George Allen

Mr. ALLEN

Mr. ALLEN. I yield.

Mr. ALLEN. I say to the Senator that in the event you, in effect, require the expenses of stock options, that does affect the tax treatment and the desirability of stock options.

Mr. ALLEN. Mr. President, I would like to use a portion of my 1 hour of time to say I agree with the purpose and the intent of the Dorgan amendment. I understand Senator Grassley of Iowa has a similar amendment that would disgorge or claw back into some ill-gotten gains of executives for the benefit of creditors and victims of their malfeasance or illegal acts. I wish to speak not on process. Although, process seems to drive a lot of what happens in this body. I would like to talk to my colleagues and the American people about the merits of certain ideas or the demerits of certain ideas that have been raised. There have been several measures dealing with the issue of stock options. Senator McCain's measure was a direct hit. I don't like it, but it was an accountable approach in getting rid of or killing stock options. We had Senator Levin's amendment, with Senator McCain, which was more of an indirect or ricochet killing of stock options by granting that study to FASB, when everyone knows what FASB's position is. There is another option regarding stock options which I would like to discuss as the approach that ought to be taken. The majority leader, Senator Daschle, mentioned that we may have a vote on it today. We may have a vote on it tomorrow, but some day we will have a vote. There ought to be a full and fair discussion of the approach we ought to take as well as what the potential adverse impacts could be if either the study by FASB or the direct killing of stock options, as far as requiring the expensing of them, were to occur. The more wise and prudent approach is one that was chiefly sponsored by my good friend Senator Enzi of Wyoming, along with Senators Lieberman, Boxer, myself, and others who joined with us, Senators Murray, Cantwell, Bennett, Wyden, Lott, Burns, Frist, Craig and Ensign. Our amendment is a more comprehensive, reasonable alternative that has the Securities and Exchange Commission review and make regulatory or legislative recommendations to Congress. Clearly, in today's climate, with the stock market dropping again today, with the scandals from Global Crossing, Enron, the crisis at WorldCom, it is axiomatic that there is a pressing need for accounting reform to address the corporate abuses and accounting firm malfeasance. The bill, as it is presented, is a very good bill. I think it addresses the two key areas that need to be addressed. It is focused, number one, on transparency. That means that people can readily and easily discern the true financial condition of a company in which they may want to invest. Secondly, you need deterrence, stiffer criminal and civil sanctions for illegal actions by corporate officers. There may be a few things added to make it better, but this bill essentially addresses those two focused goals. Indeed, enhanced transparency and improved corporate governance may restore some investor confidence and foster proper disclosure for investment decisions. More stringent penalties will provide a deterrence and substantial disincentive for the corporate wrongdoing that has led to this understandable firestorm of skepticism as a fallout from the scandalous, fraudulent misrepresentations by executives in many companies. In our effort to reform, we must not enact measures that stifle innovation and endanger the American entrepreneurial spirit. Congress should not harm future opportunities for employees to own a part of their company for whom they work. Unfortunately, the Levin-McCain amendment does just that by unjustifiably upsetting the current tax treatment of stock options. It is unnecessary and unwise to change these particular accounting policies. It is virtually impossible to accurately determine the worth or value of a stock option. Now, how are you going to predict the future performance of a company? How are you going to predict the future share value of a company, especially with the vicissitudes of the stock market these days? For example, somebody is granted a stock option by a company--a new company--and the stock is trading, after an IPO, at $5 a share. The option to this employee is to be able to purchase 1,000 shares of that company at $10 a share. Now, nobody is going to exercise a stock option until the share value reaches the strike price, or $10, and it may never get to $10. It may take 5 years before that share value gets above $10 a share, where somebody would exercise the option. So it is very difficult to determine what is the actual value of that stock option when it is granted. The amendment Mr. Levin has proposed will affect current law. Currently employers are not required to expense stock option grants on their financial statements. But they are permitted to deduct the employees' gains at exercise--that is, down the road--as a compensation expense. Now, this makes good sense. After all, a stock option grant does not require a cash outlay like other expenses such as wages. Moreover, there is no transparency problem with failing to expense stock option grants because they are disclosed on the company's financial statement. If somebody says there ought to be better disclosure, or it should be in bolder print, or it should be highlighted more and the disclosure needs to be more clear, that is fine. But I don't think it is necessary, in the midst of better disclosure and transparency, to kill this otherwise largely salutary idea and beneficial idea of stock options. Nonetheless, the amendments by Senators McCain and Levin mandate that any company taking a deduction must report the stock option as an expense on their income statement, profit and loss statement, and the deduction may not exceed the reported expense.

Mr. ALLEN. Mr. President, I yield the remainder of my hour to Senator Gramm, the Senator from Texas, who is the Republican manager of this bill.

Mr. ALLEN. I thank the Senator from Michigan. Now, the problematic aspect of these ideas is that, if you take away the current method of accounting and taxation of stock options, a company can only take a deduction up to the amount they expense at the time of the grant. Since the expense would be taken at the time of the grant, the tax deduction would be taken at the time of the exercise. If the value was too low at the time of the grant, then you are not going to get the full extent of your deduction. So the point is that if we are not careful here, with all these approaches of changing the tax treatment, changing the expensing rules, or having it be done by FASB, the result is a convoluted tax increase on companies. Now, what will happen if these tax increases or this inability to actually determine the value of the stock option occurs, which may or may not be exercised at some unknown future date, all of this consternation, inaccuracy, unpredictability--the potential of actually a tax increase, in effect--many companies will find this tax and accounting scheme is so onerous they will discontinue offering options to all but maybe a few senior executives who can bargain for them. I think the idea of doing away with stock options, or making them less desirable, is a substantial detrimental impact on not only companies but many, particularly those companies in the high-tech sector and small startups. New businesses have powered our economy in the last decade and, hopefully, they will do so in the future. Small companies motivate employees with stock options. That is the way they keep employees. Especially the startups who will get folks to serve on the board and pay them for that service in stock options. I think it is a good idea for people to care about a company doing well in the future; not only looking for a paycheck, but also caring about how well a company will do. Indeed, in the last 10 years, the number of workers who received stock options has grown dramatically--from about 1 million in 1992 to 10 million today. First, as I said, the benefits of stock options has enabled companies to recruit and keep quality workers. Absent stock options, many smaller companies lack the capital. They don't have the money to attract top-notch talent. Investors will be less likely to invest in companies that retain stock option plans because the company's earnings will be artificially deflated by this phantom expense. Finally, and perhaps most important, stock options enhance productivity by providing employees with a greater stake in their company's performance. Mr. President, these options are particularly important to rank and file employees who receive relatively modest salaries and wages. There is one company that has a pretty good presence in Virginia--Electronic Arts--which recently told me that stock options enabled many of its employees to purchase their first homes, to send their children to college, or to provide for their aging parents. Thus, the desirability of stock options as incentives is readily apparent, and we should not adopt any measure that would effectively eliminate their use as a form of employee compensation. That is not to say that I oppose all stock option reform. In fact, I fully support President Bush's proposal that requires shareholder approval for stock option plans. I think the idea of equitable treatment in the exercise of options by employees or executives is well founded. But I am joining with Senators Lieberman, Boxer, Enzi, and others in offering the amendment that directs the Securities and Exchange Commission to conduct a comprehensive study and to make recommendations regarding the accounting treatment of stock options, which is the way to go. We may introduce this proposal as a free-standing bill. Maybe we will not vote on it today but here is the approach that we ought to take. The SEC will conduct an analysis and make regulatory and legislative recommendations on the treatment of stock options in which the Commission shall analyze the following: No. 1, the accounting treatment for employees' stock options, including the accuracy of available stock option pricing models; No. 2, the adequacy of current disclosure requirements to investors and shareholders on stock options; No. 3, the adequacy of corporate governance requirements, including shareholder approval of stock option plans; No. 4, any need for new stock holding period requirements for senior executives; No. 5, the benefit and detriment of any new option expenses rules on, A, the productivity and performance of large, medium, and small companies and startup enterprises and, B, the recruitment and retention of skilled workers. The Commission shall submit its regulatory and legislative recommendations to Congress and supporting analyses of those matters as far as any changes indicated in the treatment of stock options within 180 days. In my view, this is the reasonable alternative we ought to be taking. I urge my colleagues to support this approach rather than adopting, whether it is today or in the future, Senator McCain's measure that he introduced last week or Senator Levin's study today. I think either of those would be harmful and damaging to both American industry and to working men and women. The Senator from Michigan mentioned evidence, or observations, of others as to the impact of his recommendations and his amendment. I think it is very good for us to look at what people who will be affected say about the measures that are passed in the Senate. I think it is important that we be accountable to those who are affected and we should listen to them. I have some other observations, as far as the issue of stock options is concerned. This first I will share is the views of the Information Technology Industry Council. They expressed their support for the potential alternative amendment cosponsored by Senators Lieberman, Enzi, Boxer, and Allen that would direct the Securities and Exchange Commission to examine the accounting treatment of stock options and make recommendations. The Information Technology Industry Council stated that, in particular, those entrepreneurial high-tech companies that are willing to take the risk in the pursuit of technological innovation have offered stock options as an incentive to attract and retain employees. Unfortunately, the expensing of options would end the practice of providing most employees with stock options. The result would be a reversal of the trends toward employee ownership and a significant reduction in financial opportunities for thousands of workers. Let me share another observation, and this comes from the Telecommunications Industry Association, and I read, in part: This sense of personal ownership referring to stock options helps develop the innovative entrepreneurial spirit that has characterized the high tech industry over the last decade. Should the rules for options suddenly change and be treated as a cash expense, the number of employees that receive the benefit would be drastically reduced, most likely leaving only members of the top management as recipients. They conclude with this comment: Adoption of this type of measure is a knee jerk reaction to situations such as occurred with Enron, which is not what we need. It is not in the best long-term interest of our country. Another observation from a large group of trade associations: American Electronic Association, Bankers Association, Alabama Information Technology Association, the Arizona Software and Internet Association, Biotechnology Industry Organization, Business Software Alliance, Information Technology Association of America, National Association of Manufacturers, the Retail Federation, Semiconductor Equipment and Materials International, as well as the Semiconductor Industry Association, Software and Information Industry Association, Software Finance and Tax Executives Council, the Tax Council, the Technology Network, and the U.S. Chamber of Commerce wrote me and said that the stock options tax bill--not the Levin amendment but, rather, the tax treatment changes--that legislation would, if enacted, discourage broad-based rank and file access to stock options. It would lead to investor confusion, less accurate financial statements, and raise taxes on companies issuing stock options. Now we have heard also some scholarly points of view. It is nice to hear what some of these esteemed individuals may say from time to time on the issue of stock options. Others in the body have quoted from Warren Buffett, a person for whom we all have a great deal of respect. But in another scholarly work from two gentlemen, economics professors at Princeton University and New York University, Dr. Malkiel, professor of economics at Princeton, and Dr. Baumol, professor of economics at New York University, say this: Warren Buffett and other critics suggest that the income statement should reflect an expense to the firm measured by the cash equivalent value of options. There are two problems with these views. First, if we were to consider the expense of options to be equivalent to that of cash wages, there is no way to measure that cost, the value of options at the time they are issued, with any reasonable precision. The Nobel Prize winning Black-Scholes model does an excellent job of predicting the prices at which short-term options trade in the market, but the Black-Scholes formula does not provide reliable estimates for longer term options such as those lasting 6 months to one year, and market prices often differ substantially from predicted values. Because employee stock options have durations of 5 to 10 years, are complicated by not investing immediately, are contingent on continuing employment and subject to various restrictions, it is virtually impossible to put a precise estimate on the options value. Moreover, employees' options cannot be sold, violating one of the key Black-Scholes assumptions. They conclude by saying that by targeting all stock options rather than stock option abuses, politicians are risking destruction of equity compensation instruments that have been engines of innovation and entrepreneurship. Finally, an observation today from the Software Finance and Tax Executives Council. They call themselves by the acronym SoFTEC. SoFTEC believes that Senator Levin's amendment essentially dictates a pre-determined result without requiring the FASB to analyze other relevant issues surrounding stock options. Rather than mandate FASB to achieve a predetermined result, SoFTEC believes that the SEC currently has the ability and authority to properly study all of the issues surrounding stock options and make recommendations based upon not only the technical accounting issue but the public policy implications as well. So I will conclude my time by requesting of my colleagues, whether we vote on it today, this afternoon, this evening, or in the future, that we act responsibly. It is fine to be worrying about the details of procedure and accounting minutia, but it is important also to understand the impact of this on our free enterprise system. While we are doing a lot of good as far as greater scrutiny, greater transparency, and greater punishment for wrongdoers are concerned, let us make sure we do no harm because the way that this stock market is going to change is with more investment, more risk taking, more jobs being created, and that entrepreneurial spirit that rewards people who take risks, who are creative, who are innovative. That is what is going to improve our economy, our competitiveness as a country, as well as the stock market eventually. The point is we do not need to come up with new, convoluted ways to increase taxes on companies that we want to invest in and improve our country, and I hope we will support the free enterprise system and, in doing so, look at reasonable, logical, wise, and fully comprehended decision-making as we move forward in these very uncharted waters of making major changes in stock options. The bill as it stands now is an outstanding bill. There can be improvements made to it, such as the amendments of Senator Grassley and Senator Dorgan, but let us not have the perfect be the enemy of the very good, and let us make sure we do no harm. By fouling up stock options for many men and women working in this country, it would certainly do a great deal of harm. I yield the floor. Several Senators addressed the Chair.

Mr. ALLEN. Mr. President, I say to the Senator from Michigan, I understand his amendment offered today was one to have FASB study the issue. Senator McCain's amendment was one to require the expensing of stock options. I realize they are two different matters.

Mr. ALLEN

Mr. ALLEN. Mr President, I rise today to recognize 65 fallen servicemen from Alexandria, VA, who paid the ultimate sacrifice with their life while defending freedom in the Vietnam war. No mere words can express the depth of gratitude this country owes to the families of our fallen service members for the loss of their sons, daughters, brothers, sisters, husbands, or wives. By touching their names etched in granite and marble on monuments and statues in countries around the world, we who are living and those who come after us have the ability to connect with these fallen heroes. We must never take the sacrifices of past generations of Americans for granted, for each new generation is called upon to defend representative democracy's first axiom: that ``freedom is not free.'' On July 6, 2002, the city of Alexandria dedicated a beautiful memorial plaza to pay tribute to the 65 fallen American heroes from Alexandria who were killed in action or who remain missing in action in southeast Asia from the Vietnam war. Toby Mendez, a brilliant young sculptor, has created a work that will allow us to touch the names of the brave men whose sacrifice will be memorialized for all time. A statue of U.S. Army Cpt. Humbert Roque ``Rocky'' Versace is the centerpiece of the plaza. On July 8, 2002, I had the distinct honor of being present at the White House for the posthumous awarding of the Medal of Honor by President George W. Bush for Rocky's conspicuous gallantry at the risk of his life above and beyond the call of duty while a captive of the Viet Cong from October 29, 1965, until he was executed on or about September 26, 1965. His captors took his life after they had given up trying to break Rocky's indomitable will to resist interrogation and indoctrination, his unshakable faith in God, and his steadfast trust in his country and his fellow prisoners. Captain Versace was a 1959 graduate of the U.S. Military Academy and lived his life by the West Point ideals of Duty, Honor, and Country. His fellow prisoner, U.S. Army 1 Lt James Nicholas ``Nick'' Rowe recalled that Rocky told his captors that ``as long as he was true to God and true to himself, what was waiting for him after this life was far better than anything that could happen now. So he told his captors that they might as well kill him then and there if the price of his life was getting more from him than name, rank, and serial number.'' Captain Versace's statue shows him holding hands with two Vietnamese children, who had been orphaned by Viet Cong terror against their parents. Rocky did many good works on his own to improve the lives of the many orphans he came in contact with. In fact, he planned on entering the Maryknoll priesthood after his tour of duty ended in Vietnam. It was Rocky's desire to return to Vietnam after ordination to be a missionary priest to work among the villagers and help educate their children so they could achieve a better life for themselves, free of Communist domination. The remains of Captain Versace and three other men from Alexandria lie in unmarked graves in southeast Asia, known only to God. They are: U.S. Army SSG Douglas Randolph Blodgett; U.S. Air Force Maj Joseph Edwin Davies; and U.S. Air Force Maj Morgan Jefferson Donahue. Additionally, two other servicemen drowned, and their bodies did not resurface: U.S. Army 1 Lt Leland S. McCants III, who drowned on his first day in Vietnam while trying to save another soldier; and U.S. Navy Seaman Apprentice John Anthony Winkler, who was swept off of the deck of the Navy aircraft carrier USS Bon Homme Richard and was lost at sea. The waters, jungles, and mountains of southeast Asia may never reveal these missing men's remains, but the U.S. Government is committed to continue to search for all those of our missing in action personnel, those brave souls who, in the words of General of the Army Douglas MacArthur gave up their ``youth and strength, . . . love and loyalty . . . all that mortality can give.'' Each of the 65 names engrave on the limestone benches in Alexandria has a story to tell of honor and courage. Two outstanding examples of the dedication and service of this fine group of men are Robert William Cupp and Herman Leroy Judy, Jr. U.S. Army Cpl., Robert William Cupp served proudly with Company D, 2d Battalion, 1st Infantry Brigade of the Americal Division. He was killed in action in South Vietnam on June 6, 1968, by an enemy booby trap. Corporal Cupp was laid to rest in his family's plot at Mount Comfort Cemetery on June 17, 1968, his 21st birthday. U.S. Cpl., Herman Leroy Judy, Jr. served proudly with Company B, 2nd Battalion, 505th Infantry, 82nd Airborne Division. He was killed in action in South Vietnam on May 29, 1969, a day before his first wedding anniversary. He is buried in Arlington National Cemetery. Both of these brave men received the Combat Infantryman's Badge, Bronze Star Medal, and Purple Heart Medal for their heroism in combat. Plato, that wise philosopher of ancient times, observed that ``only the dead have known the end of war.'' So it is today with the never- ending struggle between freedom and evil. All those brave men and women who proudly wear the uniform of our armed services, and who willingly risk their lives to achieve battlefield victories over our enemies, deserve our Nation's eternal gratitude. Mr. President, it is my great honor to enter into the Congressional Record the names of the 65 men from Alexandria who were killed in action or remain missing in action in southeast Asia during the Vietnam war, and who were memorialized on July 6, 2002. I ask unanimous consent that the list be printed in the Record.

Mr. ALLEN

Mr. ALLEN. Mr. President, I rise in support of Virginia's Indian Tribes and to introduce a bill to extend Federal recognition to six of Virginia's Indian Tribes. These Tribes have a rich tradition and history, not only for Virginia, but also for the Nation as a whole. My bill will recognize the Chickahominy Tribe; the Chickahominy Tribe Eastern Division; the Upper Mattaponi Tribe; the Rappahannock Tribe; the Monacan Tribe; and the Nansemond Tribe. The title of the bill is the ``Thomasina E. Jordan Indian Tribes of Virginia Federal Recognition Act''. For me, this legislation also has a very personal aspect to it. Thomasina Jordan was a dear friend of mine. As Governor of Virginia, I appointed Thomasina as Chair of the Virginia Council on Indians, and she served as an advisor to me in many ways over the years. Thomasina was a great leader and civil rights activist in Virginia, paving the way for this legislation. Regrettably, she passed away in 1999 after a long and courageous battle with cancer. I offer this legislation in her memory as her last battle on earth was for Federal recognition of Virginia's tribes. Thomasina's efforts to ensure equal rights and recognition to all American Indians continue today in spirit because she was able to have an effect on the lives of so many individuals and encourage many to join her quest for fairness, honor and justice. The American Indians in Virginia contribute to the diverse, exciting nature and heritage of the Commonwealth of Virginia. Virginians are united in their desire to honor these first residents and I am pleased that Senator Warner and I are able to join Virginia's House Delegation in offering this legislation. There are more than 550 federally recognized Tribes in the United States. While no Tribes have been federally recognized in Virginia, the Commonwealth of Virginia has recognized the eight main tribes. According to the U.S. Census Bureau, there are over 21,000 American Indians living in Virginia. ``Federally recognized'' means these tribes and groups can enjoy a special legal relationship with the U.S. government where no decisions about their lands and people are made without Indian consent. It is important that we give Federal recognition to these proud Virginia tribes so that they cannot only be honored in the manner they deserve but also for the many benefits that federal recognition would provide. Members of federally recognized tribes, most importantly, can qualify for grants for higher education opportunities. There is absolutely no reason why American Indian Tribes in Virginia should not share in the same benefits that so many Indian tribes around the country enjoy. The Indian Tribes in Virginia have one of the longest histories of any Indian tribe in America, which is a remarkable point considering none of the tribes in Virginia are federally recognized. As Virginia approaches the 400th anniversary of the 1607 founding of Jamestown, the first permanent English settlement in North America, it is crucial that the role of Indian tribes in Virginia in the development of our Commonwealth and our country are properly recognized and appreciated. There are three routes that an Indian Tribe can pursue in order to receive Federal recognition. One, the tribe can apply for administrative recognition through the Bureau of Indian Affairs, which all these Virginia Tribes have done. Two, a tribe can gain Federal recognition through an act of Congress. And three, the tribe can obtain Federal recognition through legal proceedings in the court system. There has been a sharp increase in recent years of the number of tribes seeking Federal recognition via an application to the Bureau of Indian Affairs. However, the General Accounting Office recently reported that, while the workload at the Bureau of Indian Affairs has increased dramatically, the resources to handle the large volume of applications has actually decreased. Since 1978, the Bureau of Indian Affairs has processed only 32 of the 150 applications it received, deciding favorably on only 12 of them. In fact, BIA averages only 1.3 completed applications a year. The route of Federal recognition through the Bureau of Indian Affairs and Bureau of Acknowledgement and Recognition is a cumbersome and lengthy process, which has taken sometimes over 20 years for an application to be decided upon. In 1999, the Virginia General Assembly passed a resolution calling on the U.S. Congress to grant Federal recognition to the tribes in Virginia. Identical legislation to what I introduce today has already been introduced in the House. I join my House colleagues, Mr. Moran of Virginia, Mrs. Jo Ann Davis of Virginia, Mr. Tom Davis of Virginia, Mr. Scott, Mr. Schrock, Mr. Boucher, and Mr. Forbes in this important endeavor. The precedent has already been set for the second route for attainment of Federal recognition, through an act of Congress. Since the 93rd Congress (1973-1974), Congress has restored Federal recognition to eighteen tribes and has granted seven new Federal recognitions to tribes. In 2000, Congress passed a law to grant new Federal recognition to the Shawnee Indians as a separate tribe from the Cherokee Nation of Oklahoma and another law to restore Federal recognition to the tribe of Graton Rancheria of California. It is time that Virginia's tribes receive the same recognition. The main goal of this legislation is to establish a more equitable relationship between the tribes and the State and Federal Government. While I understand that some may have a concern that Federal recognition of Indian tribes may lead to the establishment of gaming operations within a State, this is not the case. As a result of the 1988 Indian Gaming Regulatory Act, federally recognized Indian Tribes can conduct only the gaming operations that are authorized by State law. Tribes are unable to operate casinos, slot machines or card games unless approved by a specific State/Tribe Compact. My bill includes language restating this point to make it clear that nothing in the Act provides an exception to the Indian Gaming Regulatory Act. Ultimately, it gives proper coverage under Virginia law so as not to provide special gaming privileges. This legislation not only lays out the path for granting Federal recognition to six American Indian Tribes in Virginia, but it also honors and details the proud history of each of the six Tribes. The Virginia tribes have fought hard to retain their heritage and cultural identity, and it is my hope that this legislation be seen as a way to recognize this identity. As Americans, we need to appreciate the many contributions American Indians have made to our Nation in order to make it the great country it is today. Thomasina Jordan once wrote: ``We belong to this land. For 10,000 years we have been here. We were never a conquered people. The dominant society needed us to survive in 1607, and it needs American Indians and our spiritual values to survive in the next millennium.'' The Commonwealth of Virginia has realized that it needs its proud Indian tribes. This bill is another step toward recognizing and appreciating this special relationship.

Mr. ALLEN

Mr. ALLEN. Mr. President, I rise in support of Virginia's Indian Tribes and to introduce a bill to extend Federal recognition to six of Virginia's Indian Tribes. These Tribes have a rich tradition and history, not only for Virginia, but also for the Nation as a whole. My bill will recognize the Chickahominy Tribe; the Chickahominy Tribe Eastern Division; the Upper Mattaponi Tribe; the Rappahannock Tribe; the Monacan Tribe; and the Nansemond Tribe. The title of the bill is the ``Thomasina E. Jordan Indian Tribes of Virginia Federal Recognition Act''. For me, this legislation also has a very personal aspect to it. Thomasina Jordan was a dear friend of mine. As Governor of Virginia, I appointed Thomasina as Chair of the Virginia Council on Indians, and she served as an advisor to me in many ways over the years. Thomasina was a great leader and civil rights activist in Virginia, paving the way for this legislation. Regrettably, she passed away in 1999 after a long and courageous battle with cancer. I offer this legislation in her memory as her last battle on earth was for Federal recognition of Virginia's tribes. Thomasina's efforts to ensure equal rights and recognition to all American Indians continue today in spirit because she was able to have an effect on the lives of so many individuals and encourage many to join her quest for fairness, honor and justice. The American Indians in Virginia contribute to the diverse, exciting nature and heritage of the Commonwealth of Virginia. Virginians are united in their desire to honor these first residents and I am pleased that Senator Warner and I are able to join Virginia's House Delegation in offering this legislation. There are more than 550 federally recognized Tribes in the United States. While no Tribes have been federally recognized in Virginia, the Commonwealth of Virginia has recognized the eight main tribes. According to the U.S. Census Bureau, there are over 21,000 American Indians living in Virginia. ``Federally recognized'' means these tribes and groups can enjoy a special legal relationship with the U.S. government where no decisions about their lands and people are made without Indian consent. It is important that we give Federal recognition to these proud Virginia tribes so that they cannot only be honored in the manner they deserve but also for the many benefits that federal recognition would provide. Members of federally recognized tribes, most importantly, can qualify for grants for higher education opportunities. There is absolutely no reason why American Indian Tribes in Virginia should not share in the same benefits that so many Indian tribes around the country enjoy. The Indian Tribes in Virginia have one of the longest histories of any Indian tribe in America, which is a remarkable point considering none of the tribes in Virginia are federally recognized. As Virginia approaches the 400th anniversary of the 1607 founding of Jamestown, the first permanent English settlement in North America, it is crucial that the role of Indian tribes in Virginia in the development of our Commonwealth and our country are properly recognized and appreciated. There are three routes that an Indian Tribe can pursue in order to receive Federal recognition. One, the tribe can apply for administrative recognition through the Bureau of Indian Affairs, which all these Virginia Tribes have done. Two, a tribe can gain Federal recognition through an act of Congress. And three, the tribe can obtain Federal recognition through legal proceedings in the court system. There has been a sharp increase in recent years of the number of tribes seeking Federal recognition via an application to the Bureau of Indian Affairs. However, the General Accounting Office recently reported that, while the workload at the Bureau of Indian Affairs has increased dramatically, the resources to handle the large volume of applications has actually decreased. Since 1978, the Bureau of Indian Affairs has processed only 32 of the 150 applications it received, deciding favorably on only 12 of them. In fact, BIA averages only 1.3 completed applications a year. The route of Federal recognition through the Bureau of Indian Affairs and Bureau of Acknowledgement and Recognition is a cumbersome and lengthy process, which has taken sometimes over 20 years for an application to be decided upon. In 1999, the Virginia General Assembly passed a resolution calling on the U.S. Congress to grant Federal recognition to the tribes in Virginia. Identical legislation to what I introduce today has already been introduced in the House. I join my House colleagues, Mr. Moran of Virginia, Mrs. Jo Ann Davis of Virginia, Mr. Tom Davis of Virginia, Mr. Scott, Mr. Schrock, Mr. Boucher, and Mr. Forbes in this important endeavor. The precedent has already been set for the second route for attainment of Federal recognition, through an act of Congress. Since the 93rd Congress (1973-1974), Congress has restored Federal recognition to eighteen tribes and has granted seven new Federal recognitions to tribes. In 2000, Congress passed a law to grant new Federal recognition to the Shawnee Indians as a separate tribe from the Cherokee Nation of Oklahoma and another law to restore Federal recognition to the tribe of Graton Rancheria of California. It is time that Virginia's tribes receive the same recognition. The main goal of this legislation is to establish a more equitable relationship between the tribes and the State and Federal Government. While I understand that some may have a concern that Federal recognition of Indian tribes may lead to the establishment of gaming operations within a State, this is not the case. As a result of the 1988 Indian Gaming Regulatory Act, federally recognized Indian Tribes can conduct only the gaming operations that are authorized by State law. Tribes are unable to operate casinos, slot machines or card games unless approved by a specific State/Tribe Compact. My bill includes language restating this point to make it clear that nothing in the Act provides an exception to the Indian Gaming Regulatory Act. Ultimately, it gives proper coverage under Virginia law so as not to provide special gaming privileges. This legislation not only lays out the path for granting Federal recognition to six American Indian Tribes in Virginia, but it also honors and details the proud history of each of the six Tribes. The Virginia tribes have fought hard to retain their heritage and cultural identity, and it is my hope that this legislation be seen as a way to recognize this identity. As Americans, we need to appreciate the many contributions American Indians have made to our Nation in order to make it the great country it is today. Thomasina Jordan once wrote: ``We belong to this land. For 10,000 years we have been here. We were never a conquered people. The dominant society needed us to survive in 1607, and it needs American Indians and our spiritual values to survive in the next millennium.'' The Commonwealth of Virginia has realized that it needs its proud Indian tribes. This bill is another step toward recognizing and appreciating this special relationship.

Mr. ALLEN

Mr. ALLEN. Madam President, I associate myself with the remarks of the Senator from Louisiana, Ms. Landrieu, and I commend her for her resolution. With her consent, I would like to add my name to her resolution in the event the Ninth Circuit and the Supreme Court continue this errant miscarriage of justice. Madam President, we often talk about ``miscarriages of justice,'' but today I talk about an instance in which proper administration of justice was dragged into a dark alley and mugged. Many of us are outraged to learn today that a divided three-judge panel of the Ninth Circuit Court of Appeals believed it knew better than the properly exercised wisdom of the people and their duly elected representatives in striking down the Pledge of Allegiance and stating that the Pledge of Allegiance is unconstitutional. These judges ignored the very basis of our democracy and representative Government. They have ignored, right before Independence Day, the spirit of our country that Mr. Jefferson, in the Declaration of Independence, proclaimed to the British monarchy, which had an established religion, that our rights are God-given rights. He stated in the Declaration of Independence that we are endowed by our Creator ``with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.'' All of this came from the Virginia Declaration of Rights which expressed the same sentiments. Let's understand, if these judges do not understand, with their judicial activist decisions such as this, the judges are to interpret the laws, they are not to write the laws. The laws on the Pledge of Allegiance and the laws for the recitation of the Pledge of Allegiance in our schools are passed by State legislatures all across our country. They are reflecting the will, the desire, and the value of the people in their States and in their communities. Let's also understand that these activist judges, like the two involved in this majority decision of the Ninth Circuit, often cite the first 10 words of the Establishment Clause, which says: Congress shall make no law respecting an establishment of religion . . . But they too often forget the six words that follow: or prohibiting the free exercise thereof. To understand the history of religious freedom in this country, one must understand that this country, in the very beginning, starting with the Virginia Company, which was a commercial venture--it still was a crown colony, as were all the colonies, and as such it was associated with the Church of England or the Anglican Church. People were compelled to pay taxes to that church whether they wanted to go to that church or not. The concept of the statute of religious freedom first started in Virginia with Thomas Jefferson. He drafted the Virginia Statute for Religious Freedom. It is on his gravestone as one of his three most proud accomplishments, along with the founding of the University of Virginia, and drafting the Declaration of Independence. The statute of religious freedom was a novel idea. It was a radical idea because what you had in the 1700s and before then were monarchies, theocracies in effect, where the monarchs were ruling because of bloodlines not because of merit or popular will. They also had a single church and that church was given that exclusive monopoly in that they would then say that those monarchs were ruling by divine guidance and divine right. In all of these monarchies, the idea that people could believe as they saw fit and not be compelled to join a church or be compelled to support a church was a very radical idea and upsetting to the tyrannical monarchs because that upset their whole justification for being in power in the first place. The Virginia Statute for Religious Freedom actually took 7 years to pass in the Virginia General Assembly. Good ideas still sometimes take a long time. Mr. Jefferson was the Minister to France when James Madison finally got this Statute through the Virginia General Assembly. The Virginia Statute for Religious Freedom states very clearly, in article I, section 16, of the Virginia Constitution, ``That religion, or the duty which we owe our Creator and the manner of discharging it, can be directed by reason and conviction, not by force or violence; and therefore, all men are equally entitled to the free exercise of religion, according to the dictates of conscience; . . . '' and so forth. It goes on to say that people's rights and individual's rights should not be enhanced nor should they be diminished due to their religious beliefs. Now the purpose of the Establishment Clause, which was then put into the Federal Constitution in the First Amendment of the Bill of Rights, was not to expunge religion or matters of faith from all aspects of public life. The Pledge of Allegiance should remain in our schools and other public functions, but it should be voluntary. The Commonwealth of Virginia has such a law but it is voluntary. If a student does not want to recite the Pledge of Allegiance, he or she is not compelled to do so. One needs to respect that individual conscience. The way it is in the law, whether in this case in the Ninth Circuit or elsewhere, is that it allows, in accordance with the founding documents of our Nation, the ability of the majority to express their values and their wisdom. If somebody somehow does not want to recite it, they are not compelled to do so. So the Establishment Clause, as well as our Bill of Rights, and our Declaration of Independence, are all modeled on the Virginia Statute for Religious Freedom, and the Virginia Declaration of Rights. The Virginia Statute for Religious Freedom, as drafted by Mr. Jefferson and then carried forward by James Madison and adopted in 1786, counsels against the impious presumption of legislators and rulers, civil as well as ecclesiastical, who being themselves but fallible and uninspired men who have assumed dominion over the faith of others. The Virginia Declaration of Rights holds that all men are equally entitled to the free exercise of religion according to the dictates of their conscience. Minimal reference is made to a nondenominational creator or natural rights or God and that is consistent with the values and the desires of the people. This is in step, and the laws are, fortunately, in this regard, in step with our society and the views of the people, as they have been throughout our history. It is my hope, and it is not without basis, that this decision of the Ninth Circuit will be handily reversed by the Supreme Court of the United States. I remind the Senate that the Ninth Circuit Court of Appeals has by far the most dismal reversal rate in the Supreme Court of any court of appeals in our land. In recent years, the reversal rate has hovered around 80 percent compared to about 50 percent for the next highest circuit, which is the Eighth Circuit. In one recent session of the Supreme Court alone, an astonishing 28 out of 29 decisions of the Ninth Circuit Court were overturned. That is 97 percent. What ruling from the Ninth Circuit will come next? Are they going to white out passages of the Declaration of Independence? Will it be improper to recite on public grounds the Declaration of Independence because it refers to our Creator giving us unalienable rights? Will the Ninth Circuit order currency and our coinage to knock out the insidious message of ``In God We Trust''? Will they say that all coins have to be destroyed and melted down? Will they imprison school choirs and have the school directors imprisoned because the children are singing ``God Bless America''? Who knows what is next out of the Ninth Circuit. At some point, though, a proper respect for the rights of the people, their desires, and also common sense and reason must be guiding our courts, especially this particular circuit court, and today's activist, offensive decision. Today's action by the Ninth Circuit is hit-and-run jurisprudence. It is smug judicial activism at its rankest. It is outrageously out-of-touch with the desires and values of the American people. It is striking down the basic concept that laws made by Congress or by State legislatures, unless they are clearly unconstitutional, ought to be respected. I am proud today, only days before the 226th anniversary of our Nation's birth, of our Declaration of Independence, where we ceded from the monarchy of Britain, that we are going to stand for what is right. We are going to stand by our flag and the principles of freedom and justice and with our Pledge of Allegiance. I thank my colleagues for their united, bipartisan stand for what is right about America and what is right for our schools and our youngsters, and that is stating the Pledge of Allegiance to our flag. I yield the floor, and I suggest the absence of a quorum.

Mr. ALLEN

Mr. ALLEN. Madam President, I rise today in opposition to the Kennedy amendment, which would arbitrarily require Federal Government agencies, particularly the Department of Defense, to compete with the private sector for the performance of inherently nongovernmental services within the Department of Defense. As chairman of the Republican Senate High Tech task force, I believe that contracting with the private business entities helps drive innovation and indeed save the taxpayers money. This amendment would reverse the progress that has already been made in this area and obviously create damage to important initiatives such as e-government. In fact, many of the information technology companies across this country believe they would no longer seek Federal contracts with DOD under the provisions of this amendment, thereby, unfortunately, creating job losses in the private sector. This view has been shared by my colleagues, Senators Ensign, Warner, Gramm, Smith, Collins, Hutchison, Burns, Bennett, Hatch, and Brownback. This amendment would mandate that every new Department of Defense contract, modification, task order, or contract renewal undergo a so- called public-private competition, whether or not the Government even has the requisite skill, competence, or personnel to perform the work. The changes in this current process by this amendment will: (1) weaken and delay Government performance; (2) could devastate small business; and (3) have a harmful effect on our important, creative, high-technology industry. First, the anti-private-enterprise exercise that would be caused by this bill would result in delays in performance of Government contracts. The Department of Defense would lack the capacity to quickly procure and adopt innovative solutions to enhance safety, security, and effectiveness. It would be an undesirable bureaucratic impediment that could harm the ability of the Defense Department to perform its duties, especially now during a national crisis. Secondly, the added costs associated with the A-76 program, in comparison to competitive procurement practices, traditionally would exclude most small businesses from participating in service contracting. This would have a particularly detrimental impact on women, minority, and veteran-owned companies. Finally, the amendment will have a devastating impact on the high- tech industry, an industry that is so important to the competitive vitality of the American economy. This amendment is opposed by the high-tech industry, including the Information Technology Association of America (ITAA). The exemptions for technology are ambiguous and do not cover the full range of activities conducted by the exempted industry. Moreover, ITAA notes the information technology exemption herein covers only 3 percent of total IT service contracting. This is also opposed by the Chamber of Commerce and various unions. I will close with the views of the Secretary of Defense, who says: We have made a top priority of finding efficiencies and savings within the Department of Defense to enable us to improve our tool-to-tail ratio. An important element of that effort is to adapt business and financial practices to make the best warfighting use of the resources the American taxpayers provide us. The draft Kennedy amendment would increase Department cost by requiring public-private competitions for new functions and for previously contracted work already subjected to market competition. It would also adversely impact mission effectiveness by delaying contract awards for needed services. The Secretary of Defense, Mr. Rumsfeld, closes: The proposed amendment would increase Department costs and dull our warfighting edge. I suggest that no Member of this body should support legislation that dulls our warfighting edge. I therefore urge my colleagues to vote against this amendment. I yield the floor.

Mr. ALLEN

Mr. ALLEN. Madam President, I want to recognize the Metropolitan Chorus of Arlington County, VA. Tonight the Metropolitan Chorus will complete its 35th anniversary season with a performance at Lubber Run Amphitheater in Arlington, VA. The 90-voice chorus offers residents the opportunity to perform and hear the great choral works. Concerts feature music of great variety and scope that spans the period from the Renaissance to the 21st century with a strong emphasis on American composers. The chorus has performed throughout the Washington, DC, metropolitan area, including the Kennedy Center, Constitution Hall, The National Building Museum, the Smithsonian Institution, and the Rachel M. Schlesinger Concert Hall. In addition to the formal concert season, the chorus presents several informal free concerts each season as a special service to the community. The chorus has also performed internationally, traveling to Italy; Sydney; Australia; New Zealand; Austria; Finland; Russia and Brazil to compete. I congratulate the Metropolitan Chorus on its 35th anniversary and wish them continued success for many more years.

Mr. ALLEN

Mr. ALLEN. The Harkin-Allen amendment.

Mr. ALLEN

Mr. ALLEN. I say to my good friend from Iowa, Senator Harkin, this is referred to as the Harkin-Allen amendment. I thank you for your great leadership. All of us have a lot of busy times around here, but we are teamed together for the victims who ought to get just compensation from these terrorists.

Mr. ALLEN. Will the Senator yield?

Mr. ALLEN

Mr. ALLEN. Madam President, I ask unanimous consent that amendment 3838, which will be the second vote today, be referred to as the Harkin-Allen amendment in recognition of the tireless efforts and leadership of our colleague from Iowa on this important issue.

Mr. ALLEN

Mr. ALLEN. In support of the Harkin-Allen amendment No. 3838, I do want to say that our friend and colleague from Iowa, Senator Harkin, and I, introduced the measure to allow victims of terrorist acts to seek judgments in our Federal courts with due process and, if accorded a judgment, be able to try to get that judgment satisfied from assets of those terrorist organizations or terrorist assets which have been seized or frozen by the Federal Government. This measure allows those people from all across the country, including Iowa, Virginia, and other States, to get satisfaction for compensatory damages that they have been awarded. I want to again thank our colleague from Iowa, Senator Harkin, for his great leadership and his great efforts in this regard. I yield the floor.

Mr. ALLEN

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

Mr. ALLEN. All right.

Mr. ALLEN. Mr. President, if I may ask the distinguished majority leader a question, so I understand the procedure as he originally outlined it. May I inquire as to when the vote on my amendment would occur? As far as I am concerned, the amendment having to do with getting after terrorist assets for those who obtain judgments in this country has broad bipartisan support. Is there any reason why we could not vote on that tonight or, in accommodation to a lot of people who will be gone, vote on it on Tuesday?

Mr. ALLEN. Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with.

Mr. ALLEN. Mr. President, I call up amendment No. 3838.

Mr. ALLEN. Mr. President, I am asking for the yeas and nays.

Mr. ALLEN. I ask unanimous consent to set aside the pending amendment.

Mr. ALLEN. Mr. President, I rise to present this amendment, No. 3838, which is a measure that has to do with allowing those who are victims of terrorist acts in the past who have judgments, to collect those judgments against the assets of the terrorist states or the state- sponsored terrorist states involved in these acts. I thank the cosponsors of the basic bill that has been introduced, which is the basis for this amendment. The cosponsors include Senator Warner; the lead of this on the Democrat side, Senator Harkin of Iowa, Conrad Burns of Montana, Senator Bayh, Senator Cleland, Senator Collins, Senator Feinstein, Senator Johnson, Senator Miller, Senator Schumer, Senator Torricelli, Senator Baucus, Senator Burns, Senator Clinton, Senator Craig, Senator Hollings, Senator Mikulski, Senator Nickles, and Senator Bob Smith. I particularly want to thank Mr. Harkin for the leadership he has shown on this issue. He has stood strong for making terrorists responsible for their actions and for justice. I'm grateful for Sen. Harkin's tireless efforts in making this proposal a reality. Now, this amendment would permit the blocked assets of terrorists, terrorist organizations, and state sponsors of international terrorism, to be used to compensate American victims of terrorism. A little history: In 1996, Congress passed the Antiterrorism and Effective Death Penalty Act, which, in section 221, expressly amended the Foreign Sovereign Immunities Act to allow American victims of terrorism to seek justice through the courts against foreign terrorist governments. In 1998, Congress again amended the Foreign Sovereign Immunities Act, stating explicitly that any property of a terrorist state that was frozen by the U.S. Treasury Department was subject to execution or attachment to satisfy the victim's court judgments. However, in response to bureaucratic interference, Congress again, in 2000, as part of the Victims of Trafficking and Violence Protection Act, endorsed the policy of using blocked assets to impose a cost on terrorism and provide justice to victims. Currently, there are at least $3.7 billion in blocked or frozen assets of seven state sponsors of terrorism. However, the executive branch bureaucracy is once again preventing these funds from being used to compensate American victims who have brought lawsuits in our Federal courts, won their cases, and secured court-ordered judgments--victims such as Edwina Hegna of Virginia. In the 1980s, Mrs. Hegna's husband, Charles Hegna, was an employee of the U.S. Agency for International Development. In 1984, his flight from Kuwait City to Karachi, Pakistan, was hijacked by Hizbollah, an Iranian-backed organization. The terrorists demanded that all Americans reveal themselves. Mr. Hegna stepped forward. The terrorists then beat and tortured him. Upon landing, they forced him to kneel. Witnesses heard Mr. Hegna praying for his life. He was then shot in the stomach and thrown 20 feet to the tarmac below while still alive, breaking nearly every bone in his lower body. He didn't die. He laid in agony for about an hour. As an ambulance arrived, the terrorists leaned out of the airplane door and shot him repeatedly. He died in the ambulance at the age of 50, survived by his wife and their 4 children. Mrs. Hegna currently has a multimillion dollar judgment, but is unable to receive any compensation. In another equally brutal case in which I prefer not to mention the name of the family, but nevertheless it was a case in Kuwait. A pastor who now lives in Richmond, VA, was held captive while he and his children were forced to watch--and his children at the time were 10 and 13 years old--the terrorists sexually assault his wife. He currently holds a $1 million court judgment but is unable to satisfy that judgment. The United States must say today to the executive bureaucracy that Mrs. Hegna and this pastor from Richmond and all the victims--and they are not all from Virginia; they are from Iowa, New York, New Hampshire; they are from States across our Nation--for all these victims who have suffered at the hands of these ruthless terrorists we ought to say they can be compensated from the blocked assets of these terrorists and their sponsors. Indeed, this measure talks about terrorism reinsurance and who ought to be sued, the obligations of insurance companies and how should we back up those insurance companies. In these cases where someone has a judgment and where there are assets that have been seized, it is the terrorists and their state sponsors, not the American taxpayers, who should be held accountable for these heinous crimes. This amendment will accomplish three salient principles: Responsibility, justice, and punishment and deterrence. Responsibility: At least financial responsibility for the injuries and damages from those who are culpable for the terrorist criminal acts. Justice: Justice for the victims and the victims' families. Punishment and deterrence: Those who sponsor these terrorist acts should be punished and deterred. Therefore, I ask that my colleagues stand with the victims, stand with their families, and allow them to get some satisfaction, albeit only financial satisfaction. I request that we move forward with this terrorism reinsurance bill, but also add to it this opportunity for the Senate to take a stand and allow those folks who have had these injuries and these damages and loss of life, in some cases, to have those judgments satisfied, maybe satisfied in part, but satisfied against the assets that have been seized from primarily two countries that have been involved--Iran and Iraq. Some say we should be worried about what Iraq and Iran might do about all this. But sitting back and worrying about what they might do is not going to help these families and is not going to help this country. I am going to stand with these families, these victims, and our judicial system. Let these victims get after these assets. Let them try to rebuild their lives in some part. I ask for the yeas and nays on this amendment and yield the floor.