamian shell Traders and brokers have been subjected in When support by allegedly Mob-linked company. His name is Philip Abramo, and he recent months to increasing levels of violent brokerages ended, the stocks often suffered has been identified in court documents as a ‘‘persuasion’’ and punishment—threats and precipitous declines—sometimes abetted, ranking member, or capo, in the New Jersey- beatings. Among the firms that have been traders say, by Mob-linked short-sellers. The based DeCavalcante organized crime family. subject to Mob intimidation, sources say, is stocks have generally fared poorly (table, James Copeland didn’t know it. Nobody at the premier market maker in NASDAQ page 99). SC&T could have dreamed it. But the almost stocks—Herzog, Heine, Gedule Inc. Not all of the stocks were recent IPOs, and unimaginable had come true: Copeland had Using offshore accounts in the Bahamas they were often taken public by perfectly le- put his company in the hands of the Mob. and elsewhere, the Mob has engineered lucra- gitimate underwriters. International Nurs- Today, the stock market is confronting a tive schemes involving low-priced stock ing, for example, went public at $23 in 1994 vexing problem that, so far, the industry and under Regulations S of the securities laws. and was trading at $8 in early 1996 before regulators have seemed reluctant to face—or Organized crime members profit from the falling back to pennies. Short-sellers who at- even acknowledge. Call it what you will: or- runup in such stocks and also from short- tempted to sell the shares earlier this year ganized crime, the Mafia, wiseguys. They are selling the stocks on the way down. They were warned off—in one instance by a Mob the stuff of tabloids and gangster movies. To also take advantage of the very wide spreads member—market sources assert. Inter- most investors, they would seem to have as between the bid and ask prices of the stock national Nursing Chairman John Yeros de- much to do with Wall Street as the other issues controlled by their confederates. nies knowledge of manipulation of the stock. side of the moon. The Mob’s activities seem confined almost What this all adds up to is a shocking tale But in the canyons of lower Manhattan, exclusively to stocks traded in the over-the- of criminal infiltration abetted by wide- one can find members of organized crime, counter ‘‘bulletin board’’ and NASDAQ spread fear and silence—and official inac- their friends and associates. How large a small-cap markets. By contrast, New York tion. While firms and brokerage executives presence? No one—least of all regulators and Stock Exchange and American Stock Ex- who strive to keep far afield of the Mob often law enforcement—seems to know. The change issues and firms apparently have complain of NASD inaction, rarely do such Street’s ranking reputed underworld chief- been free of Mob exploitation. people feel strongly enough to share their tain, Abramo, is described by sources famil- Wall Street has become as lucrative for the views with regulators or law enforcement. iar with his activities as controlling at least Mob that it is allegedly a major source of in- Instead, they engage in self-defense. One four brokerages through front men and ex- come for high-level members of organized major brokerage, which often executes erting influence upon still more firms. Until crime—few of whom have ever been publicly trades for small-cap market makers, keeps recently Abramo had an office in the heart of identified as having ties to the Street. mammoth intelligence files—to steer clear of the financial district, around the corner Abramo, who may well be the most active re- Mob-run brokers. A major accounting firm from the regional office of an organization puted mobster on the Street, has remained keeps an organized-crime expert on the pay- that might just as well be on Venus as far as completely out of the public eye—even stay- roll. His duties include preventing his firm the Mob is concerned—the National Associa- ing active on the Street after his recent con- from doing business with brokerages linked tion of Securities Dealers, the self-regu- viction for tax evasion. to organized crime and the Russian Mob. latory organization that oversees the small- Mob-related activities on the Street are Mr. BIDEN. Mr. President, they are stock business. the subject of inquiries by the FBI and the not talking about legitimate traders; A three-month investigation by Business office of Manhattan District Attorney Rob- they are talking about the mob’s at- Week reveals that substantial elements of ert M. Morgenthau, which is described by tempt to infiltrate Wall Street. It the small-cap market have been turned into one source as having received numerous seems to me for us to carve out of the a veritable Mob franchise, under the very complaints concerning mobsters on the noses of regulators and law enforcement. Street. (Officials at both agencies and the original legislation an exemption from And that is a daunting prospect for every in- New York Police Dept. did not respond to re- RICO predicate statutes securities vestor who buys small-cap stocks and every peated requests for comment.) fraud is a serious mistake. But it would small company whose stock trades on the Overall, the response of regulators and law also be a serious mistake for me to NASDAQ market and over the counter. For enforcement to Mob penetration of Wall push this issue without the votes at the Mob makes money in various ways, rang- Street has been mixed at best. Market this point, because I realize there is an ing from exploiting IPOs to extortion to get- sources say complaints of Mob coercion have attempt to bring this legislation to a ting a ‘‘piece of the action’’ from traders and often been ignored by law enforcement. Al- though an NASD spokesman says the agency close. brokerage firms. But its chief means of live- I think it is bad legislation generally. lihood is ripping off investors by the time- would vigorously pursue reports of Mob infil- tested method of driving share prices up- tration, two top NASD officials told Business I think it is a serious mistake to have ward—and dumping them on the public Week that they have no knowledge of Mob done this, but I also have been here through aggressive cold-calling. penetration of member firms. Asked to dis- long enough, as I said, to be able to In its inquiry, Business Week reviewed a cuss such allegations, another high NASD of- know where the votes are. mountain of documentation and interviewed ficial declined, saying: ‘‘I’d rather you not I withdraw the amendment. traders, brokerage executives, investors, reg- tell me about it.’’ The PRESIDING OFFICER. The ulators, law-enforcement officials, and pros- The Hanover, Sterling & Co. penny-stock amendment is withdrawn. ecutors. It also interviewed present and firm, which left 12,000 investors in the lurch The amendment (No. 2398) was with- former associates of the Wall Street Mob when it went out of business in early 1995, is drawn. contingent. Virtually all spoke on condition alleged by people close to the firm to have Mr. D’AMATO. Mr. President, I ask been under the control of members of the of anonymity, with several Street sources unanimous consent that the Senator fearing severe physical harm—even death—if Genovese organized crime family. Sources their identities became known. One, a say other Mob factions engaged in aggressive from California be recognized for 1 former broker at a Mob-run brokerage, says short-selling of stocks brought public by minute and thereafter, the sponsor of he discussed entering the federal Witness Hanover. the legislation who has not spoken Protection Program after hearing that his Federal investigators are said to be prob- today, Senator DOMENICI, who has been life might be in danger. A short-seller in the ing extortion attempts by Mob-linked short- tied up in committee, has asked to be Southwest, alarmed by threats, carries a sellers who had been associated with the recognized for up to 5 minutes. Then I now-defunct Stratton Oakmont penny-stock gun. ask unanimous consent that we go to Among Business Week’s findings: firm. The Mob has established a network of Mob manipulation has affected the mar- final passage. stock promoters, securities dealers, and the kets in a wide range of stocks. Among those The PRESIDING OFFICER. Without all-important ‘‘boiler rooms’’—a crucial part identified by Business Week are Affinity En- objection, it is so ordered. The Senator of Mob manipulation schemes—that sell tertainment, Celebrity Entertainment, from California is recognized for 1 stocks nationwide through hard-sell cold- Beachport Entertainment, Crystal Broad- minute. calling. The brokerages are located mainly casting, First Colonial Ventures, Global Mrs. BOXER. Thank you very much, in the New York area and in Florida, with Spill Management, Hollywood Productions, Mr. President. the heart of their operations in the vicinity Innovative Medical Services, International The question before the Senate today of lower Broad Street in downtown Manhat- Nursing Services, Novatek International, is the following: How many securities tan. Osicom Technologies, ReClaim, SC&T, Solv- Four organized crime families as well as Ex, and TJT. Officials of the companies deny litigation laws should there be relative elements of the Russian Mob directly own or any knowledge of Mob involvement in the to class-action lawsuits involving na- control, through front men, perhaps two trading of their stocks, and there is no evi- tionally traded securities? dozen brokerage firms that make markets in dence that company managements have been I believe the answer is one. And I be- hundreds of stocks. Other securities dealers in league with stock manipulators. These lieved the answer was one when we had May 13, 1998 CONGRESSIONAL RECORD — SENATE S4813 this debate in 1995. And even though I tonight I think we will pass, by an even work hard on this issue. In 1995, with advocated for a stronger law at that more overwhelming number, the cul- tremendous help from Chairman time, I always thought there ought to mination of this effort. The bill will D’AMATO and Senator GRAMM, we be one law. keep plaintiffs’ lawyers from picking passed a law. The Private Securities We, as policymakers, must establish State courts to do what we have pre- Litigation Reform Act of 1995 passed a regulatory environment in which in- cluded them from doing in the Federal Congress in an overwhelmingly biparti- vestors have sufficient rights and rem- courts. This bill will stop them from san way—over President Clinton’s veto edies while also ensuring that the high- doing what we know they already are of the bill. growth industries of our economy, doing—they look for a sympathetic And since enactment of the Reform many of which are located in my home state forum where they can get these Act, we have seen great changes in the State of California, are provided the lawsuits filed. conduct of plaintiffs’ class action law- stability and the certainty they need This is legislation that helps the yers in federal court. Because of more to expand, grow, and create jobs. high-tech companies that get started stringent pleading requirements, plain- This bill does just that. It is nar- in America. We have testimony that tiffs’ lawyers no longer ‘‘race to the rowly crafted to address only the issue the Intel company—that great Amer- courthouse’’ to be the first to file secu- of class action lawsuits and nationally ican company—had they faced one of rities class actions. Because of the new traded securities—I think this is very these kinds of suits when they were in rules, we no longer have ‘‘professional important. It defines and limits class- their infancy, they are almost certain plaintiffs’’—investors who buy a few action lawsuits. It applies only to na- that they would not exist today. We do shares of stock and then serve as tionally traded securities. It is a bill not know how many other companies named plaintiffs in multiple securities which I am proud to support. now do not exist because they faced class actions. Other rules make it dif- Chairman Levitt, who I respect these kinds of lawsuits. ficult for plaintiffs’ lawyers to file law- greatly, Chairman of the SEC, is sup- But essentially we are doing an excit- suits to force companies into settle- portive of this legislation, and I think ing thing for growth, prosperity, and ment rather than face the expensive his words should carry a great deal of we are harming and hurting no one and time consuming ‘‘fishing expedi- weight. We ought to give this law a with legitimate complaints against tion’’ discovery process. chance to work in the Federal court corporations for fraud, misrepresenta- Now, it looks like our new law has and not see this law go to 50 different tion, and malfeasance. worked too well. Entrepreneurial trial State courts. This would be very dis- As I said, I rise today in strong sup- lawyers have begun filing similar ruptive and it doesn’t make sense for port of S. 1260, the ‘‘Securities Litiga- claims in State court instead of federal nationally traded securities. tion Reform Uniform Standards Act of court to avoid the new law’s safeguards If, after a time, we feel the law isn’t 1998’’ and I want to commend the Ma- against frivolous and abusive lawsuits. good enough, isn’t strong enough, isn’t jority Leader for bringing this bill to Instead of one set of rules, we now have working as we had envisioned, we can the floor this week. Few issues are 51—one for the Federal system and 50 revisit it and address it as necessary. more important to the high-tech com- different ones in the States. But I think today we ought to support munity and the efficient operation of According to the Securities and Ex- this bill, as drafted, and assert there our capital markets than securities change Commission, this migration of ought to be one law when it comes to fraud lawsuit reform. claims from Federal court to State class action lawsuits involving nation- I am pleased to serve as an original court ‘‘may be the most significant de- ally traded securities. co-sponsor of this legislation with Sen- velopment in securities litigation’’ So, Mr. President, I am pleased to ators D’AMATO, DODD, and GRAMM—a since the passage of the new law in join the Chairman of the Banking Com- bill to provide one set of rules to gov- 1995. mittee and the ranking member on the ern securities fraud class actions. In fact, prior to passage of the new Securities Subcommittee, Senator As I said previously, this bill com- law in 1995, State courts rarely served DODD, in support of this bill. I yield the pletes the work I began more than 6 as the forum for securities fraud law- floor, and I yield the time back to the years ago with Senator Sanford of suits. Now, more than 25 percent of all Senator from New York. North Carolina. Back in the early securities class actions are brought in The PRESIDING OFFICER. The Sen- 1990’s, Senator Sanford and I noticed State court. A recent Price Waterhouse ator from New Mexico has 5 minutes. that a small group of entrepreneurial study found that the average number Mr. DOMENICI. Mr. President, I will plaintiffs’ lawyers were taking advan- of State court class actions filed in not use that amount of time. tage of our securities laws and the fed- 1996—the first year after the new law— I just want to say how pleased I am eral rules related to class action law- grew 335 percent over the 1991–1995 av- that today we are going to close the suits to file frivolous and abusive erage. In 1997, State court filings were loop and make sure that the small claims against high-technology compa- 150 percent greater than the 1991–1995 group of entrepreneurial plaintiff law- nies in Federal courts. average. yers who were taking advantage of our Often these lawsuits were based sim- So, there has been an unprecedented securities laws are now going to follow ply on the fact that a company’s stock increase in State securities fraud class a uniform law in the States and in the price had fallen, without any real evi- actions. In fact, trial lawyers have tes- Federal courts. dence of fraud. Senator Sanford and I tified to Congress that they have an It was in 1990 that Senator Sanford of realized a long time ago that stock obligation to file securities fraud law- North Carolina, who passed away just price volatility—common in high tech suits in State court if it provides a recently, and I introduced the first leg- stocks—simply is not stock fraud. more attractive forum for their clients. islation on this issue. We did so be- But, because it was so expensive and Imagine that—plaintiffs’ lawyers admit cause we found that a small group of time consuming to fight these law- that they are attempting to avoid fed- plaintiff’s lawyers were engaged in the suits, many companies settled even eral law. business of finding meritless lawsuits when they knew they had done nothing These State court lawsuits also have to file, but since they were class action wrong. The money used to pay for prevented high-tech companies from lawsuits, they would have to get set- these frivolous lawsuits could have taking advantage of one of the most tled. We found a trend across the coun- been used for research and development significant reforms in the 1995 law—the try where they settled all these cases or to create new, high-paying jobs. safe harbor for predictive statements. rather than have jury trials. A small So, we introduced a bill to make Under the 1995 law, companies which cadre of lawyers became rich, and, as some changes to the securities fraud make forward-looking statements are far as we can find out, very few stock- class action system. Of course, since we exempt from lawsuits based on those holders benefited. were up against the plaintiffs’ lawyers, statements if they meet certain re- We passed the first bill to tighten up the bill didn’t go anywhere for awhile. quirements. Companies are reluctant the rules in the Federal court system After Senator Sanford left the Sen- to use the safe harbor and make pre- in 1995. It is the only bill where we ate, the senior Senator from Connecti- dictive statements because they fear overrode President Clinton’s veto. And cut, Senator DODD, and I continued to that such statements could be used S4814 CONGRESSIONAL RECORD — SENATE May 13, 1998 against them in State court. This fear Mr. President, this is a vote that I this legislation know. We are talking chills the free flow of important infor- believe that my colleagues who support about protecting small investors in mation to investors—certainly not a the measure—and I am not unmindful America who, I believe, are left with result we intended when we passed the of how the votes lie—will live to rue. fewer defenses as a result of this. new law. At a time when investor fraud is I yield the floor. So today, the Senate will vote to cre- mounting with billions and billions of Mr. DODD addressed the Chair. ate one set of rules for securities fraud dollars, we have a consistent, steady The PRESIDING OFFICER. The Sen- cases. One uniform set of rules is criti- course of action where we are system- ator from Connecticut. cal for our high-technology community atically depriving individual small in- Mr. DODD. I will be very brief on and our capital markets. vestors from protections. this. And we have been through this. Without this legislation, the produc- This adds a further limitation to the The last time it was a 5-day debate. We tivity of the fastest growing segment statute of limitations. And 37 out of ought to take some solace in the fact of our economy—high tech—will con- the 50 States provide a greater remedy. that we have done this in half a day. tinue to be hamstrung by abusive, law- This provides a limitation in terms of And let me commend my colleagues, yer-driven lawsuits. Rather than spend the ability of an investor to file an ac- all of them, who have been involved in their resources on R&D or creating new tion against an accomplice. And 49 out this and over some period of time. jobs, high-tech companies will con- of 50 States provide that remedy. We But I say, Mr. President, this is a tinue to be forced to spend massive take that away in this course of action. very sound piece of legislation that can sums fending off frivolous lawsuits. Most States provide a remedy for make a huge difference today. That in- When I first worked on this issue, ex- joint and several liability so that an vestor that my colleague, the distin- ecutives at Intel Corporation told me investor who is defrauded may recover guished Senator from Nevada, talks that if they had been hit with a frivo- the full amount of his or her loss from about, that is the investor that depos- lous securities lawsuit early in the any one of the individual investors. If its their hard-earned money in the se- company’s history, they likely never this legislation had been in place at the curities of struggling businesses, high- would have invented the microchip. We time of the Keating fraud, where tech companies that are the primary should not let that happen to the next Keating himself was, in effect, judg- targets of these lawsuits. And it is generation of Intels. ment proof, there would have been no these industries that represent the This bill also is important to our ability to recover against the fraudu- knowledge-based economy of our 21st markets. Our capital markets are the lent activity of the accomplices—the century. envy of the world, and by definition are accountants, the lawyers, and others. Too often we have seen predator law- national in scope. Information provided That is why, contrary to the asser- yers out there go after them. What we by companies to the markets is di- tion by the proponents, this is not a are trying to do with this bill is to rected to investors across the United plaintiff’s lawyer’s argument that is tighten up the loophole, to make it States and throughout the world. possible for these companies to grow Under the Commerce Clause of the being made in opposition to this. There are some abuses, and we should confine while simultaneously—simulta- U.S. Constitution, Congress has the au- neously—seeing to it that investors thority to regulate in areas affecting ourselves to that. That is why all of the governmental institutions who are can bring a rightful cause of action, as ‘‘interstate commerce.’’ I cannot imag- plaintiffs, where fraud has been com- ine a more classic example of what charged with their public responsibil- ity as stewards of investment funds, re- mitted. constitutes ‘‘interstate commerce’’ This is going to make for a far sound- tirement funds, municipalities, school than the purchase and sale of securities er system for people in this country. districts, States, all have expressed over a national exchange. And I predict to my colleagues that we their opposition to the legislation, be- Not only does Congress have the au- will see economic growth in these firms cause they recognize that the taxpayer, thority to regulate in this area, it and businesses, where they can avoid himself or herself, is frequently de- clearly is necessary and appropriate. the kind of tremendous expenditures frauded by this course of action. Right now, in an environment where that have had to be laid out to fight there are 50 different sets of rules, com- So this is a bad piece of legislation. And we continue on a slippery slope in frivolous lawsuits and end up as settle- panies must take into account the ments, costing fortunes with, of course, most onerous State liability rules and eliminating basic investor protections. The small guys get dealt out of the cases being thrown out of court. tailor their conduct accordingly. If the So I predict to my colleagues, this game with this legislation. The vic- liability rules in one State make it will be a vote they will be very proud tims, they can take care of themselves. easier for entrepreneurial lawyers to of in the years ahead to avoid these But for the millions and millions of bring frivolous lawsuits, that affects frivolous lawsuits we have seen in the small investors who have confidence in companies and the information avail- past. I urge passage of the legislation. able to investors in all other States. our markets, who are coming in—one Mr. D’AMATO. I ask unanimous con- out of every three in the country—they One uniform set of rules will eliminate sent that Senator KOHL be recognized that problem. are the big losers in this legislation. for a request, and then I will call for Mr. SARBANES. Will the Senator Mr. President, I again want to com- the yeas and nays. mend my colleagues for their work on yield? The PRESIDING OFFICER. Without this important bill. I understand that Mr. BRYAN. I am happy to yield. objection, it is so ordered. this is a bi-partisan bill which has the Mr. SARBANES. I want to commend Mr. KOHL. Thank you, I say to Sen- the Senator from Nevada for a very support of the SEC and at least 40 Sen- ator D’AMATO. powerful statement and for his very ators. I think by the end of the day, CHANGE OF VOTE—ROLL CALL VOTE NO. 132 strong presentation of the arguments. many, many more Senators will join us Mr. KOHL. Mr. President, on rollcall All I want to say to my colleague is, I in supporting this bill. Thank you, Mr. vote No. 132, I voted no. It was my in- am confident in making the prediction President. tention to vote aye. Therefore, I ask that events down the road, when the Mr. D’AMATO. Mr. President, I have unanimous consent that I be permitted investors come in, innocent people, and one more unanimous consent. The Sen- to change my vote. This will in no way say, ‘‘We didn’t have a remedy,’’ he ator from Nevada has asked to speak change the outcome of the vote. for up to 3 minutes. I ask unanimous will be proven correct. The PRESIDING OFFICER. Without consent that he be given that and then Mr. BRYAN. I thank the Senator objection, it is so ordered. we go to final passage. from Maryland for his comments. He Mr. D’AMATO. I ask for the yeas and The PRESIDING OFFICER. Without has stood tall, not only in this legisla- nays. objection, it is so ordered. tion but in the 1995 legislation on be- The PRESIDING OFFICER. Is there a The Senator from Nevada. half of small investors. That is what sufficient second? Mr. BRYAN. I thank the Presiding this matter is all about. There is no There is a sufficient second. Officer. sympathy for plaintiff lawyers. That is The yeas and nays were ordered. I thank the chairman for his cour- not the argument, as the Senator from Mr. D’AMATO. I suggest the absence tesy. Maryland and I and others who oppose of a quorum. May 13, 1998 CONGRESSIONAL RECORD — SENATE S4815 The PRESIDING OFFICER. The (3) this shift has prevented that Act from State pension plan from bringing an action clerk will call the roll. fully achieving its objectives; involving a covered security on its own be- The legislative clerk proceeded to (4) State securities regulation is of con- half, or as a member of a class comprised call the roll. tinuing importance, together with Federal solely of other States, political subdivisions, Mr. D’AMATO. Mr. President, I ask regulation of securities, to protect investors or State pension plans similarly situated. and promote strong financial markets; and unanimous consent that the order for ‘‘(2) STATE PENSION PLAN DEFINED.—For (5) in order to prevent certain State pri- purposes of this paragraph, the term ‘State the quorum call be rescinded. vate securities class action lawsuits alleging pension plan’ means a pension plan estab- The PRESIDING OFFICER. Without fraud from being used to frustrate the objec- lished and maintained for its employees by objection, it is so ordered. tives of the Private Securities Litigation Re- the government of the State or political sub- The PRESIDING OFFICER. The form Act of 1995, it is appropriate to enact division thereof, or by any agency or instru- question is on agreeing to the commit- national standards for securities class action mentality thereof. tee amendment in the nature of a sub- lawsuits involving nationally traded securi- ties, while preserving the appropriate en- ‘‘(g) DEFINITIONS.—For purposes of this sec- stitute, as amended. tion the following definitions shall apply: The committee amendment in the forcement powers of State securities regu- ‘‘(1) AFFILIATE OF THE ISSUER.—The term nature of a substitute, as amended, was lators and not changing the current treat- ment of individual lawsuits. ‘affiliate of the issuer’ means a person that agreed to. SEC. 3. LIMITATION ON REMEDIES. directly or indirectly, through 1 or more The PRESIDING OFFICER. The intermediaries, controls or is controlled by (a) AMENDMENTS TO THE SECURITIES ACT OF question is on the engrossment and or is under common control with, the issuer. 1933.— ‘‘(2) CLASS ACTION.— third reading of the bill. (1) AMENDMENT.—Section 16 of the Securi- The bill was ordered to be engrossed ties Act of 1933 (15 U.S.C. 77p) is amended to ‘‘(A) IN GENERAL.—The term ‘class action’ for a third reading and was read the read as follows: means— third time. ‘‘(i) any single lawsuit (other than a deriv- ‘‘SEC. 16. ADDITIONAL REMEDIES; LIMITATION ative action brought by 1 or more sharehold- The PRESIDING OFFICER. The bill ON REMEDIES. ers on behalf of a corporation) in which— having been read the third time, the ‘‘(a) REMEDIES ADDITIONAL.—Except as pro- ‘‘(I) damages are sought on behalf of more vided in subsection (b), the rights and rem- question is, Shall the bill pass? than 50 persons or prospective class mem- edies provided by this title shall be in addi- The yeas and nays have been ordered. bers, and questions of law or fact common to The clerk will call the roll. tion to any and all other rights and remedies that may exist at law or in equity. those persons or members of the prospective The legislative clerk called the roll. class, without reference to issues of individ- The result was announced—yeas 79, ‘‘(b) CLASS ACTION LIMITATIONS.—No class action based upon the statutory or common ualized reliance on an alleged misstatement nays 21 as follows: law of any State or subdivision thereof may or omission, predominate over any questions [Rollcall Vote No. 135 Leg.] be maintained in any State or Federal court affecting only individual persons or mem- YEAS—79 by any private party alleging— bers; or ‘‘(II) 1 or more named parties seek to re- Abraham Frist Mack ‘‘(1) an untrue statement or omission of a Allard Gorton McConnell material fact in connection with the pur- cover damages on a representative basis on Ashcroft Graham Mikulski chase or sale of a covered security; or behalf of themselves and other unnamed par- Baucus Gramm Moseley-Braun ‘‘(2) that the defendant used or employed ties similarly situated, and questions of law Bennett Grams Murkowski any manipulative or deceptive device or con- or fact common to those persons or members Bingaman Grassley Murray trivance in connection with the purchase or of the prospective class predominate over Bond Gregg Nickles sale of a covered security. any questions affecting only individual per- Boxer Hagel Reed sons or members; or Breaux Harkin Reid ‘‘(c) REMOVAL OF CLASS ACTIONS.—Any Brownback Hatch Robb class action brought in any State court in- ‘‘(ii) any group of lawsuits (other than de- Burns Helms Roberts volving a covered security, as set forth in rivative suits brought by 1 or more share- Campbell Hollings Rockefeller subsection (b), shall be removable to the holders on behalf of a corporation) filed in or Chafee Hutchinson Roth Federal district court for the district in pending in the same court and involving Coats Hutchison Santorum which the action is pending, and shall be common questions of law or fact, in which— Cochran Inhofe Sessions ‘‘(I) damages are sought on behalf of more Collins Jeffords Smith (NH) subject to subsection (b). Coverdell Kempthorne Smith (OR) ‘‘(d) PRESERVATION OF CERTAIN ACTIONS.— than 50 persons; and Craig Kennedy Snowe ‘‘(1) IN GENERAL.—Notwithstanding sub- ‘‘(II) the lawsuits are joined, consolidated, D’Amato Kerrey Specter section (b), a class action described in para- or otherwise proceed as a single action for Daschle Kerry Stevens graph (2) of this subsection that is based any purpose. DeWine Kohl Thomas upon the statutory or common law of the ‘‘(B) COUNTING OF CERTAIN CLASS MEM- Dodd Kyl Thompson State in which the issuer is incorporated (in BERS.—For purposes of this paragraph, a cor- Domenici Landrieu Thurmond Enzi Leahy Warner the case of a corporation) or organized (in poration, investment company, pension plan, Faircloth Lieberman Wyden the case of any other entity) may be main- partnership, or other entity, shall be treated Feinstein Lott tained in a State or Federal court by a pri- as 1 person or prospective class member, but Ford Lugar vate party. only if the entity is not established for the NAYS—21 ‘‘(2) PERMISSIBLE ACTIONS.—A class action purpose of participating in the action. is described in this paragraph if it involves— ‘‘(3) COVERED SECURITY.—The term ‘covered Akaka Dorgan Levin ‘‘(A) the purchase or sale of securities by security’ means a security that satisfies the Biden Durbin McCain Bryan Feingold Moynihan the issuer or an affiliate of the issuer exclu- standards for a covered security specified in Bumpers Glenn Sarbanes sively from or to holders of equity securities paragraph (1) or (2) of section 18(b) at the Byrd Inouye Shelby of the issuer; or time during which it is alleged that the mis- Cleland Johnson Torricelli ‘‘(B) any recommendation, position, or representation, omission, or manipulative or Conrad Lautenberg Wellstone other communication with respect to the deceptive conduct occurred.’’. The bill (S. 1260), as amended, was sale of securities of the issuer that— (2) CONFORMING AMENDMENTS.—Section passed, as follows: ‘‘(i) is made by or on behalf of the issuer or 22(a) of the Securities Act of 1933 (15 U.S.C. an affiliate of the issuer to holders of equity 77v(a)) is amended— S. 1260 securities of the issuer; and (A) by inserting ‘‘except as provided in sec- Be it enacted by the Senate and House of ‘‘(ii) concerns decisions of those equity tion 16 with respect to class actions,’’ after Representatives of the United States of America holders with respect to voting their securi- ‘‘Territorial courts,’’; and in Congress assembled, ties, acting in response to a tender or ex- (B) by striking ‘‘No case’’ and inserting SECTION 1. SHORT TITLE. change offer, or exercising dissenters’ or ap- ‘‘Except as provided in section 16(c), no This Act may be cited as the ‘‘Securities praisal rights. case’’. Litigation Uniform Standards Act of 1998’’. ‘‘(e) PRESERVATION OF STATE JURISDIC- (b) AMENDMENTS TO THE SECURITIES EX- SEC. 2. FINDINGS. TION.—The securities commission (or any The Congress finds that— agency or office performing like functions) CHANGE ACT OF 1934.—Section 28 of the Secu- (1) the Private Securities Litigation Re- of any State shall retain jurisdiction under rities Exchange Act of 1934 (15 U.S.C. 78bb) is form Act of 1995 sought to prevent abuses in the laws of such State to investigate and amended— private securities fraud lawsuits; bring enforcement actions. (1) in subsection (a), by striking ‘‘The (2) since enactment of that legislation, ‘‘(f) STATE ACTIONS.— rights and remedies’’ and inserting ‘‘Except considerable evidence has been presented to ‘‘(1) IN GENERAL.—Notwithstanding any as provided in subsection (f), the rights and Congress that a number of securities class other provision of this section, nothing in remedies’’; and action lawsuits have shifted from Federal to this section may be construed to preclude a (2) by adding at the end the following new State courts; State or political subdivision thereof or a subsection: S4816 CONGRESSIONAL RECORD — SENATE May 13, 1998 ‘‘(f) LIMITATIONS ON REMEDIES.— ualized reliance on an alleged misstatement port for it over here. I just wanted to ‘‘(1) CLASS ACTION LIMITATIONS.—No class or omission, predominate over any questions advise the distinguished majority lead- action based upon the statutory or common affecting only individual persons or mem- er of that fact. law of any State or subdivision thereof may bers; or Mr. LOTT. I might respond to the be maintained in any State or Federal court ‘‘(II) 1 or more named parties seek to re- by any private party alleging— cover damages on a representative basis on fact that we do want to get that bill ‘‘(A) a misrepresentation or omission of a behalf of themselves and other unnamed par- done. We have run into a possible tech- material fact in connection with the pur- ties similarly situated, and questions of law nical problem that we are trying to chase or sale of a covered security; or or fact common to those persons or members work out, as you well know. ‘‘(B) that the defendant used or employed of the prospective class predominate over Mr. LEAHY. I understand what the any manipulative or deceptive device or con- any questions affecting only individual per- leader wants to do. I wanted to make trivance in connection with the purchase or sons or members; or sure that he understands this side of sale of a covered security. ‘‘(ii) any group of lawsuits (other than de- the aisle is ready and raring to go. ‘‘(2) REMOVAL OF CLASS ACTIONS.—Any class rivative suits brought by 1 or more share- action brought in any State court involving holders on behalf of a corporation) filed in or Mr. LOTT. Mr. President, for the in- a covered security, as set forth in paragraph pending in the same court and involving formation of all Senators, the Senate (1), shall be removable to the Federal dis- common questions of law or fact, in which— has now passed the second of the four trict court for the district in which the ac- ‘‘(I) damages are sought on behalf of more high-tech bills that we had been work- tion is pending, and shall be subject to para- than 50 persons; and ing on and have worked to get agree- graph (1). ‘‘(II) the lawsuits are joined, consolidated, ments. And we have been successful in ‘‘(3) PRESERVATION OF CERTAIN ACTIONS.— or otherwise proceed as a single action for ‘‘(A) IN GENERAL.—Notwithstanding para- that. It is our intent at the earliest op- any purpose. portunity to consider and pass the graph (1), a class action described in subpara- ‘‘(C) COUNTING OF CERTAIN CLASS MEM- graph (B) of this paragraph that is based BERS.—For purposes of this paragraph, a cor- WIPO bill, even though I understand upon the statutory or common law of the poration, investment company, pension plan, there may be a technical problem with State in which the issuer is incorporated (in partnership, or other entity, shall be treated the blue slip issue involving the House the case of a corporation) or organized (in as 1 person or prospective class member, but of Representatives. We are trying to the case of any other entity) may be main- only if the entity is not established for the check that out, and also the immigra- tained in a State or Federal court by a pri- purpose of participating in the action. vate party. tion bill that the Senator from Michi- ‘‘(D) COVERED SECURITY.—The term ‘cov- gan has been working on, and Senator ‘‘(B) PERMISSIBLE ACTIONS.—A class action ered security’ means a security that satisfies KENNEDY from Massachusetts. is described in this subparagraph if it in- the standards for a covered security specified volves— in paragraph (1) or (2) of section 18(b) of the It would be our intent to call up that ‘‘(i) the purchase or sale of securities by Securities Act of 1933, at the time during immigration bill, if we do not do it be- the issuer or an affiliate of the issuer exclu- which it is alleged that the misrepresenta- fore noon on Monday, with the possibil- sively from or to holders of equity securities tion, omission, or manipulative or deceptive ity of stacked votes on Monday after- of the issuer; or conduct occurred.’’. ‘‘(ii) any recommendation, position, or noon about 5:30. I am not asking unani- other communication with respect to the SEC. 4. APPLICABILITY. mous consent to that effect right now. sale of securities of an issuer that— The amendments made by this Act shall I have discussed that with Senator ‘‘(I) is made by or on behalf of the issuer or not affect or apply to any action commenced ABRAHAM, and Senator KENNEDY. But I an affiliate of the issuer to holders of equity before and pending on the date of enactment would need to check that with Senator of this Act. securities of the issuer; and DASCHLE and others. ‘‘(II) concerns decisions of such equity Mr. GRASSLEY. Mr. President, I But I want the Members to know holders with respect to voting their securi- move to reconsider the vote by which ties, acting in response to a tender or ex- that we need to complete action on the bill was passed. these high-tech bills. A lot of great change offer, or exercising dissenters’ or ap- Mr. LOTT. I move to lay that motion praisal rights. work has been done. We have been able ‘‘(4) PRESERVATION OF STATE JURISDIC- on the table. to pass two of them. We are very close TION.—The securities commission (or any The motion to lay on the table was to being able to get the other two done. agency or office performing like functions) agreed to. Our intent is to stay with that until we of any State shall retain jurisdiction under Mr. LOTT. Mr. President, I suggest get it completed. the laws of such State to investigate and the absence of a quorum. The Senate will now begin the DOD bring enforcement actions. The PRESIDING OFFICER. The authorization bill. ‘‘(5) STATE ACTIONS.— clerk will call the roll. ‘‘(A) IN GENERAL.—Notwithstanding any Having said all of that, there will be other provision of this subsection, nothing in The legislative clerk proceeded to no further votes this evening, and the this subsection may be construed to preclude call the roll. Senate will consider the DOD author- a State or political subdivision thereof or a Mr. LOTT. Mr. President, I ask unan- ization bill throughout Thursday’s ses- State pension plan from bringing an action imous consent that the order for the sion of the Senate. I had hoped there involving a covered security on its own be- quorum call be rescinded. would be opening statements. But I un- half, or as a member of a class comprised The PRESIDING OFFICER. Without derstand we will just lay the bill down, solely of other States, political subdivisions, objection, it is so ordered. or State pension plans similarly situated. and then we will begin tomorrow. f ‘‘(B) STATE PENSION PLAN DEFINED.—For But I want the RECORD to show that purposes of this paragraph, the term ‘State ORDER OF PROCEDURE I was requested to have the remainder pension plan’ means a pension plan estab- of the night for the DOD authorization Mr. LOTT. Mr. President, I am trying lished and maintained for its employees by bill so that we could get 2 or 3 hours on to have an announcement for the Mem- the government of a State or political sub- it. We are not going to be able to do division thereof, or by any agency or instru- bers. But I need to check with a couple that. But I am certainly prepared and mentality thereof. of people in just a moment. So if the willing, and wanted to do that. ‘‘(6) DEFINITIONS.—For purposes of this sub- Senator from Iowa would like to pro- section the following definitions shall apply: ceed with statements, I would like to f ‘‘(A) AFFILIATE OF THE ISSUER.—The term maybe interrupt in a moment. ‘affiliate of the issuer’ means a person that directly or indirectly, through 1 or more Mr. LEAHY. Mr. President, while the leader is on the floor—if the Senator UNANIMOUS-CONSENT REQUEST— intermediaries, controls or is controlled by S. 2057 or is under common control with, the issuer. from Iowa will withhold for just a mo- ‘‘(B) CLASS ACTION.—The term ‘class ac- ment—I know the leader is trying to Mr. LOTT. Mr. President, I now ask tion’ means— get a schedule together. I just wanted unanimous consent the Senate turn to ‘‘(i) any single lawsuit (other than a deriv- to note, because there has been some S. 2057, the DOD authorization bill. ative action brought by 1 or more sharehold- question over here on this side of the Mr. ABRAHAM. Mr. President, I ob- ers on behalf of a corporation) in which— aisle, that on S. 2037, the WIPO bill, or ject. ‘‘(I) damages are sought on behalf of more than 50 persons or prospective class mem- the digital new millennium copyright The PRESIDING OFFICER. Objec- bers, and questions of law or fact common to legislation, there is absolutely no ob- tion is heard. those persons or members of the prospective jection to going forward with it. I sug- The Senate majority leader has the class, without reference to issues of individ- gest that there will be unanimous sup- floor. May 13, 1998 CONGRESSIONAL RECORD — SENATE S4817 UNANIMOUS CONSENT REQUEST— the Department of Defense, for military con- our allies have decided to join in plac- S. 1415 struction, and for defense activities of the ing these sanctions on India. The law Department of Energy, to prescribe person- Mr. LOTT. Mr. President, I ask unan- requires it, and we must place the full nel strengths for such fiscal year for the measure of the law on India in this re- imous consent that S. 1415, the tobacco Armed Forces, and for other purposes. bill, be referred to the Finance Com- gard. The PRESIDING OFFICER. Is there Mr. President, I visited the south mittee until 9 p.m. on Thursday, May objection to the immediate consider- 14, and if the committee has not re- Asia region twice in the last year and ation of the bill? a half. I understand the complexity of ported the bill at that time, the meas- There being no objection, the Senate ure be automatically discharged and their internal politics and their inter- proceeded to consider the bill. national relations. But I must say this, placed immediately on the calendar, Mr. LOTT. I yield the floor. notwithstanding a recess or adjourn- that whatever problems there may PRIVILEGE OF THE FLOOR have been before have been multiplied ment of the Senate. Mr. INHOFE. Mr. President, I ask I further ask the Finance Committee a thousandfold by what India just did. unanimous consent that Dan Again, I hope the nations in that re- have permission to meet during the Groeschen be granted the privilege of gion will exercise caution and restraint session of the Senate on Thursday, the floor during the consideration of in light of this. Right now, India has May 14, to consider S. 1415. the 1999 defense authorization bill. become the pariah of the world com- Mr. McCONNELL addressed the Mr. PRESIDING OFFICER. Without munity of nations, and rightfully so, Chair. objection, it is so ordered. for what it has done. It should remain The PRESIDING OFFICER. Is there Mr. HARKIN addressed the Chair. a pariah for a considerable amount of objection? The PRESIDING OFFICER. The Sen- time, until it reverses its course, until Mr. McCONNELL. Reserving the ator from Iowa. it sits down with its neighbors to reach right to object. Mr. HARKIN. Parliamentary inquiry. peaceful solutions in that area, until The PRESIDING OFFICER. The Sen- What is the floor situation right now? India is willing to sit down with its ator from Kentucky. What are we on? neighbor, Pakistan, and solve once and Mr. McCONNELL. I would ask the The PRESIDING OFFICER. We are for all the issue of Kashmir; until India majority leader if he could hold for a on the bill S. 2057, Department of De- is ready to sit down with its neighbor, few moments on propounding this UC; fense authorization bill. Pakistan, and secure their borders; there are some discussions going on on f until India is willing to disavow put- that subject. ting their nuclear arsenals within their Mr. LOTT. Mr. President, I will with- NUCLEAR DETONATIONS IN INDIA military. Until that time, until these hold the unanimous consent request at Mr. HARKIN. Mr. President, I want things are done, India will and should this time, and while I am working on to take a little time again today to remain a pariah among the world com- both of these unanimous consent re- talk about the perilous situation that munity of nations. quests, the Senators from Iowa wish to we find in south Asia at this point in Earlier today, our Secretary of De- be recognized so I yield the floor. time. Once again, in complete dis- fense appeared before our Appropria- Mr. GRASSLEY addressed the Chair. regard of world opinion, in complete tions Subcommittee on Defense. We The PRESIDING OFFICER. The Sen- disregard of peace in the region, in discussed these developments in south ator from Iowa. complete disregard of the concerns of Asia and what they mean. Will there be (The remarks of Mr. GRASSLEY per- its neighbors and its allies and friends, a nuclear arms race now in the region? taining to the introduction of S, 2078 yesterday the nation of India once Will Pakistan follow suit and detonate are located in today’s RECORD under again detonated two more nuclear de- a nuclear weapons test in response to ‘‘Statements on Introduced Bills and vices. That makes five in 2 days. India? What about China? What is Joint Resolutions.’’) What I hear around here, Mr. Presi- China going to do now? How about Mr. GRASSLEY. I yield the floor. dent, people are saying, what have they Iran? Don’t forget, they have a border f done? Have they lost their senses? also. What is Iran going to do now that Have they lost all concept of reality? UNANIMOUS CONSENT India has taken this step? So what are Have they gone berserk? Are they com- AGREEMENT—S. 1415 all these nations going to do? pletely nutty now? Those are the kinds Secretary Cohen this morning, in Mr. LOTT. Mr. President, I ask unan- of things I hear around the Chamber open testimony, indicated that we may imous consent that S. 1415, the tobacco and around the Capitol—people talking see a chain reaction of events. I think bill, be referred to the Finance Com- about India, and what has happened to that is an apt term, considering the mittee until 9 p.m. on Thursday, May them. I do not believe that all Indians physics of nuclear fission. Just as a nu- 14, and if the committee has not re- have gone berserk or that all Indians clear explosion is an uncontrolled nu- ported the bill at that time, the meas- are crazy, but certainly something has clear chain reaction, so we may see un- ure be automatically discharged and happened with their Government to controlled events now happen in that placed immediately on the calendar, flaunt what they have done, to go region. But, just like a nuclear chain notwithstanding a recess or adjourn- ahead and not only set off three in 1 reaction, there are things you can do ment of the Senate. day, but two the next day, and also to slow it down and stop it. Just as in I further ask that the Senate Finance near the border of Pakistan. For the a nuclear powerplant, to slow down the Committee have permission to meet life of me, I cannot understand what chain reaction, they stick in the graph- during the session of the Senate on they can possibly be thinking of. ite rods to slow down the reaction, so Thursday, May 14, to consider S. 1415. So, I am pleased that the President we need to insert some graphite rods The PRESIDING OFFICER. Without has announced that he will, in accord- into the events that just happened in objection, it is so ordered. ance with the law, invoke the full south Asia. f range of sanctions that are required What I mean by that is that I believe under the Nuclear Policy Prevention that certain steps must be taken to NATIONAL DEFENSE AUTHORIZA- Act of 1994. These are tough, and we slow down these events. First of all, as TION ACT FOR FISCAL YEAR 1999 want to make sure that the adminis- I mentioned, we must apply the full Mr. LOTT. Mr. President, I now ask tration follows through on them. We force and effect of law on the sanctions unanimous consent again that the Sen- have to end all foreign assistance and to India. Second, I believe we must ate turn to S. 2057, the DOD authoriza- loans to the Nation of India. We must meet with Pakistan at the earliest pos- tion bill. terminate all military aid and weapons sible time to discuss our mutual secu- The PRESIDING OFFICER. The transfers. We must oppose inter- rity needs in that area of the world; to clerk will report. national foreign aid and financial as- discuss them with Pakistan, who has The bill clerk read as follows: sistance to the Nation through the been a friend and an ally going clear A bill (S. 2057) to authorize appropriations World Bank and the International back to the establishment of Pakistan for fiscal year 1999 for military activities in Monetary Fund. I understand many of as a nation. When people wondered S4818 CONGRESSIONAL RECORD — SENATE May 13, 1998 what direction Pakistan would go, me. They are now going to have to re- MORNING BUSINESS would they go to the Soviet Union or fine their warheads. They are going to Mrs. HUTCHISON. Mr. President, I would they tilt toward the United have to have further testing so that ask unanimous consent that there be a States, Pakistan declared at that time they have the kind of warheads they period for the transaction of morning they would go with the United States, can deliver with missiles and perhaps business until 7:45 p.m., with Senators they would follow the path of democ- aircraft. We have to stop that from permitted to speak for up to 10 minutes racy and freedom and not with the So- happening, and that is why we need the each. viet Union. Comprehensive Test Ban Treaty. The PRESIDING OFFICER. Without It would have been better if we had Time and time and time again, Paki- objection, it is so ordered. stan has come to our aid, our assist- this in effect beforehand to stop what f ance, whether it was overflights over happened in India, but we didn’t have the Soviet Union for purposes of intel- it. We can’t turn the clock back. We NOTICE OF DECISION TO ligence gathering, helping us in that can’t put the genie back in the bottle, TERMINATE RULEMAKING terrible war in Afghanistan. There are but what we can do is we can push Mr. THURMOND. Mr. President, pur- still over a million refugees in the ahead now. suant to Section 303 of the Congres- Here is how I see it, Mr. President. country of Pakistan from that war that sional Accountability Act of 1995 (2 We have to put the full force and effect helped topple the Soviet Union. Every U.S.C. sec. 1383), a Notice of Decision of the law on India with all these sanc- step of the way, Pakistan has been our to Terminate Rulemaking was submit- tions, cut off all aid, military assist- friend and our ally. So I think we need ted by the Office of Compliance, U.S. ance and cut off all World Bank loans to meet with them at the earliest pos- Congress. This Notice announces the and IMF. In fact, I think we ought to sible time to discuss our mutual secu- termination of a proceeding com- rity interests in that area. withdraw our ambassador, which the President has done, and not send him menced by a Notice of Proposed Rule- Next, I hope President Clinton will, making and a Supplementary Notice of at the earliest possible time, indicate back. Then I believe the U.S. Senate should ratify the Comprehensive Test Proposed Rulemaking published in the that he will not be visiting India this CONGRESSIONAL RECORD on October 1, year. I know there has been a trip Ban Treaty and insist that India do so immediately, before we ever lift any 1997, and January 29, 1998, respectively. planned for the President to visit Paki- I ask unanimous consent that this stan and India this fall. I call upon the sanctions. In that way, India may have a bomb, but they may not have some- Notice be printed in the RECORD. President to indicate now that, because There being no objection, the notice of these events, it would not be right thing that they could deliver on the head of a missile. was ordered to be printed in the and proper for him to visit India but RECORD, as follows: that it would be right and proper for That is why I believe it is so impor- OFFICE OF COMPLIANCE—THE CONGRESSIONAL him to visit Pakistan and perhaps tant that we bring up the Comprehen- sive Test Ban Treaty and ratify it in ACCOUNTABILITY ACT OF 1995: AMENDMENTS other nations in that area such as Ban- the Senate and stop this madness, stop TO PROCEDURAL RULES gladesh. So, I call upon him to call off these uncontrolled events that may NOTICE OF DECISION TO TERMINATE that visit to India to send another take place in south Asia unless we act RULEMAKING strong signal. Summary.—On October 1, 1997, the Execu- And, third, in order to put these right now. In fact, I must say, I know the occu- tive Director of the Office of Compliance graphite rods back into this chain reac- pant of the chair has spoken on this published a notice in the CONGRESSIONAL tion and to slow it down, I believe we RECORD proposing, among other things, to issue. I know he had a hearing on it need to press ahead with the Com- extend the Procedural Rules of the Office to today. Quite frankly, I am somewhat prehensive Test Ban Treaty, or the cover the General Accounting Office and the shocked that more Senators are not Library of Congress and their employees CTBT, that would outlaw all nuclear out here talking about what has hap- weapons tests globally. So far, 149 na- with respect to alleged violations of sections pened in India in the last couple of 204–207 of the Congressional Accountability tions have signed the treaty. In fact, days. I believe this is the biggest single Act of 1995 (‘‘CAA’’). These sections apply we thought we were going to get it all danger to world peace that we have the rights and protections of the Employee done in August of 1996, except one na- faced perhaps in the last 20 to 30 years, Polygraph Protection Act, the Worker Ad- tion walked out and refused to sign it— because uncontrolled events can start justment and Retraining Notification Act, India. And now we know why. Is it too taking place. and the Uniformed Services Employment late for a Comprehensive Test Ban and Reemployment Act, and prohibit retalia- On the one hand, I believe we must tion and reprisal for exercising rights under Treaty? I don’t believe so. In fact, I be- come down with the full force and ef- lieve what has happened in India more the CAA. The notice invited public comment, fect of the law on India. I believe the and, on January 28, 1998, a supplementary than anything indicates that we have President should call off his trip there notice was published inviting further com- to act now in the U.S. Senate to ratify this fall. I believe we need to meet with ment. Having considered the comments re- the Comprehensive Test Ban Treaty. our friends in Pakistan to discuss our ceived, the Executive Director has decided to We have not taken it up yet, and we mutual security needs in that area. On terminate the rulemaking and, instead, to should. We have signed it. It is now sit- the other hand, we need to ratify a recommend that the Office’s Board of Direc- ting before the Senate. We ought to comprehensive test ban treaty and tors prepare and submit to Congress legisla- take it up because the Comprehensive tive proposals to resolve questions raised by then say to India, ‘‘If you want to re- the comments. Test Ban Treaty will help put those join the community of nations, sign, graphite rods back in that chain reac- Availability of comments for public re- join, no more testing.’’ Then we get view.—Copies of comments received by the tion, slowing down uncontrolled events other nations to sign it, and we will Office with respect to the proposed amend- in south Asia. have a comprehensive test ban treaty ments are available for public review at the The CTBT will not by itself eliminate and will stop the uncontrolled events Law Library Reading Room, Room LM–201, the possibility of proliferation, but it that may be unfolding in south Asia. Law Library of Congress, James Madison will make it extremely difficult for nu- It is a perilous time. India cannot be Memorial Building, Washington, D.C., Mon- clear nations, such as India, to develop excused from what it did. Hopefully, day through Friday, between the hours of sophisticated weapons that could be de- 9:30 a.m. and 4:00 p.m. the community of nations can put the For further information contact.—Execu- livered by ballistic missiles. proper pressure on India to come to its Again, we have India, and they set off tive Director, Office of Compliance, Room senses and join the rest of the world LA 200, John Adams Building, 110 Second their underground explosions. But, as community in saying, ‘‘No; that they Street, S.E., Washington, D.C. 20540–1999; we know, that is not the end of the line will never ever test nuclear weapons telephone (202) 724–9250 (voice), (202) 426–1912 in terms of developing the kind of ever again.’’ (TTY). This Notice will be made available in weapons that can be delivered by bal- Mr. President, I yield the floor. large print or braille or on computer disk listic missiles. If we don’t sign and if Mrs. HUTCHISON addressed the upon request to the Office of Compliance. we don’t urge other nations and India Chair. SUPPLEMENTARY INFORMATION to sign the CTBT, this will not be the The PRESIDING OFFICER. The Sen- The Congressional Accountability Act of end of India’s nuclear testing, believe ator from Texas. 1995 (‘‘CAA’’), 2 U.S.C. § 1301 et seq., applies May 13, 1998 CONGRESSIONAL RECORD — SENATE S4819 the rights and protections of eleven labor, GAO and the Library have the statutory ‘‘uninvent’’ nuclear weapons every- employment, and public access laws to the right to use the administrative and judicial where in the world. Therefore, we must Legislative Branch. Sections 204–206 of the procedures under the CAA, and whether GAO do the next best thing—prepare our CAA explicitly cover the General Accounting and the Library may be charged as respond- Office (‘‘GAO’’) and the Library of Congress best defense. ent or defendant under those procedures, During the Cold War standoff with (‘‘Library’’). These sections apply the rights where violations of sections 204–207 of the and protections of the Employee Polygraph CAA are alleged. The Office will continue to the Soviet Union, we operated under a Protection Act of 1988 (‘‘EPPA’’), the Worker accept any request for counseling or medi- system known as MAD, for Mutually Adjustment and Retraining Notification Act ation and any complaint filed by a GAO or Assured Destruction. No country, back (‘‘WARN Act’’), and section 2 of the Uni- Library employee and/or alleging a violation then, would attack us with a nuclear formed Services Employment and Reemploy- by GAO or the Library. Any objection to ju- weapon because there was full realiza- ment Rights Act of 1994 (‘‘USERRA’’). risdiction may be made to the hearing offi- tion that it would face certain annihi- On October 1, 1997, the Executive Director cer or the Board under sections 405–406 or to of the Office of Compliance (‘‘Office’’) pub- lation because we could and would re- the court during proceedings under sections taliate in kind, and with greater lished a Notice of Proposed Rulemaking 407–408 of the CAA. Furthermore, the Office (‘‘NPRM’’) proposing to extend the Proce- will counsel any employee who initiates such strength. MAD was never a completely dural Rules of the Office to cover GAO and proceedings that a question has been raised risk-free strategy, though. We had to the Library and their employees for purposes as to the Office’s and the courts’ jurisdiction rely on the hope that other govern- of proceedings involving alleged violations of under the CAA and that the employee may sections 204–206, as well as proceedings in- ments would act responsibly and not volving alleged violations of section 207, wish to preserve rights under any other put their citizens in the path of a di- which prohibits intimidation and retaliation available procedural avenues. rect, retaliatory missile hit. This was for exercising rights under violations of sec- The Executive Director’s decision an- the best we could do back then. MAD nounced here does not affect the coverage of tion 207, which prohibits intimidation and has outlived its usefulness today be- retaliation for exercising rights under the GAO and the Library and their employees with respect to proceedings under section 215 cause we have the capability to protect CAA. 143 CONG. REC. S10291 (daily ed. Oct. 1, of the CAA (which applies the rights and pro- ourselves better—we now have the abil- 1997). The Library submitted comments in ity to develop defensive technologies opposition to adoption of the proposed tections of the OSHAct) or ex parte commu- amendments and raising questions of statu- nications. On February 12, 1998, the Execu- that can give us a system that will tory construction. On January 28, 1998, the tive Director, with the approval of the knock out a ballistic missile before it Executive Director published a Supple- Board, published a Notice of Adoption of can land on one of our cities. mentary Notice of Proposed Rulemaking Amendments amending the Procedural Rules It should be clear to everyone that in (‘‘Supplementary NPRM’’) requesting fur- to include such coverage. 144 CONG. REC. S720 today’s more complicated world the ther comment on the issues raised by the Li- (daily ed. Feb. 12, 1998). Signed at Washington, D.C., on this 12th threat of a ballistic missile attack is brary. 144 CONG. REC. S86 (daily ed. Jan. 28, day of May, 1998. not confined to a couple of super- 1998). Comments in response to the Supple- RICKY SILBERMAN, powers; there is a greater risk than mentary NPRM were submitted by GAO, the Executive Director, Office of Compliance. Library, a union of Library employees, and a ever before of a launch against the committee of the House of Representatives. f U.S., either by accident or design, from any of a number of so-called ‘‘rogue’’ The comments expressed divergent views AMERICAN MISSILE PROTECTION as to the meaning of the relevant statutory nations. And, with the additional risk ACT OF 1998 provisions. The CAA extends rights, protec- that chemical or biological weapons tions, and procedures only to certain defined Mr. FAIRCLOTH. Mr. President, this can be launched using the same ballis- ‘‘employing offices’’ and ‘‘covered employ- morning, the Senate failed to invoke tic missile technology as is used for nu- ees.’’ The definitions of these terms in sec- cloture on S. 1873, the American Mis- tion 101 of the CAA, which apply throughout clear weapons delivery, the threat is the CAA generally, omit GAO and the Li- sile Protection Act of 1998. The bill is more widespread and we must defend brary and their employees from coverage, simple and its purpose can be stated against it. but sections 204–206 of the CAA expressly in- very easily by reciting Section 3 in its Without National Missile Defense, clude GAO and the Library and their em- entirety. ‘‘It is the policy of the United there is a greater risk that an incident, ployees within the definitions of ‘‘employing States to deploy as soon as is techno- even one involving chemical or biologi- office’’ and ‘‘covered employee’’ for purposes logically possible an effective National cal weapons, could escalate into full of those sections. Two commenters argued that the provisions of sections 401–408, which Missile Defense system capable of de- scale nuclear war. If we must stick establish the administrative and judicial fending the territory of the United with a MAD strategy, we will have to procedures for remedying violations of sec- States against limited ballistic missile retaliate once we identify a ballistic tions 204–206, refer back to the definitions in attack (whether accidental, unauthor- missile launch at the U.S. It would be section 101 ‘‘without linking to the very lim- ized, or deliberate).’’ much better to eliminate those mis- ited coverage’’ of the instrumentalities in Everyone knows that it is necessary siles with a defensive system, and then sections 204–206, and therefore do not cover to first vote to stop endless debate on GAO and the Library and their employees. determine what most appropriate re- However, two other commenters argued to a bill when a filibuster has been threat- sponse, diplomatic or military, we the contrary. One stated that, because em- ened, then, after cloture, we can have would undertake. ployees of the instrumentalities were given limited debate followed by a vote on Ignoring that National Missile De- the protections of sections 204–206, ‘‘the con- the bill itself. From this morning’s fense can keep us from an escalating comitant procedural rights’’ of sections 401– vote, it can be seen that more than 40 nuclear war, critics of the American 408 were also conferred on them; and the percent of my colleagues feel that it Missile Protection Act, through twist- other commenter argued that construing the should be the policy of the United ed logic, say that if the U.S. builds a CAA to grant rights but not remedies would States to keep our citizens exposed to defeat the stated legislative purpose, ‘‘since defensive capability, this will drive the a right without a remedy is often no right at the risks of a ballistic missile attack. world closer to a nuclear war. Their ar- all.’’ The four commenters also expressed di- Mr. President, I know that the Cold gument goes something like this—if we vergent views about whether GAO and the War is over. Unfortunately, although can defend against a ballistic missile Library and their employees, who were not some would like to believe otherwise, attack, there is nothing that will stop expressly referenced by section 207, are nev- this does not mean that we are one us from striking another country first ertheless covered by the prohibition in that happy world, where all countries are because we no longer have to worry section against retaliation and reprisal for working in mutual cooperation. It is no about retaliation. As incredible as it exercising applicable CAA rights. Having considered that the comments re- time for the United States to let down may sound, they say that a National ceived express such opposing views of the its guard or to cease doing everything Missile Defense is actually an act of statute, the Executive Director has decided possible to maintain our national secu- aggression. to terminate the rulemaking without adopt- rity. In order to buy into such an argu- ing the proposed amendments and, instead, The nuclear testing in India this ment, however, you have to first as- to recommend that the Office’s Board of Di- week should shake some sense into sume that the United States has been rectors prepare and submit to Congress legis- those calling for the U.S. to disarm standing by, waiting to take over the lative proposals to resolve questions raised by the comments. itself of our nuclear deterrent capabil- world with its nuclear defensive arse- In light of the statutory questions raised, ity, as if that would set an example to nal, but the Soviet bear kept us in our it remains uncertain whether employees of the rest of the world. We cannot cage. You would have to believe that S4820 CONGRESSIONAL RECORD — SENATE May 13, 1998 Americans have been so intent on 14, 1979. This report is submitted pursu- has also authorized payments to sur- spreading democracy around the world ant to section 204(c) of the Inter- viving family members of 220 Iranian that we would attack any country that national Emergency Economic Powers victims of the aerial incident, totaling would not adopt our free system of gov- Act (IEEPA), 50 U.S.C. 1703(c). This re- $54,300,000. ernment and force democracy upon its port covers events through March 31, During this reporting period, the full peoples. 1998. My last report, dated November Tribunal held a hearing in Case No. A/ No, Mr. President, building a Na- 25, 1997, covered events through Sep- 11 from February 16 through 18. Case tional Missile Defense is not an act of tember 30, 1997. No. A/11 concerns Iran’s allegations aggression that would free us up to 1. There have been no amendments to that the United States violated its ob- launch an unprovoked attack on other the Iranian Assets Control Regula- ligations under Point IV of the Algiers countries. It is an act of common sense tions, 31 CFR Part 535 (the ‘‘IACR’’), Accords by failing to freeze and gather in a dangerous world. since my last report. information about property and assets purportedly located in the United f 2. The Iran-United States Claims Tri- bunal (the ‘‘Tribunal’’), established at States and belonging to the estate of MESSAGES FROM THE PRESIDENT The Hague pursuant to the Algiers Ac- the late Shah of Iran or his close rel- cords, continues to make progress in atives. Messages from the President of the 4. U.S. nationals continue to pursue United States were communicated to arbitrating the claims before it. Since the period covered in my last report, claims against Iran at the Tribunal. the Senate by Mr. Williams, one of his Since my last report, the Tribunal has secretaries. the Tribunal has rendered one award. This brings the total number of awards issued an award in one private claim. EXECUTIVE MESSAGES REFERRED On March 5, 1998, Chamber One issued rendered by the Tribunal to 585, the As in executive session the Presiding an award in George E. Davidson v. Iran, majority of which have been in favor of Officer laid before the Senate messages AWD No. 585–457–1, ordering Iran to pay U.S. claimants. As of March 31, 1998, from the President of the United the claimant $227,556 plus interest for the value of awards to successful U.S. States submitting a treaty and one Iran’s interference with the claimant’s claimants paid from the Security Ac- nomination which was referred to the property rights in three buildings in count held by the NV Settlement Bank Committee on Governmental Affairs. Tehran. The Tribunal dismissed the was $2,480,897,381.53. claimant’s claims with regard to other (The nomination received today is Since my last report, Iran has failed printed at the end of the Senate pro- property for lack of proof. The claim- to replenish the Security Account es- ant received $20,000 in arbitration ceedings.) tablished by the Algiers Accords to en- f costs. sure payment of awards to successful 5. The situation reviewed above con- REPORT CONCERNING THE INDIAN U.S. claimants. Thus, since November tinues to implicate important diplo- NUCLEAR TESTS ON MAY 11, 5, 1992, the Security Account has con- matic, financial, and legal interests of 1998—MESSAGE FROM THE PRESI- tinuously remained below the $500 mil- the United States and its nationals and DENT—PM 125 lion balance required by the Algiers presents and unusual challenge to the Accords. As of March 31, 1998, the total national security and foreign policy of The PRESIDING OFFICER laid be- amount in the Security Account was the United States. The Iranian Assets fore the Senate the following message $125,888,588.35, and the total amount in Control Regulations issued pursuant to from the President of the United the Interest Account was $21,716,836.85. Executive Order 12170 continue to play States, together with an accompanying Therefore, the United States continues an important role in structuring our report; which was referred to the Com- to pursue Case No. A/28, filed in Sep- relationship with Iran and in enabling mittee on Foreign Relations. tember 1993, to require Iran to meet its the United States to implement prop- To the Congress of the United States: obligation under the Algiers Accords to erly the Algiers Accords. I shall con- Pursuant to section 102(b)(1) of the replenish the Security Account. tinue to exercise the powers at my dis- Arms Export Control Act, I am hereby The United States also continues to posal to deal with these problems and reporting that, in accordance with that pursue Case No. A/29 to require Iran to will continue to report periodically to section, I have determined that India, a meet its obligation of timely payment the Congress on significant develop- non-nuclear-weapon state, detonated a of its equal share of advances for Tri- ments. nuclear explosive device on May 11, bunal expenses when directed to do so WILLIAM J. CLINTON. 1998. I have further directed the rel- by the Tribunal. Iran filed its Rejoin- THE WHITE HOUSE, May 13, 1998. evant agencies and instrumentalities of der in this case on February 9, 1998. f 3. The Department of State continues the United States Government to take MESSAGES FROM THE HOUSE the necessary actions to impose the to respond to claims brought against At 1:10 p.m., a message from the sanctions described in section 102(b)(2) the United States by Iran, in coordina- House of Representatives, delivered by of that Act. tion with concerned government agen- Mr. Hays, one of its reading clerks, an- WILLIAM J. CLINTON. cies. nounced that the House has passed the THE WHITE HOUSE, May 13, 1998. On January 16, 1998, the United States filed a major submission in Case following bills, in which it requests the f No. B/1, a case in which Iran seeks re- concurrence of the Senate: REPORT CONCERNING THE NA- payment for alleged wrongful charges H.R. 1021. An act to provide for a land ex- TIONAL EMERGENCY WITH RE- to Iran over the life of its Foreign Mili- change involving certain National Forest tary Sales (FMS) program, including System lands within the Routt National For- SPECT TO IRAN—MESSAGE FROM est in the State of Colorado. THE PRESIDENT—PM 126 the costs of terminating the program. H.R. 2217. An act to extend the deadline The January filing primarily addressed The PRESIDING OFFICER laid be- under the Federal Power Act applicable to Iran’s allegation that its FMS Trust the construction of FERC Project Number fore the Senate the following message Fund should have earned interest. 9248 in the State of Colorado, and for other from the President of the United Under the February 22, 1996, settle- purposes. States, together with an accompanying ment agreement related to the Iran Air H.R. 2841. An act to extend the time re- report; which was referred to the Com- quired for the construction of a hydro- case before the International Court of electric project. mittee on Banking, Housing, and Justice and Iran’s bank-related claims Urban Affairs. H.R. 2886. An act to provide for a dem- against the United States before the onstration project in the Stanislaus National To the Congress of the United States: Tribunal (see report of May 16, 1996), Forest, California, under which a private I hereby report to the Congress on the Department of State has been proc- contractor will perform multiple resource developments since the last Presi- essing payments. As of March 31, 1998, management activities for that unit of the National Forest System. dential report of November 25, 1997, the Department of State has author- H.R. 3723. An act to authorize funds for the concerning the national emergency ized payment to U.S. nationals totaling payment of salaries and expenses of the Pat- with respect to Iran that was declared $13,901,776.86 for 49 claims against Ira- ent and Trademark Office, and for other pur- in Executive Order 12170 of November nian banks. The Department of State poses. May 13, 1998 CONGRESSIONAL RECORD — SENATE S4821 H.R. 3811. An act to establish felony viola- ent and Trademark Office, and for other pur- POM–392. A resolution adopted by the Sen- tions for the failure to pay legal child sup- poses; to the Committee on the Judiciary. ate of the Legislature of the Commonwealth port obligations, and for other purposes. Pursuant to the order of today, May of Massachusetts; to the Committee on Ap- The message also announced that the 13, 1998, the following bill was ordered propriations. House has agreed to the following con- referred to the Committee on Finance: RESOLUTIONS current resolutions, in which it re- S. 1415. A bill to reform and restructure the Whereas, although we believe that the quests the concurrence of the Senate: processes by which tobacco products are United States should retain its position as H. Con. Res. 255. Concurrent resolution au- manufactured, marketed, and distributed, to the strongest military Nation in the world, thorizing the use of the Capitol grounds for prevent the use of tobacco products by mi- we also believe that the security of our Na- the Greater Washington Soap Box Derby. nors, to redress the adverse health effects of tion is dependent fundamentally not on mili- H. Con. Res. 262. Concurrent resolution au- tobacco use, and for other purposes; ordered, tary might, but on the well-being and vital- thorizing the 1998 District of Columbia Spe- referred to the Committee on Finance until ity of our citizens; and cial Olympics Law Enforcement Torch Run 9:00 pm on Thursday, May 14, 1998 to report Whereas, programs which sustain and im- to be run through the Capitol Grounds. or be discharged. prove the health, education, and affordable H. Con. Res. 263. Concurrent resolution au- housing, environmental protection, and safe- f thorizing the use of the Capitol Grounds for ty of our citizens are being transferred from the seventeenth annual National Peace Offi- MEASURES PLACED ON THE the Federal to the State governments; and cers’ Memorial Service. CALENDAR Whereas, the funds being provided by the The message further announced that Federal Government to the States are insuf- The following bills were read the first ficient to fulfill these responsibilities; and the House has passed the following bill, and second times, and placed on the with amendments, in which it requests Whereas, the seven countries currently Calendar: identified as our potential adversaries have a the concurrence of the Senate: H.R. 1021. An act to provide for a land ex- combined military budget of 15 billion dol- S. 1605. An act to establish a matching change involving certain National Forest lars, while the United States military budget grant program to help States, units of local Systems lands within the Routt National for 1997 is 265 billion dollars; and government, and Indian tribes to purchase Forest in the State of Colorado. Whereas, the United States military budg- armor vests for use by law enforcement offi- H.R. 3811. An act to establish felony viola- et remains at cold war levels and contains: cers. tions for the failure to pay legal child sup- 114 billion dollars not requested by the Pen- The message also announced that the port obligations, and for other purposes. tagon, 25 billion dollars for 10,000 nuclear House has disagreed to the amendment f weapons and their delivery systems, and 40 of the Senate to the bill (H.R. 629) to billion dollars in excess and what many grant the consent of Congress to the PETITIONS AND MEMORIALS former military leaders and leading execu- tives consider sufficient; and Texas Low-Level Radioactive Waste The following petitions and memori- Whereas, current Pentagon spending out- Disposal Compact, and asks a con- als were laid before the Senate and weighs all military threats, and creates ference with the Senate on the dis- were referred or ordered to lie on the fewer jobs than increased spending on domes- agreeing votes of the two Houses there- table as indicated: tic programs would deliver; and on; and appoints for consideration of POM–391. A resolution adopted by the Sen- Whereas, shifting funds from the military the House bill and the Senate amend- ate of the Legislature of the State of Michi- to repairing our infrastructure would dra- ment, and modifications committed to gan; to the Committee on Agriculture, Nu- matically improve the lives of our citizens conference: Mr. BLILEY, Mr. DAN trition, and Forestry. and strengthen our ability to complete suc- cessfully in the world market; and SCHAEFER of Colorado, Mr. BARTON of SENATE RESOLUTION NO. 163 Whereas, sufficient amounts of money need Texas, Mr. DINGELL, and Mr. HALL of Whereas, Federal departments such as the to be redirected from the military budget to Texas, as the managers of the con- Environmental Protection Agency have the several States so that the States can ference on the part of the Houses. sought to implement strict standards on meet the critical needs of rebuilding commu- The message further announced that American farmers regarding pesticide use; nities and inner cities, repairing schools, pursuant to the provisions of 22 U.S.C. and educating children, reducing hunger, provid- 276d, the Speaker appoints the follow- Whereas, Certain nations allow the use of ing housing, improving transportation, pro- pesticides that are prohibited for use by tecting the environment, and obtaining a de- ing Members of the House to the Can- American farmers and the export to the ada-United States Interparliamentary cent level of health care and safety for all of United States of agricultural products our citizens, thereby increasing fundamen- Group, in addition to Mr. HOUGHTON of growth with the assistance of these pes- tally our security and well-being; Now, New York, Chairman, appointed on ticides; and therefore, be it April 27, 1998: Mr. GILMAN, Mr. HAMIL- Whereas, This provides an unfair advan- Resolved, That the Massachusetts Senate TON, Mr. CRANE, Mr. LAFALCE, Mr. tage to other nations and their citizens over memorialize the President and the Congress OBERSTAR, Mr. SHAW, Mr. LIPINSKI, Mr. American farmers and American agricul- of the United States to shift sufficient funds tural workers who depend on this productiv- UPTON, Mr. STEARNS, Mr. PETERSON of from the military to the States for the im- ity for their livelihood; and Minnesota, and Mr. DANNER. provement of the lives of citizens; and be it Whereas, The United States’ agriculture is further f a vital industry to the nation’s economy and Resolved, That a copy of these resolutions MEASURES REFERRED quality of life; and be transmitted forthwith by the clerk of the Whereas, Protecting our citizens by proven The following bills were read the first Senate to the President of the United States, science and policy is of paramount impor- the Presiding Officers of each branch of Con- and second times by unanimous con- tance to American citizens; and gress and the Members thereof from this sent and referred as indicated: Whereas, No nation should be allowed to commonwealth. H.R. 2217. An act to extend the deadline export items into our nation using methods such as certain pesticides that the govern- under the Federal Power Act applicable to POM–393. A resolution adopted by the ment of the United States prohibits its own the construction of FERC Project Number House of the Legislature of the Common- farmers from using based on debatable 9248 in the State of Colorado, and for other wealth of Massachusetts; to the Committee claims of health and environmental con- purposes; to the Committee on Energy and on Appropriations. Natural Resources. cerns; now, therefore, be it RESOLUTION H.R. 2841. An act to extend the time re- Resolved by the Senate, That we memorial- quired for the construction of a hydro- ize the Congress of the United States to pro- Whereas, in August of 1996, the United electric project; to the Committee on Energy hibit the importation of agricultural and States Congress enacted the Personal Re- and Natural Resources. other food items from nations that do not sponsibility and Work Opportunity Rec- H.R. 2886. An act to provide for a dem- have the same requirements, standards, and onciliation Act of 1996, so-called; and onstration project in the Stanislaus National restrictions on allowable pesticides and Whereas, Congress in said act forbade use Forest, California, under which a private chemicals used in the production, preserva- of Federal funds to provide SSI benefits and contractor will perform multiple resource tion, and growth of the products in future food stamp benefits for financially needy im- management activities for that unit of the trade agreements; and be it further migrants lawfully residing in the United National Forest System; to the Committee Resolved, That copies of this resolution be States; and on Energy and Natural Resources; to the transmitted to the President of the United Whereas, legal immigrants pay taxes and Committee on Energy and Natural Re- States Senate, the Speaker of the United contribute in many ways to the productivity sources. States House of Representatives, and the and vitality of our communities; and H.R. 3723. An act to authorize funds for the members of the Michigan congressional dele- Whereas, the United States was founded payment of salaries and expenses of the Pat- gation. and built by immigrants; and S4822 CONGRESSIONAL RECORD — SENATE May 13, 1998 Whereas, Congress should be applauded for even those who had been hospitalized with the Committee on Commerce, Science, and the restoration of SSI benefits for legal im- injuries, was granted survivor leaves to visit Transportation. migrants through passage of the Balanced their families before being reassigned to reg- POM–398. A joint resolution adopted by the Budget Act of 1997; and ular duties; and none of these survivors was General Assembly of the State of Colorado; Whereas, Congress must continue in this called to testify at the Court of Inquiry; and to the Committee on Commerce, Science, effort by resolving to restore its financial re- Whereas, Captain Merrill T. Kline, Officer- and Transportation. sponsibility in the Food Stamp Benefits Pro- in-Charge of Port Chicago, issued a state- HOUSE JOINT RESOLUTION 98–1018 gram as the present situation imposes a fi- ment praising the African American enlisted Whereas, the Internet is a massive global nancial burden on the States and needy resi- men and stating that ‘‘the men displayed network spanning local government, state, dents of the States; therefore, be it creditable coolness and bravery under those and international borders; and Resolved, That the Massachusetts House of emergency conditions’’; and Whereas, transmissions over the Internet Representatives respectfully requests that Whereas, after the disaster, white sailors are made through packet-switching, a proc- the President and the Congress of the United were given 30 days’ leave to visit their fami- ess that makes it not only impossible to de- States restore to the States the authority to lies—according to survivors, this was the termine with any degree of certainty the provide federally funded food stamp benefits standard for soldiers involved in a disaster— precise geographic route or endpoints of spe- to needy, lawful residents of the United while only African American sailors were or- cific Internet transmissions but infeasible to States; and be it further dered back to work the next day to clean and separate interstate from intrastate Internet Resolved, That the Massachusetts House of remove human remains; and transmissions or domestic from foreign Representatives respectfully requests that Whereas, after the disaster, the prepara- transmissions; and the President and the Congress of the United tion of Mare Island for the arrival of African Whereas, the United States Supreme Court States restore to the Commonwealth ade- American sailors included moving the bar- has ruled that state taxation of companies quate Federal funding to allow for the provi- racks of white sailors away from the loading operating outside the borders of the state is sion of food stamp benefits for financially area in order to be clear of the ships being constitutional only if there is a substantial needy immigrants lawfully residing in this loaded in case of another explosion; and connection between the state and the com- Commonwealth; and be it further Whereas, the survivors and new personnel pany and the tax is fairly apportioned, does Resolved, That a copy of these resolutions who later were ordered to return to loading not discriminate against interstate com- be transmitted forthwith by the clerk of the ammunition expressed their opposition, cit- merce, and is fairly related to services pro- House of Representatives to the President of ing the possibility of another explosion; the vided by the state; and the United States of America, the Presiding first confrontation occurred on August 9 Whereas, the tax laws and regulations of Officer of each branch of the United States when 328 men from three divisions were or- local governments, state governments, and Congress and each Member of the Massachu- dered out to the loading pier; the great ma- the federal government were established setts congressional delegation. jority of the men balked, and eventually 258 were arrested and confined for three days on long before the Internet or interactive com- puter services became available; and POM–394. A resolution adopted by the a large barge tiered to the pier; and Whereas, fifty of these men were selected Whereas, taxation of Internet trans- Board of Supervisors of the County of Yuba, missions by local, state, and federal govern- California relative to Beale Air Force Base; as the ring-leaders and charged with mutiny, and on October 24, 1944, after only 80 minutes ments without a thorough understanding of to the Committee on Armed Services. the impact such taxation would have on POM–395. A joint resolution adopted by the of a military court, all 50 men were found Internet users and providers could have un- Legislature of the State of California; to the guilty of mutiny—10 were sentenced to 15 intentional and unpredictable consequences Committee on Armed Services. years in prison, 24 sentenced to 12 years, 11 sentenced to 10 years, and five sentenced to and may be unconstitutional if it does not ASSEMBLY JOINT RESOLUTION NO. 52 eight years; and all were to be dishonorably meet the tests set forth by the United States Whereas, on the night of July 17, 1944, two discharged from the Navy; and Supreme Court; and transport vessels loading ammunition at the Whereas, after a massive outcry the next Whereas, the United States Congress is Port Chicago naval base on the Sacramento year, in January 1946, 47 of the Port Chicago being asked to consider federal legislation River in California were suddenly engulfed in men were released from prison and ‘‘exiled’’ that would establish a national policy on the a gigantic explosion, the incredible blast of for one year overseas before returning to taxation of the Internet and other inter- which wrecked the naval base and heavily their families; and active computer services; now, therefore, damaged the town of Port Chicago, located Whereas, in a 1994 investigation, the Be It Resolved by the House of Representa- 1.5 miles away; and United States Navy stated that ‘‘there is no tives of the Sixty-first General Assembly of the Whereas, everyone on the pier and aboard doubt that racial prejudice was responsible State of Colorado, the Senate concurring herein: the two ships was killed instantly—some 320 for the posting of only African American en- That the Colorado General Assembly does American naval personnel, 200 of whom were listed personnel to loading divisions at Port not support at this time any Congressional Black enlisted men; and another 390 military Chicago’’; and action that would establish a national policy and civilian personnel were injured, includ- Whereas, in the 1994 investigation, the expanding taxation of the Internet and other ing 226 Black enlisted men; and United States Navy, prompted by Members interactive computer services; be it further Whereas, the two ships and the large load- of Congress, admitted that the routine as- Resolved, That the Colorado General As- ing pier were totally annihilated and an esti- signment of only African American enlisted sembly endorses a moratorium on taxation mated $12,000,000 in property damage was personnel to manual labor was clearly moti- of the internet and interactive computer caused by the huge blast; and vated by race; now, therefore, be it services until the impact of such taxation Whereas, this single, stunning disaster ac- Resolved by the Senate and the Assembly of can be thoroughly studied and evaluated; be counted for nearly one-fifth of all Black the State of California, jointly, That the Legis- it further naval casualties during the whole of World lature of the State of California respectfully Resolved, That the Colorado General As- War II; and memorializes the Congress and the President sembly encourages Congress to establish or Whereas, the specific cause of the explo- of the United States to act to vindicate the appoint a consultative group to study, evalu- sion was never officially established by a sailors unjustly blamed for, and the sailors ate, and report back to Congress on the im- Court of Inquiry, in effect clearing the offi- convicted of mutiny following, the Port Chi- pact of any taxation on the use of the Inter- cers-in-charge of any responsibility for the cago disaster, and to rectify any mistreat- net and other interactive computer services disaster and insofar as any human cause was ment by the military of those sailors; and be and the users of those services; be it further invoked, laid the burden of blame on the it further Resolved, That any consultative group es- shoulders of the Black enlisted men who died Resolved, That the Secretary of the Senate tablished or appointed by Congress should in the explosion; and transmit copies of this resolution to the include state and local governments, con- Whereas, following the incident, many of President and Vice President of the United sumer and business groups, and other groups the surviving Black sailors were transferred States, the Speaker of the House of Rep- and individuals that may be impacted by a to nearby Camp Shoemaker where they re- resentatives, and each Senator and Rep- national policy on the taxation of the inter- mained until July 31, when two of the divi- resentative from California in the Congress net and other interactive computer services; sions were transferred to naval barracks in of the United States. be it further Vallejo near Mare Island; another division, Resolved, That copies of this Joint Resolu- which was also at Camp Shoemaker until POM–396. A resolution adopted by the tion be sent to the United States Senate, the July 31, returned to Port Chicago to help Council of the City of Pittsburgh, Pennsyl- United States House of Representatives, with the cleaning up and rebuilding of the vania relative to Federal credit unions; to Governor Roy Romer, the National Gov- base; and the Committee on Banking, Housing, and ernors’ Association, and each member of the Whereas, many of these men were in a Urban Affairs. Colorado Congressional Delegation. state of shock, troubled by the vivid memory POM–397. A resolution adopted by the of the horrible explosion; however, they were Mayor and Councilmen of the City of Oak POM–399. A resolution adopted by the Leg- provided no psychiatric counseling or medi- Ridge, Tennessee relative to the Department islature of the State of Minnesota; to the cal screening, except for those who were ob- of Energy Laboratory for Comparative and Committee on Commerce, Science, and viously physically injured; none of the men, Functional Genomics in Oak Ridge (TN); to Transportation. May 13, 1998 CONGRESSIONAL RECORD — SENATE S4823 RESOLUTION NO. 6 By Mr. GRASSLEY (for himself, Mr. ies point out that the temporary na- Whereas, the Aircraft Repair Station Safe- BAUCUS, Mr. ROBERTS, Mr. KERREY, ture of the Credit has prevented com- ty Act of 1997 would provide for more strin- Ms. MOSELEY-BRAUN, Mr. HAGEL, and panies from building careful research gent standards for certification of foreign re- Mr. ALLARD): strategies. A recent study by Coopers pair stations by the Federal Aviation Admin- S. 2078. A bill to amend the Internal Reve- and Lybrand claimed a $41 billion stim- nue Code of 1986 to provide for Farm and istration and would revoke the certification ulus for the economy by 2010, with $13 of any repair facility that knowingly uses Ranch Risk Management Accounts, and for defective parts; and other purposes; to the Committee on Fi- billion added to the economy’s produc- Whereas, the Aircraft Repair Station Safe- nance. tive capacity by 2010. Many of my Sen- ty Act of 1997 would require all maintenance f ate colleagues have endorsed legisla- facilities, whether domestic or foreign, to tion that includes this critical action, adhere to the same safety and operating pro- SUBMISSION OF CONCURRENT AND more than twenty at last count. cedures; now, therefore, be it SENATE RESOLUTIONS My legislative proposal goes further. Resolved by the Legislature of the State of The following concurrent resolutions The current Credit references a compa- Minnesota, That it urges the President and and Senate resolutions were read, and ny’s research intensity back to their Congress of the United States to enact the level in the 1984–88 time period. That Aircraft Repair Station Safety Act of 1997; referred (or acted upon), as indicated: be it further By Mr. LOTT (for himself and Mr. time period is too outdated to meet to- Resolved, That the Secretary of State of DASCHLE): day’s dynamic market conditions. the State of Minnesota is directed to prepare S. Res. 230. A resolution to authorize the Many companies now are operating in copies of this memorial and transmit them production of records by the Select Commit- dramatically different markets, many to the President and Vice-President of the tee on Intelligence; considered and agreed to. with totally new product lines. My leg- United States, the President and the Sec- f islation allows a company to choose a retary of the United States Senate, the four year period in the last ten years Speaker and the Clerk of the United States STATEMENTS ON INTRODUCED that best matches their own needs. House of Representatives, the chair of the BILLS AND JOINT RESOLUTIONS This allows companies to tailor and op- Senate Committee on Commerce, Science, and Transportation, the chair of the House By Mr. DOMENICI (for himself timize research strategies to match Committee on Transportation and Infra- and Mr. FRIST): current market conditions. structure, and Minnesota’s Senators and S. 2072. A bill to amend the Internal The current approach has a provision Representatives in Congress. Revenue Code of 1986 to enhance the that severely restricts the ability of f global competitiveness of United many start-up companies to benefit States businesses by permanently ex- from the full impact of the Credit. Re- INTRODUCTION OF BILLS AND tending the research credit, and for cent analysis shows that 5 out of 6 JOINT RESOLUTIONS other purposes; to the Committee on start-up companies receive reduced The following bills and joint resolu- Finance. benefits because of a provision that tions were introduced, read the first RESEARCH TAX CREDIT LEGISLATION limits their allowable increase in re- and second time by unanimous con- Mr. DOMENICI. Mr. President, ad- search expenditures to half of their sent, and referred as indicated: vanced technologies drive a significant current expenditures. I’m concerned By Mr. THOMPSON (for himself and part of our nation’s economic strength. when start-up companies aren’t receiv- Mr. GLENN): Our economy and our wonderful stand- ing full benefit from this Credit. These S. 2071. A bill to extend a quarterly finan- ard of living depend on a constant in- are just the companies that tend to cial report program administered by the Sec- drive the innovative cycle in this coun- retary of Commerce; to the Committee on flux of new technologies, processes, and products from our industries. try, they are the ones that frequently Governmental Affairs. bring out the newest leading-edge prod- By Mr. DOMENICI (for himself and Mr. Many countries can provide labor at ucts. My legislation allows start up FRIST): lower costs than the United States. As companies for their first ten years to S. 2072. A bill to amend the Internal Reve- any new product matures, competitors take full credit for their increases in nue Code of 1986 to enhance the global com- using overseas labor can frequently petitiveness of United States businesses by research costs. find a way to undercut our production permanently extending the research credit, My legislation addresses several and for other purposes; to the Committee on prices. We maintain our lead by con- other shortcomings in the current Finance. stantly improving our products Credit. Now there is a Basic Research By Mr. HATCH (for himself, Mr. through encouragement of innovation. Credit’’ allowed, but rarely used. It is DEWINE, and Mr. ABRAHAM): The majority of new products require defined to include only research with S. 2073. A bill to authorize appropriations industrial research and development to for the National Center for Missing and Ex- ‘‘no commercial interest.’’ Now, I don’t reach the market stage. I want to en- know too many companies that want ploited Children; to the Committee on the courage that research and development Judiciary. to support—much less admit to their By Mr. WELLSTONE: to create new products to ensure that stockholders that they are support- S. 2074. A bill to guarantee for all Ameri- our factories stay busy and that our ing—research with no commercial in- cans quality, affordable, and comprehensive workforce stays fully employed at high terest. The idea of this clause was to health care coverage; to the Committee on salaried jobs. I want more of our large encourage support of long term re- Finance. multi-national companies to select the search; the kind that benefits far more By Mr. ASHCROFT (for himself and United States as the location for their Mr. MCCONNELL): than just the next product improve- S. 2075. A bill to provide for expedited re- R&D. R&D done here creates American ment. This is the kind of research that view of executive privilege claims and to im- jobs. And frequently the benefits of can enable a whole new product or prove efficiency of independent counsel in- R&D in one area apply in another area; service. We need to encourage this long vestigations; to the Committee on the Judi- I want those spin-off benefits in this term research. My legislation adds an ciary. country, too. incentive for this type of research by S. 2076. A bill to provide reporting require- The federal government has used the including any research that is done for ments for the assertion of executive privi- Research Tax Credit to encourage com- a consortium of U.S. companies or any lege, and for other purposes; to the Commit- panies to perform research. But many tee on the Judiciary. research that is destined for open lit- By Mr. FORD (for himself, Mr. BOND, studies document that the present erature publication. These two addi- Mr. DORGAN, and Mr. LEAHY): form of this Tax Credit is not providing tions will include a lot more long term S. 2077. A bill to maximize the national se- as much stimulation to industrial R&D research that has future product appli- curity of the United States and minimize the as it could. Today, I introduce legisla- cations. I’ve also allowed this credit to cost by providing for increased use of the ca- tion to improve the Research Tax Cred- apply to research done in national labs, pabilities of the National Guard and other it. so companies can select the best source reserve components of the United States; to The single most important change improve the readiness of the reserve compo- of research for any particular project. nents; to ensure that adequate resources are I’m proposing in the Research Tax And finally my legislation recognizes provided for the reserve components; and for Credit is to make it permanent. The the importance of encouraging compa- other purposes; to the Committee on Armed credit has never been permanent, since nies to use research capabilities wher- Services. Congress created it in 1981. Many stud- ever they exist in the country, whether S4824 CONGRESSIONAL RECORD — SENATE May 13, 1998 in other businesses, universities, or na- tifies action by Congress to formally NCMEC is a shining example of the tional labs. The current credit dis- recognize it as the nation’s official type of public-private partnership the allows 35% of all expenses invested in missing and exploited children’s cen- Congress should encourage and recog- research performed under an external ter, and to authorize a line-item appro- nize. I urge my colleagues to support contract—my legislation allows all priation. This bill will enable the Cen- this legislation, which would help im- such expenses to apply towards the ter to focus completely on its missions, prove the performance of the National Credit. This should encourage creation without expending the annual effort to Center for Missing and Exploited Chil- of partnerships, where different part- obtain authority and grants from dren and thus the safety of our Na- ners can leverage their individual OJJDP. It also will allow the Center to tion’s children. strengths. These partnerships enable expand its longer-term arrangements I ask for unanimous consent that a our companies to perform research with domestic and foreign law enforce- copy of the legislation be printed in the more efficiently, that can further ment entities. By providing an author- RECORD. strengthen our economy. ization, the bill also will allow for bet- There being no objection, the bill was In summary, Mr. President, this pro- ter congressional oversight of the Cen- ordered to be printed in the RECORD, as follows: posed Bill significantly strengthens in- ter. centives for private companies to un- The record of the Center, described S. 2073 dertake search that leads to new proc- briefly below, demonstrates the appro- Be it enacted by the Senate and House of Rep- priateness of this authorization. resentatives of the United States of America in esses, new services, and new products. Congress assembled, For fourteen years the Center has The result is stronger companies that SECTION 1. FINDINGS. are better positioned for global com- served as the national resource center Congress makes the following findings: petition. Those stronger companies and clearinghouse mandated by the (1) For 14 years, the National Center for will hire more people at higher salaries Missing Children’s Assistance Act. The Missing and Exploited Children (referred to with real benefits to our national econ- Center has worked in partnership with in this section as the ‘‘Center’’) has— omy and workforce. the Department of Justice, the Federal (A) served as the national resource center Bureau of Investigation, the Depart- and clearinghouse congressionally mandated By Mr. HATCH (for himself, Mr. ment of Treasury, the State Depart- under the provisions of the Missing Chil- dren’s Assistance Act of 1984; and DEWINE, and Mr. ALLARD): ment, and many other federal and state (B) worked in partnership with the Depart- S. 2073. A bill to authorize appropria- agencies in the effort to find missing ment of Justice, the Federal Bureau of Inves- tions for the National Center for Miss- children and prevent child victimiza- tigation, the Department of the Treasury, ing and Exploited Children; to the tion. the Department of State, and many other Committee on the Judiciary. The trust the federal government has agencies in the effort to find missing chil- THE NATIONAL CENTER FOR MISSING AND placed in NCMEC, a private, non-profit dren and prevent child victimization. EXPLOITED CHILDREN corporation, is evidenced by its unique (2) Congress has given the Center, which is Mr. HATCH. Mr. President, today I access to the FBI’s National Crime In- a private non-profit corporation, unique pow- ers and resources, such as having access to am proud to introduce the National formation Center, and the National the National Crime Information Center of Center for Missing and Exploited Chil- Law Enforcement Telecommunications the Federal Bureau of Investigation, and the dren Authorization Act of 1998. This System (NLETS). National Law Enforcement Telecommuni- bill recognizes the outstanding record NCMEC has utilized the latest in cations System. of achievements of this outstanding or- technology, such as operating the Na- (3) Since 1987, the Center has operated the ganization and will enable NCMEC to tional Child Pornography Tipline, es- National Child Pornography Tipline, in con- provide even greater protection of our tablishing its new Internet website, junction with the United States Customs www.missingkids.com, which is linked Service and the United States Postal Inspec- Nation’s children in the future. tion Service and, beginning this year, the As part of the Missing Children’s As- with hundreds of other websites to pro- Center established a new CyberTipline on sistance Act, the Office of Juvenile vide real-time images of breaking cases child exploitation, thus becoming ‘‘the 911 Justice and Delinquency Prevention of missing children, and, beginning this for the Internet’’. has selected and given grants to the year, establishing a new CyberTipline (4) In light of statistics that time is of the Center for the last 14 years to operate on child exploitation. essence in cases of child abduction, the Di- a national resource center located in NCMEC has established a national rector of the Federal Bureau of Investigation Arlington, Virginia and a national 24- and increasingly worldwide network, in February of 1997 created a new NCIC child abduction (‘‘CA’’) flag to provide the Center hour toll-free telephone line. The Cen- linking NCMEC online with each of the immediate notification in the most serious ter provides invaluable assistance and missing children clearinghouses oper- cases, resulting in 642 ‘‘CA’’ notifications to training to law enforcement around the ated by the 50 states, the District of the Center and helping the Center to have its country in cases of missing and ex- Columbia and Puerto Rico. In addition, highest recovery rate in history. ploited children. The Center’s record is NCMEC works constantly with inter- (5) The Center has established a national quite impressive, and its efforts have national law enforcement authorities and increasingly worldwide network, linking led directly to a significant increase in such as Scotland Yard in the United the Center online with each of the missing the percentage of missing children who Kingdom, the Royal Canadian Mounted children clearinghouses operated by the 50 States, the District of Columbia, and Puerto are recovered safely. Police, INTERPOL headquarters in Rico, as well as with Scotland Yard in the In fiscal year 1998, the Center re- Lyon, France, and others. This net- United Kingdom, the Royal Canadian Mount- ceived an earmark of $6.9 million in the work enables NCMEC to transmit im- ed Police, INTERPOL headquarters in Lyon, Departments of Commerce, Justice, ages and information regarding miss- France, and others, which has enabled the and State Appropriations conference ing children to law enforcement across Center to transmit images and information report. In addition, the Center’s Jimmy America and around the world in- regarding missing children to law enforce- Ryce Training Center received 1.185M stantly. NCMEC also serves as the U.S. ment across the United States and around in this report. State Department’s representative at the world instantly. This legislation directs OJJDP to (6) From its inception in 1984 through child abduction cases under the Hague March 31, 1998, the Center has— make a grant to the Center and author- Convention. (A) handled 1,203,974 calls through its 24- izes appropriations up to $10 million in The record of NCMEC is dem- hour toll-free hotline (1-800-THE-LOST) and fiscal years 1999 through 2003. The au- onstrated by the 1,203,974 calls received currently averages 700 calls per day; thorization would, of course, be subject at its 24-hour toll-free hotline, (B) trained 146,284 law enforcement, crimi- to appropriations. The bill thus contin- 1(800)THE LOST, the 146,284 law en- nal and juvenile justice, and healthcare pro- ues and formalizes NCMEC’s long part- forcement, criminal/juvenile justice, fessionals in child sexual exploitation and nership with the Justice Department and healthcare professionals trained, missing child case detection, identification, and OJJDP. the 15,491,344 free publications distrib- investigation, and prevention; (C) disseminated 15,491,344 free publica- NCMEC’s exemplary record of per- uted, and, most importantly, by its tions to citizens and professionals; and formance and success, as demonstrated work on 59,481 cases of missing chil- (D) worked with law enforcement on the by the fact that NCMEC’s recovery dren, which has resulted in the recov- cases of 59,481 missing children, resulting in rate has climbed from 62% to 91%, jus- ery of 40,180 children. the recovery of 40,180 children. May 13, 1998 CONGRESSIONAL RECORD — SENATE S4825 (7) The demand for the services of the Cen- (1) operate the official national resource So this is still a crisis for many ter is growing dramatically, as evidenced by center and information clearinghouse for Americans, and this is an issue that the fact that in 1997, the Center handled missing and exploited children; walks into the living rooms of many 129,100 calls, an all-time record, and by the (2) provide to State and local governments, families and stares them in the face. fact that its new Internet website public and private nonprofit agencies, and (www.missingkids.com) receives 1,500,000 individuals, information regarding— The second chart shows the actual ‘‘hits’’ every day, and is linked with hun- (A) free or low-cost legal, restaurant, lodg- percent of annual family income, on dreds of other websites to provide real-time ing, and transportation services that are average, that goes to premiums and images of breaking cases of missing children, available for the benefit of missing and ex- out-of-pocket payments in the form of helping to cause such results as a police offi- ploited children and their families; and deductibles, copays or other amounts cer in Puerto Rico searching the Center’s (B) the existence and nature of programs of money that people have to spend on website and working with the Center to iden- being carried out by Federal agencies to as- health care. It is, I think, very impor- tify and recover a child abducted as an in- sist missing and exploited children and their tant to look at this. fant from her home in San Diego, California, families; First, what you see is that at the bot- 7 years earlier. (3) coordinate public and private programs (8) In 1997, the Center provided policy that locate, recover, or reunite missing chil- tom end of the income ladder, families training to 256 police chiefs and sheriffs from dren with their families; with annual incomes of $30,000 or less 50 States and Guam at its new Jimmy Ryce (4) disseminate, on a national basis, infor- are spending an inordinate, and I would Law Enforcement Training Center. mation relating to innovative and model say unaffordable, percent of their in- (9) The programs of the Center have had a programs, services, and legislation that ben- come for their health care. If you look remarkable impact, such as in the fight efit missing and exploited children; at families with incomes between against infant abductions in partnership (5) provide technical assistance and train- $10,000 and $20,000, you can see they are with the healthcare industry, during which ing to law enforcement agencies, State, and spending on average 8 percent of their the Center has performed 668 onsite hospital local governments, elements of the criminal walk-throughs and inspections, and trained justice system, public and private nonprofit income on health care expenses. Then 45,065 hospital administrators, nurses, and agencies, and individuals in the prevention, when you look at families with in- security personnel, and thereby helped to re- investigation, prosecution, and treatment of comes under $10,000, you can see that duce infant abductions in the United States cases involving missing and exploited chil- the average family is paying well over by 82 percent. dren; and 20 percent of their annual income, and (10) The Center is now playing a leading (6) provide assistance to families and law these are the people who can least af- role in international child abduction cases, enforcement agencies in locating and recov- ford to make that kind of payment. serving as a representative of the Depart- ering missing and exploited children, both Next, you can see that for families ment of State at cases under The Hague Con- nationally and internationally. with annual incomes of $30,000 or more, vention, and successfully resolving the cases (b) AUTHORIZATION OF APPROPRIATIONS.— of 343 international child abductions, and There is authorized to be appropriated to the the average amount of that income providing greater support to parents in the Administrator to carry out this section, spent on premiums, deductibles and United States. $10,000,000 for each of fiscal years 1999, 2000, copays drops to below 5 percent on av- (11) The Center is a model of public/private 2001, 2002, and 2003. erage—I would say a more affordable partnership, raising private sector funds to amount. But don’t forget these are just match congressional appropriations and re- By Mr. WELLSTONE: averages. Many families at every in- ceiving extensive private in-kind support, in- S. 2074: A bill to guarantee for all come level are spending more than 10 cluding advanced technology provided by the Americans, quality, affordable, and percent of their family income on computer industry such as imaging tech- comprehensive health care coverage; to health care, especially if someone in nology used to age the photographs of long- the Committee on Finance. term missing children and to reconstruct fa- the family has a serious illness. That is cial images of unidentified deceased chil- HEALTHY AMERICANS ACT not affordable. That is not fair. dren. Mr. WELLSTONE. Mr. President, Now if we look back at the same (12) The Center was 1 of only 10 of 300 today I introduce the Healthy Ameri- chart we can see what would happen major national charities given an A+ grade cans Act. Colleagues will be hearing under the Healthy Americans Act. All in 1997 by the American Institute of Philan- more about it because there will be Americans would pay what they can af- thropy. amendments that I will offer on this ford—people should pay what they can (13) In light of its impressive history, the subject here on the floor of the Senate; Center has been redesignated as the Nation’s afford—but it will be well within their missing children clearinghouse and resource and with every bit of ability I have as means. For those hardest-pressed fami- center once every 3 years through a competi- a Senator, I will push this piece of leg- lies, people would pay no more than 1⁄2 tive selection process conducted by the Of- islation here and talk about it in my percent of their income. Those with fice of Juvenile Justice and Delinquency State of Minnesota and around the higher incomes would pay no more Prevention of the Department of Justice, country. than 3 or 5 percent; and no family, in- and has received grants from that Office to The Healthy Americans Act insures cluding those with at the highest in- conduct the crucial purposes of the Center. the uninsured; guarantees affordable, come levels, would pay above 7 percent (14) An official congressional authorization comprehensive insurance for all, and will increase the level of scrutiny and over- of their annual income for health care. sight by Congress and continue the Center’s ensures quality health care through its So, Mr. President, as you can see, long partnership with the Department of patient protection provisions. these two charts demonstrate the need Justice and the Office of Juvenile Justice Let me start out by providing some to provide coverage for the uninsured and Delinquency Prevention of the Depart- context, Mr. President. I have two and to make health care coverage af- ment of Justice. charts beside me to demonstrate my fordable for all. (15) The exemplary record of performance points. In 1987, we had about 32 million The Healthy Americans Act does just and success of the Center, as exemplified by Americans who were uninsured. Today, that. First of all, it covers the unin- the fact that the Center’s recovery rate has as you can see from this graph beside sured, which I think is the first and climbed from 62 to 91 percent, justifies ac- me, we are up to close to 45 million tion by Congress to formally recognize the most important thing to do. It builds, National Center for Missing and Exploited Americans who are uninsured. Mr. I say to my colleague from Indiana, on Children as the Nation’s official missing and President, since we debated the subject existing State programs. This is uni- exploited children’s center, and to authorize of universal health care coverage sev- versal coverage with maximum flexi- a line-item appropriation for the National eral years ago, a debate both of us were bility. In addition to covering the unin- Center for Missing and Exploited Children in very involved in, we have had about a sured, many of them moderate-income the Federal budget. million more people a year who have and low-income citizens, we are going SEC. 2. NATIONAL CENTER FOR MISSING AND EX- been dropped from coverage. to make sure that health care coverage PLOITED CHILDREN. Assuming the same economic growth is affordable for all citizens. (a) GRANTS.—The Administrator of the Of- with no economic downturn, which is a In other words, we are going to have fice of Juvenile Justice and Delinquency very rosy assumption, we will continue family protection. So, first, we cover Prevention of the Department of Justice to see this same kind of a profile where the uninsured. Then we have family shall annually make a grant to the National we will get up pretty close to 48 million protection, and we say no family pays Center for Missing and Exploited Children, Americans by the year 2005 who will more than 7 percent of family income which shall be used to— have no health insurance coverage. on health care, and it goes from about S4826 CONGRESSIONAL RECORD — SENATE May 13, 1998 0.5 percent to 7 percent depending on What we are saying to Minnesota or ance, and we are being told that we income. We include Medicare recipients Indiana or California or New York: Let cannot have universal health care cov- as well. The income profile of elderly us cover the uninsured. We can build erage in the United States of America? people is not that high and they need on what you are already doing with the We are being told that we cannot afford income protection, too. State Children’s Health Insurance to make sure that every man, woman, So, again, first, we cover the unin- Plan, by expanding it to adults and and child has decent coverage? That sured, expanding existing programs; more children. Let us make sure there there cannot be some protection of second, we have protection for family is family income protection. Let us family income? That the uninsured income; third, we make sure there is a make sure there is patient protection can’t be insured? That elderly people good package of benefits comparable to and a good package of benefits that is aren’t able to get the care they need? what we have here in the Congress; comprehensive. And you decide how That some patient protection for the fourth of all, we have strong consumer you want to do it. You decide how you people isn’t possible? That is not ac- protections, strong patient protections, want to do it in Indiana. You decide ceptable. Of course it is possible. Of something we have been talking about how you want to do it in Minnesota or course we can do this. Of course we can every day; fifth of all, we expand cov- California or New York or North Caro- do better as a nation. And that is what erage to include some needed benefits lina or Florida or New Hampshire or this piece of legislation says, Mr. that are long overdue. Iowa—you name it. You decide how President. In Minnesota, and around the coun- you want to do it. I just say to colleagues again that I try—it could very well be the case in But the point is, if a State wants to have been disappointed that we have Indiana, Mr. President—a lot of elderly participate—and I think most States put this issue of universal coverage off people are paying well over 30 percent will be very interested in participating the table. It should be put back on the of their monthly income just on pre- in this piece of legislation—then there table. I have had so many conversa- scription drug costs. We cover prescrip- will be Federal grant money that will tions with people in Minnesota, poign- tion drug costs and add that benefit to come on, roughly speaking, a 70–30 ant conversations—it happens in other Medicare. We have good, strong mental matching basis. parts of the country, too—which are health parity, and substance abuse cov- Mr. President, I would like to talk a about health care. I will just give but erage as well. And this is, I think, real- little bit about the cost of this, because one example. I think I may have given ly important. I do not want to introduce a piece of The way all of this comes together it one time before on the floor. But, legislation and treat people in the for the States is to have a maximum after all, the legislation we introduce United States of America as if they do amount of flexibility. And what we are is all about people’s lives. Why else not have intelligence. If we think essentially saying to States is, ‘‘Look, should we be here? It is all about, hope- here is what we decided in the Senate. something is important, then we invest fully, improving people’s lives. We are going to make sure the unin- in it. This piece of legislation, as we I will never forget a discussion with a sured are covered. That is phase one. have costed it out and done our actuar- woman whose husband I had met a year The second thing, we are going to ial estimates, goes like this: In the earlier. When I met him a year earlier, make sure there is protection of family first year—we are just trying to cover he was in bad shape. He is a young income. The third thing is we are going the uninsured—it will be $42 billion; man, maybe 40 at most, a railroad to make sure there is a good package of year two, it gets up to $48 billion; year worker struggling with cancer. And benefits, at least as good as what we three, $62 billion; years four and five— then I met her a year later out at a have in the Congress. The fourth thing when we include both coverage for the farm gathering, and she came up to me that we are going to do is make sure uninsured and now also providing the and she said, ‘‘I want you to come over there is good, strong patient protec- family income protection, it gets up to and meet my husband again, Senator’’ tion. If you agree to that, States, there $85 billion, and then, $98 billion. or ‘‘PAUL.’’ ‘‘He’s a real fighter. The will be Federal money that will go to You would add an additional, roughly doctor said he only had 3 months to you on a, roughly speaking, 70–30 speaking, $26 billion to $39 billion to live, but it’s a year later and he’s still matching basis. And you decide how that estimate in the last 2 years if you struggling. He’s now in a wheelchair.’’ you want to do it. In other words, the are going to cover Medicare recipients, And so we talked. funds are there for you to use if you making sure they do not pay more Then she took me aside, and she said, agree to lay out a plan for universal, than 7 percent of annual income for ‘‘Every day is a living hell. Every day affordable, comprehensive health care health care coverage and making sure I’m battling with these companies to and follow it over the next 4 years. that prescription drug costs are cov- find out what they’re going to cover.’’ This is a good strategy for going into ered. Now, I say to colleagues, the I do not think any American with a the next century; it is a good strategy maximum gets to be above $100 bil- loved one who is struggling with an ill- for reaching universal coverage in our lion—we have estimated this to be $137 ness or a sickness should have to worry country.’’ We are offering the States a billion at the very end of this 5 year pe- about whether or not there is going to carrot; not a stick. riod. be decent coverage. I think that is un- No State has to do it. There is maxi- How do we pay for this? I will tell acceptable. I think we can do better in mum flexibility. I say to my colleague you. We have hundreds of billions of America. I think it is time again to from Indiana—we are friends even dollars of what many of us have called talk about humane, affordable, dig- though we do not always agree on corporate welfare, a variety of dif- nified health care for every man, issues—we will not have this ideologi- ferent deductions and tax breaks, many woman, and child. That is what this cal debate about single payer or ‘‘pay of which I do not believe are necessary. Healthy Americans Act does. or play’’ and all these other things that In addition, we have some military I love ideas. I am really interested in people do not understand. This piece of weaponry that I think there is a very policy. I am proud of the people who legislation, the Healthy Americans legitimate debate as to whether or not have helped me on this legislation: Dr. Act, leaves it up to the States. we need to be spending money on some John Gilman in my office; Rick Brown, This legislation says to Minnesota, of these items. And in addition, we who is with the UCLA School of Public let us expand. We are already above 90 take a look at some of the domestic Health; Doctors Nicole Lurie and Steve percent on the number insured in my programs that I think people can call Miles from Minnesota. State. Let us expand the coverage for into question as to whether or not they I like the fact that the Healthy these people who still have no insur- are essential. Americans Act is a decentralized plan. ance. Let us have some protection of But, Mr. President, my point is that I like that. I like the fact that it is family income, a very big issue for a we offset the expenditure. We are not simple. I like the fact that it gives lot of people who are covered but they talking about taxpayers paying any States a lot of leeway, so different are paying way more than they can af- more money. But what we are saying is States can try different approaches, ford, especially when you include the that this is a worthwhile investment. and we can see what works best. deductibles and copays and the pre- We have a GDP of over $8 trillion, we But we do have here, colleagues, a miums. have an economy at its peak perform- commitment as a nation to make sure May 13, 1998 CONGRESSIONAL RECORD — SENATE S4827 those people who are uninsured have dent wants to be able to assert the ing tactic or to protect unofficial acts, health insurance, to make sure fami- privilege and have a court rule on it, the privilege in its distorted form be- lies do not go broke and are able to af- all without the knowledge of Congress comes an unacceptable impediment to ford health insurance, to make sure it or the American people. the public’s right to know. These two is a package of benefits as good as what This is an affront to Congress and the bills impose accountability require- we have. Shouldn’t the people we rep- public. Congress has a vital interest in ments on the executive to ensure that resent have as good health care cov- the development of the law of execu- the privilege is used in an appropriate erage as Members of the Congress have, tive privilege. Until this Administra- way. Mr. President, I ask unanimous and shouldn’t they be guaranteed tion, grand jury investigations into consent that additional material be strong patient protections? presidential communications were printed in the RECORD. I think this is, in my not so humble rare. Congressional oversight hearings, There being no objection, the mate- opinion, an excellent piece of legisla- by contrast, are commonplace. But rial was ordered to be printed in the tion. I think it is going to take a real Congress will have to live with what- RECORD, as follows: battle to get it passed. But I will bring ever rules the courts develop concern- S. 2075 amendments out on the floor. I will do ing the scope of executive privilege. Be it enacted by the Senate and House of Rep- everything I can as a U.S. Senator to Without notice that the President is resentatives of the United States of America in bring this to people in the country. I raising these claims, Congress cannot Congress assembled, am absolutely convinced that this is protect its interests by filing amicus SECTION 1. AMENDMENT TO TITLE 28. one of the most important things we briefs. Section 594 of title 28, United States Code, can do as a Senate to respond to a very The President’s covert assertion of is amended by adding at the end the follow- real issue that affects the lives of so executive privilege is of concern not ing: many people we represent. just to Congress but to every citizen. ‘‘(m) JUDICIAL REVIEW OF EXECUTIVE PRIVI- Although a limited executive privilege LEGE CLAIMS.— By Mr. ASHCROFT (for himself is necessary to protect national secu- ‘‘(1) EXPEDITED CONSIDERATION.—It shall be the duty of a district court of the United and Mr. MCCONNELL) rity, the privilege is contrary to the S. 2075. A bill to provide for expedited States and the Supreme Court of the United public’s right to know. As a con- States to advance on the docket and to expe- review of executive privilege claims sequence, asserting the privilege has dite to the maximum extent practicable the and to improve efficiency of independ- historically come with a political cost. disposition of any claim asserting executive ent counsel investigations; to the Com- President Clinton has tried to enjoy privilege in any investigation authorized mittee on the Judiciary. the benefits of the privilege while pursuant to this chapter. EXECUTIVE PRIVILEGE LEGISLATION avoiding these costs. We should ensure ‘‘(2) APPEAL TO SUPREME COURT.—Notwith- S. 2076. A bill to provide reporting re- that if a President takes the extraor- standing any other provision of law, any quirements for the assertion of execu- order of a district court of the United States dinary step of asserting executive disposing of a claim asserting executive tive privilege, and for other purposes; privilege that he not be able to keep privilege in any investigation authorized to the Committee on the Judiciary. that action from the American people. pursuant to this chapter shall be reviewable THE EXECUTIVE ACCOUNTABILITY ACT OF 1998 The Executive Accountability Act of by appeal directly to the Supreme Court of Mr. ASHCROFT. Mr. President, I rise 1998 addresses the problem of the cov- the United States. Any such appeal shall be today in order to introduce two bills ert use of executive privilege through taken by a notice of appeal filed within 10 designed to address the abuse and mis- the simple expedient of requiring full calendar days after such order is entered and use of executive privilege by the Presi- disclosure. If the President decides to the jurisdictional statement shall be filed invoke the privilege in court, both the within 30 calendar days after such order is dent, the Executive Accountability Act entered. No stay of an order described in this of 1998 and a companion bill designed President and the presiding judge must subsection shall be issued by a single Justice to expedite appeals of executive privi- disclose that fact to Congress. If the of the Supreme Court of the United States.’’. lege claims asserted in independent court rules on a claim of executive SEC. 2. EFFECTIVE DATE. counsel investigations. I want to thank privilege, the court must inform Con- Section 594(m) of title 28, United States Senator MCCONNELL who has joined me gress. If the President decides to appeal Code (as added by section 1 of this Act), ap- as a co-sponsor of both these measures. an adverse ruling on a claim of execu- plies to any claim of executive privilege as- Executive privilege is just that—a tive privilege, he must also disclose serted on or after January 1, 1998, except privilege extended to the President, that fact to Congress. If the Attorney that, for purposes of an order described in and the President alone, to be invoked General provides a written opinion con- section 594(m)(1) of title 28, United States in those rare circumstances in which Code (as added by section 1 of this Act), en- cerning the validity of the privilege, tered before the date of enactment of this the President must keep discussions that too should be shared with the Con- Act, the time periods for appeal provided in about official acts secret from the gress. Finally, the Act confirms that section 594(m)(2) of that title 28, United courts, Congress and the American peo- any Member of Congress has the capac- States Code (as added by section 1 of this ple in order to protect national secu- ity to file an amicus brief in any judi- Act), shall begin running on the date of en- rity. cial proceeding in which the President actment of this Act. This President has abused this privi- asserts executive privilege. The legisla- lege. He has used it as a delaying tactic tion also builds in protections to en- S. 2076 to try to shield the details of unofficial sure that none of these disclosures en- Be it enacted by the Senate and House of Rep- acts having nothing to do with na- dangers national security. resentatives of the United States of America in tional security, but everything to do I am also introducing a companion Congress assembled, with Mr. Clinton’s personal legal prob- bill to address the President’s misuse SECTION 1. SHORT TITLE. lems. As I detailed in a letter to my of executive privilege as a delaying This Act may be cited as the ‘‘Executive Accountability Act of 1998’’. colleagues back in March, the Presi- tactic to try to run out the clock on dent’s current claim of executive privi- the Independent Counsel’s investiga- SEC. 2. FINDINGS. Congress finds the following: lege is legally baseless. I would ask tion. The bill would provide for expe- (1) Grand jury investigations into Presi- that that letter be included in the dited review of such claims and for a dential communications have been, to date, record. direct appeal to the Supreme Court. extraordinary and rare occurrences, and Part and parcel of the President’s Hopefully, this provision will remove hopefully, will remain that way. Congres- abuse of executive privilege is his un- the temptation to use executive privi- sional oversight hearings, by contrast, are willingness to acknowledge the mere lege claims as delaying tactics, and commonplace. fact that he has asserted the privilege. will force the President to think twice (2) If judicial decisions permit presidential Indeed, the President’s lawyers re- before asserting a spurious claim of aides to withhold crucial information from a cently have attacked the Independent grand jury investigating criminal mis- privilege. conduct, congressional inquiries will be sty- Counsel’s office for acknowledging the When properly confined to official mied by similar claims of executive privi- Court’s entirely predictable rejection acts affecting national security, execu- lege. of the President’s assertion of execu- tive privilege serves an important (3) For these reasons, the proper scope of tive privilege. Apparently, the Presi- function. But when abused as a delay- executive privilege is of concern to every S4828 CONGRESSIONAL RECORD — SENATE May 13, 1998 Member of Congress, and every Member of whether executive privilege has any applica- share the fate of this administration’s other Congress has an interest in being notified of tion at all to this situation. novel theories of privilege, which caused assertions of executive privilege by the Grand jury investigations into Presidential delay, but ultimately were rejected by the President and in having the opportunity to communications are extraordinary and rare courts. First, the President asserted a novel file amicus briefs in appropriate cases. occurrences, and hopefully, will remain that immunity from civil suit that, in his view, (4) In the context of the current litigation way. Congressional oversight hearings, by extended even to cases of private misconduct before Judge Norma Holloway Johnson, the contrast, are commonplace. If the Presi- occurring before he took the presidential President failed to acknowledge publicly dent’s aides are permitted to withhold cru- oath of office. The Supreme Court rejected that he asserted executive privilege to shield cial information from a grand jury inves- that claim 9–0. See Clinton v. Jones, 117 S. Ct. information from the grand jury. tigating criminal misconduct, we can rest 1636 (1997). Then the administration asserted (5) Indeed, lawyers for the President have assured that congressional inquiries will be a novel theory of government attorney-cli- protested that the outcome of Judge John- stymied by similar claims of executive privi- ent privilege, which would treat taxpayer-fi- son’s order rejecting the President’s claim of lege. For this reason, the proper scope of ex- nanced government attorneys just like pri- executive privilege became public. ecutive privilege is of concern to every mem- vate attorneys for purposes of the attorney- (6) As a consequence, Members of Congress ber of Congress. client privilege. The Eighth Circuit Court of have not had a proper basis to decide wheth- As Chairman of the Constitution Sub- Appeals rejected that argument, concluding er to file amicus briefs apprising the court of committee, I have inquired into the law of that allowing the White House ‘‘to use its in- the unique interests and views of Congress executive privilege as developed by the house attorneys as a shield against the pro- with respect to executive privilege. courts. Although for years the body of duction of information relevant to a federal SEC. 3. REPORTING REQUIREMENTS. caselaw did not extend much beyond Chief criminal investigation would represent a Justice Marshall’s opinion in the criminal gross misuse of public assets.’’ In re Grand (a) INITIAL REPORT.—Whenever the Presi- Jury Subpoena Duces Tecum, 112 F.3d 910, 921 dent asserts executive privilege in a judicial trial of Aaron Burr, a number of decisions in (8th Cir. 1997). The Supreme Court declined action or proceeding, the President shall the last quarter century have clarified the to review that decision. See 117 S. Ct. 2482 promptly report to Congress and provide an relatively modest scope of executive privi- (1997). Now we have novel claims of executive explanation of the reasons for such assertion lege. A number of critical principles emerge privilege, a privilege extending to commu- in such detail as is consistent with national from these cases. Executive privilege extends only to com- nications with the First Lady, and a secret security. munications made in relation to official re- service privilege. (b) REPORT BY PRESIDING JUDGE OF ASSER- sponsibilities. The privilege does not cover The President’s current claim of executive TION.—Whenever, in a judicial action or pro- unofficial acts. ‘‘[The privilege is] limited to privilege appears to be foreclosed by well-es- ceeding, the President asserts executive communications in performance of [a Presi- tablished limits on the privilege and cal- privilege, it shall be the duty of the presid- dent’s] responsibilities of his office and made culated more for delay than anything else. ing judicial officer in that action or proceed- in the process of shaping policies and making However, we are not privy to all the informa- ing promptly to report the assertion to Con- decisions.’’ Nixon v. Administrator of the GSA, tion that is at the President’s disposal. Fu- gress. 433 U.S. 425, 449 (1977); see also United States v. ture developments may strengthen or weak- (c) REPORT BY PRESIDING JUDGE OF DISPOSI- Nixon, 418 U.S. 683, 715 (1974). en the President’s assertion of privilege or TION.—Whenever in a judicial action or pro- Even if executive privilege applies to a make it clear that the assertion implicates ceeding, the President asserts executive communication, it generally does not pre- issues that have not yet reached the Su- privilege, it shall be the duty of the presid- vent disclosure to a grand jury. ‘‘The gener- preme Court, such as whether the privilege ing judicial officer in that action or proceed- alized assertion of privilege must yield to applies to anyone other than the President. ing promptly to report to Congress any order the demonstrated, specific need for evidence In the event such novel issues arise, the or ruling disposing of that claim and provide in a pending criminal trial.’’ United States v. Constitution Subcommittee may hold hear- an explanation of the reasons for such dis- Nixon, 418 U.S. 683, 713 (1974). ings in an effort to clarify the proper scope position in such detail as is consistent with The sole exception is for communications of executive privilege. I continue to believe national security. concerning national security. The Court in that the Senate has a critical responsibility (d) AMICUS BRIEFS.—Any Member of either United States v. Nixon indicated that the to ensure that the doctrine of executive House of Congress shall have the right to file scope of any absolute executive privilege privilege does not become distorted in a an amicus brief, regarding an assertion of ex- would be limited to ‘‘military or diplomatic manner that will interfere with congres- ecutive privilege by the President, in any ju- secrets.’’ 418 U.S. at 710. Outside this con- sional oversight long after the current scan- dicial action or proceeding in which that as- text, even a valid claim of executive privi- dals subside. sertion is made. lege cannot keep presidential communica- Sincerely, (e) REPORT CONCERNING DECISION TO AP- tions from the grand jury as long as the con- JOHN ASHCROFT, PEAL.—Whenever the President decides to versations are ‘‘preliminarily shown to have Chairman, U.S. Senate appeal an adverse disposition of a claim of some bearing on the pending criminal Judiciary, Sub- executive privilege or to file a petition for cases.’’ Id. at 713. committee on the certiorari in response to such adverse dis- I hope you find this summary helpful. For Constitution, Fed- position, the President shall promptly report my part, these well-established principles eralism and Property the decision to Congress. lead me to believe that the President is on Rights. (f) ADDITIONAL REQUIREMENT.—Whenever tenuous legal ground in asserting executive the President asserts executive privilege in privilege. In order for his claim to prevail, he By Mr. FORD (for himself, Mr. any forum, the President shall forward to first would have to show that the discussions BOND, Mr. DORGAN, and Mr. Congress any written legal opinion regarding he had with aides concerning how to respond LEAHY): the lawfulness of the assertion redacted as is to allegations of sexual misconduct in his S. 2077. A bill to maximize the na- consistent with national security. private life qualify as official government tional security of the United States (g) REPORT TO CONGRESS.—For purposes of acts. I sincerely doubt he could make such a and minimize the cost by providing for this Act, providing notice or a report to the showing, especially in light of his asserted Senate Majority and Minority Leaders and ability to compartmentalize his private life increased use of the capabilities of the the Speaker of the House and House Minor- from the affairs of state. National Guard and other reserve com- ity Leader shall constitute notice to Con- However, even if he made such a showing, ponents of the United States; to im- gress. the President would still need either to dem- prove the readiness of the reserve com- onstrate that the communications concerned ponents; to ensure that adequate re- DEAR COLLEAGUE: The newspapers and talk ‘‘military or diplomatic secrets,’’ or to con- sources are provided for the reserve shows have been filled for the past few weeks vince a court that the information is neither components; and for other purposes; to with discussion of executive privilege. First, necessary nor relevant to the grand jury’s there were reports of the President’s decision investigation. The President seems unlikely the Committee on Armed Services. to invoke the privilege to prevent several of to prevail on either issue. Although there is THE NATIONAL GUARD AND RESERVE his aides from testifying before the grand some dispute as to the exact nature of the COMPONENTS EQUITY ACT OF 1998 jury. Now it has been reported that the demonstration of relevance or need that the Mr. FORD. Mr. President, on behalf President has argued that his executive prosecutor must make, even the most de- of Senator BOND, co-chairman of the privilege extends to discussions between manding opinion on the subject states that Senate National Guard Caucus, Sen- presidential aides and the First Lady. Many the prosecution ‘‘will be able easily to ex- ators DORGAN and LEAHY, I am intro- commentators appear to assume that execu- plain’’ why it should have access to privi- ducing today the National Guard and tive privilege applies to these communica- leged presidential communications when the Reserve Components Equity Act of tions and have focused on the prudence of President and his close aids are the subject the President’s decision to invoke the privi- of the criminal investigation. See In re Sealed 1998. lege in light of the parallels to Watergate. I Case, 121 F.3d 729, 755 (D.C. Cir. 1997). Over the past few years, we’ve had to will leave that question for the pundits. The In the end, it seems quite likely that the expend a huge amount of energy fend- more pressing question for the Congress is President’s claim of executive privilege will ing off attacks to the Guard. Worse, May 13, 1998 CONGRESSIONAL RECORD — SENATE S4829 the whole time we’re dusting ourselves The Guard has a greater relevance today Mr President, the Reserve Compo- off and assessing the damage, our oppo- than during the Cold War—exactly the kind nents are the only contact a majority nents deny they’ve ever laid a finger on of relevance the Founding Fathers envi- of Americans have with the military. us. sioned when they elected to place the pre- When they see a neighbor, a child’s It reminds me of the boxer who, at ponderance of the nation’s military strength in the state militias. teacher, or their family doctor rep- the insistence of his trainer, took on resenting the U.S. in the international the current champ. After the first They understand that with its ‘‘dual arena or on hand when natural disas- round, he came back to his corner with use system,’’ the Guard is the wave of ters strike, they have a direct link to a busted lip, and his trainer patted him the future, not a relic of the past. the military. on the back and said, ‘‘You’re doing While many of us felt blind-sided by That bond has remained strong for great,’’ then shoved him back out when the QDR, the fact is it was just one well over 200 years. And despite resist- the second bell sounded. After the sec- more instance where the Pentagon re- ance from the Pentagon, I believe Con- ond round, he staggered back to his fuses to give the Guard the status it gress has no intention of seeing that corner with a black eye and a busted deserves. bond damaged through insufficient cheek, and his trainer said, ‘‘You’re I don’t believe making the Chief of funds or lack of resources—from oper- doing great, he hasn’t laid a hand on the National Guard a four star general ations and maintenance to pay and al- you.’’ And the boxer replied, ‘‘Well and a member of the Joint Require- lowances to continued equipment mod- you’d better keep an eye on the referee, ments Oversight Council will solve all ernization and military construction. ‘cause someone is beating’ the heck out of the Guard’s problems, but I do be- This is why the National Guard and Re- of me.’’ lieve it would help to change the dy- serve Components Equity Act of 1998 Year after year, the Guard has come namics of this dysfunctional relation- needs to become law. back to its corner, bruised and battered ship, and better ensure the Guard’s Muhammad Ali used to say that not by the budget process, only to hear needs are met when the Defense budget only could he knock’em out, but he Pentagon officials insist they haven’t is being written, rather than through could pick the round. Opponents to the laid a hand on them. Congressional intervention. Guard and Reserves should be on no- I think we all agree that as we enter As many of you probably recall, last tice—no matter how much they try and the 21st Century, the common goal of year Senator Stevens offered an bob and weave, this is the round the U.S. military should be to create amendment to the Defense Authoriza- they’re going to go down. and maintain a seamless Total Force tion bill to make this change. It was Before closing, I’d like to take just a that provides our military leaders with approved by the Senate, but later moment to say how much I’ve enjoyed the necessary flexibility and strength dropped in Conference Committee. In- working with Senator BOND on Na- to address whatever conflicts that stead, Conferees agreed to having a tional Guard issues over the last ten might arise. Two-Star General from the Guard and The 1997 QDR should have been the years. We’ve worked together, along one from the Reserves—a position the with the other members of the Caucus, vehicle to achieve that goal. Unfortu- Guard already has. nately, it fell far short. One analyst de- in a bipartisan manner to ensure that Since then, I’ve been working with the National Guard and Reserve com- scribed the QDR as ‘‘another banal de- Senator BOND—my co-chairman of the fense of the status quo.’’ ponents receive the funding these dedi- Senate National Guard Caucus to come cated men and women need to success- There are close to a half million men up with new legislation reinforcing the and women in the National Guard, ac- fully fulfill their role in preserving our important role of both the Guard and national security. counting for about 20 percent of this the Reserves. nation’s Armed Forces. Because of Mr. President, I ask unanimous con- The bill would direct the Secretary of sent that the National Guard and Re- their dual federal-state mission, Na- Defense to submit a report to Congress tional Guardsmen and women are on serve Components Equity Act of 1998 be regarding the force structure necessary printed in the RECORD, along with a hand to serve in both the international for the Army National Guard and Army arena and in our own backyards. Per- section-by-section description this leg- Reserve to meet future national secu- haps more than any other soldier, islation. rity threats. The bill would freeze the members of the Guard embody our There being no objection, the mate- end strength of the Army National forefathers’ vision of the citizen-sol- rial was ordered to be printed in the Guard and the Army Reserve at the dier. RECORD, as follows: level Congress approved for Fiscal Year That’s because the citizen-soldiers of S. 2077 the National Guard find their roots not 1998, until September 30, 2000. This freeze will provide Congress a chance Be it enacted by the Senate and House of Rep- only in the history of this country, but resentatives of the United States of America in equally important, in the communities to review the force structure report Congress assembled, submitted by the Secretary of Defense. of this country. SECTION 1. SHORT TITLE. The Army National Guard alone pro- The bill also requires the Secretary This Act may be cited as the ‘‘National vides more than 55 percent of the of Defense to develop a master plan for Guard and Reserve Components Equity Act ground combat forces, 45 percent of the the modernization of the National of 1998’’. combat support forces, and 25 percent Guard And Reserve Components to en- TITLE I—STRATEGIC PLANNING of the Army’s combat support units— sure compatibility of equipment with SEC. 101. FORCE STRUCTURE. all while using only two percent of the our active forces. Under this legisla- (a) REQUIREMENT.—At the same time as the Department of Defense budget. tion, the Secretary must also submit a President submits the budget to Congress for But if you look at the QDR process, master plan to Congress on meeting fiscal year 2000 under section 1105(a) of title you would think the Guard has out- the military construction needs of the 31, United States Code, the Secretary of De- lived its usefulness—that their cost-ef- National Guard and Reserve Compo- fense shall submit to Congress a report on the Army reserve component force structure. fectiveness, their flexibility, their nents. This legislation builds on Senator (b) CONTENT OF REPORT.—The report shall readiness are all figments of this Sen- include the following: ator’s imagination. STEVENS’s amendment to last year’s (1) The force structure that the Secretary This contentious relationship got Defense Authorization. It elevates the considers appropriate for the Army National even hotter last spring when leaders of Chief of the National Guard Bureau to Guard and the Army Reserve for meeting the National Guard expressed outrage the Grade of General (4-star) and ele- threats to the national security that are at never being given the opportunity to vates the Senior Representatives of the considered probable for the six fiscal years present their case before the QDR and Reserves one Grade. These are just beginning with fiscal year 2000. over the Army’s failure to be up-front some provisions of the bill. My Guard (2) Specific wartime missions for the units in that force structure, including missions Caucus Co-Chairman, Senator BOND, about how deeply they wanted to cut relating to responses to emergencies involv- the Army Guard. someone who has been deeply commit- ing weapons of mass destruction. The outrage was well placed. The ted to improving the readiness of the (b) FREEZE ON END STRENGTHS.—Notwith- Washington Times was right on target Guard, will be outlining other provi- standing any other provision of law, the when they wrote back in June that sions of the bill. Armed Forces shall maintain the same S4830 CONGRESSIONAL RECORD — SENATE May 13, 1998 strengths for Selected Reserve personnel of reau is the principal adviser to the Presi- ‘‘(B) Subparagraph (A) applies to an officer the Army National Guard of the United dent, the Secretary of Defense, any other while serving in any of the following posi- States and the Army Reserve through Sep- person designated to exercise national com- tions: tember 30, 2000, as are authorized under para- mand authority, the Secretary of the Army, ‘‘(i) The Chief of the National Guard Bu- graphs (1) and (2), respectively, of section the Chief of Staff of the Army, the Secretary reau, if serving in the grade of general. 411(a) of the National Defense Authorization of the Air Force, and the Chief of Staff of the ‘‘(ii) The Vice Chief of the National Guard Act for Fiscal Year 1998 (Public Law 105–85; Air Force on matters relating to— Bureau, if serving in the grade of lieutenant 111 Stat. 1719) ‘‘(1) the National Guard; general. SEC. 102. MODERNIZATION PLAN. ‘‘(2) the Army National of the United ‘‘(iii) The Director of the Army National (a) PLAN REQUIRED.—The Secretary of De- States; Guard, if serving in the grade of lieutenant fense shall develop a master plan that pro- ‘‘(3) the Air National Guard of the United general. vides for the complete modernization of the States; ‘‘(iv) The Director of the Air National National Guard and the other reserve compo- ‘‘(4) domestic security; and Guard, if serving in the grade of lieutenant nents of the Armed Forces, including the ‘‘(5) public safety.’’. general. modernization necessary to ensure the com- (d) RELATIONSHIP TO THE ARMY STAFF AND ‘‘(7)(A) An officer while serving in a posi- patibility of the equipment used by the re- THE AIR STAFF.—Section 10502 of title 10, tion referred to in subparagraph (B), if serv- serve components. United States Code, is amended by adding at ing in the grade of lieutenant general or vice (b) SUBMISSION TO CONGRESS.—The Sec- the end the following new paragraph: admiral, is in addition to the number that retary shall submit the plan to Congress not ‘‘(e) RELATIONSHIP TO ARMY AND AIR would otherwise be permitted for that offi- later than six months after the date of the STAFF.—To the extent that it does not im- cer’s armed force for that grade under para- enactment of this Act. pair the independence of the Chief of the Na- graph (1) or (2), as applicable. SEC. 103. MILITARY CONSTRUCTION. tional Guard Bureau in the performance of ‘‘(B) Subparagraph (A) applies to an officer (a) PLAN REQUIRED.—The Secretary of De- his duties, the Chief of the National Guard serving in any of the following positions: fense shall develop a master plan that pro- Bureau shall serve at the level of the Vice ‘‘(i) The Chief of Army Reserve. vides for meeting the unmet requirements of Chief of Staff of the Army in all forums ‘‘(ii) The Chief of Naval Reserve. the National Guard and the other reserve within the Department of the Army, and at ‘‘(iii) The Commander, Marine Forces Re- components for military construction. the level of the Vice Chief of Staff of the Air serve. (b) SUBMISSION TO CONGRESS.—The Sec- Force in all forums within the Department ‘‘(iv) The Chief of Air Force Reserve.’’. retary shall submit the plan to Congress not of the Air Force.’’. (g) EFFECTIVE DATE.—This section and the later than six months after the date of the SEC. 202. GRADES OF RESERVE COMPONENT amendments made by this section shall take enactment of this Act. LEADERS. effect on January 1, 1999. TITLE II—RESERVE COMPONENT (a) NATIONAL GUARD BUREAU LEADERSHIP.— SEC. 203. ADJUTANTS GENERAL OF THE NA- LEADERSHIP (1) CHIEF.—Section 10502(d) of title 10, TIONAL GUARD. SEC. 201. CHIEF OF THE NATIONAL GUARD BU- United States Code, is amended by striking (a) FEDERAL RECOGNITION.—The Secretary REAU. out ‘‘lieutenant general’’ and inserting in of Defense shall prescribe in regulations a re- (a) RELATIONSHIP TO THE JOINT CHIEFS OF lieu thereof ‘‘general’’. quirement that, whenever a person is ap- STAFF.—Section 151 of title 10, United States (2) VICE CHIEF.—Section 10505(c) of such pointed to the position of State adjutant Code, is amended by adding at the end the title is amended by striking out ‘‘major gen- general of the National Guard, the board following new subsection: eral’’ and inserting in lieu thereof ‘‘lieuten- that is to consider the appointee for being ‘‘(h) PARTICIPATION BY THE CHIEF OF THE ant general’’. extended Federal recognition be convened NATIONAL GUARD BUREAU.—(1) The Chief of (3) OTHER GENERAL OFFICERS.—Section within 60 days after the date of the appoint- the National Guard Bureau shall identify for 10506(a)(1) of such title is amended by strik- ment. the Chairman any matter scheduled for con- ing out ‘‘major general’’ each place it ap- (b) INVESTIGATIONS OF ADJUTANTS GEN- sideration by the Joint Chiefs of Staff that pears and inserting in lieu thereof ‘‘lieuten- ERAL.—The Secretary of Defense shall pre- directly concerns the National Guard, do- ant general’’. scribe in regulations a requirement that the mestic security, or public safety. (b) CHIEF OF ARMY RESERVE.—Section Inspector General of the Department of De- ‘‘(2) Unless, upon request of the Chairman 3038(c) of such title is amended by striking fense be responsible for conducting inves- for a determination, the Secretary of De- out ‘‘major general’’ in the third sentence tigations regarding appointments of State fense determines that a matter identified and inserting in lieu thereof ‘‘lieutenant gen- adjutants general of the National Guard for pursuant to paragraph (1) does not concern eral’’. the Department of Defense. the National Guard, domestic security, or (c) CHIEF OF NAVAL RESERVE.—Section 5143 (c) STATE INCLUDES POSSESSIONS, ET public safety, the Chief of the National of such title is amended— CETERA.—For the purposes of this section, Guard Bureau shall meet with the Joint (1) in subsection (b), by striking out ‘‘from the term ‘‘State’’ includes the District of Co- Chiefs of Staff when that matter is under officers who—’’ and inserting in lieu thereof lumbia, Puerto Rico, Guam, and the Virgin consideration. The Chief of the National ‘‘from among officers of the Naval Reserve Islands. Guard Bureau has equal status with the who—’’; and SEC. 204. REVIEW OF PROMOTIONS AND FED- members of the Joint Chiefs of Staff for the (2) in subsection (c)(2), by striking out ‘‘a ERAL RECOGNITION FOR NATIONAL consideration of the matter by the Joint grade above rear admiral (lower half)’’ in the GUARD OFFICERS. Chiefs of Staff. third sentence and inserting in lieu thereof (a) GAO REVIEW.—The Comptroller General ‘‘(3) The Chairman shall provide the Chief ‘‘the grade of vice admiral’’. shall review the promotions of, and exten- of the National Guard Bureau with all agen- (d) COMMANDER, MARINE FORCES RE- sions of Federal recognition to, officers of da for the meetings of the Joint Chiefs of SERVE.—Section 5144 of such title is amend- the National Guard to determine the timeli- Staff and any other information that the ed— ness and fairness of the processing of such Chairman considers appropriate to assist the (1) in subsection (b), by striking out actions. Chief of the National Guard Bureau to carry ‘‘from officers who—’’ and inserting in lieu (c) SCOPE OF REVIEW.—The Comptroller out his responsibilities under this sub- thereof ‘‘from among officers of the Marine General shall determine the period and num- section.’’. Corps Reserve who—’’; and ber of actions that are necessary to be re- (b) MEMBERSHIP ON THE JOINT REQUIRE- (2) in subsection (c)(2), by striking out ‘‘a viewed in order to provide a meaningful basis MENTS OVERSIGHT COUNCIL.—Section 181(c) of grade above brigadier general’’ in the third for making determinations under subsection such title is amended— sentence and inserting in lieu thereof ‘‘the (a). (1) in paragraph (1)— grade of lieutenant general’’. (c) REPORT.—Not later than one year after (A) in subsection (D), by striking out (e) CHIEF OF AIR FORCE RESERVE.—Section the date of the enactment of this Act, the ‘‘and’’; 8038(c) of such title is amended by striking Comptroller General shall submit to Con- (B) in subsection (E), by striking out the out ‘‘major general’’ in the third sentence gress a report on the review. The report shall period at the end and inserting in lieu there- and inserting in lieu thereof ‘‘lieutenant gen- include the Comptroller General’s deter- of ‘‘; and’’; and eral’’. minations together with any recommenda- (C) by adding at the end the following: (f) EXCLUSION FROM DISTRIBUTION LIMITS tions that the Comptroller General considers ‘‘(F) the Chief of the National Guard Bu- FOR GENERAL OFFICERS ON ACTIVE DUTY.— appropriate. reau.’’; and Section 525(b) of title 10, United States Code, TITLE III—USE OF THE RESERVE COMPO- (2) in paragraph (2), by inserting ‘‘and the is amended by adding at the end the follow- NENTS FOR EMERGENCIES INVOLVING Chief of the National Guard Bureau’’ after ing: WEAPONS OF MASS DESTRUCTION ‘‘other than the Chairman of the Joint ‘‘(6)(A) An officer serving in a position re- Chiefs of Staff’’. ferred to in subparagraph (B) in the grade SEC. 301. DISASTER RELIEF. (c) ADDITIONAL ADVISORY FUNCTIONS.—Sec- specified for the position in that subpara- (a) AUTHORITY.— tion 10502(c) of title 10, United States Code, graph is in addition to the number that (1) DEFINITIONS.— is amended to read as follows: would otherwise be permitted for that offi- (A) MAJOR DISASTER.—Paragraph (2) of sec- ‘‘(c) ADVISER ON NATIONAL GUARD MAT- cer’s armed force for that grade under para- tion 102 of the Robert T. Stafford Disaster TERS.—The Chief of the National Guard Bu- graph (1). Relief and Emergency Assistance Act (42 May 13, 1998 CONGRESSIONAL RECORD — SENATE S4831 U.S.C. 5122) is amended by striking out ‘‘or ‘‘115. Reimbursement for State costs of pre- ing a weapon of mass destruction (as defined explosion’’ and inserting in lieu thereof ‘‘ex- paredness programs for emer- section 1402 of the Defense Against Weapons plosion, or emergency involving a weapon of gencies involving weapons of of Mass Destruction Act of 1996 (50 U.S.C. mass destruction.’’. mass destruction.’’. 2302(1))) shall not be counted for purposes of (B) WEAPON OF MASS DESTRUCTION.—Such SEC. 302. RESERVES ON ACTIVE DUTY. a limitation in subsection (a).’’. section is further amended by adding at the (a) AUTHORITY.— TITLE IV—STRENGTHENED REFORMS FOR end the following: (1) ORDER TO ACTIVE DUTY.—Section 12301(b) ARMY NATIONAL GUARD COMBAT READ- ‘‘(9) WEAPON OF MASS DESTRUCTION.—‘Weap- of title 10, United States Code, is amended— INESS on of mass destruction’ has the meaning (A) by inserting ‘‘(1)’’ after ‘‘(b)’’; SEC. 401. ADEQUATE FUNDING FOR MEETING given that term in section 1402 of the De- (B) by striking out ‘‘for not more than 15 NCO EDUCATION REQUIREMENTS. fense Against Weapons of Mass Destruction days a year’’ in the first sentence; and Section 1114(b) of the Army National Act of 1996 (50 U.S.C. 2302(1)). (C) by adding at the end the following; Guard Combat Readiness Reform Act of 1992 ‘‘(10) NATIONAL GUARD.—‘National Guard’ ‘‘(2) The authority under paragraph (1) in- (title XI of Public Law 102–484; 10 U.S.C. 10105 has the meaning given that term in section cludes authority to order a unit or member note) is amended to read as follows: 101(3) of title 32, United States Code. to active duty to provide assistance in re- ‘‘(b) AVAILABILITY OF TRAINING.—The Sec- ‘‘(11) RESERVE COMPONENTS.—‘Reserve com- sponding to an emergency involving a weap- retary of the Army shall ensure that suffi- ponents of the Armed Forces’ means the re- on of mass destruction (as defined section cient training positions and funds are avail- serve components named in section 10101 of 1402 of the Defense Against Weapons of Mass able to enable compliance with subsection title 10, United States Code.’’. Destruction Act of 1996 (50 U.S.C. 2302(1))). (a) without it being necessary for non- (2) USE OF RESERVE COMPONENTS.—Section ‘‘(3) A unit or member may not be ordered commissioned officers to be absent from unit 201(a) of such Act (42 U.S.C. 5131) is amend- to active duty under this subsection for more annual training for the units of assignment ed— than 15 days a year. Days of service on active in order to attend training to meet military (A) by striking out the period at the end of duty to provide assistance described in para- education requirements.’’. paragraph (7) and inserting in lieu thereof ‘‘; graph (2), up to 15 days a year, shall not be SEC. 402. COMBAT UNIT TRAINING. and’’; and counted toward the limitation on the total Section 1119 of the Army National Guard (B) by adding at the end the following: number of days set forth in the preceding Combat Readiness Reform Act of 1992 is ‘‘(8) the use of the National Guard or the sentence.’’. amended— other reserve components of the Armed (2) USE OF ACTIVE GUARD AND RESERVE PER- (1) by inserting ‘‘(a) PROGRAM TO MINIMIZE Forces to take actions that may be nec- SONNEL.—Section 12310 of title 10, United POST-MOBILIZATION TRAINING NEEDS.—’’ be- essary to provide an immediate response to States Code, is amended by adding at the end fore ‘‘The Secretary’’; an incident involving a use or threat of use the following: (2) by inserting ‘‘all’’ before ‘‘combat of a weapon of mass destruction.’’. ‘‘(c)(1) A Reserve on active duty as de- units’’ in the first sentence; (3) REQUESTS BY DIRECTOR OF FEMA.—Sec- scribed in subsection (a), or a Reserve who is (3) in paragraph (1)— tion 611 of such Act (42 U.S.C. 5196) is amend- a member of the National Guard serving on (A) in subparagraph (A), by inserting ‘‘and ed by adding at the end the following: full-time National Guard duty under section professional development’’ after ‘‘qualifica- ‘‘(l) USE OF THE RESERVE COMPONENTS.— 502(f) of title 32 in connection with functions tion’’; The Director may request the Secretary of referred to in subsection (a), may perform (B) in subparagraph (B), by striking out Defense to authorize the National Guard or any duties in support of emergency prepared- ‘‘and squad level’’ and inserting in lieu to direct other reserve components of the ness programs to prepare for or to respond to thereof ‘‘squad, and platoon level’’; and Armed Forces to conduct training exercises, any emergency involving the use of a weapon (C) by striking out subparagraph (C) and preposition equipment and other items, and of mass destruction (as defined in section inserting in lieu thereof the following: take such other actions that may be nec- 1402 of the Defense Against Weapons of Mass ‘‘(C) maneuver training at the platoon essary to provide an immediate response to Destruction Act of 1996 (50 U.S.C. 2302(1))). level to at least the minimum extent re- an emergency involving a weapon of mass de- ‘‘(2) The costs of the pay, allowances, quired of all Army units; and’’; and struction. The Secretary of Defense may au- clothing, subsistence, gratuities, travel, and (4) by adding at the end the following: thorize the National Guard or direct other related expenses for a Reserve performing ‘‘(b) ADEQUACY OF FUNDING.—The Secretary reserve components to take actions re- duties under the authority of paragraph (1) shall ensure that sufficient funds are made quested by the Director under the preceding shall be paid from the appropriation that is available for conducting the training re- sentence.’’. available to pay such costs for other mem- quired under the program.’’. (b) REIMBURSEMENT OF STATES.— bers of the reserve component of that Re- SEC. 403. USE OF COMBAT SIMULATORS. (1) AUTHORITY.—Chapter 1 of title 32, serve who are performing duties as described The text of section 1120 of such Act is United States Code, is amended by adding at in subsection (a).’’. amended to read as follows: the end the following new section: (b) EXCLUSION FROM STRENGTH LIMITA- ‘‘The Secretary of the Army shall— ‘‘§ 115. Reimbursement for State costs of pre- TIONS.— ‘‘(1) expand the use of simulations, simula- paredness programs for emergencies in- (1) GENERAL LIMITATION.—Section 115(d) of tors, and advanced training devices and tech- volving weapons of mass destruction such title is amended by adding at the end nologies to fully support the complete inte- the following: gration of Army National Guard units with ‘‘(a) REIMBURSEMENT AUTHORIZED.—The ‘‘(8) Members of the reserve components on Secretary of Defense may reimburse a State active Army units; and active duty and members of the National ‘‘(2) use and distribute combat simulators for expenses incurred by the State for the Guard on full-time National Guard duty to National Guard of that State to participate so as to serve the training of Army National participate in emergency preparedness pro- Guard units as well as active Army units.’’. in emergency preparedness programs to re- grams for responding to emergencies involv- spond to an emergency involving the use of ing a weapon of mass destruction (as defined TITLE V—PAY, ALLOWANCES, RETIRE- a weapon of mass destruction. Expenses re- section 1402 of the Defense Against Weapons MENT, AND OTHER MONETARY BENE- imbursable under this section may include of Mass Destruction Act of 1996 (50 U.S.C. FITS the costs of the following: 2302(1))).’’. SEC. 501. BASIC ALLOWANCE FOR HOUSING. ‘‘(1) Pay, allowances, clothing, subsistence, (2) OFFICER PERSONNEL LIMITATION.—Sec- (a) RESERVES ON ACTIVE DUTY MORE THAN travel, and related expenses of personnel of tion 12011 of such title is amended by adding 100 MILES FROM HOME.—Section 403(g)(3) of the National Guard. at the end the following: title 37, United States Code, is amended by ‘‘(2) Operation and maintenance of equip- ‘‘(c) Members of the reserve components on adding at the end the following: ‘‘A member ment and facilities of the National Guard. active duty and members of the National of a reserve component on active duty may ‘‘(3) Procurement of services and equip- Guard on full-time National Guard duty to not be denied a basic allowance for housing ment for the National Guard. participate in emergency preparedness pro- at that rate on the basis of being provided ‘‘(b) STATE INCLUDES POSSESSIONS, ET grams for responding to emergencies involv- quarters of the United States if the member CETERA.—For the purposes of this section, ing a weapon of mass destruction (as defined is performing duty more than 100 miles from the term ‘State’ includes the District of Co- section 1402 of the Defense Against Weapons the member’s primary residence.’’. lumbia, Puerto Rico, Guam, and the Virgin of Mass Destruction Act of 1996 (50 U.S.C. (b) EFFECTIVE DATE AND APPLICABILITY.— Islands. 2302(1))) shall not be counted for purposes of The amendment made by subsection (a) shall ‘‘(c) WEAPON OF MASS DESTRUCTION DE- a limitation in subsection (a).’’. take effect on the date of the enactment of FINED.—In this section, the term ‘weapon of (3) ENLISTED PERSONNEL LIMITATION.—Sec- this Act and shall apply with respect to ac- mass destruction’ has the meaning given tion 12011 of such title is amended by adding tive duty performed on or after that date. that term in section 1402 of the Defense at the end the following: SEC. 502. ELIGIBILITY FOR HAZARDOUS OR IMMI- Against Weapons of Mass Destruction Act of ‘‘(c) Members of the reserve components on NENT DANGER PAY. 1996 (50 U.S.C. 2302(1)).’’. active duty and members of the National (a) FULL MONTHLY RATE FOR ACTIVE DUTY (2) CLERICAL AMENDMENT.—The table of Guard on full-time National Guard duty to FOR PARTIAL MONTH.—Section 310(a) of title sections at the beginning of such chapter is participate in emergency preparedness pro- 37, United States Code, is amended in the amended by adding at the end the following: grams for responding to emergencies involv- matter preceding paragraph (1) by striking S4832 CONGRESSIONAL RECORD — SENATE May 13, 1998 out ‘‘for any month in which he was entitled out ‘‘of this title—’’ and all that follows serve-National Guard employee on any day to basis pay’’ and inserting in lieu thereof through ‘‘for the purposes of clause (2)’’ and during a taxable year when the employee ‘‘for any month in which he was entitled to inserting in lieu thereof ‘‘of this title, the was absent from employment for the purpose any basic pay (without regard to the number member may not be considered to have been of performing qualified active duty. of days of duty performed for the month)’’. separated from the Selected Reserve for the ‘‘(c) LIMITATIONS.— (b) EFFECTIVE DATE.—The amendments purposes’’. ‘‘(1) MAXIMUM CREDIT.—The maximum made by subsection (a) shall take effect on SEC. 602. DEMONSTRATION PROGRAM ON UNLIM- credit allowable under subsection (a) shall the first day of the first month that begins ITED USE OF COMMISSARY STORES. not exceed $2,000 in any taxable year with re- on or after the date of the enactment of this (a) PROGRAM REQUIRED.—The Secretary of spect to any one Ready Reserve-National Act. Defense shall carry out a demonstration pro- Guard employee. SEC. 503. ALLOTMENTS OF PAY. gram to test the efficacy of permitting un- ‘‘(2) DAYS OTHER THAN WORK DAYS.—No Section 701(d) of title 37, United States limited use of commissary stores by mem- credit shall be allowed with respect to a Code, is amended— bers and former members of the reserve com- Ready Reserve-National Guard employee (1) by inserting ‘‘(including a member of a ponents who are eligible for limited use of who performs qualified active duty on any reserve component of that armed force)’’ in commissary stores under section 1063 and day on which the employee was not sched- the first sentence after ‘‘a member of the 1064 of title 10, United States Code. uled to work (for a reason other than to par- Army, Navy, Air Force, or Marine Corps’’; (b) PERIOD FOR PROGRAM.—The program ticipate in qualified active duty) and ordi- and shall be carried out for one year beginning narily would not have worked. ‘‘(d) DEFINITIONS.—For purposes of this sec- (2) by inserting ‘‘(three allotments, in the on January 1, 1999. tion— case of a member of a reserve component)’’ (c) REPORT.—Not later than March 31, 2000, ‘‘(1) QUALIFIED ACTIVE DUTY.—The term in the second sentence after ‘‘six allot- the Secretary of Defense shall submit to ‘qualified active duty’ means— ments’’. Congress a report on the results of the dem- onstration program, together with any com- ‘‘(A) active duty, as defined in section SEC. 504. EARLY RETIREMENT FOR PHYSICAL 101(d)(1) of title 10, United States Code; DISABILITY. ments and recommendations that the Sec- ‘‘(B) full-time National Guard duty, as de- (a) PERMANENT AUTHORITY.—Chapter 1223 retary considers appropriate. fined in section 1010(d)(5) of such title; and of title 10, United States Code, is amended by SEC. 603. SPACE AVAILABLE TRAVEL FOR MEM- ‘‘(C) hospitalization incident to duty re- inserting after section 12731a the following: BERS OF SELECTED RESERVE. ferred to in subparagraph (A) or (B). (a) IN GENERAL.—Chapter 157 of title 10, § 12731b. Early retirement for physical dis- ‘‘(2) COMPENSATION.—The term ‘compensa- United States Code, is amended by adding at ability tion’ means any remuneration for employ- the end the following new section: ‘‘(a) RETIREMENT WITH AT LEAST 15 YEARS ment, whether in cash or in kind, which is OF SERVICE.—For the purposes of section ‘‘§ 2646. Space available travel: members of paid or incurred by a taxpayer and which is 12731 of this title, the Secretary concerned Selected Reserve deductible from the taxpayer’s gross income may— ‘‘(a) AVAILABILITY.—The Secretary of De- under section 162(a)(1). ‘‘(1) determine to treat a member of the fense shall prescribe regulations to allow ‘‘(3) READY RESERVE-NATIONAL GUARD EM- Selected Reserve of a reserve component of members of the Selected Reserve in good PLOYEE.—The term ‘Ready Reserve-National the armed force under the jurisdiction of standing (as determined by the Secretary Guard employee’ means an employee who is that Secretary as having met the service re- concerned), and dependents of such members, a member of the Ready Reserve or of the Na- quirements of subsection (a)(2) of that sec- to receive transportation on aircraft of the tional Guard. tion and provide the member with the notifi- Department of Defense on a space available ‘‘(4) NATIONAL GUARD.—The term ‘National cation required by subsection (d) of that sec- basis under the same terms and conditions as Guard’ has the meaning given such term by tion if the member— apply to members of the armed forces on ac- section 101(c)(1) of title 10, United States ‘‘(A) has completed at least 15, and less tive duty and dependents of such members. Code. than 20, years of service computed under sec- ‘‘(b) CONDITION ON DEPENDENT TRANSPOR- ‘‘(5) READY RESERVE.—The term ‘Ready Re- tion 12732 of this title; and TATION.—A dependent of a member of the Se- serve’ has the meaning given such term by ‘‘(B) no longer meets the qualifications for lected Reserve may be provided transpor- section 10142 of title 10, United States Code.’’ membership in the Selected Reserve solely tation under this section only when the de- (b) CREDIT TO BE PART OF GENERAL BUSI- because the member is unfit because of phys- pendent is actually accompanying the mem- NESS CREDIT.—Subsection (b) of section 38 of ical disability; and ber on the travel.’’. such Code (relating to general business cred- ‘‘(2) upon the request of the member sub- (b) CLERICAL AMENDMENT.—The table of it) is amended by striking ‘‘plus’’ at the end mitted to the Secretary, transfer the mem- sections at the beginning of such chapter is of paragraph (11), by striking the period at ber to the Retired Reserve. amended by adding at the end the following the end of paragraph (12) and inserting ‘‘, ‘‘(b) EXCLUSION.—This section does not new item: plus’’, and by adding at the end the following new paragraph: apply to persons referred to in section ‘‘2646. Space available travel: members of Se- ‘‘(13) the Ready Reserve-National Guard 12731(c) of this title.’’. lected Reserve.’’. (b) REPEAL OF SUPERSEDED AUTHORITY.— employee credit determined under section SEC. 604. REPEAL OF EXPIRATION OF ELIGI- 45D(a).’’ Section 12731(a)(c) of such title is amended BILITY FOR VETERANS HOUSING (c) CONFORMING AMENDMENT.—The table of by striking out paragraph (3). BENEFITS BASED ON SERVICE IN sections for subpart D of part IV of sub- (c) CLERICAL AMENDMENT.—The table of THE SELECTED RESERVE. chapter A of chapter 1 of the Internal Reve- sections at the beginning of such chapter is Section 3702(a)(2)(E) of title 38, United nue Code of 1986 is amended by inserting amended by inserting after the item relating States Code, is amended by striking out after the item relating to section 45C the fol- to section 12731a the following: ‘‘For the period beginning on October 28, lowing new item: ‘‘12731b. Early retirement for physical dis- 1992, and ending on October 27, 1999, each’’ ability.’’. and inserting in lieu thereof ‘‘Each’’. ‘‘Sec. 45D. Ready Reserve-National Guard employee credit.’’ TITLE VI—OTHER BENEFITS TITLE VII—OTHER MATTERS (d) EFFECTIVE DATE.—The amendments SEC. 701. READY RESERVE-NATIONAL GUARD EM- SEC. 601. REPEAL OF 10-YEAR LIMITATION ON made by this Act shall apply to taxable USE OF MONTGOMERY GI BILL BEN- PLOYEE CREDIT ADDED TO GEN- EFITS. ERAL BUSINESS CREDIT. years beginning after December 31, 1997. (a) REPEAL.—Subsection (a) of section 16133 (a) READY RESERVE-NATIONAL GUARD CRED- SECTION-BY-SECTION ANALYSIS of title 10, United States Code, is amended by IT.—Subpart D of part IV of subchapter A of Section 101: Directs the Secretary of De- striking out ‘‘(1)’’ and all that follows and chapter 1 of the Internal Revenue Code of fense to submit a report to Congress regard- inserting in lieu thereof ‘‘on the date the 1986 (relating to business-related credits) is amended by adding at the end the following ing the following; person is separated from the Selected Re- 1) force structure appropriate for the Army new section: serve.’’. National Guard and the Army Reserve to (b) CONFORMING AMENDMENTS.—Subsection ‘‘SEC. 45D. READY RESERVE-NATIONAL GUARD meet national security threats. (b) of such section is amended— EMPLOYEE CREDIT. 2) freezes the end strength of the Army Na- (1) in paragraph (1)— ‘‘(a) GENERAL RULE.—For purposes of sec- tional Guard and Army Reserve at the levels (A) by striking out ‘‘In’’ in the matter pre- tion 38, the Ready Reserve-National Guard approved in Public Law 105–85 Stat. 1719 ceding subparagraph (A) and inserting in lieu employee credit determined under this sec- until September 30, 2000. thereof ‘‘Subsection (a) does not apply in’’; tion for the taxable year is an amount equal Section 102: Directs the Secretary of De- and to 50 percent of the actual compensation fense to develop a master plan for the mod- (B) by striking out the comma at the end amount for the taxable year. ernization of the National Guard and Re- of subparagraph (B) and all that follows and ‘‘(b) DEFINITION OF ACTUAL COMPENSATION serve Component of the Armed Services to inserting in lieu thereof a period; AMOUNT.—For purposes of this section, the ensure compatibility of equipment. The re- (2) by striking out paragraph (3); and term ‘actual compensation amount’ means port is to be submitted to Congress six (3) by redesignating paragraph (4) as para- the amount of compensation paid or incurred months from date of enactment of legisla- graph (3) and, in such paragraph, by striking by an employer with respect to a Ready Re- tion. May 13, 1998 CONGRESSIONAL RECORD — SENATE S4833 Section 103: Directs the Secretary of De- Section 604: Makes permanent the eligi- ordinate their operations. I could hard- fense to develop a master plan regarding the bility for veterans’ home loan guarantees for ly believe it, but many fighter aircraft unmet military construction requirements members of the Selected Reserves. Reserve units suffer the same fate, and you can of the National Guard and Reserve Compo- eligibility is to expire October 1999. nents. This Report will be submitted within Section 701: Provides a tax incentive to imagine that the theater commanders six months after passage of the legislation. businesses that employ National Guard and don’t care to have independent fighter Sections 201 & 202: Elevates the Chief of Reserve personnel. A business can receive a units involved in heavily coordinated the National Guard Bureau to the Grade of tax credit of up to $2000.00 per year, per em- and multi-national operations. General (4-Star) and elevates the Senior Rep- ployee for a member of the Guard and Re- Digitization, situational awareness resentatives of the Reserves (Army, Navy, serve who is absent from employment for the data link upgrades and avionics mod- Air Force and Marines) to Lieutenant Gen- purpose of performing Active Duty assign- ernization of reserve and Guard units is eral (3-Star). Adjusts the responsibility of ments. imperative. This bill directs the Sec- the Chief of the National Guard Bureau re- Mr. BOND. Mr. President, I am proud garding issues that directly affect the Na- retary of Defense to develop a master tional Guard. Includes the Chief of the Na- to join with my colleague and co-chair plan for the modernization of these tional Guard Bureau as a full time member of the Senate National Guard Caucus, components. of the Joint Requirements Oversight Coun- Senator FORD to introduce a bill today The bill also addresses the use of cil. to bolster the recognition of the Na- Guard and reserve component person- Section 203: Requires the Secretary of De- tional Guard and reserve components nel in response to an emergency involv- fense to appoint the Federal Recognition by the Department of Defense. The bill ing a weapon of mass destruction; to Board for an Adjutant General within 60 days entitled the National Guard and Re- of the Adjutant General’s appointment by a include their integration with efforts Governor. This section also requires the Sec- serve Components Equity Act of 1998. of the Federal Emergency Management retary of Defense to have the Inspector Gen- Since the Senate National Guard Agency. eral of the Defense Department be respon- Caucus was established in 1987, Senator Family issues are addressed, as well. sible for conducting investigations regarding FORD and I and the sixty five other As I mentioned earlier, there are provi- appointments of State Adjutants General. members have worked tirelessly to in- sions for demonstration program for Section 204: Requires the General Account- sure the adequate resourcing of the Na- unlimited use of military ing Office (GAO) to review the National tional Guard and reserves. This year Guard members promotions and extensions commissionaries by reserve component of Federal recognition as to the timeliness will be Senator FORD’s final year as members, and for the development of and fairness of the process. GAO will report Caucus co-chair. I will sorely miss his rules governing Space Available Travel to Congress one year after the enactment of advise and counsel. The legislation we for reservists and their families. the legislation. lay before you this day is testimony to I urge my colleagues to review this Section 301: Enhanced integration of the his commitment to improving the bill, sign on and help us to provide National Guard Bureau, Reserve Components quality of life standards for our nations these and other long overdue measures and the Federal Emergency Management active, Guard and reserve component Agency (FEMA) for emergencies involving to bring equity in individual recogni- Weapons of Mass Destruction. service members. He and I have worked tion and resource allocation to these Section 302: Describes duties of Reserves to include major quality of life and vital components of our national secu- (National Guard & Reserves) in responding resourcing issues highlighted by re- rity. to an emergency involving a weapon of mass serve and National Guard Associations. destruction. This bill seeks to provide overdue By Mr. GRASSLEY (for himself, Section 401: Directs the Secretary of the recognition and benefits to the nation’s Mr. BAUCUS, Mr. ROBERTS, Mr. Army to ensure that sufficient training reservists and Guard personnel and KERREY, Ms. MOSELEY-BRAUN, funds are available for enlisted men and Mr. HAGEL, and Mr. ALLARD): women to meet their military education re- their families. For too long, the na- quirements. tion’s reservists and National Guards- S. 2078. A bill to amend the Internal Section 402: Directs the Secretary of the men and women have been the recipi- Revenue Code of 1986 to provide for Army to ensure that sufficient training ents of less than a full commitment by Farm and Ranch Risk Management Ac- funds are available for the training of Army the Department of Defense. The bill we counts, and for other purposes; to the National Guard to maintain Platoon level have introduced will stir some con- Committee on Finance. operations. troversy I am sure, but these men and FARM AND RANCH RISK MANAGEMENT ACT Section 403: Directs the Secretary of the Army to expand the use of simulations, sim- women deserve our support. As we ask Mr. GRASSLEY. Mr. President, I rise ulators and advanced training devices to more and more of our reserve and today to introduce the Farm and fully support the integration of Army Na- Guard we owe it to the people who we Ranch Risk Management Act of 1998. tional Guard with Active Army units. ask to go into harm’s way, to provide This bill gives farmers another tool to Section 501: Prohibits the Services from them with equality in pay, equality in manage the risk of price and income denying Basic Housing allowance to Reserve fielded equipments and equality in fluctuations inherent in agriculture. It component members if they are on active training. We owe it to their families to does this by encouraging farmers to duty more than 100 miles from their primary home. provide them with equal access to com- save some of their income during good Section 502: Provides equity between Re- missaries and space available travel. years and allowing the funds to supple- serve component members and active duty We owe it to them to continue reserv- ment income during bad years. This counterparts in receiving Hazardous or Im- ist eligibility for VA home loans and new tool will more fully equip family minent Danger pay. repeal Montgomery Bill limitations for farmers to deal with the vagaries of the Section 503: Increases Reserve Components Selected Reservists. We need to do all marketplace. pay allotment authorization to the same Farming is a unique sector of the level as Active duty personnel. this and more. We must also recognize Section 504: Makes permanent the early re- the sacrifices made by reservist and American economy. Although agri- tirement for Physical Disability of National Guard employers. This bill addresses culture represents one-sixth of our Guard and Reserve component members who each of these issues. We must remove Gross Domestic Product, it consists of have between 15 and 20 years of satisfactory any semblance of second class status hundreds of thousands of farmers service. The present law expires at the end of from the shoulders of these profes- across the nation. Many of whom oper- Fiscal Year 1999. sional and dedicated individuals. ate small, family farms. These farms Section 601: Repeals the Ten Year limita- tion on the use of the Montgomery GI bill Reserve and Guard components are often support entire families, and even benefits if the reservists remain members in being called upon to integrate them- several generations of a family. And good standing of the Selected Reserve. selves into the tactical operations of they work hard every day and produce Section 602: Provides for a demonstration the nation’s defense plans, in order to the food consumed by the rest of the program on unlimited use of military com- do this effectively, the systems used by country, and around the world as well. missary stores for reserve component mem- the components must be compatible. Yet farming remains one of the most bers. That is not the case today. In many in- perilous ways to make a living. The in- Section 603: Directs the Secretary of De- fense to develop rules for Reserve Compo- stances, radios and data transfer equip- come of a farm family depends, in large nent Members and their families to travel on ments are incompatible. For instance part, on factors outside its control. Department of Defense Aircraft on a space many artillery units operate independ- Weather is one of those factors. For in- available basis. ently because they are unable to co- stance, I have heard on the Senate S4834 CONGRESSIONAL RECORD — SENATE May 13, 1998 floor recently that the income of North a new bureaucracy purporting to help MOSELEY-BRAUN] and the Senator from Dakota farmers dropped 98% last year farmers. The bill simply provides farm- Nevada [Mr. BRYAN] were added as co- because of flooding. Weather can to- ers with a fighting chance to survive sponsors of S. 1334, a bill to amend title tally wipe out a farmer. And, at best, the down times and an opportunity to 10, United States Code, to establish a weather can cause farmers’ income to succeed when prices eventually in- demonstration project to evaluate the fluctuate wildly. crease. feasibility of using the Federal Em- Another factor is the uncertainty of Mr. President, I want to thank my ployees Health Benefits program to en- international markets. Iowa farmers colleagues for supporting this bill, es- sure the availability of adequate health now export 40% of all they produce. pecially Senator BAUCUS, the lead care for Medicare-eligible beneficiaries But what happens when European Democratic cosponsor. I look forward under the military health care system. countries impose trade barriers on to working with him on the Finance S. 1580 beef, pork and genetically-modified Committee to ensure passage of this At the request of Mr. SHELBY, the feed grain, as examples. And what hap- important effort for our farmers. name of the Senator from Kansas [Mr. pens when Asian governments devalue ADDITIONAL COSPONSORS BROWNBACK] was added as a cosponsor their currencies. Exports fall and farm of S. 1580, a bill to amend the Balanced income declines. Through no fault of S. 89 Budget Act of 1997 to place an 18-month the farmer, but because of decisions At the request of Ms. SNOWE, the moratorium on the prohibition of pay- made in foreign countries. names of the Senator from Wisconsin ment under the medicare program for Mr. President, the 1996 farm bill took [Mr. FEINGOLD] and the Senator from home health services consisting of planting decisions out of the hands of Oregon [Mr. WYDEN] were added as co- venipuncture solely for the purpose of government bureaucrats and put them sponsors of S. 89, a bill to prohibit dis- obtaining a blood sample, and to re- back into the hands of farmers. Farm- crimination against individuals and quire the Secretary of Health and ers now have the ability to plant ac- their family members on the basis of Human Services to study potential cording to the demands of the market. genetic information, or a request for fraud and abuse under such program The farmers I talk to are pleased with genetic services. with respect to such services. this change in philosophy. They would S. 381 S. 1754 rather make their own decisions and At the request of Mr. ROCKEFELLER, At the request of Mr. FRIST, the rely on the market for their income, the name of the Senator from Massa- name of the Senator from North Caro- instead of the government. chusetts [Mr. KERRY] was added as a lina [Mr. FAIRCLOTH] was added as a co- But the sometimes volatile nature of cosponsor of S. 381, a bill to establish a sponsor of S. 1754, a bill to amend the commodity markets can make it dif- demonstration project to study and Public Health Service Act to consoli- ficult for family farmers to survive provide coverage of routine patient date and reauthorize health professions even a normal business cycle. When care costs for medicare beneficiaries and minority and disadvantaged health prices are high, farmers often pay so with cancer who are enrolled in an ap- professions and disadvantaged health much of their income in taxes that proved clinical trial program. education programs, and for other pur- they are unable to save anything. S. 831 poses. When prices drop again, farmers can be At the request of Mr. SHELBY, the S. 1758 faced with liquidity problems. This bill name of the Senator from Montana At the request of Mr. LUGAR, the allows farmers to manage their in- [Mr. BURNS] was added as a cosponsor name of the Senator from North Da- come, to smooth out the highs and of S. 831, a bill to amend chapter 8 of kota [Mr. DORGAN] was added as a co- lows of the commodity markets. title 5, United States Code, to provide sponsor of S. 1758, a bill to amend the In that way, this bill is complemen- for congressional review of any rule Foreign Assistance Act of 1961 to facili- tary with the philosophy of the new promulgated by the Internal Revenue tate protection of tropical forests farm program. Business decisions are Service that increases Federal revenue, through debt reduction with developing left in the hands of farmers, not bu- and for other purposes. countries with tropical forests. reaucrats at the Department of Agri- S. 863 S. 1825 culture, and not elected officials. The At the request of Mrs. MURRAY, her At the request of Mrs. MURRAY, the farmer decides whether to defer his in- name was withdrawn as a cosponsor of name of the Senator from Delaware come for later years. The farmer de- S. 863, a bill to authorize the Govern- [Mr. BIDEN] was added as a cosponsor of cides when to withdraw funds to sup- ment of India to establish a memorial S. 1825, a bill to amend title 10, United plement his operation. to honor Mahatma Gandhi in the Dis- States Code, to provide sufficient fund- Mr. President, I will take just a mo- trict of Columbia. ing to assure a minimum size for honor ment to explain how the bill works. El- guard details at funerals of veterans of S. 1260 igible farmers are allowed to make the Armed Forces, to establish the At the request of Mrs. HUTCHISON, her contributions to tax-deferred accounts, minimum size of such details, and for name was added as a cosponsor of S. also known as FARRM accounts. The other purposes. 1260, a bill to amend the Securities Act contributions are tax-deductible and S. 1868 of 1933 and the Securities Exchange Act limited to 20% of the farmer’s taxable At the request of Mr. NICKLES, the of 1934 to limit the conduct of securi- income for the year. The contributions name of the Senator from Kansas [Mr. ties class actions under State law, and are invested in cash or other interest- BROWNBACK] was added as a cosponsor for other purposes. bearing obligations. The interest is of S. 1868, a bill to express United taxed during the year it is earned. S. 1320 States foreign policy with respect to, The funds can stay in the account for At the request of Mr. ROCKEFELLER, and to strengthen United States advo- up to five years. Upon withdrawal, the the name of the Senator from Delaware cacy on behalf of, individuals per- funds are taxed as regular income. If [Mr. BIDEN] was added as a cosponsor of secuted for their faith worldwide; to the funds are not withdrawn after five S. 1320, a bill to provide a scientific authorize United States actions in re- years, they are taxed as income and basis for the Secretary of Veterans Af- sponse to religious persecution world- subject to an additional 10% penalty. fairs to assess the nature of the asso- wide; to establish an Ambassador at Essentially, the farmer is given a ciation between illnesses and exposure Large on International Religious Free- five-year window to manage his money to toxic agents and environmental or dom within the Department of State, a in a way that is best for his own oper- other wartime hazards as a result of Commission on International Religious ation. The farmer can contribute to the service in the Persian Gulf during the Persecution, and a Special Adviser on account in good years and withdraw Persian Gulf War for purposes of deter- International Religious Freedom with- from the account when his income is mining a service connection relating to in the National Security Council; and low. such illnesses, and for other purposes. for other purposes. This bill helps the farmer help him- S. 1334 S. 1959 self. It is not a new government sub- At the request of Mr. BOND, the At the request of Mr. COVERDELL, the sidy for agriculture. It will not create names of the Senator from Illinois [Ms. names of the Senator from Kentucky May 13, 1998 CONGRESSIONAL RECORD — SENATE S4835

[Mr. MCCONNELL] and the Senator from resolution proclaiming the week of Oc- (b) AMENDMENT TO TITLE VII OF THE CIVIL New Hampshire [Mr. SMITH] were added tober 18 through October 24, 1998, as RIGHTS ACT OF 1964.—Title VII of the Civil as cosponsors of S. 1959, a bill to pro- ‘‘National Character Counts Week.’’ Rights Act of 1964 (42 U.S.C. 2000e et seq.) is hibit the expenditure of Federal funds amended by adding at the end the following SENATE RESOLUTION 216 new section: to provide or support programs to pro- At the request of Mr. LIEBERMAN, the ‘‘SEC. 719. EXCLUSIVITY OF POWERS AND PROCE- vide individuals with hypodermic nee- name of the Senator from Nevada [Mr. DURES. dles or syringes for the use of illegal REID] was added as a cosponsor of Sen- ‘‘Notwithstanding any Federal law (other drugs. ate Resolution 216, a resolution ex- than a Federal law that expressly refers to S. 1973 pressing the sense of the Senate re- this title) that would otherwise modify any At the request of Mr. BUMPERS, the garding Japan’s difficult economic con- of the powers and procedures expressly appli- name of the Senator from California dition. cable to a right or claim arising under this title, such powers and procedures shall be [Mrs. FEINSTEIN] was added as a co- f the exclusive powers and procedures applica- sponsor of S. 1973, a bill to amend sec- SENATE RESOLUTION 230—AU- ble to such right or such claim unless after tion 2511 of title 18, United States such right or such claim arises the claimant Code, to revise the consent exception THORIZING THE PRODUCTION OF voluntarily enters into an agreement to en- to the prohibition on the interception RECORDS BY THE SELECT COM- force such right or resolve such claim of oral, wire, or electronic communica- MITTEE ON INTELLIGENCE through arbitration or another procedure.’’. tions. Mr. LOTT (for himself and Mr. (c) AMENDMENT TO THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967.—The Age Dis- S. 1981 DASCHLE) submitted the following reso- crimination in Employment Act of 1967 (29 At the request of Mr. HUTCHINSON, lution; which was considered and U.S.C. 621 et seq.) is amended— the name of the Senator from Iowa agreed to: (1) by redesignating sections 16 and 17 as [Mr. GRASSLEY] was added as a cospon- S. RES. 230 sections 17 and 18, respectively; and sor of S. 1981, a bill to preserve the bal- Whereas, the Office of the Inspector Gen- (2) by inserting after section 15 the follow- ance of rights between employers, em- eral of the United States Department of Jus- ing new section 16: ployees, and labor organizations which tice has requested that the Senate Select ‘‘SEC. 16. EXCLUSIVITY OF POWERS AND PROCE- is fundamental to our system of collec- Committee on Intelligence provide it with DURES. tive bargaining while preserving the copies of committee records relevant to the ‘‘Notwithstanding any Federal law (other rights of workers to organize, or other- Office’s pending inquiry into the handling than a Federal law that expressly refers to this Act) that would otherwise modify any of wise engage in concerted activities pro- and dissemination by the Department of Jus- tice and the Federal Bureau of Investigation the powers and procedures expressly applica- tected under the National Labor Rela- of certain foreign intelligence and counter- ble to a right or claim arising under this tions Act. intelligence information; Act, such powers and procedures shall be the S. 1992 Whereas, by the privileges of the Senate of exclusive powers and procedures applicable At the request of Mrs. HUTCHISON, the the United States and Rule XI of the Stand- to such right or such claim unless after such name of the Senator from Mississippi ing Rules of the Senate, no evidence under right or such claim arises the claimant vol- untarily enters into an agreement to enforce [Mr. COCHRAN] was added as a cospon- the control or in the possession of the Senate such right or resolve such claim through ar- sor of S. 1992, a bill to amend the Inter- can, by administrative or judicial process, be taken from such control or possession but by bitration or another procedure.’’. nal Revenue Code of 1986 to provide permission of the Senate; (d) AMENDMENT TO THE REHABILITATION ACT that the $500,000 exclusion of a gain on Whereas, when it appears that documents, OF 1973.—Section 505 of the Rehabilitation the sale of a principal residence shall papers, and records under the control or in Act of 1973 (29 U.S.C. 795) is amended by add- apply to certain sales by a surviving the possession of the Senate may promote ing at the end the following new subsection: spouse. the administration of justice, the Senate will ‘‘(c) Notwithstanding any Federal law S. 2036 take such action as will promote the ends of (other than a Federal law that expressly re- justice consistently with the privileges of fers to this title) that would otherwise mod- At the request of Mrs. HUTCHISON, the the Senate: Now, therefore, be it ify any of the powers and procedures ex- names of the Senator from Georgia Resolved, That the Chairman and Vice pressly applicable to a right or claim arising [Mr. COVERDELL], the Senator from Or- Chairman of the Senate Select Committee under section 501, such powers and proce- egon [Mr. SMITH], the Senator from on Intelligence, acting jointly, are author- dures shall be the exclusive powers and pro- Alabama [Mr. SESSIONS], the Senator ized to provide to the Office of Inspector cedures applicable to such right or such from Colorado [Mr. ALLARD], the Sen- General of the United States Department of claim unless after such right or such claim ator from Mississippi [Mr. LOTT], the Justice, under appropriate security proce- arises the claimant voluntarily enters into Senator from Oklahoma [Mr. NICKLES], dures, copies of committee records relevant an agreement to enforce such right or re- to the Office’s pending inquiry into the han- solve such claim through arbitration or an- the Senator from Alaska [Mr. STE- dling and dissemination by the Department other procedure.’’. VENS ], the Senator from North Caro- of Justice and the Federal Bureau of Inves- (e) AMENDMENT TO THE AMERICANS WITH lina [Mr. HELMS], and the Senator from tigation of certain foreign intelligence and DISABILITIES ACT OF 1990.—Section 107 of the Idaho [Mr. CRAIG] were added as co- counterintelligence information. Americans with Disabilities Act of 1990 (42 sponsors of S. 2036, a bill to condition f U.S.C. 12117) is amended by adding at the end the use of appropriated funds for the the following new subsection: purpose of an orderly and honorable re- AMENDMENTS SUBMITTED ‘‘(c) Notwithstanding any Federal law duction of U.S. ground forces from the (other than a Federal law that expressly re- Republic of Bosnia and Herzegovina. fers to this Act) that would otherwise modify THE SECURITIES LITIGATION any of the powers and procedures expressly SENATE CONCURRENT RESOLUTION 88 UNIFORM STANDARDS ACT OF 1998 applicable to a right or claim based on a vio- At the request of Mr. D’AMATO, the lation described in subsection (a), such pow- name of the Senator from South Da- ers and procedures shall be the exclusive kota [Mr. JOHNSON] was withdrawn as a FEINGOLD AMENDMENT NO. 2394 powers and procedures applicable to such cosponsor of Senate Concurrent Reso- right or such claim unless after such right or lution 88, a concurrent resolution call- Mr. FEINGOLD proposed an amend- such claim arises the claimant voluntarily ing on Japan to establish and maintain ment to the bill (S. 1260) to amend the enters into an agreement to enforce such right or resolve such claim through arbitra- an open, competitive market for con- Securities Act of 1933 and the Securi- ties Exchange Act of 1934 to limit the tion or another procedure.’’. sumer photographic film and paper and (f) AMENDMENT TO SECTION 1977 OF THE RE- other sectors facing market access bar- conduct of securities class actions under State law, and for other pur- VISED STATUTES.—Section 1977 of the Revised riers in Japan. Statutes (42 U.S.C. 1981) is amended by add- poses; as follows: SENATE RESOLUTION 176 ing at the end the following new subsection: At the appropriate place, add the follow- At the request of Mr. DOMENICI, the ‘‘(d) Notwithstanding any Federal law ing: names of the Senator from Mississippi (other than a Federal law that expressly re- SEC. ll. CIVIL RIGHTS PROCEDURES PROTEC- fers to this section) that would otherwise [Mr. LOTT], the Senator from Maine TIONS. modify any of the powers and procedures ex- [Ms. COLLINS], and the Senator from (a) SHORT TITLE.—This section may be pressly applicable to a right or claim con- Montana [Mr. BURNS] were added as co- cited as the ‘‘Civil Rights Procedures Protec- cerning making and enforcing a contract of sponsors of Senate Resolution 176, a tion Act of 1998’’. employment under this section, such powers S4836 CONGRESSIONAL RECORD — SENATE May 13, 1998

and procedures shall be the exclusive powers ‘‘(3) APPLICABILITY OF STATE STATUTE OF this subsection may be construed to preclude and procedures applicable to such right or LIMITATIONS.—Notwithstanding paragraph a State or political subdivision thereof or a such claim unless after such right or such (1), an action that is removed to Federal State pension plan from bringing an action claim arises the claimant voluntarily enters court under paragraph (2) shall be subject to involving a covered security on its own be- into an agreement to enforce such right or the State statute of limitations that would half, or as a member of a class comprised resolve such claim through arbitration or have applied in the action but for such re- solely of other States, political subdivisions, another procedure.’’. moval. or State pension plans similarly situated. (g) AMENDMENT TO THE EQUAL PAY RE- On page 14, line 11, strike ‘‘(3)’’ and insert ‘‘(B) STATE PENSION PLAN DEFINED.—For QUIREMENT UNDER THE FAIR LABOR STAND- ‘‘(4)’’. purposes of this paragraph, the term ‘State ARDS ACT OF 1938.—Section 6(d) of the Fair On page 15, line 15, strike ‘‘(4)’’ and insert pension plan’ means a pension plan estab- Labor Standards Act of 1938 (29 U.S.C. 206(d)) ‘‘(5)’’. lished and maintained for its employees by is amended by adding at the end the follow- On page 15, line 20, strike ‘‘(5)’’ and insert the government of a State or political sub- ing new paragraph: ‘‘(6)’’. division thereof, or by any agency or instru- ‘‘(5) Notwithstanding any Federal law mentality thereof. (other than a Federal law that expressly re- AMENDMENT NO. 2396 On page 15, line 20, strike ‘‘(5)’’ and insert fers to this Act) that would otherwise modify On page 10, strike line 24 and all that fol- ‘‘(6)’’. any of the powers and procedures expressly lows through page 12, line 11 and insert the applicable to a right or claim arising under following: BIDEN AMENDMENT NO. 2398 this subsection, such powers and procedures ‘‘(2) CLASS ACTION.— shall be the exclusive powers and procedures ‘‘(A) IN GENERAL.—The term ‘class action’ Mr. BIDEN proposed an amendment applicable to such right or such claim unless means any single lawsuit (other than a de- to the bill, S. 1260, supra; as follows: after such right or such claim arises the rivative action brought by 1 or more share- At the appropriate place, insert the follow- claimant voluntarily enters into an agree- holders on behalf of a corporation) in ing new section: ment to enforce such right or resolve such which— SEC. ll. FRAUD AS PREDICATE OFFENSE. claim through arbitration or another proce- ‘‘(i) 1 or more named parties seek to re- Section 1964(c) of title 18, United States dure.’’. cover damages on a representative basis on Code, is amended by striking ‘‘, except’’ and (h) AMENDMENT TO THE FAMILY AND MEDI- behalf of themselves and other unnamed par- all that follows through ‘‘final’’. CAL LEAVE ACT OF 1993.—Title IV of the Fam- ties similarly situated; and f ily and Medical Leave Act of 1993 (29 U.S.C. ‘‘(ii) questions of law or fact common to 2601 et seq.) is amended— those persons or members of the prospective AUTHORITY FOR COMMITTEES TO (1) by redesignating section 405 as section class predominate over any questions affect- MEET 406; and ing only individual persons or members. On page 16, strike line 3 and all that fol- COMMITTEE ON ENERGY AND NATURAL (2) by inserting after section 404 the follow- RESOURCES ing new section: lows through page 17, line 13 and insert the following: Mr. DOMENICI. Mr. President, I ask ‘‘SEC. 405. EXCLUSIVITY OF REMEDIES. ‘‘(B) CLASS ACTION.— unanimous consent that the Commit- ‘‘Notwithstanding any Federal law (other ‘‘(i) IN GENERAL.—The term ‘class action’ tee on Energy and Natural Resources than a Federal law that expressly refers to means any single lawsuit (other than a de- be granted permission to meet during this Act) that would modify any of the pow- rivative action brought by 1 or more share- ers and procedures expressly applicable to a the session of the Senate on Wednes- holders on behalf of a corporation) in right or claim arising under this Act or day, May 13, for purposes of conducting which— under an amendment made by this Act, such a Full Committee business meeting ‘‘(I) 1 or more named parties seek to re- powers and procedures shall be the exclusive which is scheduled to begin at 9:30 a.m. cover damages on a representative basis on powers and procedures applicable to such behalf of themselves and other unnamed par- The purpose of this business meeting is right or such claim unless after such right or ties similarly situated; and to consider pending calendar business. such claim arises the claimant voluntarily ‘‘(II) questions of law or fact common to The PRESIDING OFFICER. Without enters into an agreement to enforce such those persons or members of the prospective objection, it is so ordered. right or resolve such claim through arbitra- class predominate over any questions affect- COMMITTEE ON FOREIGN RELATIONS tion or another procedure.’’. ing only individual persons or members. Mr. DOMENICI. Mr. President, I ask (i) AMENDMENT TO TITLE 9, UNITED STATES On page 17, line 14, strike ‘‘(C)’’ and insert CODE.—Section 14 of title 9, United States unanimous consent that the Commit- ‘‘(ii)’’ and move the margin 2 ems to the tee on Foreign Relations be authorized Code, is amended— right. (1) by inserting ‘‘(a)’’ before ‘‘This’’; and On page 17, line 21, strike ‘‘(D)’’ and insert to meet during the session of the Sen- (2) by adding at the end the following new ‘‘(C)’’. ate on Wednesday, May 13, 1998, at 10:00 subsection: a.m. to hold a hearing. ‘‘(b) This chapter shall not apply with re- SARBANES (AND OTHERS) The PRESIDING OFFICER. Without spect to a claim of unlawful discrimination AMENDMENT NO. 2397 objection, it is so ordered. in employment if such claim arises from dis- COMMITTEE ON THE JUDICIARY crimination based on race, color, religion, Mr. SARBANES (for himself, Mr. Mr. DOMENICI. Mr. President, I ask sex, national origin, age, or disability.’’. BRYAN, Mr. JOHNSON, and Mr. BIDEN) (j) APPLICATION OF AMENDMENTS.—The unanimous consent that the Commit- proposed an amendment to the bill, S. tee on the Judiciary be authorized to amendments made by this section shall 1260, supra; as follows: apply with respect to claims arising on and meet during the session of the Senate after the date of enactment of this Act. On page 10, between lines 16 and 17, insert on Wednesday, May 13, 1998, at 10:30 the following: a.m. in room 226 of the Senate Dirksen ‘‘(f) STATE ACTIONS.— Mr. SARBANES (for himself, Mr. ‘‘(1) IN GENERAL.—Notwithstanding any Office Building to hold a hearing on BRYAN, and Mr. JOHNSON) proposed other provision of this section, nothing in ‘‘Tobacco Litigation: Is it Constitu- two amendments to the bill, S. 1260, this section may be construed to preclude a tional?’’ supra; as follows: State or political subdivision thereof or a The PRESIDING OFFICER. Without State pension plan from bringing an action objection, it is so ordered. AMENDMENT NO. 2395 involving a covered security on its own be- SUBCOMMITTEE ON COMMUNICATIONS On page 9, between lines 9 and 10, insert half, or as a member of a class comprised Mr. DOMENICI. Mr. President, I ask the following: solely of other States, political subdivisions, unanimous consent that the Commu- ‘‘(d) APPLICABILITY OF STATE STATUTE OF or State pension plans similarly situated. nications Subcommittee of the Senate LIMITATIONS.—Notwithstanding subsection ‘‘(2) STATE PENSION PLAN DEFINED.—For (b), an action that is removed to Federal purposes of this paragraph, the term ‘State Committee on Commerce, Science, and court under subsection (c) shall be subject to pension plan’ means a pension plan estab- Transportation be authorized to meet the State statute of limitations that would lished and maintained for its employees by on Wednesday, May 13, 1998, at 9:30 a.m. have applied in the action but for such re- the government of the State or political sub- on Federal Communications Commis- moval. division thereof, or by any agency or instru- sion Oversight: Wireless Bureau. On page 9, line 10, strike ‘‘(d)’’ and insert mentality thereof. The PRESIDING OFFICER. Without ‘‘(e)’’. On page 10, line 17, strike ‘‘(f)’’ and insert objection, it is so ordered. On page 10, line 12, strike ‘‘(e)’’ and insert ‘‘(g)’’. ‘‘(f)’’. On page 15, between lines 19 and 20, insert SUBCOMMITTEE ON NEAR EASTERN AND SOUTH On page 10, line 17, strike ‘‘(f)’’ and insert the following: ASIAN AFFAIRS ‘‘(g)’’. ‘‘(5) STATE ACTIONS.— Mr. DOMENICI. Mr. President, I ask On page 14, between lines 10 and 11, insert ‘‘(A) IN GENERAL.—Notwithstanding any unanimous consent that the Sub- the following: other provision of this subsection, nothing in committee on near Eastern and South May 13, 1998 CONGRESSIONAL RECORD — SENATE S4837 Asian Affairs be authorized to meet that we experienced the ‘‘green revolu- others have been celebrating the 50th during the session of the Senate on tion’’ whereby the world learned to anniversary of the birth of Israel. A Wednesday, May 13, 1998, at 2:00 p.m. to produce more food using fewer re- celebration of Israel is a celebration of hold a hearing. sources. Through research we have de- democracy, prosperity, faith and the The PRESIDING OFFICER. Without veloped technologies that have in- fulfillment of the dream of a Jewish objection, it is so ordered. creased farm efficiency exponentially, homeland. COMMITTEE ON LABOR AND HUMAN RESOURCES transformed food processing, and en- It was on May 14, 1948, that David Mr. DOMENICI. Mr. President, I ask hanced human nutrition. Given the Ben-Gurion announced Israel’s birth to unanimous consent that the Commit- structure of the agriculture industry, the world. Fifty years later, Israel is a tee on Labor and Human Resources be these advances never would have oc- mature state—a survivor of wars, as- authorized to meet in executive session curred if it had been up to individual sassinations and painful regional con- during the session of the Senate on farmers or individual companies to flicts. And Israel has not only survived, Wednesday, May 13, 1998, at 9:30 a.m. conduct the necessary research. it has prospered and thrived. It has bloomed in the desert, taking The PRESIDING OFFICER. Without Furthermore, the intensive use of root against seemingly impossible objection, it is so ordered. farmland here in the U.S. means that sensitive ecosystems around the odds. SUBCOMMITTEE ON FINANCIAL INSTITUTIONS ON But it does not surprise us, for we REGULATORY RELIEF world—which would have to be con- verted to farmland were it not for the know that overcoming the insurmount- Mr. DOMENICI. Mr. President, I ask able is the story of the Jewish people. unanimous consent that the Sub- productive capacity of the Midwest— can be spared. Continuing to search for Examples of Israel’s achievements committee on Financial Institutions abound: it is a world leader in develop- and Regulatory Relief of the Commit- ways to increase the productive capac- ity of America’s farmers will help en- ing agricultural techniques for arid cli- tee on Banking, Housing, and Urban mates, and in harnessing the power of Affairs be authorized to meet during sure that these ecosystems are not de- stroyed in order to provide for the food solar energy. the session of the Senate on Wednes- Ben-Gurion believed that Israel could needs of the world’s growing popu- day, May 13, 1998, to conduct an over- lead the world to a better future by lation. So the advances achieved sight and reauthorization hearing on marrying the ethical teachings of the through research have not only im- the Community Development Finan- ancients with the discoveries of mod- cial Institutions Fund (CDFI) Program. proved our own economic position, ern science. ‘‘It is only by the integra- The PRESIDING OFFICER. Without they have also benefitted the environ- tion of the two,’’ he wrote, ‘‘that the objection, it is so ordered. ment worldwide. blessings of both can flourish.’’ The bill also provides a stable fund- Israel ranks among the most ad- SUBCOMMITTEE ON INTERNATIONAL SECURITY, ing mechanism for crop insurance, PROLIFERATION, AND FEDERAL SERVICE vanced economies in the world, and is a which has been subject to annual de- vigorous democracy in a region of Mr. DOMENICI. Mr. President, I ask bates in recent years. This has been unanimous consent on behalf of the largely authoritarian regimes. Voter problematic for farmers and insurance turnout for Israel’s 1996 elections were Governmental Affairs Subcommittee agents, who need to be able to plan on International Security, Prolifera- about 80 percent, a high turnout by any ahead. With the more liberalized mar- standard, and one that surpasses and tion, and Federal Services to meet on ket conditions that the new Freedom Wednesday, May 13, 1998 at 2:00 p.m. for challenges the United States, which to Farm Act provides, risk manage- had just 49 percent turnout that same a hearing on ‘‘S. 1710, The Retirement ment is more important than ever for Coverage Error Correction Act of 1998.’’ year. And Israel has successfully reset- farmers. And, for many, crop insurance tled Jewish immigrants from the The PRESIDING OFFICER. Without is the most viable option for managing objection, it is so ordered. former Soviet Republics and across the risk. In fact, lenders often require that globe, including absorbing 680,000 im- f producers obtain crop insurance in migrants during a three year period. ADDITIONAL STATEMENTS order to qualify for operating loans. The culture of Israel is equally vibrant, All of the spending that is directed as Israelis have drawn on their dra- toward these programs is offset by sav- matic personal and national histories AGRICULTURAL RESEARCH, EX- ings from food stamp administration to create invaluable contributions to TENSION, AND EDUCATION accounts and the limitation of Com- the arts. REFORM ACT—CONFERENCE RE- modity Credit Corporation funding for At 50, Israel has character, strength PORT computers. So, the increased spending and dignity. Of course, like anyone who in this bill does not jeopardize the bal- reaches 50, Israel is also experiencing ∑ Mr. BROWNBACK. Mr. President, anced budget agreement enacted last something of a mid-life crisis. particularly in light of the 1996 Farm year. As Israelis take stock of their Bill, it is important that the federal It goes without saying that this bill achievements at this important mo- government focus its attention on the is critical for a farm state like Kansas. ment in their history, they find prob- factors that will increase U.S. agri- However, the benefits of agricultural lems yet to be solved and many goals culture’s competitiveness in a deregu- research and a reliable mechanism to yet to be reached. Israel has not yet lated farm economy. This includes im- manage risk extend well beyond the made peace with all of her neighbors, proving efficiency in the transpor- state lines of farm states—this coun- and difficult decisions about how to tation system, keeping international try’s production affords our consumers achieve peace, or whether to continue markets active and growing, advancing in rural communities and cities alike to, at this point, seek peace at all, are research, and facilitating use of mar- the cheapest, safest, and most abun- causing painful rifts in Israeli society. ket oriented risk management tools. dant food supply on earth. It is impera- Personally, I look at Israel from Yesterday the Senate approved the tive that Congress continue the invest- many perspectives—as an American, as Conference Report to S. 1150, which ment that makes this competitive ad- a Jew, as a United States Senator and provides for two of those critical fac- vantage possible. I am glad that the as a member of the Senate Foreign Re- tors. First of all, it provides important Senate finally approved the Conference lations Committee. funding for agriculture research pro- Report, and hope that the House will As an American, I see Israel as a grams. Though I am critical of govern- act soon to secure these benefits for staunch ally and friend. As a Jew, I see ment funding of applied research that rural America.∑ a spiritual homeland, a place where all would otherwise be financed by those f Jews have a claim, a right to belong. who will directly benefit in the private Israel is an oasis of faith for Jews in sector, I view basic research as a re- CELEBRATION OF ISRAEL’S 50TH every corner of the world. As a United sponsibility of the federal government. ANNIVERSARY States Senator and member of the Sen- It is through research—largely con- Mr. FEINGOLD. Mr. President, dur- ate’s Foreign Relations Committee, I ducted by the land grant universities ing the last few days, both in Israel and take a deep interest in Israel and the supported by the federal government— around the world, Jews and millions of Middle East peace process. S4838 CONGRESSIONAL RECORD — SENATE May 13, 1998 I first visited Israel when I was 19 largely grounded in the desire to help Palestinian cities in December 1995, years old. My father and mother took re-settle hundreds of thousands of Jew- and the Palestinian elections in Janu- me as a way to educate me about the ish refugees, displaced people and sur- ary 1996. importance of Israel, and the trip had vivors of the Holocaust. As much as we hoped the historic an enormously powerful impact on me. From May 14, 1948, until today, moment on the White House lawn I returned two more times, in 1976 and America could always count on Israel would bring an end to terrorism, blood- 1977, while I was a student at Oxford as an island of democracy and stability shed and occupation, we all knew just University. in an area of the world not altogether as well that the road to peace would My strongest memory of that last familiar with either concept. not be that simple. Years of bitter ex- trip was our visit to the Western Wall, The presence of a secure and vital perience also told us the road would when I brushed up against a soldier Israel, in and of itself, is in America’s not be that short. carrying a machine gun under his jack- interests. But 1994 and 1995 were relatively good et. It was then that I felt for the first For many years, those interests in- years. The peace process was progress- time, through the cold steel of a weap- cluded containment of Soviet expan- ing, and, by late 1995, it seemed rela- on, what it was like to exist in a soci- sion into the Middle East, securing ac- tions between Rabin and Arafat were ety where the threat of violence was a cess to the region’s oil for the industri- warming. Then, of course, as we can constant. At the time, I hoped upon my alized nations of the West, promoting never forget, extremism struck again next return to Israel that there would market economies and democratic in- with the assassination of Yitzhak be peace in the region—never realizing stitutions and safeguarding Israel’s na- Rabin by a Jewish radical. It is impor- that we would find ourselves in the tional security. As the inter-relation- tant to note that this was a terrorist stalemate we are in today so many ship between Israel and the United attack like so many in the new Middle years later. For these 21 years since States has developed, matured and East, where extremism and violence of then, I was unable to return to Israel adapted to political and economic de- every stripe lashes out against any except for one time and one time velopments, so too has American pol- sign of peace and tolerance. only—and then only for 10 hours—for icy. During the tenure of President Today, this extremism and violence the sad occasion of Yitzhak Rabin’s fu- Jimmy Carter, for example, America present perhaps the greatest and most neral in November 1995. was very active in the Middle East persistent threat to peace. Just before he died, Rabin said, I went as a very young man and re- peace process, culminating in the sign- ‘‘Peace is the future.’’ We must remain turned much changed—I had become a ing of the Camp David accords. faithful to the memory of Rabin and all Senator, a husband and a father—but During the first Reagan term, the ad- those who had the courage and the was still awed by the powerful presence ministration’s priorities of combating abiding discipline to put ancient of faith and hope, violence and conflict terrorism, promoting cooperative secu- hatreds aside and made peace their pri- that still characterize the Jewish state rity and confronting Soviet expansion ority, because Rabin had no illusions today. found common ground with the per- about the difficulty of the peace proc- In between these visits, I had the op- spectives of Prime Ministers Begin and ess. portunity to study the evolving rela- Shamir, and, in general, those closer Someone who witnessed Rabin in a relations survived the policy dif- tionship between Israel and the United meeting on the peace process said to ferences arising over the Lebanon war States for a paper I did for a history the prime minister, ‘‘I can see I’m talk- course at the University of Wisconsin- in 1982. Ties between Israel and the ing to the converted.’’ Rabin’s reply Madison. To research this paper, I read United States grew stronger during was, ‘‘You’re talking to the committed, all the comments of Members of Con- President Reagan’s second term, in- not the converted.’’ It was commit- gress in the CONGRESSIONAL RECORD cluding the signing of several prece- ment that peace required of him and concerning Israel for the years 1948, dent-setting strategic and cooperative requires of all of us. 1956, 1967 and 1973, and analyzed how defense agreements. As we look forward to Israel’s next 50 those comments reflected a changing During the early Bush years, U.S.- years, we must be able to look forward definition of U.S. interests in the re- Israel relations were marked again by to a future that gives every Israeli, and gion from the birth of Israel, through tension caused by some policy dis- every Jew, a peaceful homeland. But the Suez Crisis, the Six Day War and agreements, but tension eased in 1990 the Palestinians are also clearly key to the Yom Kippur War. when—amid Iraqi threats against peace in the region, and that is why it In 1948, most of the talk was about Israel generated by the Persian Gulf is so important to get the current ne- the need for a homeland for the Jewish crisis—President Bush repeated the gotiations back on track. people, especially after the Holocaust. U.S. commitment to Israel’s security. Although our priorities and percep- In 1956, that talk shifted to describing Confidence in U.S. support was a pri- tions on the path to peace sometimes Israel as a blooming democracy; a mary factor in Israel’s decision not to differ, America and Israel have, by and small outpost of democratic values in retaliate against Iraq for its Scud mis- large, moved forward together, and I the midst of a non-democratic region. sile attacks. believe that partnership will continue. In 1967, Israel was the non-aggressive Of course, the first year of the Clin- Earlier this month, in honor of this dove who triumphed in a hostile envi- ton administration saw the historic 50th anniversary, Congress unani- ronment. By 1973, my predecessors had signing on the White House lawn of the mously passed a resolution which read, shifted to speaking of Israel in a very Declaration of Principles establishing in part, ‘‘The United States commends positive geopolitical and national secu- the goals and framework for peace the people of Israel for their remark- rity terms. talks. On September 13, 1993, the world able achievements in building a new Today, I add my own remarks about watched with hope and trepidation as state and a pluralistic democratic soci- Israel to the long chronicle of the Prime Minister Rabin and Yasser ety in the Middle East in the face of American-Israeli relationship in the Arafat inaugurated a new era in the terrorism, hostility and belligerence by CONGRESSIONAL RECORD to those of my Middle East. This would soon be fol- many of her neighbors.’’ The resolution predecessors who came to speak in lowed by two other major peace agree- reaffirmed the bonds of friendship be- times of crisis and triumph for Israel. ments: the May 1994 Gaza-Jericho tween Israel and the U.S., and extended The U.S. has played a pivotal role in Agreement that provided for Palestin- best wishes for a peaceful, prosperous Israel’s history, and our relationship ian control over the Gaza Strip and the and successful future. has been a strong one from the begin- environs of Jericho after an Israeli The key to continued success and ning. Within minutes of Ben-Gurion’s withdrawal, and the September 1995 In- prosperity in Israel will be a lasting announcement of the birth of Israel, terim Agreement that set a timetable peace, and the United States clearly President Harry Truman recognized and an agenda for final status negotia- has an interest in taking an active role the fledgling state. Prior to Israel’s tions. in the peace process, as it has done founding, between the end of the Sec- The Palestinians and Israelis have throughout the years. ond World War and May 14, 1948, offi- also agreed to other arrangements, Helping facilitate the peace process cial U.S. support for a Jewish state was such as the Israeli withdrawal from six is one facet of U.S. relations with May 13, 1998 CONGRESSIONAL RECORD — SENATE S4839 Israel, and another is foreign assist- survivors and other Jews persecuted called frequently to assist in recovery ance. Since 1976, Israel has been the around the world could have a home- activities outside the county and even largest recipient of U.S. foreign assist- land where they could seek refuge and outside the state. ance. Over the past 10 years, Israel has build a life. And 50 years after that Mr. President, I hope all my col- annually received about $3 billion in founding, Israel has taken root in the leagues will join me in offering our economic and military grants, refugee desert soil and it has thrived. congratulations to Captain Harry settlement assistance, and other aid, The United States has built an alli- Adams, Co-Captain Richie Schoolcraft, from the United States. ance and friendship with Israel that Treasurer and Secretary Brian Sexton, Recently, we have seen a movement has enriched American life and helped First Lieutenant Derek Calhoun and to gradually reduce that level of aid, Israel thrive, and I hope that partner- Second Lieutenant Lee Schoolcraft and beginning with the declaration by ship will continue for the next 50 years all the volunteers of the Floyd County Prime Minister Netanyahu that Israel and beyond. But as Israelis well know Rescue Squad. They carry on the should reduce its dependence on the and all of us must recognize, the dream Squad’s rich tradition of volunteering United States when he addressed a of those at the First Zionist Congress their time and risking their lives to joint session of Congress two years ago. and of other Jews for centuries, to have help the people of their community, Negotiations have since been con- a homeland, cannot be truly fulfilled and they are all worthy of our admira- ducted with the goal of reducing the until peace is attained. tion and thanks.∑ overall level of American assistance Violence and conflict are a constant f and to gradually phase out economic threat to the people of Israel, and to ANTI-SLAMMING AMENDMENTS aid while increasing military aid. the Nation of Israel itself. As we cele- Specifically, the Clinton administra- brate the 50th anniversary of the birth ACT tion and the Congress are currently re- of Israel, we have every right to wish ∑ Mr. LEVIN. Mr. President, yester- viewing an Israeli proposal to reduce for something more. Not just for a Jew- day, Senator MCCAIN and Senator HOL- the $1.2 billion in U.S. economic assist- ish homeland, but a homeland at peace. LINGS proposed a managers’ amend- ance to Israel to zero over 10 years, and As Theodore Herzl said, ‘‘If you will ment, Amendment No. 2389 to S. 1618, a to increase U.S. military aid to Israel it, it is not a dream.’’∑ bill to amend the Communications Act from $1.8 billion to $2.4 billion per year. f of 1934. The amendment significantly I am intrigued by this idea, and am improves the protections for consumers TRIBUTE TO THE FLOYD COUNTY glad to see Israel taking the lead in against ‘‘slammers,’’ persons who de- EMERGENCY AND RESCUE this regard. Israel has recognized that liberately deceive consumers and SQUAD: FORTY YEARS OF VOL- in its 50-year history, it has made enor- change their long distance carrier UNTEER SERVICE IN EASTERN mous strides in economic development without proper authorization. The KENTUCKY and, as a result, now boasts a rel- manager’s amendment included two of atively healthy economy. At the same ∑ Mr. MCCONNELL. Mr. President, I my amendments which were cospon- time, Israel recognizes—as I think we rise today to recognize the recent anni- sored by Senator DURBIN and Senator all do—that it still faces a substantial versary of the Floyd County Emer- GLENN. security threat, and so must maintain gency and Rescue Squad. Forty years The Permanent Subcommittee on In- a robust military and access to state- ago, this squad of volunteers was vestigations held a hearing recently on of-the-art weaponry. formed to help the people of Eastern slamming. At this hearing, we became The proposal to change our aid rela- Kentucky in times of emergency and aware of the fact that slammers inten- tionship reflects this reality. It is an disaster, and have been doing so ever tionally used names like Phone Com- Israeli plan, and as such reflects Israeli since. pany and Long Distance Services to de- priorities, including a desire to de- The Floyd County Emergency and liberately deceive customers on their crease its dependence on the United Rescue Squad was founded on April 27, phone bills. Usually local telephone States, and boost its own self-suffi- 1958, as a result of a tragic accident in companies or billing agents precede an ciency. I am concerned about potential Prestonsburg, Kentucky, in which a itemized list of long distance calls by unintended consequences of hasty ac- school bus plunged into the Big Sandy printing the name of the long distance tion by the Congress, and so, I, along River, killing 26 students and the driv- service provider. When deceptive com- with others in this body are still con- er. As a result of this tragedy, dozens pany names are used, customers are sidering our legislative response. But of community members came together not aware that their long distance by and large I believe these are worthy to form the Squad and the late Graham service provider has been changed. My goals that we should support, just as Burchett became the first Captain, a intention was to remedy this situation we have supported Israel in the past. position he held for twenty years. by requiring the billing companies to Ben-Gurion envisioned many achieve- Since that time, over 300 community specify the long distance provider ments for Israel, including one I men- members have served on the Squad— using a statement like, ‘‘Your provider tioned earlier, the idea of building a doctors and lawyers, coal miners and for the following long distance service successful nation by marrying sci- factory workers—people from all walks is——————’’ . If that type of state- entific advances with ancient Hebrew of life have worked side-by-side in vol- ment were made conspicuously and traditions. He believed that by drawing unteer service to their community. The clearly stated on a consumer’s phone on the strength, wisdom and skill of a Squad operates without any public sup- bill before the itemized long distance nation of faith and accomplishment, port. The members are all volunteers charges, consumers would know if their Israel could build a lasting peace with and all their equipment is paid for long distance carrier had been changed. its neighbors. through private donations and grants. Section 231 of the manager’s amend- Israel deserves that peace at last. The Squad currently maintains a ros- ment, entitled Obligations of Tele- Just over 100 years ago, the First Zi- ter of thirty active members and doz- phone Billing Agents, has language onist Congress convened in Basel, Swit- ens of reserve members. The Squad is that differs from my proposed amend- zerland. Under the leadership of Theo- called on for auto extrication, water ment. The language in the Manager’s dore Herzl, the participants announced rescue and drowning recovery, lost or amendment is language that was sug- their desire to reestablish a Jewish missing persons, and assistance to coal gested by the staff at the Federal Com- homeland in the historic land of Israel. mine rescue teams. In the last month munications Commission. Herzl once said that ‘‘If you will it, it alone, they have assisted in the evacu- I chose not to use the FCC language is not a dream.’’ ation of flood victims, recovered a because my staff contacted several Israel is a testament to the will of a drowning victim and have assisted on telephone companies and learned that people who believed those words and four auto accidents. if we used the FCC language several proved them true. Despite the fact that the Squad must problems could be created which may It would be 51 years until the dream labor mightily for every dollar they result in potential increased costs to expressed at the First Zionist Congress get, they have managed to secure consumers. GAO has advised my staff would become reality, until Holocaust ultra-modern equipment, and are that some of the requirments in the S4840 CONGRESSIONAL RECORD — SENATE May 13, 1998 provision as passed simply can’t be There are separate playrooms, outdoor students’ self esteem. In addition, they done. play structures and a schoolroom. have raised over $120,000 for the Hep- Because of time constraints we were There are large and numerous windows burn Center, an intergenerational, unable to resolve the language in the welcoming natural light. There is art- community-based organization that provision. It is not our intention to in- work of birds and frogs, sculptures, provides after-school care and orga- crease consumers costs for telephone painting, and poems. nizes activities for the elderly. services in order to alert them about One particular poem, ‘‘Naknuwisha’’ Evelyn Jones Lewis, 70, began her ‘‘slammers.’’ If the current bill in- which appears in the waiting room of volunteer work when she was ap- creases costs, and we believe it could, the hospital and is a Sahaptin term pointed to serve on the Florida Advi- we need to modify this section so con- among the Yakima, meaning ‘‘to care sory Council on Aging. Since then, she sumers are protected without having to for something precious, particularly has been active in urging Congress to pay for that protection. I sincerely children who need our help’’ was writ- pass legislation that would improve the hope we can continue to work to im- ten by Kim Stafford in 1996 and serves ever-changing nutritional and trans- prove this section in the conference as a constant reminder to all who enter portation needs of the elderly. committee, if there is one, or before the hospital that this is a place for Claire F. Mitchel, 76, is truly an asset the bill is enacted into law, to make children, and a place where healing and to the elderly community because she sure that we are not creating a burden hope begin: promotes acceptance and celebration of the aging process. She promotes these on telecommunications carriers which Naknuwisha will be passed on to consumers.∑ young friend, values in work with organizations like f be part of something old— the Rape Crisis Center, Women in Dis- be home here in the great world tress and the Older Women’s League. COMMENDING THE CREDIT UNIONS where rain wants to give you drink Estella Mae Moriarty, 62, exemplifies FOR KIDS PROGRAM where forest wants to be your house the true meaning of altruism by em- ∑ Mr. SMITH of Oregon. Mr. President, where frogs say your name and your name bracing foster-care children of all ages I rise today in recognition of the Credit where wee birds carry your wishes far who have been abandoned, abused or and the sun reaches for your hand— Unions for Kids program, an effort neglected. Realizing that children need be home here a permanent home in the developing which began in my state of Oregon but be healed which has since spread to more than 35 be well stages of their lives, she co-founded the states across the nation and has served be with us all SOS Children’s Village, which provides as an outstanding example of commu- young friend. care and comfort for children in dis- nity service. Mr. President, this beautiful new tress. Lily Ann Olfern, 68, is involved with The Credit Unions for Kids program hospital is the foundation of a commit- a telephone service bank to build a represents credit union employees and ment made by the community, fami- public safety building. Thanks to her members in Oregon and Southwest lies, friends, physicians, and by busi- many hours on the phone, the new fa- Washington who have volunteered nesses who have given the gift of time cility will be opening in Davie next their resources and time in raising $1.7 and resources to turn a dream into a year. She also bags toys for children on million to benefit the Doernbecher reality. I am proud to recognize the Christmas, feeds the homeless on Children’s Hospital Foundation. Last Credit Unions of Oregon and Washing- Thanksgiving, and teaches senior citi- year, Oregon ranked first in the aver- ton, and to congratulate them on their age dollars raised per credit union on a zens how to avoid various scam oper- contribution to this facility and this ations. nationwide basis. day of celebration of the opening of the Reuben Sperber, 90, came to Florida This is a day for celebration, not Credit Unions for Kids floor of the to retire. However, he has worked just only for this donation, but for the gen- Doernbecher Children’s Hosptial. as hard during his twenty years in this erosity exhibited by a twelve-year Congratulations, and thank you.∑ community as while he was in the fund-raising effort undertaken by the f workforce. Over the years, Reuben has employees, families, and members of served in his temple, given of his time the credit unions in Oregon and South- NAN S. HUTCHINSON SENIOR HALL OF FAME HONOREES at the Margate General Hospital, and west Washington. This combined effort become one of the most respected Mr. GRAHAM. Mr. President, I am serves as an example to the businesses, ∑ members of the Alzheimer’s Family communities and corporations in the delighted to recognize and congratu- Center’s Board of Directors. Pacific Northwest and throughout the late a group of exemplary citizens upon Jacob Statemann, 76, has dedicated nation that anything is possible, even their induction into the 1998 Dr. Nan S. his time to the Southeast Focal Point fulfilling the dream of a new children’s Hutchinson Senior Hall of Fame. These Senior Center in Hollywood for over 10 hospital, one floor at a time. men and women have each given a years. At the Center he has taught For a moment, I would like to focus great gift to their communities—they classes ranging from current events to on the recipient of this donation—the have given of themselves. foreign language, and he has never new Doernbecher Children’s Hospital Arnold Abbott, 73, works everyday to hesitated to organize holiday events or which replaces a very old and outdated fulfill his self-appointed mission to assist other classes that need help. He facility on the campus of Oregon feed and help the homeless on the also leads a senior choral group at HUD Health Sciences University. This four- streets of Broward County. He also or- housing. story, 250,000 square-foot facility ganized a small, dedicated core of vol- Ira Subin, 83, spends much of his houses 120 beds, including the medical/ unteers to assist him in finding time and efforts helping the Area surgical units, a pediatric intensive clothes, counseling and living arrange- Agency on Aging’s Advisory Council care unit, the Kenneth W. Ford Cancer ments, and to reunite the homeless plan social events and fundraisers. His Center and the Doernbecher Neonatal with their family members. advocacy for the Seniors for Seniors Care Center. The hospital also has a 16- Ruth Forbes, 76, began her work of Dollar Drive, along with matching bed floor dedicated to inpatient and community service in 1993 with the funds that the program has received outpatient cancer treatment. Area Agency on Aging’s Advisory from the state, has substantially in- Perhaps what is most impressive Council. In her time there, she has held creased the quality of services that the about this facility is the focus on the the positions of Legislative Chair, Vice Area Agency on Aging can provide. need of the children and families whom Chair, and Chairperson. In addition to Mr. President, all of these outstand- it will serve. Designed by Doernbecher improving the lives of those in her own ing seniors have diligently and self- staff, parents and patients, the hospital age group, she also aids disadvantaged lessly given of their time and energy to has places for families to gather to- children. make Broward County a better place gether, facilities for families who wish Arnold & Joann Lanner, 76 and 79, re- for all its residents. Florida is very for- to cook their own meals, and patient spectively, work with the ‘‘I Am Some- tunate to have these inspiring senior rooms that have extra beds so that par- body’’ program at elementary schools. citizens who give so much to our com- ents may stay with their children. This program is aimed at increasing munities. I congratulate them today May 13, 1998 CONGRESSIONAL RECORD — SENATE S4841 and wish for them many more produc- His retirement becomes effective at the tended consequence of this amend- tive and healthy years.∑ end of this semester. ment. ‘‘With Vince’s retirement, not just the f If this amendment becomes law, the Patterson School, but the University of Ken- minority rule adopted by only a small TRIBUTE TO DR. VINCE DAVIS: 27 tucky, loses one of their academic giants of number of States—sixteen—requiring YEARS AT THE PATTERSON the past half century,’’ said current director John D. Stempel. the consent of all parties for the lawful SCHOOL OF DIPLOMACY AND interception of telephone calls, would INTERNATIONAL COMMERCE Davis, 67, was the school’s second director for 22 years after an active and reserve ca- be applied to all conversations that ∑ Mr. MCCONNELL. Mr. President, I reer in the U.S. Navy. He receives much of take place between patients and health rise today to recognize the tremendous the credit for building the school’s prestige insurers or providers. There are a num- accomplishments of Dr. Vince Davis, as a world-class international relations pro- ber of legitimate reasons for patients who is retiring this spring after 27 gram. to want to record their calls with a years at the Patterson School of Diplo- ‘‘Patterson School has a unique combina- health provider or insurer: medical in- tion of superior foreign-affairs training and macy and International Commerce at structions can be complicated. Insur- related community outreach,’’ said David D. ers’ explanations of coverage or deci- the University of Kentucky in Lexing- Newsom, former ambassador and adviser to ton. the Patterson School. Newsom, who was un- sions regarding reimbursement may be Since I was first elected to the dersecretary of state during the Carter ad- complicated. Patients may have sound United States Senate in 1984, Vince and ministration, was the featured speaker. reasons for recording those conversa- I have had occasion to discuss impor- Although the Patterson School was found- tions if they are unable to take notes tant issues of the day in foreign affairs, ed in 1959, it was the brainchild of UK’s first or want to keep the oral instructions president, James K. Patterson, who served for future reference. For example, pa- as well as the underlying trends and from 1878 to 1910. currents that shape and guide world tients, especially Alzheimer sufferers, Patterson died in 1922 at the age of 89. In may want to record their calls as a events looming just over the horizon. I his will, he ordered that his estate’s assets memory aid, and be too embarrassed to have never failed to find his views both go to the university for the creation of such say so. penetrating and insightful, and have a school, with the proceeds invested for a A more carefully crafted amendment always appreciated his counsel over the prolonged period before UK could gain the money. would have reduced the unwarranted years. risk of criminal liability to patients. If But now, Vince has decided to pursue The school, Patterson also ordered, should be named in honor of William Andrew Pat- this provision were to become law, we new interests after nearly three dec- terson, his son. would have to revisit this issue ades of toiling in the academic vine- Davis worked to build the program into promptly.∑ yard, and so it’s appropriate that we one nationally known for the quality of its f bid him adieu with fondness and with graduates. Although enrollment is limited to gratitude. 25 to 30 students, the Patterson School is APPOINTMENT OF CONFEREES— Thinking back over the span of his often compared to similar but larger pro- H.R. 2676 career, I believe Vince Davis’s mark on grams at prestigious universities, such as The PRESIDING OFFICER. Under Kentucky and the world has been and Harvard and Princeton. the previous order, the Chair appoints Current and past students of the school always will be the enormous store of praised Davis as an interested mentor with a the following conferees to H.R. 2676. labor and love he poured into the Pat- quick wit. The Presiding Officer (Mr. terson School of Diplomacy and Inter- Davis, himself, didn’t dwell on the acco- BROWNBACK) appointed Mr. ROTH, Mr. national Commerce. It’s clear to me lades bestowed on him, including a $100,000 CHAFEE, Mr. GRASSLEY, Mr. HATCH, Mr. that Vince’s tireless and inspired stew- endowed trust to support Patterson students’ MURKOWSKI, Mr. NICKLES, Mr. GRAMM, ardship of the program has fashioned internships. Mr. MOYNIHAN, Mr. BAUCUS, Mr. the Patterson School into the glimmer- ‘‘All I have done is to work to carry on the GRAHAM, Mr. BREAUX, Mr. KERREY, and ing jewel of excellence for which it is great tradition started by my predecessors,’’ from the Committee on Governmental Davis said. Affairs, Mr. THOMPSON, Mr. now justly famous. Vince has given his On his retirement, he said he got a hint BROWNBACK, Mr. COCHRAN, Mr. DURBIN all to the School, and two generations from a former student a couple of months of bright young students have been im- ago that it was time to retire. and Mr. CLELAND conferees on the part measurably enriched by his exertions. ‘‘When your former graduate students of the Senate. Mr. President, there is an old Irish start to retire, perhaps it’s wise to consider f proverb that says, ‘‘The work praises joining them.’’∑ REMOVAL OF INJUNCTION OF SE- the man.’’ In that spirit, each time I f CRECY—TREATY DOCUMENT NO. think of the Patterson School, I will ANTI-SLAMMING AMENDMENTS 105–44 remember Vince Davis, for the Patter- ACT Mrs. HUTCHISON. Mr. President, as son School is his work, and we all in executive session, I ask unanimous should praise that which he leaves as ∑ Mr. LEAHY. Mr. President, yester- day, an amendment offered by Senator consent that the injunction of secrecy his legacy. be removed from the following treaty Mr. President, I also ask that an arti- FEINSTEIN to the anti-‘‘slamming’’ bill, S. 1618, was passed without debate. transmitted to the Senate on May 13, cle from the Lexington Herald Leader 1998, by the President of the United of Sunday, April 19, 1998, be printed in While this amendment was intended to enhance the privacy rights of patients, States: Treaty with Saint Vincent and the RECORD. the Grenadines on Mutual Legal As- The article follows: the consequence of this amendment would be far different. Specifically, sistance in Criminal Matters (Treaty TEACHER PRAISED FOR YEARS AT UK this amendment would change current Document No. 105–44). DIPLOMACY SCHOOL I further ask unanimous consent that federal law and put patients at risk of (By Holly E. Stepp) the treaty be considered as having been criminal liability if they record their read the first time; that it be referred, For years, the University of Kentucky’s conversations with health providers Patterson School of Diplomacy and Inter- with accompanying papers, to the Com- national Commerce has urged the state’s and health insurers without first alert- mittee on Foreign Relations and or- residents—from the business community to ing and obtaining the consent of those dered to be printed; and that the Presi- average Joes—to think globally. providers and insurers. dent’s message be printed in the And one of the leaders behind that charge This Feinstein amendment modifies RECORD. was retiring professor and former director the wiretap law, in title 18 of the The PRESIDING OFFICER. Without Vincent Davis. United States Code, but was never con- objection, it is so ordered. Last night, Davis, the Patterson Chair pro- sidered by the Committee of the Judi- The message of the President is as fessor, was honored for his dedication to that ciary, which has jurisdiction over this mission during a black-tie dinner at follows: Lexington’s Wyndham Garden Hotel. More law. The risk of passing legislation To the Senate of the United States: than 200 alumni and friends of the 39-year- quickly and bypassing the Committee With a view to receiving the advice old-school came out to celebrate Davis’ com- with jurisdiction over the subject mat- and consent of the Senate to ratifica- mitment to the program. ter is amply revealed by the unin- tion, I transmit herewith the Treaty S4842 CONGRESSIONAL RECORD — SENATE May 13, 1998 Between the Government of the United ate proceed to the consideration of H. a request from the Office of the Inspec- States of America and the Government Con. Res. 262, which was received from tor General of the Department of Jus- of Saint Vincent and the Grenadines on the House. tice for copies of committee records Mutual Legal Assistance in Criminal The PRESIDING OFFICER. Without relevant to the Inspector General’s Matters, and a related Protocol, signed objection, it is so ordered. The clerk pending inquiry into the handling by at Kingstown on January 8, 1998. I will report. the Department of Justice and the Fed- transmit also, for the information of The bill clerk read as follows: eral Bureau of Investigation of certain the Senate, the report of the Depart- A concurrent resolution (H. Con. Res. 262) foreign intelligence and counterintel- ment of State with respect to the Trea- authorizing the 1998 District of Columbia ligence information obtained in the ty. Special Olympics Law Enforcement Torch course of the Department’s ongoing The Treaty is one of a series of mod- Run to be run through the Capitol Grounds. campaign finance investigation. ern mutual legal assistance treaties The Senate proceeded to consider the This resolution would authorize the being negotiated by the United States concurrent resolution. chairman and vice chairman of the In- in order to counter criminal activities Mrs. HUTCHISON. Mr. President, I telligence Committee, acting jointly, more effectively. The Treaty should be ask unanimous consent that the reso- to provide committee records in re- an effective tool to assist in the pros- lution be agreed to; that the motion to sponse to this request, utilizing appro- ecution of a wide variety of crimes, in- reconsider be laid upon the table; and priate security procedures. cluding drug trafficking offenses. The that any statements relating to the Mrs. HUTCHISON. Mr. President, I Treaty is self-executing. resolution appear at the appropriate ask unanimous consent that the reso- The Treaty provides for a broad place in the RECORD. lution be agreed to; that the preamble range of cooperation in criminal mat- The PRESIDING OFFICER. Without be agreed to; that the motion to recon- ters. Mutual assistance available under objection, it is so ordered. sider be laid upon the table; and that a the Treaty includes: taking of testi- The concurrent resolution (H. Con. statement of explanation by the major- mony or statements of persons; provid- Res. 262) was agreed to. ity leader be placed at the appropriate ing documents, records, and articles of f place in the RECORD. evidence; serving documents; locating The PRESIDING OFFICER. Without or identifying persons; transferring AUTHORIZING USE OF CAPITOL objection, it is so ordered. persons in custody for testimony or GROUNDS FOR NATIONAL PEACE The resolution (S. Res. 230) was other purposes; executing requests for OFFICERS’ MEMORIAL SERVICE agreed to. searches and seizures; assisting in pro- Mrs. HUTCHISON. Mr. President, I The preamble was agreed to. ceedings related to immobilization and ask unanimous consent that the Sen- The resolution, with its preamble, is forfeiture of assets; restitution; collec- ate proceed to the consideration of H. as follows: tion of fines; and any other form of as- Con. Res. 263, which was received from S. RES. 230 sistance not prohibited by the laws of the House. Whereas, the Office of the Inspector Gen- the Requested State. The PRESIDING OFFICER. Without eral of the United States Department of Jus- I recommend that the Senate give objection, it is so ordered. The clerk tice has requested that the Senate Select early and favorable consideration to will report. Committee on Intelligence provide it with the Treaty and related Protocol, and The bill clerk read as follows: copies of committee records relevant to the Office’s pending inquiry into the handling give its advice and consent to ratifica- A concurrent resolution (H. Con. Res. 263) tion. and dissemination by the Department of Jus- authorizing the use of the Capitol Grounds tice and the Federal Bureau of Investigation WILLIAM J. CLINTON. for the seventeenth annual National Peace of certain foreign intelligence and counter- THE WHITE HOUSE, May 13, 1998. Officers’ Memorial Service. intelligence information; f The Senate proceeded to consider the Whereas, by the privileges of the Senate of AUTHORIZING USE OF CAPITOL concurrent resolution. the United States and Rule XI of the Stand- ing Rules of the Senate, no evidence under GROUNDS FOR GREATER WASH- Mrs. HUTCHISON. Mr. President, I ask unanimous consent that the reso- the control or in the possession of the Senate INGTON SOAP BOX DERBY can, by administrative or judicial process, be lution be agreed to; that the motion to Mrs. HUTCHISON. Mr. President, I taken from such control or possession but by reconsider be laid upon the table; and ask unanimous consent that the Sen- permission of the Senate; that any statements relating to the ate proceed to the consideration of H. Whereas, when it appears that documents, resolution appear at the appropriate papers, and records under the control or in Con. Res. 255, which was received from place in the RECORD. the possession of the Senate may promote the House. The PRESIDING OFFICER. Without the administration of justice, the Senate will The PRESIDING OFFICER. Without objection, it is so ordered. take such action as will promote the ends of objection, it is so ordered. The clerk The concurrent resolution (H. Con. justice consistently with the privileges of will report. the Senate: Now, therefore, be it Res. 263) was agreed to. The bill clerk read as follows: Resolved, That the Chairman and Vice A concurrent resolution (H. Con. Res. 255) f Chairman of the Senate Select Committee on Intelligence, acting jointly, are author- authorizing the use of the Capitol Grounds AUTHORIZING PRODUCTION OF for the Greater Washington Soap Box Derby. ized to provide to the Office of Inspector RECORDS BY THE SELECT COM- General of the United States Department of The Senate proceeded to consider the MITTEE ON INTELLIGENCE Justice, under appropriate security proce- concurrent resolution. dures, copies of committee records relevant Mrs. HUTCHISON. Mr. President, I Mrs. HUTCHISON. Mr. President, I to the Office’s pending inquiry into the han- ask unanimous consent that the reso- ask unanimous consent that the Sen- dling and dissemination by the Department lution be agreed to; that the motion to ate proceed to the immediate consider- of Justice and the Federal Bureau of Inves- reconsider be laid upon the table; and ation of Senate Resolution 230, submit- tigation of certain foreign intelligence and that any statements relating to the ted earlier today by Senator LOTT and counterintelligence information. resolution appear at the appropriate Senator DASCHLE. f place in the RECORD. The PRESIDING OFFICER. Without ORDERS FOR THURSDAY, MAY 14, The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 1998 objection, it is so ordered. will report. The concurrent resolution (H. Con. The bill clerk read as follows: Mrs. HUTCHISON. Mr. President, I Res. 255) was agreed to. A resolution (S. Res. 230) to authorize the ask unanimous consent that when the f production of records by the Select Commit- Senate completes its business today, it tee on Intelligence. stand in recess until 9:30 a.m. on Thurs- AUTHORIZING TORCH RUN The Senate proceeded to consider the day, May 14. I further ask unanimous THROUGH CAPITOL GROUNDS resolution. consent that on Thursday, imme- Mrs. HUTCHISON. Mr. President, I Mr. LOTT. Mr. President, the Select diately following the prayer, the rou- ask unanimous consent that the Sen- Committee on Intelligence has received tine requests through the morning May 13, 1998 CONGRESSIONAL RECORD — SENATE S4843 hour be granted and the Senate then The PRESIDING OFFICER. The George Caram Steeh, III, of Michigan, to begin a period for the transaction of clerk will call the roll. be United States District Judge for the East- morning business until 10:30 a.m., with The bill clerk proceeded to call the ern District of Michigan. Senators permitted to speak for up to 5 roll. f minutes each, with the following ex- Mrs. HUTCHISON. Mr. President, I ceptions: Senator DEWINE, 15 minutes; ask unanimous consent that the order LEGISLATIVE SESSION Senator LAUTENBERG, 15 minutes; Sen- for the quorum call be rescinded. The PRESIDING OFFICER. Under ator ALLARD, 15 minutes. The PRESIDING OFFICER. Without the previous order, the Senate will re- The PRESIDING OFFICER. Without objection, it is so ordered. turn to legislative session. objection, it is so ordered. f Mrs. HUTCHISON. I further ask f unanimous consent that following EXECUTIVE SESSION morning business, the Senate resume RECESS UNTIL 9:30 A.M. consideration of S. 2057, the Depart- TOMORROW ment of Defense authorization bill. EXECUTIVE CALENDAR Mrs. HUTCHISON. Mr. President, if The PRESIDING OFFICER. Without Mrs. HUTCHISON. Mr. President, I there is no further business to come be- objection, it is so ordered. ask unanimous consent that the Sen- fore the Senate, I now ask unanimous f ate immediately proceed to executive consent that the Senate stand in recess PROGRAM session to consider the following nomi- under the previous order. There being no objection, the Senate, Mrs. HUTCHISON. Mr. President, for nations on the Executive Calendar: at 7:37 p.m., recessed until Thursday, the information of all Senators, tomor- Nos. 572 and 573. I further ask unani- May 14, 1998, at 9:30 a.m. row morning at 9:30 a.m., the Senate mous consent that the nominations be will begin a period of morning business confirmed, the motion to reconsider be f until 10:30 a.m. Following morning laid upon the table, any statements re- business, the Senate will resume con- lating to the nominations appear at NOMINATIONS sideration of the Department of De- the appropriate place in the RECORD, Executive nominations received by fense authorization bill. It is hoped the President be immediately notified the Senate May 13, 1998: of the Senate’s action, and the Senate that Senators will come to the floor to EXECUTIVE OFFICE OF THE PRESIDENT debate this important piece of legisla- then return to legislative session. JACOB JOSEPH LEW, OF NEW YORK, TO BE DIRECTOR tion and offer amendments under short The PRESIDING OFFICER. Without OF THE OFFICE OF MANAGEMENT AND BUDGET, VICE time agreements. Members should ex- objection, it is so ordered. FRANKLIN D. RAINES, RESIGNED. pect rollcall votes throughout Thurs- Mrs. HUTCHISON. Mr. President, for f day’s session in an attempt to make reference, those are the confirmations progress on the defense bill. of U.S. District Judge Arthur Tarnow CONFIRMATIONS Also, the Senate has reached time from Michigan and U.S. District Judge Executive nominations confirmed by agreements with respect to the Abra- George Steeh from Michigan. the Senate May 13, 1998: ham immigration bill and the WIPO The nominations considered and con- copyright treaty legislation, and those firmed en bloc are as follows: THE JUDICIARY ARTHUR J. TARNOW, OF MICHIGAN, TO BE UNITED bills could be considered during Thurs- THE JUDICIARY STATES DISTRICT JUDGE FOR THE EASTERN DISTRICT day’s session. Arthur J. Tarnow, of Michigan, to be OF MICHIGAN. Mr. President, I suggest the absence GEORGE CARAM STEEH, III, OF MICHIGAN, TO BE United States District Judge for the Eastern UNITED STATES DISTRICT JUDGE FOR THE EASTERN of a quorum. District of Michigan. DISTRICT OF MICHIGAN.