John Breaux

Mr. BREAUX

Mr. BREAUX. Mr. President, today Mr. Mack and I are again introducing legislation to place a permanent moratorium on the Department of the Treasury's authority to finalize any proposed regulations issued pursuant to Notice 98-35, dealing with the treatment of hybrid branch transactions under subpart F of the Internal Revenue Code. Our bill also prohibits Treasury from issuing new regulations relating to the tax treatment of hybrid transactions under subpart F and requires the Secretary to conduct a study of the tax treatment of hybrid transactions and to provide a written report to the Senate Committee on Finance and the House Committee on Ways and Means. By way of background, the United States generally subjects U.S. citizens and corporations to current taxation on their worldwide income. Two important devices mitigate or eliminate double taxation of income earned from foreign sources. First, bilateral income tax treaties with many countries exempt American taxpayers from paying foreign taxes on certain types of income (e.g. interest) and impose reduced rates of tax on other types (e.g. dividends and royalties). Second, U.S. taxpayers receive a credit against U.S. taxes for foreign taxes paid on foreign source income. To reiterate, these devices have been part of our international tax rules for decades and are aimed at preventing U.S. businesses from being taxed twice on the same income. The policy of currently taxing U.S. citizens on their worldwide income is in direct contrast with the regimes employed by most of our foreign trading competitors. Generally they tax their citizens and domestic corporations only on the income earned within their borders (the so- called ``water's edge'' approach). Foreign corporations generally are also not subject to U.S. tax on income earned outside the United States, even if the foreign corporation is controlled by a U.S. parent. Thus, U.S. tax on income earned by foreign subsidiaries of U.S. companies--that is, from foreign operations conducted through a controlled foreign corporation (CFC)--is generally deferred until dividends paid by the CFC are received by its U.S. parent. This policy is referred to as ``tax deferral.'' In 1961, President John F. Kennedy proposed eliminating tax deferral with respect to the earnings of U.S.-controlled foreign subsidiaries. The proposal provided that U.S. corporations would be currently taxable on their share of the earnings of CFCs, except in the case of investments in certain ``less developed countries.'' The business community strongly opposed the proposal, arguing that in order for U.S. multinational companies to be able to compete effectively in global markets, their CFCs should be subject only to the same taxes to which their foreign competitors were subject. In the Revenue Act of 1962, Congress rejected the President's proposal to completely eliminate tax deferral, recognizing that to do so would place U.S. companies operating in overseas markets at a significant disadvantage vis-a-vis their foreign competitors. Instead, Congress opted to adopt a policy regime designed to end deferral only with respect to income earned from so-called ``tax haven'' operations. This regime, known as ``subpart F,'' generally is aimed at currently taxing foreign source income that is easily moveable from one taxing jurisdiction to another and that is subject to low rates of foreign tax. Thus, the subpart F provisions of the Internal Revenue Code (found in sections 951-964) have always reflected a balancing of two competing policy objectives: capital export neutrality (i.e. neutrality of taxation as between domestic and foreign operations) and capital import neutrality (i.e. neutrality of taxation as between CFCs and their foreign competitors). While these competing principles continue to form the foundation of subpart F today, recent actions by the Department of the Treasury threaten to upset this long-standing balance. On January 16, 1998, the Department of the Treasury announced in Notice 98-11 its intention to issue regulations to prevent the use of hybrid branches ``to circumvent the purposes of subpart F.'' The hybrid branch arrangements identified in Notice 98-11 involved entities characterized for U.S. tax purposes as part of a controlled foreign corporation, but characterized for purposes of the tax law of the country in which the CFC was incorporated as a separate entity. The Notice indicated that the creation of such hybrid branches was facilitated by the entity classification rules contained in section 301.7701-I through -3 of the Income Tax Regulations (the ``check the box'' regulations). Notice 98-11 acknowledged that U.S. international tax policy seeks to balance the objectives of capital export neutrality with the objective of allowing U.S. businesses to compete on a level playing field with foreign competitors. In the view of the Treasury and IRS, however, the hybrid transactions attacked in the Notice ``upset that balance.'' Treasury indicated that the regulations to be issued generally would apply to hybrid branch arrangements entered into or substantially modified after January 16, 1998, and would provide that certain payments to and from foreign hybrid branches of CFCs would be treated as generating subpart F income to U.S. shareholders in situations in which subpart F would not otherwise apply to a hybrid branch as a separate entity. This represented a significant expansion of subpart F, by regulation rather than through legislation. Shortly after Notice 98-11 was issued, the Administration released its Fiscal Year 1999 budget proposals which, among other things, included a provision requesting Congress to statutorily grant broad regulatory authority to the Treasury Secretary to prescribe regulations clarifying the tax consequences of hybrid transactions in cases in which the intended results are inconsistent with the purposes of U.S. tax law. . . . While the explanation accompanying the budget proposal argued that this grant of authority as applied to many cases ``merely makes the Secretary's current general regulatory authority more specific, and directs the Secretary to promulgate regulations pursuant to such authority,'' the explanation conceded that in other cases, ``the Secretary's authority may be questioned and should be clarified.'' Notice 98-11 and the accompanying budget proposal generated widespread concerns in the Congress and the business community that the Treasury was undertaking a major new initiative in the international tax arena that would undermine the ability of U.S. multinationals to compete in international markets. For example, House Ways and Means Committee Chairman Bill Archer wrote to Treasury Secretary Rubin on March 20, 1998 requesting that ``Notice 98-11 be withdrawn and that no regulations in this area be issued or allowed to take effect until Congress has an appropriate opportunity, to consider these matters in the normal legislative process.'' The Ranking Democrat on the Committee, Charles Rangel, wrote to Secretary Rubin expressing strong concerns about the Treasury's increasing propensity to ``legislate through the regulatory process as evidenced by Notice 98-11.'' Despite these concerns, on March 23, 1998, the Treasury department issued two sets of proposed and temporary regulations, the first relating to the treatment of hybrid branch arrangements under subpart F, and the second relating to the treatment of a CFC's distributive share of partnership income. As Notice 98-11 had promised, the regulations provided that certain payments between a controlled foreign corporation and a hybrid branch would be recharacterized as subpart F income if the payments reduce the payer's foreign taxes. The week after the temporary and proposed regulations were issued, the Senate Finance Committee considered H.R. 2676, the Internal Revenue Service Restructuring and Reform Act of 1998. A provision was included in the bill prohibiting the Treasury and IRS from implementing temporary or final regulations with respect to Notice 98-11 prior to six months after the date of enactment of H.R. 2676. The Senate bill also included language expressing the ``sense of the Senate'' that ``the Department of the Treasury and the Internal Revenue Service should withdraw Notice 98-11 and the regulations issued thereunder, and that the Congress, and not the Department of the Treasury or the Internal Revenue Service, should determine the international tax policy issues relating to the treatment of hybrid transactions under subpart F provisions of the Code.'' Opposition to Notice 98-11 and the temporary and proposed regulations continued to mount. On April 23, 1998, 33 Members of the House Ways and Means Committee wrote to Secretary Rubin expressing concern about the Treasury's decision to move forward and issue regulations pursuant to Notice 98-11 without an appropriate opportunity for Congress to consider this issue in the normal legislative process, urging Treasury to withdraw the regulations. In the face of these and other pressures from the Congress and the business community, on June 19, 1998, the Treasury Department announced in Notice 98-35 that it was withdrawing Notice 98-11 and the related temporary, and proposed regulations. According to Notice 98-35, Treasury intends to issue a new set of proposed regulations to be effective in general for payments made under hybrid branch arrangements on or after June 19, 1998. These regulations, however, will not be finalized before January 1, 2000, in order to permit both the Congress and Treasury Department the opportunity to further study the issues that were raised following the publication of Notice 98-11 earlier this year. While we applaud the Treasury's decision to withdraw Notice 98-11 and the temporary regulations, we believe that additional legislative action is needed to prevent the Treasury from finalizing the forthcoming regulations until Congress considers the issues involved. We believe that only the Congress has the authority to achieve a permanent resolution of this issue. Notice 98-35, like its predecessor, Notice 98-11 continues to suffer from a fatal flaw; it is the prerogative of Congress, and not the Executive Branch, to pass laws establishing the nation's fundamental tax policies. Simply put, Notice 98-35 adds restrictions to the subpart F regime that are not supported by the Code's clear statutory language, and there has been no express delegation of regulatory authority to the Treasury that relates specifically to the issues presented in the Notice. More importantly, we question the policy objectives to be achieved by Notice 98-35 and the accompanying proposed regulations. We do not understand the rationale for penalizing U.S. multinational companies for employing normal tax planning strategies that reduce foreign (as opposed to U.S.) income taxes. Moreover, Notice 98-35 is contrary to recent Congressional efforts to simplify the international tax provisions of the Code. For example, the Congress reduced complexity and ridded the code of a perverse incentive for U.S. companies to invest overseas by repealing the Section 956A tax on excess passive earnings in 1996. Again in 1997, the Congress repealed the application of the Passive Foreign Investment Company regime to U.S. shareholders of controlled foreign corporations because of the complexity involved in applying both regimes, in addition to enacting a host of other foreign tax simplifications. The Senate Finance Committee will hold a hearing on March 11, 1999 to further investigate the reforms needed in the international tax arena that not only reduce complexity, but also encourage U.S. global economic competition. I fully expect Notice 98-35 to be discussed at this hearing. In order for Congress to gain a better understanding of the Treasury Department's position on this matter, our bill would require the Treasury to conduct a thorough study of the tax treatment of hybrid transactions under subpart F and to provide a report to the Senate Committee on Finance and House Committee on Ways and Means on this issue. If the forthcoming regulations are permitted to be finalized by the Treasury, U.S. multinational businesses will be placed at a competitive disadvantage vis-a-vis foreign companies who remain free to employ strategies to reduce the foreign taxes they pay. Clearly, such a result should be permitted to take effect only if Congress, after having an opportunity to fully consider all of the tax and economic issues involved, agrees that the arguments advanced by the Treasury are compelling and determines that additional statutory changes to subpart F are necessary and appropriate. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, today Mr. Mack and I are again introducing legislation to place a permanent moratorium on the Department of the Treasury's authority to finalize any proposed regulations issued pursuant to Notice 98-35, dealing with the treatment of hybrid branch transactions under subpart F of the Internal Revenue Code. Our bill also prohibits Treasury from issuing new regulations relating to the tax treatment of hybrid transactions under subpart F and requires the Secretary to conduct a study of the tax treatment of hybrid transactions and to provide a written report to the Senate Committee on Finance and the House Committee on Ways and Means. By way of background, the United States generally subjects U.S. citizens and corporations to current taxation on their worldwide income. Two important devices mitigate or eliminate double taxation of income earned from foreign sources. First, bilateral income tax treaties with many countries exempt American taxpayers from paying foreign taxes on certain types of income (e.g. interest) and impose reduced rates of tax on other types (e.g. dividends and royalties). Second, U.S. taxpayers receive a credit against U.S. taxes for foreign taxes paid on foreign source income. To reiterate, these devices have been part of our international tax rules for decades and are aimed at preventing U.S. businesses from being taxed twice on the same income. The policy of currently taxing U.S. citizens on their worldwide income is in direct contrast with the regimes employed by most of our foreign trading competitors. Generally they tax their citizens and domestic corporations only on the income earned within their borders (the so- called ``water's edge'' approach). Foreign corporations generally are also not subject to U.S. tax on income earned outside the United States, even if the foreign corporation is controlled by a U.S. parent. Thus, U.S. tax on income earned by foreign subsidiaries of U.S. companies--that is, from foreign operations conducted through a controlled foreign corporation (CFC)--is generally deferred until dividends paid by the CFC are received by its U.S. parent. This policy is referred to as ``tax deferral.'' In 1961, President John F. Kennedy proposed eliminating tax deferral with respect to the earnings of U.S.-controlled foreign subsidiaries. The proposal provided that U.S. corporations would be currently taxable on their share of the earnings of CFCs, except in the case of investments in certain ``less developed countries.'' The business community strongly opposed the proposal, arguing that in order for U.S. multinational companies to be able to compete effectively in global markets, their CFCs should be subject only to the same taxes to which their foreign competitors were subject. In the Revenue Act of 1962, Congress rejected the President's proposal to completely eliminate tax deferral, recognizing that to do so would place U.S. companies operating in overseas markets at a significant disadvantage vis-a-vis their foreign competitors. Instead, Congress opted to adopt a policy regime designed to end deferral only with respect to income earned from so-called ``tax haven'' operations. This regime, known as ``subpart F,'' generally is aimed at currently taxing foreign source income that is easily moveable from one taxing jurisdiction to another and that is subject to low rates of foreign tax. Thus, the subpart F provisions of the Internal Revenue Code (found in sections 951-964) have always reflected a balancing of two competing policy objectives: capital export neutrality (i.e. neutrality of taxation as between domestic and foreign operations) and capital import neutrality (i.e. neutrality of taxation as between CFCs and their foreign competitors). While these competing principles continue to form the foundation of subpart F today, recent actions by the Department of the Treasury threaten to upset this long-standing balance. On January 16, 1998, the Department of the Treasury announced in Notice 98-11 its intention to issue regulations to prevent the use of hybrid branches ``to circumvent the purposes of subpart F.'' The hybrid branch arrangements identified in Notice 98-11 involved entities characterized for U.S. tax purposes as part of a controlled foreign corporation, but characterized for purposes of the tax law of the country in which the CFC was incorporated as a separate entity. The Notice indicated that the creation of such hybrid branches was facilitated by the entity classification rules contained in section 301.7701-I through -3 of the Income Tax Regulations (the ``check the box'' regulations). Notice 98-11 acknowledged that U.S. international tax policy seeks to balance the objectives of capital export neutrality with the objective of allowing U.S. businesses to compete on a level playing field with foreign competitors. In the view of the Treasury and IRS, however, the hybrid transactions attacked in the Notice ``upset that balance.'' Treasury indicated that the regulations to be issued generally would apply to hybrid branch arrangements entered into or substantially modified after January 16, 1998, and would provide that certain payments to and from foreign hybrid branches of CFCs would be treated as generating subpart F income to U.S. shareholders in situations in which subpart F would not otherwise apply to a hybrid branch as a separate entity. This represented a significant expansion of subpart F, by regulation rather than through legislation. Shortly after Notice 98-11 was issued, the Administration released its Fiscal Year 1999 budget proposals which, among other things, included a provision requesting Congress to statutorily grant broad regulatory authority to the Treasury Secretary to prescribe regulations clarifying the tax consequences of hybrid transactions in cases in which the intended results are inconsistent with the purposes of U.S. tax law. . . . While the explanation accompanying the budget proposal argued that this grant of authority as applied to many cases ``merely makes the Secretary's current general regulatory authority more specific, and directs the Secretary to promulgate regulations pursuant to such authority,'' the explanation conceded that in other cases, ``the Secretary's authority may be questioned and should be clarified.'' Notice 98-11 and the accompanying budget proposal generated widespread concerns in the Congress and the business community that the Treasury was undertaking a major new initiative in the international tax arena that would undermine the ability of U.S. multinationals to compete in international markets. For example, House Ways and Means Committee Chairman Bill Archer wrote to Treasury Secretary Rubin on March 20, 1998 requesting that ``Notice 98-11 be withdrawn and that no regulations in this area be issued or allowed to take effect until Congress has an appropriate opportunity, to consider these matters in the normal legislative process.'' The Ranking Democrat on the Committee, Charles Rangel, wrote to Secretary Rubin expressing strong concerns about the Treasury's increasing propensity to ``legislate through the regulatory process as evidenced by Notice 98-11.'' Despite these concerns, on March 23, 1998, the Treasury department issued two sets of proposed and temporary regulations, the first relating to the treatment of hybrid branch arrangements under subpart F, and the second relating to the treatment of a CFC's distributive share of partnership income. As Notice 98-11 had promised, the regulations provided that certain payments between a controlled foreign corporation and a hybrid branch would be recharacterized as subpart F income if the payments reduce the payer's foreign taxes. The week after the temporary and proposed regulations were issued, the Senate Finance Committee considered H.R. 2676, the Internal Revenue Service Restructuring and Reform Act of 1998. A provision was included in the bill prohibiting the Treasury and IRS from implementing temporary or final regulations with respect to Notice 98-11 prior to six months after the date of enactment of H.R. 2676. The Senate bill also included language expressing the ``sense of the Senate'' that ``the Department of the Treasury and the Internal Revenue Service should withdraw Notice 98-11 and the regulations issued thereunder, and that the Congress, and not the Department of the Treasury or the Internal Revenue Service, should determine the international tax policy issues relating to the treatment of hybrid transactions under subpart F provisions of the Code.'' Opposition to Notice 98-11 and the temporary and proposed regulations continued to mount. On April 23, 1998, 33 Members of the House Ways and Means Committee wrote to Secretary Rubin expressing concern about the Treasury's decision to move forward and issue regulations pursuant to Notice 98-11 without an appropriate opportunity for Congress to consider this issue in the normal legislative process, urging Treasury to withdraw the regulations. In the face of these and other pressures from the Congress and the business community, on June 19, 1998, the Treasury Department announced in Notice 98-35 that it was withdrawing Notice 98-11 and the related temporary, and proposed regulations. According to Notice 98-35, Treasury intends to issue a new set of proposed regulations to be effective in general for payments made under hybrid branch arrangements on or after June 19, 1998. These regulations, however, will not be finalized before January 1, 2000, in order to permit both the Congress and Treasury Department the opportunity to further study the issues that were raised following the publication of Notice 98-11 earlier this year. While we applaud the Treasury's decision to withdraw Notice 98-11 and the temporary regulations, we believe that additional legislative action is needed to prevent the Treasury from finalizing the forthcoming regulations until Congress considers the issues involved. We believe that only the Congress has the authority to achieve a permanent resolution of this issue. Notice 98-35, like its predecessor, Notice 98-11 continues to suffer from a fatal flaw; it is the prerogative of Congress, and not the Executive Branch, to pass laws establishing the nation's fundamental tax policies. Simply put, Notice 98-35 adds restrictions to the subpart F regime that are not supported by the Code's clear statutory language, and there has been no express delegation of regulatory authority to the Treasury that relates specifically to the issues presented in the Notice. More importantly, we question the policy objectives to be achieved by Notice 98-35 and the accompanying proposed regulations. We do not understand the rationale for penalizing U.S. multinational companies for employing normal tax planning strategies that reduce foreign (as opposed to U.S.) income taxes. Moreover, Notice 98-35 is contrary to recent Congressional efforts to simplify the international tax provisions of the Code. For example, the Congress reduced complexity and ridded the code of a perverse incentive for U.S. companies to invest overseas by repealing the Section 956A tax on excess passive earnings in 1996. Again in 1997, the Congress repealed the application of the Passive Foreign Investment Company regime to U.S. shareholders of controlled foreign corporations because of the complexity involved in applying both regimes, in addition to enacting a host of other foreign tax simplifications. The Senate Finance Committee will hold a hearing on March 11, 1999 to further investigate the reforms needed in the international tax arena that not only reduce complexity, but also encourage U.S. global economic competition. I fully expect Notice 98-35 to be discussed at this hearing. In order for Congress to gain a better understanding of the Treasury Department's position on this matter, our bill would require the Treasury to conduct a thorough study of the tax treatment of hybrid transactions under subpart F and to provide a report to the Senate Committee on Finance and House Committee on Ways and Means on this issue. If the forthcoming regulations are permitted to be finalized by the Treasury, U.S. multinational businesses will be placed at a competitive disadvantage vis-a-vis foreign companies who remain free to employ strategies to reduce the foreign taxes they pay. Clearly, such a result should be permitted to take effect only if Congress, after having an opportunity to fully consider all of the tax and economic issues involved, agrees that the arguments advanced by the Treasury are compelling and determines that additional statutory changes to subpart F are necessary and appropriate. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. I thank the Chair and welcome the Presiding Officer in that very important position that he has undertaken. We all have had an opportunity to do it in our careers. I ask unanimous consent to proceed for up to 5 minutes. I take it we are in morning business.

Mr. BREAUX. I yield the floor. Mr. GREGG addressed the Chair.

Mr. BREAUX

Mr. BREAUX. I take the time today, Mr. President and my colleagues, to introduce a bill which I happen to think addresses a very important issue that this Nation is facing; and that is the question of trying to devise a system where the United States can continue to be the world's leader in the space launch business. Every day, every month, more and more satellites around the world are being put into service. I daresay that most people really do not follow the details of how this is accomplished, but I do know that over the last several months people in this country have heard a great deal about Chinese rockets, Ukrainian rockets, Russian rockets and all the problems that they have been involved with related to the U.S. aerospace industry. One may wonder, why would a U.S. company have to use a Ukraine launch vehicle or a Chinese launch vehicle or a Russian launch vehicle or a European launch vehicle in order to launch a U.S. satellite to serve the technological and communications needs of the world. The reason is not that hard to figure out when you look at the fact that these countries that I just mentioned are not countries that are under the same economic obligations that we are. Many of those are not free market economies. Many are still government-run economies. Many of those countries have governments that have put a great deal of money in their launch industries and are now able to provide those launch vehicles for use at a cutrate or subsidized price. I do not think that is particularly good for our country to have to buy space transportation on a Ukraine rocket to launch a U.S. satellite. When those rockets malfunction, then we are in a problem area trying to tell them based on our technological expertise why the failure happened. Our companies could get into trouble because of the risk that they are sharing with them technology that could be used for military purposes. So I, for one, do not think I would want to drive a Ukrainian car let alone ride in a Ukrainian rocket. But that is what is happening because of a situation where we do not have enough access in the private industry to U.S.-built space transportation vehicles that can launch U.S.-built satellites for communications purposes. We have learned that one of the reasons is the fact that there is inadequate private sector funding for U.S. companies to engage in building space transportation vehicles for this purpose. It is, of course, a high-risk business. This is much more risky than building a ship or building a car or building just about anything else. A lot can go wrong. So it is a high risk. And there is inadequate funding in the private sector. To solve this problem, what do you do? Do you make the Government take it over? Do you make the Government own the launch vehicles and make the Government pay for the building of the launch vehicles? In our society the answer is no. But I think that the legislation that I am introducing today, along with Senator Conrad Burns of Montana, sets up a program which would be a loan guarantee program where the U.S. Government can pattern in the space transportation industry what we have done very successfully in the shipbuilding industry under what is known as a Title XI shipbuilding loan guarantee program, where the Federal Government comes to a qualified builder who is having a difficult time getting adequate financing because of the nature of the industry, and that the Federal Government will be in a position to guarantee the loan to a company which company would go out into the private market and borrow the money but have the loan guaranteed by the Federal Government. Under that scenario, we have built literally hundreds and hundreds of vessels, probably thousands, through the Title XI loan guarantee program. What I am proposing in the ``Commercial Space Transportation Cost Reduction Act of 1999'' is to set up a loan guarantee program which would be patterned after the Title XI Shipyard Loan Guarantee Program. We would vest the Secretary of Transportation in our Government with the administrative responsibilities for the program operations. The legislation would initially provide up to $500 million of funding for the loan guarantee program. That would represent the possibility of generating up to $5 billion in loans for U.S. space transportation companies to engage other U.S. companies and U.S. workers in building space transportation vehicles for use in our society. I ask unanimous consent for 2 additional minutes.

Mr. BREAUX. And by having that type of a system, I think that we would give our private companies the ability to compete with all of these other companies in countries which have their governments supporting them in these areas. We have had a number of Senators who have expressed an interest in participating with us in this legislation. Let me just mention Senator Lott, Senator Bacchus, Senator Bingaman, Senator Graham of Florida and Senator Landrieu of Louisiana. I hope--and now that the bill has been introduced, that the Commerce Committee can have some hearings on it-- that we can continue to improve it and move forward with establishing something that will allow the private sector of the United States to continue to be, and even increase the ability to be, the world leader in space transportion. In particular, the ability to launch our satellites with our vehicles and not have to rent space from the Russians or from the Chinese or from the Ukrainians or from any other part of the world. This is a vitally important industry, and the United States should be the technological leader now and for the future. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. And by having that type of a system, I think that we would give our private companies the ability to compete with all of these other companies in countries which have their governments supporting them in these areas. We have had a number of Senators who have expressed an interest in participating with us in this legislation. Let me just mention Senator Lott, Senator Bacchus, Senator Bingaman, Senator Graham of Florida and Senator Landrieu of Louisiana. I hope--and now that the bill has been introduced, that the Commerce Committee can have some hearings on it-- that we can continue to improve it and move forward with establishing something that will allow the private sector of the United States to continue to be, and even increase the ability to be, the world leader in space transportion. In particular, the ability to launch our satellites with our vehicles and not have to rent space from the Russians or from the Chinese or from the Ukrainians or from any other part of the world. This is a vitally important industry, and the United States should be the technological leader now and for the future. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX. I take the time today, Mr. President and my colleagues, to introduce a bill which I happen to think addresses a very important issue that this Nation is facing; and that is the question of trying to devise a system where the United States can continue to be the world's leader in the space launch business. Every day, every month, more and more satellites around the world are being put into service. I daresay that most people really do not follow the details of how this is accomplished, but I do know that over the last several months people in this country have heard a great deal about Chinese rockets, Ukrainian rockets, Russian rockets and all the problems that they have been involved with related to the U.S. aerospace industry. One may wonder, why would a U.S. company have to use a Ukraine launch vehicle or a Chinese launch vehicle or a Russian launch vehicle or a European launch vehicle in order to launch a U.S. satellite to serve the technological and communications needs of the world. The reason is not that hard to figure out when you look at the fact that these countries that I just mentioned are not countries that are under the same economic obligations that we are. Many of those are not free market economies. Many are still government-run economies. Many of those countries have governments that have put a great deal of money in their launch industries and are now able to provide those launch vehicles for use at a cutrate or subsidized price. I do not think that is particularly good for our country to have to buy space transportation on a Ukraine rocket to launch a U.S. satellite. When those rockets malfunction, then we are in a problem area trying to tell them based on our technological expertise why the failure happened. Our companies could get into trouble because of the risk that they are sharing with them technology that could be used for military purposes. So I, for one, do not think I would want to drive a Ukrainian car let alone ride in a Ukrainian rocket. But that is what is happening because of a situation where we do not have enough access in the private industry to U.S.-built space transportation vehicles that can launch U.S.-built satellites for communications purposes. We have learned that one of the reasons is the fact that there is inadequate private sector funding for U.S. companies to engage in building space transportation vehicles for this purpose. It is, of course, a high-risk business. This is much more risky than building a ship or building a car or building just about anything else. A lot can go wrong. So it is a high risk. And there is inadequate funding in the private sector. To solve this problem, what do you do? Do you make the Government take it over? Do you make the Government own the launch vehicles and make the Government pay for the building of the launch vehicles? In our society the answer is no. But I think that the legislation that I am introducing today, along with Senator Conrad Burns of Montana, sets up a program which would be a loan guarantee program where the U.S. Government can pattern in the space transportation industry what we have done very successfully in the shipbuilding industry under what is known as a Title XI shipbuilding loan guarantee program, where the Federal Government comes to a qualified builder who is having a difficult time getting adequate financing because of the nature of the industry, and that the Federal Government will be in a position to guarantee the loan to a company which company would go out into the private market and borrow the money but have the loan guaranteed by the Federal Government. Under that scenario, we have built literally hundreds and hundreds of vessels, probably thousands, through the Title XI loan guarantee program. What I am proposing in the ``Commercial Space Transportation Cost Reduction Act of 1999'' is to set up a loan guarantee program which would be patterned after the Title XI Shipyard Loan Guarantee Program. We would vest the Secretary of Transportation in our Government with the administrative responsibilities for the program operations. The legislation would initially provide up to $500 million of funding for the loan guarantee program. That would represent the possibility of generating up to $5 billion in loans for U.S. space transportation companies to engage other U.S. companies and U.S. workers in building space transportation vehicles for use in our society. I ask unanimous consent for 2 additional minutes.

Mr. BREAUX

Mr. BREAUX. Mr. President, I am pleased to introduce today with my colleague, Senator Hatch, an important bill that will assist states and localities in working with private industry to foster economic development and provide home ownership opportunities to low- income Americans. Specifically, our bill will increase the private activity tax-exempt bond cap to $75 per capita or $250 million, if greater, and index the cap to inflation. Congress created the private activity tax-exempt bond decades ago to apply to mortgage revenue bonds and other bonds for multifamily housing, redevelopment of blighted areas, student loans, manufacturing, and hazardous waste disposal facilities. However, Congress unintentionally restricted the growth of this program by imposing a cap on the bond volume of $50 per capita or $150 million that was not indexed to inflation. The resulting erosion in purchasing power has crippled the ability of states to meet the growing demand for these bonds. Congress took an important step to correct this problem in the Fiscal Year 1999 Omnibus Appropriations bill by approving a partial, phased-in increase in each state's bond cap. The bond cap will be increased by $5 per capita beginning in 2003. The volume limit will reach $70 per capita, or $210 million if greater, in 2006. Unfortunately, inflation will have reduced the purchasing power of these bonds by nearly thirty- three percent by the time the volume cap increase is fully phased in. Tax-exempt bonds are issued by state and local governments to provide below market interest rates to fund authorized programs and projects. Revenue bond investors accept lower interest from these bonds because the interest income is tax-exempt. For example, mortgage revenue bonds are issued to help lower income working families buy their first homes. These low interest loans significantly lower the cost of owning a home. In my own state, the Louisiana Housing Finance Agency has issued over $1.1 billion in mortgage revenue bonds for almost 16,000 affordable home mortgages since the program began. In 1996 alone, the agency issued over $112 million in mortgage revenue bonds for nearly 1,200 home loans. That's 1,200 Louisiana families who now know the pride of owning their own home--Louisiana families that earned, on average, less than $28,000 last year. The Louisiana Housing Finance Agency estimates that it could have put another $50 million in bond authority to good use. Nationwide, states could have used an additional $7 billion in bond cap for mortgage revenue bonds, student loan bonds, industrial revenue bonds, pollution control bonds and other worthy investments. Student loan bonds are also issued to raise a pool of money at tax- exempt interest rates resulting in lower interest rate college loans. In my state, the Louisiana Public Facilities Authority has issued $745 million in student loan bonds since 1984. These bonds have funded over 80,000 college loans for deserving Louisiana students--students who otherwise might not have been able to afford to attend college. In Louisiana, the roughly $40 million of remaining 1997 volume cap will not come close to fulfilling the $330 million of demand for these bonds. The total 1997 volume cap for Louisiana was $217,500,000. After funding minimal housing and student loan needs, little volume cap remains available for industrial development bonds for manufacturing purposes. Many of the industrial and manufacturing facilities create substantial employment opportunities. Unfortunately, a deficiency in volume cap limits these opportunities. Our bill will correct this woeful situation and improve the ability of states and localities to provide home ownership opportunities to low-income families throughout the United States, to help fund student loans for college students and to help finance industrial and manufacturing facilities. These facilities will, in turn, increase employment and the tax base of local governments. I urge my colleagues to join me and Senator Hatch in this effort.

Mr. BREAUX

Mr. BREAUX. Mr. President, I am pleased to introduce today with my colleague, Senator Hatch, an important bill that will assist states and localities in working with private industry to foster economic development and provide home ownership opportunities to low- income Americans. Specifically, our bill will increase the private activity tax-exempt bond cap to $75 per capita or $250 million, if greater, and index the cap to inflation. Congress created the private activity tax-exempt bond decades ago to apply to mortgage revenue bonds and other bonds for multifamily housing, redevelopment of blighted areas, student loans, manufacturing, and hazardous waste disposal facilities. However, Congress unintentionally restricted the growth of this program by imposing a cap on the bond volume of $50 per capita or $150 million that was not indexed to inflation. The resulting erosion in purchasing power has crippled the ability of states to meet the growing demand for these bonds. Congress took an important step to correct this problem in the Fiscal Year 1999 Omnibus Appropriations bill by approving a partial, phased-in increase in each state's bond cap. The bond cap will be increased by $5 per capita beginning in 2003. The volume limit will reach $70 per capita, or $210 million if greater, in 2006. Unfortunately, inflation will have reduced the purchasing power of these bonds by nearly thirty- three percent by the time the volume cap increase is fully phased in. Tax-exempt bonds are issued by state and local governments to provide below market interest rates to fund authorized programs and projects. Revenue bond investors accept lower interest from these bonds because the interest income is tax-exempt. For example, mortgage revenue bonds are issued to help lower income working families buy their first homes. These low interest loans significantly lower the cost of owning a home. In my own state, the Louisiana Housing Finance Agency has issued over $1.1 billion in mortgage revenue bonds for almost 16,000 affordable home mortgages since the program began. In 1996 alone, the agency issued over $112 million in mortgage revenue bonds for nearly 1,200 home loans. That's 1,200 Louisiana families who now know the pride of owning their own home--Louisiana families that earned, on average, less than $28,000 last year. The Louisiana Housing Finance Agency estimates that it could have put another $50 million in bond authority to good use. Nationwide, states could have used an additional $7 billion in bond cap for mortgage revenue bonds, student loan bonds, industrial revenue bonds, pollution control bonds and other worthy investments. Student loan bonds are also issued to raise a pool of money at tax- exempt interest rates resulting in lower interest rate college loans. In my state, the Louisiana Public Facilities Authority has issued $745 million in student loan bonds since 1984. These bonds have funded over 80,000 college loans for deserving Louisiana students--students who otherwise might not have been able to afford to attend college. In Louisiana, the roughly $40 million of remaining 1997 volume cap will not come close to fulfilling the $330 million of demand for these bonds. The total 1997 volume cap for Louisiana was $217,500,000. After funding minimal housing and student loan needs, little volume cap remains available for industrial development bonds for manufacturing purposes. Many of the industrial and manufacturing facilities create substantial employment opportunities. Unfortunately, a deficiency in volume cap limits these opportunities. Our bill will correct this woeful situation and improve the ability of states and localities to provide home ownership opportunities to low-income families throughout the United States, to help fund student loans for college students and to help finance industrial and manufacturing facilities. These facilities will, in turn, increase employment and the tax base of local governments. I urge my colleagues to join me and Senator Hatch in this effort.

Mr. BREAUX

Mr. BREAUX. Mr. Chief Justice and my colleagues. Thank you very much, Mr. Chief Justice, as so many people have said before, for serving with your patience and your fairness. If you care to extend your time with us, I would invite you to help preside over my Medicare commission--if you would like to help out in that regard. I also want to acknowledge and thank our two leaders for the fairness and the patience that they both have exhibited to all of us and the good job they have done keeping this body together, which I happen to think is extremely important as well. I think it is always very difficult for us to sit in judgment of another human being, and particularly is that very difficult when it involves moral behavior, or moral misbehavior as this case essentially is all about. I was always taught that there was a higher authority that made those types of decisions, but here we are, and that is part of our task. I think it is also especially difficult to make those kinds of decisions when they involve someone you know and someone you actually deal with in a relatively close relationship, almost on a day-to-day basis. It is difficult when it is someone that you can in private kid with or that you in private can joke with, as is the case for many of us with this accused whom we now sit in judgment of. I know this President and he is someone I have admired for his political accomplishments and I have admired for what he has been able to do for this country, but also quite well recognize the human frailties that he has, as all of us have. If this were a normal trial, many of us wouldn't even be here; we would have been excused a long time ago; we would never have been selected to sit in judgment of this President. We would have been excused because of friendship, we would have been excused because we know him, we would have been excused because we campaigned for him and with him, or we would have been excused for the opposite reasons--because he is a political adversary that we have campaigned against, that we have given speeches against, that we disagree with publicly on just about everything he stands for. None of us would find ourselves sitting in judgment of this individual if it were a normal trial. But, then again, it is not a normal trial, and these certainly are not normal times. For many of us, this is the first time we have ever had a President who has sort of been a contemporary--certainly for me, and many of my colleagues are in that same category. I was here, as many of you in my generation, when President Johnson was here, and served throughout the time of President Johnson all the way through President Bush. I have met them all and knew them all to various degrees but never in the same way that I and many of us know this particular President, because he really is in the same generation as we are. I think we have that feeling, when we talk with him. I mean, many times I feel he knows what I am going to say before I say it and he understands what I am trying to convey to him before I even have say anything about the subject matter. I think that many of us have had, with him, the same type of life experiences, and that our lives have been shaped by similar events because we really are of the same generation. So it is very difficult, coming from that position and now sitting in judgment of a person for his moral behavior. So I think we have to be extremely careful, those of us who come from this side with that personal friendship and relationship, as well as those who come from the opposite side, as a political adversary. It is very difficult to set those emotions aside and say I am going to be fair in judging someone I just cannot stand politically, that I don't agree with on anything, and I wish he wasn't my President; in fact, I supported someone else. So, it is very difficult for all of us to try to set that aside and come to an honest and fair and decent conclusion. I think the American people have been able to do that. I think they have had a good understanding of what this case is about from the very beginning. They understood what it was about before the trial ever started, they understood what it was about during the trial, and I think they understand what it is all about after the trial. I think they understand what happened. I think they know when it happened, they know where it happened, and they know what was said about it. I think that they were correct from the very beginning. What we really have is a middle-aged man, who happens to be President of the United States, who has a sexual affair with someone in his office, and that when people started finding out about it, he lied about it, tried to cover it up, tried to mislead people about what happened. I would daresay that this is not the first time in the history of the world that this has ever happened. I daresay it probably will not be the last time that it will happen. It is probably not the first time it has happened in this city. All of that does not make it right; it does not make it acceptable. It does not make it excusable. It cannot be condoned and it cannot be overlooked. Actions that are wrong have consequences, and now the consequences must be determined by the Senate. The question here is not really whether anything wrong was done. For heaven's sakes, everybody knows that what was done was clearly wrong. It was unacceptable. It was embarrassing. It was indefensible and any other adjective you can possibly think of to really describe it. But that is not really the question before us, and we can all agree on that. I think the question is not even whether this was perjury or whether it was obstruction of justice under the terms of the Constitution. I think the only question before us is whether what happened rises to the highest constitutional standards of high crimes and misdemeanors under the Constitution, justifying automatic removal of this President from the office of President. I have concluded that the Constitution was designed very carefully to remove the President of the United States for wrongful actions as President of the United States in his capacity as President of the United States and in carrying out his duties as President of the United States. For wrongful acts that are not connected with the official capacity and duties of the President of the United States, there are other ways to handle it. There is the judicial system. There is the court system. There are the U.S. attorneys out there waiting. There may even be the Office of Independent Counsel, which will still be there after all of this is finished. But we here cannot expand the Constitution in this area. I think history supports my position. I will cite you just a quick two examples. Senator Slade Gorton earlier spoke about the situation with the Secretary of the Treasury, Alexander Hamilton. As Secretary, he was having an affair with a woman here in this city and they found out about it. He was paying off the husband of the wife that he was having an affair with. He was trying to get her to burn the evidence, which were letters that he had sent, to try to cover it up--criminal acts. But the Congress that was investigating him, came to the conclusion that the behavior was private. It was wrong, it was terrible, it was criminal, but it was private behavior and he was not impeached. Not because, I think, as Slade tried to say, that he wasn't impeached because he admitted it, he only admitted it when he got caught. But he was not impeached because they decided that it was essentially private behavior. That was in 1792, and Adams and the Founding Fathers were here at that time and they came to that conclusion. More recently, the situation with President Richard Nixon, I think, is a clear example of what we are struggling with here, to find this connection between official duties and what he did. One of the articles that they accused President Nixon with was that he had, not once, but four times filed fraudulent income tax returns under the criminal penalty of perjury--that he deducted things that he should not have deducted and that he didn't report income that should have been reported. By a 26-to-12 vote, the House Judiciary Committee said, among other things, that ``the conduct must be seriously incompatible with either the constitutional form and principles of our Government or the proper performance of the constitutional duties of the President's office.'' They said that it did not demonstrate public misconduct, but rather private misconduct that had become public. I think the situation today is very similar. These are clear examples both in the beginning of our country's history and very recently about the need for this nexus or connection between the illegal acts and the duties of the office of the President. Let me conclude by saying I am voting not to convict and remove. But that is not a vote on the innocence of this President. He is not innocent. And by not voting to convict we can't somehow establish his innocence. If the standard of removal was bad behavior, he would be gone. I mean there would probably be no disagreement about that. But that is not the standard. I urge a ``no'' vote on conviction and removal and ask our colleagues to join in a bipartisan, strong, clear censure resolution and spell out what happened and where it happened and when it happened and what was said about what happened so that history will be able to, forever, look at that censure resolution and study it and learn from what we do today. That, my colleagues, I think is an appropriate and a proper remedy. Thank you.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise to commend Senator Grassley for his leadership on the important issue of cutting waste, fraud and abuse in the Medicare program. As chairman of the National Bipartisan Commission on the Future of Medicare, I strongly support our legislation that will save federal dollars by modernizing an outdated and confusing billing system. The Medicare Universal Product Number Act of 1999 is a practical solution which will ensure that the Health Care Financing Administration (HCFA) knows what it is paying for when reimbursing for durable medical equipment (DME) under the Medicare program. Currently, HCFA's billing system uses overly broad and sometimes outdated codes. These codes can cover a wide range of products which vary in price and quality, making it difficult for HCFA to track and price medical equipment accurately. By using Universal Product Numbers (UPNs), which provide a unique, unambiguous means of identifying each product on the market, HCFA will be able to track utilization more efficiently. Because UPNs are unique identifiers, HCFA will be better equipped in combating fraud against the Medicare program. Currently the system is vulnerable to a type of fraud called ``upcoding.'' This occurs when Medicare is billed for a product under an improper code. Perpetrators of fraud can use improper codes to receive higher reimbursement rates then those given for the products which they actually provide. By tracking utilization, made possible by UPNs, HCFA will know what product is provided to the beneficiary and how much that product costs. There is widespread support for the use of UPNs in the Medicare program. A recent GAO report addresses the need to reform Medicare's billing system. The report found that HCFA ``does not know specifically what Medicare is paying for when its contractors process claims for'' medical equipment and supplies. The Department of Defense and the Veterans' Administration have already begun to require UPNs, as do many private sector purchasing groups. Moreover, the medical products industry recognizes the value of UPNs and strongly supports this legislation. Medicare's current billing system is vulnerable to abuse. This legislation is a practical approach to help ensure that taxpayer dollars are protected and spent wisely. I thank Senator Grassley for his leadership, and I encourage my colleagues to support this important legislation.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise to commend Senator Grassley for his leadership on the important issue of cutting waste, fraud and abuse in the Medicare program. As chairman of the National Bipartisan Commission on the Future of Medicare, I strongly support our legislation that will save federal dollars by modernizing an outdated and confusing billing system. The Medicare Universal Product Number Act of 1999 is a practical solution which will ensure that the Health Care Financing Administration (HCFA) knows what it is paying for when reimbursing for durable medical equipment (DME) under the Medicare program. Currently, HCFA's billing system uses overly broad and sometimes outdated codes. These codes can cover a wide range of products which vary in price and quality, making it difficult for HCFA to track and price medical equipment accurately. By using Universal Product Numbers (UPNs), which provide a unique, unambiguous means of identifying each product on the market, HCFA will be able to track utilization more efficiently. Because UPNs are unique identifiers, HCFA will be better equipped in combating fraud against the Medicare program. Currently the system is vulnerable to a type of fraud called ``upcoding.'' This occurs when Medicare is billed for a product under an improper code. Perpetrators of fraud can use improper codes to receive higher reimbursement rates then those given for the products which they actually provide. By tracking utilization, made possible by UPNs, HCFA will know what product is provided to the beneficiary and how much that product costs. There is widespread support for the use of UPNs in the Medicare program. A recent GAO report addresses the need to reform Medicare's billing system. The report found that HCFA ``does not know specifically what Medicare is paying for when its contractors process claims for'' medical equipment and supplies. The Department of Defense and the Veterans' Administration have already begun to require UPNs, as do many private sector purchasing groups. Moreover, the medical products industry recognizes the value of UPNs and strongly supports this legislation. Medicare's current billing system is vulnerable to abuse. This legislation is a practical approach to help ensure that taxpayer dollars are protected and spent wisely. I thank Senator Grassley for his leadership, and I encourage my colleagues to support this important legislation.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise today to introduce legislation allowing certain U.S. legal tender coins to be qualified investments for an individual retirement account (IRA). Congress excluded ``collectibles'', such as antiques, gold and silver bullion, and legal tender coinage, as appropriate for contribution to IRAs in 1981. The primary reason was the concerns that individuals would get a tax break when they bought collectibles for their personal use. For example, a taxpayer might deduct the purchase of an antique rug for his/her living room as an IRA investment. Congress was also concerned about how the many different types of collectibles are valued. Over the years, however, certain coins and precious metals have been excluded from the definition of a collectible because they are independently valued investments that offer investors portfolio diversity and liquidity. For example, Congress excluded gold and silver U.S. American Eagles from the definition of collectibles in 1986, and the Taxpayer Relief Act of 1997 took the further step of excluding certain precious metals bullion. My legislation would exclude form the definition of collectibles only those U.S. legal tender coins which meet the following three standards; certification by a nationally-recognized grading service, traded on a nationally-recognized network and held by a qualified trustee as described in the Internal Revenue Code. In other words, only investment quality coins that are independently valued and not held for personal use may be included in IRAs. There are several nationally-recognized, independent certification or grading services. Full-time professional graders (numismatists) examine each coin for authenticity and grade them according to established standards. Upon certification, the coin is sonically-sealed (preserved) to ensure that it remains in the same condition as when it was graded. Legal tender coins are then traded via two independent electronic networks--the Certified Coin Exchange and Certified CoinNet. These networks are independent of each other and have no financial interest in legal tender coinage and precious metals markets. The networks function in precisely the same manner as the NASDAQ with a series of published ``bid'' and ``ask'' prices and last trades. The buys and sells are enforceable prices that must be honored as posted until updated. Mr. President, the liquidity provided through a bona fide national trading network, combined with published prices, make legal tender coinage a practical investment that offers investors diversification and liquidity. Investment in these tangible assets has become a safe and prudent course of action for both the small and large investor and should be given the same treatment under the law as other financial investments. I urge the Senate to enact this important legislation as soon as possible. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, I am pleased to introduce the Regulatory Right to Know Act of 1999 with my colleague, Senator Thompson. This important piece of legislation will make the regulatory system more understandable and accountable to the American people. The Regulatory Right to Know Act of 1999 is similar to an amendment that was attached to the Fiscal Year 1999 Treasury, Postal Appropriations bill and which the Senate unanimously passed on July 29, 1998. It is also similar to the two Stevens' Amendments passed with a large majority of support in the Senate in 1996 and 1997. All of these amendments required the Office of Management and Budget to prepare an accounting statement and report on the annual costs and benefits of federal regulatory programs. Obviously, Congress is on record in support of having more information about the federal regulatory system. The Regulatory Right to Know Act of 1999 simply makes this requirement permanent and requires OMB to submit a yearly report to Congress on the total costs and benefits of federal regulations. Costs and benefits include those that are both quantifiable and non- quantifiable. OMB must present both an analysis of the impacts of regulations on Federal, State, local and tribal governments, the private sector, small businesses, wages and economic growth, as well as recommendations for reforming wasteful or outdated regulations. Lastly, our bill provides the public with an opportunity to comment on the draft report before it is submitted to Congress. Our bill does not do a number of things. It does not require that any regulations or programs be eliminated because the benefits do not outweigh the costs. It does not impose an unworkable burden on the OMB because much of the needed information is already available. And, our bill doesn't undermine the need for regulations protecting public health, worker safety, food quality or environmental preservation. Some studies have estimated the total cost of federal regulations to be almost $700 billion annually. On average, regulations cost every household in America approximately $7,000 per year. As the people who bear the cost of federal regulatory programs, America's citizens have a right to know what they are getting for their $7,000. Taxpayers are able to track how the government spends its tax dollars through the budget process. The same openness should apply to the federal regulatory system. Congress also needs the accounting statements provided by our bill in order to make better, more informed, and more efficient decisions. For these reasons. I urge all of my colleagues to support the Regulatory Right to Know Act of 1999.

Mr. BREAUX

Mr. BREAUX. Mr. President, I am pleased that the Internet Moratorium Act is included in the 1998 omnibus appropriations bill. Present federal law neither authorizes, nor imposes, nor ratifies any excise, sales, or domain registration tax on Internet use for electronic interstate commerce, and only one fee for the Intellectual Infrastructure Fund. This temporary moratorium will prevent federal and state governments from implementing or enforcing taxes imposed on Internet commerce over the next three years. We would also like to clarify that this Congress has not ratified or authorized any federal taxes on Internet domain name registrations. The U.S. Federal Court has stated that Section 8003 ratifies what was previously declared to be an unconstitutional tax. However, it was never intended to ratify a tax on the Internet; it only speaks to a fee for the Intellectual Infrastructure Fund. Because the fee constitutes an unconstitutional tax, it was not ratified by section 8003. I am confident that this moratorium will enable Congress to develop a coherent national strategy of appropriate taxation of business transactions conducted over the Internet without hindering business opportunities and would also like to reiterate that this Congress has never ratified an unconstitutional tax on the Internet.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise to announce that I look forward to working with my colleagues in the next Congress to pass legislation to implement the OECD Shipbuilding Agreement, an international agreement that will finally allow our commercial shipyards to compete on equal footing with those of our foreign trading partners. With the hard work of Members both in the House and Senate, especially my friend the Majority Leader, we were able to craft implementing legislation that was passed and reported out of both the Senate Commerce Committee and the Senate Finance Committee and had the strong support of the Department of Defense. If a floor vote had been possible this Congress, I am confident we could have passed this important legislation and the President would have signed it into law. Unless we as a country are content to concede the international commercial shipbuilding market to our trading partners and rely instead only upon the limited and protected U.S. Jones Act market for commercial shipbuilding orders, we must ratify and implement the OECD Shipbuilding Agreement. So again, I look forward next Congress to working with the Majority Leader, Finance Committee Chairman Roth, Commerce Committee Chairman McCain, and my Democratic and Republican colleagues, including the few Members who remain opposed to the Agreement, to implement the OECD Shipbuilding Agreement for the benefit of the country and our U.S. entire commercial shipbuilding industry.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise today to support S. 1259, the United States Coast Guard Authorization Act. As many of my distinguished colleagues know, I have a great deal of admiration for the Coast Guard, as well as for Coast Guard men and women that carry out critical missions for our country. Before going into greater detail on the importance of the Coast Guard, I wish to discuss an amendment that Senator Ford and I intended to offer to this bill, but have withdrawn in order to address certain concerns raised by my colleague from Rhode Island, Senator Chafee. Our amendment would have eliminated the unjustified use of strict criminal liability statutes that do not require a showing of criminal intent or even the slight negligence in oil spill incidents. Through comprehensive congressional action that led to the enactment and implementation of the Oil Pollution Act of 1990, commonly referred to as ``OPA90,'' the United States has successfully reduced the number of oil spills in the maritime environment and has established a cooperative public/private partnership to respond effectively in the diminishing number of situations when an oil spill occurs. Nonetheless, over the course of the last eight years, the use of the unrelated strict criminal liability statutes that I referred to above has undermined the spill prevention and response objectives of OPA90, the very objectives that were established by the Congress to preserve the environment, safeguard the public welfare, and promote the safe transportation of oil. Reasonable, measured refinements in federal law are urgently required to preserve the objectives of OPA90 by preventing the unjustified use of strict criminal liability in oil spill incidents. Accordingly, I have been working with my distinguished colleague from Kentucky, Senator Ford, and other members of the Senate to include legislation in this bill to enact such refinements. As stated in the coast Guard's own environmental enforcement directive, a company, its officers, employees, and mariners, in the event of an oil spill ``could be convicted and sentenced to a criminal fine even where [they] took all reasonable precautions to avoid the discharge''. With increasing frequency, responsible operators in my home state of Louisiana and elsewhere in the United States who transport oil are unavoidably exposed to potentially immeasurable criminal fines and, in the worst case scenario, jail time. Not only is this situation unfairly targeting an industry that plays an extremely important role in our national economy, but it also works contrary to the public welfare.

Mr. BREAUX. Therefore, Mr. President, despite the commitment and effort to provide trained and experienced vessel operators and employees, to comply with all Coast Guard laws and regulations, to abide by the safety and other operational mandates of the AWO Responsible Carrier Program and other similar industry initiatives, and to provide for the safe transportation of oil as required by OPA90, maritime transportation companies in Louisiana, Kentucky, and elsewhere still cannot avoid criminal liability in the event of an oil spill. Responsible, law-abiding companies have unfortunately been forced to undertake the only prudent action that they could under the circumstances, namely the development of criminal liability action plans and retention of criminal counsel in an attempt to prepare for the unavoidable risks of such liability. These are only preliminary steps and do not begin to address the many implications of the increasing criminalization of oil spills. The industry is now asking what responsibility does it have to educate its mariners and shoreside staff about the potential personal exposure they may face and wonder how to do this without creating many undesirable consequences? How should the industry organize spill management teams and educate them on how to cooperate openly and avoid unwitting exposure to criminal liability? Mr. President, my colleague from Kentucky and I have thought about these issues a great deal and simply do not know how to resolve these dilemmas under current, strict liability law.

Mr. BREAUX. To restore the delicate balance of interests reached in the enactment of OPA90 almost eight years ago, I strongly believe that the Congress should reaffirm the OPA90 framework for criminal prosecutions in oil spill incidents, and work to enact legislation that reasserts the role of OPA90 as the statute providing the exclusive criminal penalties for oil spills. My colleague from Kentucky and I have proposed such legislation that will ensure increased cooperation and responsiveness desired by all those interested in oil spill response issues, while not diluting the deterrent effect and stringent criminal penalties imposed by OPA90 itself. My colleague from Kentucky and I are hopeful that we can work with Senator Chafee and other Members of the Congress to ensure the passage of such reform measures to preserve the oil spill prevention and response objectives of OPA90. Mr. President, another issue of great importance which is addressed in this legislation is the double hull alternative design study. Section 417 directs the Secretary of Transportation to coordinate with the Marine Board of the National Research Council to conduct necessary research and development for alternative tanker designs to the double hull. If this effort utilizes technical performance standards it will undoubtedly enhance development designs such as the central ballast tanker system. These, American designs, some of which have already passed rigorous scientific tests and meet or exceed international shipbuilding standards, have not in my mind received appropriate attention. In my opinion, this may be due to inaccurate interpretation of Congress' intent which the Coast guard believes restricts any consideration of alternative designs to the double hull. Let me be clear, I am not opposed to the double hull design. In fact, I believe there is a place for the double hull. However, to consider only the double hull, while ignoring new, innovative technology which has been developed since the passage of the Clean Water Act and OPA90 exhibits bad judgment and simply put is bad policy. It is estimated that 8,000 tankers will have to be constructed or redesigned by 2015 to meet the requirements of the petroleum industry. This equates to a ship building program which the industry conservatively estimates to be worth $400 billion, all of which will be built by foreign shipyards if we do not pursue alternative designs. For those who do not believe that U.S. shipyards can't compete--just look at what's happening right now. Currently, there are two hundred double hull tankers under construction or contract around the world of which only two have been built in the United States, both of which lost money for the U.S. shipyard. In fact, I am told that the U.S. shipyard which built these two double hull ships has refused to construct anymore. Without incorporating innovative design and technology, our shipyards and U.S. workers will lose out to Japanese, Korean, Norwegian and other foreign yards and workers. Mr. President, this issue is about more than jobs. Being from Louisiana, I am intimately familiar with the importance of this issue from an environmental standpoint. I grew up on Louisiana's Gulf coast and know first hand how environmentally sensitive our wetlands and coastlines are and also appreciate how important their health is to the livelihood of the many people who live along the richest fishery in the world. Therefore, it should come as no surprise that all of us in Louisiana, and I suspect just about all those who live along the Gulf Coast, are extremely concerned with the safety and reliability of oil transport vessels in our waters. Innovative designs like the central ballast tanker system will add a greater degree of safety in our waters an will further protect our sensitive and vitally important coastal ecosystem. I am confident that the Secretary, in conjunction with the Marine Board, the Coast Guard and industry leaders will pull together to consider and eventually approve alternative designs to the double hull so our waters can be cleaner and safer and our shipyards and American workers will successfully participate in tanker construction in the years to come. Mr. President, as I initially indicated, I have a great deal of admiration for the U.S. Coast Guard. I therefore, stand here today in support of S. 1259 the United States Coast Guard Authorization Act. The Coast Guard is essential to the safety and well being of the citizens of my home state of Louisiana, as well as every other coastal State, every State with navigable waters and even several landlocked States. Using Louisiana as an example, with its hundreds of miles of coastline, active maritime and fishing industries, and thriving recreational boating population the Coast Guard must be at full strength. The payback to our nation is unparalleled. For instance, every year the Coast Guard: Saves about 5,000 lives; Conducts 65,700 search and rescue missions; Responds to 11,680 hazardous waste spills; Protects vital marine habitats from encroachment and pollution; Maintains 50,000 aids to ensure maritime safety; and Keeps $2.6 billion worth of drugs off U.S. streets. In the Greater New Orleans area alone, the Coast Guard: Conducted over 300 search and rescue missions; Responded to 2500 pollution incidents; Investigated nearly 700 marine casualties; Conducted over 2700 vessel inspections; and Seized hundreds of pounds of drugs (Marijuana and Cocaine). In the event my distinguished colleagues aren't already amazed let me continue. More than two-thirds of the total budget for the Coast Guard goes to operating expenses to protect public safety and the marine environment, to enforce fishery and other laws and treaties, maintain aids to navigation, prevent illegal drug trafficking and illegal immigrants, and preserve defense readiness. I believe it's our responsibility to ensure that the Coast Guard has adequate resources for its missions as it prepares for the next century. As I've outlined, the resources we provide to the Coast Guard have a direct impact on our communities. The Coast Guard's Search and Rescue Program alone provides a four-to-one return on their Operating Expenses Appropriation and only scratched the surface of what the Coast Guard does for America, everyday, around the clock. This pay-pack is unrivaled and can only be claimed by a few agencies, including the Coast Guard. Always serving as an example, over the past 4 years, the Coast Guard on its own initiative to reduce overhead eliminated close to 4,000 positions and streamlined to save approximately $400 million per year. This has resulted in the smallest Coast Guard since 1967, yet their workload has grown substantially over the past 3 decades. Over the years, we the Congress has continued to expand the Coast Guard's mission. The ``can-do'' attitude they continually display should serve as an example to us all. However, we can no longer force this proud maritime service to do more with less. I now call my colleagues to action. The Coast Guard's fiscal year 1999 budget request contains the minimum funding necessary to sustain Coast Guard operations. As a co-sponsor of the Western Hemisphere Drug Elimination Act, I strongly support increased counter-drug operations, but I believe earmarks to increase them at the expense of several other Coast Guard missions inside a net reduction in operating expenses is not possible. It goes without saying how important the Coast Guard is to our Nation. I urge my colleagues to assure all necessary funding be secured in the 1999 Transportation Appropriations Bill, expected on the floor any day now. Restoration of earmarks are paramount to avoid necessary loss of life and negatively impacting public safety. I urge my colleagues to ensure the Coast Guard is provided a fiscal year budget very close to the President's request. (At the request of Mr. Daschle, the following statement was ordered to be printed in the Record.)

Mr. BREAUX. As the scenario presented by my colleague from Kentucky demonstrates, the unjustified use of strict liability statutes is plainly undermining the very objectives which OPA90 sought to achieve, namely to enhance the prevention of and response to oil spills in Louisiana and elsewhere in the United States. As we are well aware, tremendous time, effort, and resources have been expended by both the federal government and the maritime industry to eliminate oil spills to the maximum extent possible, an to plan for and undertake an immediate and effective response to mitigate any environmental damage from spills that do occur. Clearly unwarranted and improper prosecutorial use of strict liability statutes will have a ``chilling'' effect on these cooperative spill prevention and response efforts. Indeed, even if we were to believe that criminal prosecution only follows intentional criminal conduct, the mere fact that strict criminal liability statutes are available at the prosecutor's discretion will intimidate even the most innocent and careful operator. With strict liability criminal enforcement, responsible members of the maritime transportation industry and faced with an extreme dilemma in the event of an oil spill--provide less than full cooperation and response as criminal defense attorneys will certainly direct, or cooperate fully despite the risk of criminal prosecution that could result from any additional actions or statements made during the course of the spill response. Consequently, increased criminalization of oil spill incidents introduces uncertainty into the response effort by discouraging full and open communication and cooperation and leaves vessel owners and operators criminally vulnerable for response actions taken in an effort to ``do the right thing''.

Mr. BREAUX. through the efforts of AWO and other organizations, the maritime transportation industry has achieved an outstanding compliance record with the numerous laws and regulations enforced by the Coast Guard. Let me be clear: responsible carriers, and frankly their customers, have a ``zero tolerance'' policy for oil spills. For example, I am aware of a major marine transportation company headquartered in Louisiana that has a record of having performed over 5,300 liquid cargo transfer operations without spilling or contaminating any of the almost 2.8 billion gallons it transferred over a recent three year period. Additionally, the industry is taking spill response preparedness seriously. Industry representatives and operators routinely participate in Coast Guard oil spill crisis management courses, PREP Drills, and regional spill response drills. Yet despite all of the modernization, safety, and training efforts of the marine transportation industry, their mariners and shoreside employees cannot escape the threat of criminal liability in the event of an oil spill, even where it is shown that they ``took all reasonable precautions to avoid [a] discharge''. Mr. President, as you know, in response to the tragic Exxon Valdez spill, Congress enacted OPA90. OPA90 mandated new, comprehensive, and complex regulatory and enforcement requirements for the transportation of oil products and for oil spill response. Both the federal government and maritime industry have worked hard to accomplish the legislation's primary objective--to provide greater environmental safeguards in oil transportation by creating a comprehensive prevention, response, liability, and compensation regime to deal with vessel and facility oil pollution.

Mr. BREAUX. My colleague from Kentucky and I do not advocate nor do we support any effort to change the tough criminal sanctions that were imposed in OPA90. The criminal sanctions under OPA90 properly follow the traditional notion of what constitutes a criminal act in this country, namely, that a crime occurs when a knowing, intentional act is committed or when a party's conduct is so egregious that ``negligence'' has occurred. These tough, comprehensive OPA90 provisions collectively operate as a major deterrent for oil spills and should not be changed. However, responsible, law-abiding members of the maritime industry in Louisiana and elsewhere are concerned by both the justice Department's willingness in the post-OPA90 environment to use strict criminal liability statues and the Coast Guard's increasing attention to criminal enforcement in oil spill incidents. As you know, strict liability imposes criminal sanctions without requiring a showing of criminal knowledge, intent or even negligence. These federal actions imposing strict liability have created an atmosphere of extreme uncertainty for the maritime transportation industry and Oil Spill Response Organizations (OSROs) about how to respond to and cooperate with the Coast Guard and other federal agencies in cleaning up an oil spill. Criminal culpability in this country, both historically and as reflected in the comprehensive OPA90 legislation itself, typically requires wrongful actions or omissions by individuals through some degree of criminal intent or through the failure to use the required standard of care. However, Federal prosecutors have been employing other antiquated, seemingly unrelated ``strict liability'' statutes that do not require a showing of ``knowledge'' or ``intent'' as a basis for criminal prosecution for oil spill incidents. Such strict criminal liability statutes as the Migratory Bird Treaty Act and the Refuse Act, statutes that were enacted at the turn of the century to serve other purposes, have been used to harass and intimidate the maritime industry, and, in effect, have turned every oil spill into a potential crime scene without regard to the fault or intent of companies, corporate officers and employees, and mariners. The Migratory Bird Treaty Act (MBTA) (16 U.S.C. 703 et seq.) provides that ``it shall be unlawful at any time, by any means or in any manner, to pursue, hunt, take, capture, kill, attempt to take, capture, or kill, . . . any migratory bird . . .'', a violation of which is punishable by imprisonment and/or fines. Prior to the Exxon Valdez oil spill in 1989, the MBTA was primarily used to prosecute the illegal activities of hunters and capturers of migratory birds, as the Congress originally intended when it enacted the MBTA in 1918. In the Exxon Valdez case itself, and prior to the enactment of OPA90, the MBTA was first used to support a criminal prosecution against a vessel owner in relation to a maritime oil spill, and this ``hunting statute'' has been used ever since against the maritime industry. The ``Refuse Act'' (33 U.S.C. 407, 411) was enacted 100 years ago at a time well before subsequent federal legislation essentially replaced it with comprehensive requirements and regulations specifically directed to the maritime transportation of oil and other petroleum products. Such strict liability statutes are unrelated to the regulation and enforcement of oil transportation activities, and in fact were not included within the comprehensive OPA90 legislation as statutes in which criminal liability could be found. With the prosecutorial use of strict liability statutes, owners and mariners engaged in the transportation of oil cannot avoid exposure to criminal liability, regardless of how diligently they adhere to prudent practice and safe environmental standards. Although conscientious safety and training programs, state-of-the-art equipment, proper operational procedures, preventative maintenance programs, and the employment of qualified and experienced personnel will collectively prevent most oil spills from occurring, unfortunately spills will still occur on occasion.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise today in support of the Medicare Home Health Fair Payment Act of 1998. This is an issue that I have worked on for several months with Senator Grassley and other Members of the Senate and I am pleased that the Senate has addressed this issue before adjourning. I am the first to admit that there is too much fraud, waste, and abuse in Medicare's home health benefit and there is probably no other state where the problem is more pronounced than Louisiana. Every graph I see on home health shows Louisiana off the charts--Louisiana has the highest per beneficiary spending in the country; we have more visits per patient than any other state in the country; Louisiana represents 5.2% of all Medicare home health visits even though only 2.3% of Medicare beneficiaries live in the state. There are 466 home health agencies in Louisiana--we have more home health agencies than McDonalds in the state. So I know firsthand that there are problems with home health and that states like Louisiana could afford a reduction in the number of agencies. The problem is that the interim payment system crafted by Congress and the Administration last year is causing the wrong agencies to go out of business. It is clear that the IPS has had serious unintended consequences. In Louisiana and other states, the interim payment system has for the most part rewarded inefficient providers and forced many low-cost, efficient agencies out of the program. For example, you could have one agency with a per beneficiary limit of $12,000 competing with another agency down the street with a per beneficiary limit of $4,000. What we did with IPS is essentially put that $4,000 agency at such a competitive disadvantage that there is no way it can stay in business. When we finally move home health to prospective payment, it is critical that some low-cost providers be in business to treat patients who need home care. The Grassley-Breaux bill that we introduced several months ago tried to level the playing field by bringing the very high cost providers down while raising the reimbursement for low cost providers. This reflects what will happen under prospective payment when all providers will essentially be paid the same amount for treating the same kind of patient. We also eliminated the distinction between old and new providers in an attempt to further level the playing field. To ensure that high cost patients would still have access to home health, the Grassley-Breaux bill included an outlier policy so that home health agencies would not turn high cost patients away. The interim payment reform proposal put forward by Senators Roth and Moynihan is an important first step towards fixing IPS and I applaud the bipartisan approach the Senate used in arriving at this proposal. I think most members would argue that much more needs to be done and I would agree. I am hearing from many home health agencies in Louisiana that this bill will only be of marginal help to the state but that it is important that something get done this year. As is the case with most things we do around here, particularly in the waning hours of this Congress, getting something is better than getting nothing. I am pleased that there is a bipartisan commitment by the Senate Finance Committee to revisit this issue next year and take a much more comprehensive look at the home health benefit. It is imperative that the Congress address this issue again next year since this proposal represents only a temporary fix. But it is an important one. The Senate bill: (1) Institutes a new blend for old agencies to increase reimbursements to low-cost agencies and reduce payments to very high- cost agencies. This will begin to level the playing field and prepare all providers for prospective payment. While the Senate proposal narrows the discrepancy between old and new agencies, I think much more needs to be done to restore equity to the program. (2) Slightly increases payments to so-called ``new'' agencies, those in business since 1994. While in Louisiana this will only mean about an extra $52 per patient per year, it is important to recognize that new agencies need some relief. (3) Increases the per visit cost limits from 105% of the national median to 110% of the national median. (4) Most importantly, the Senate proposal delays the across-the-board 15% reduction that is currently scheduled for October 1, 1999. HCFA was originally required to institute a prospective payment system for home health agencies by October 1 of next year. Because of the Y2K problem, HCFA is now anticipating that it will not have PPS in place until April 1, 2000. Delaying the automatic 15% reduction in payments to home health agencies will ensure that the agencies aren't punished for HCFA's inability to implement PPS in a timely manner. The goal of this bill is to fix some of the problems created in the BBA. Again, it is certainly only a first step--there is still much more that needs to be done and I am hopeful that the 106th Congress will revisit this issue to ensure that Medicare beneficiaries continue to have access to this very important benefit. I urge my colleagues to support this bipartisan measure. It may not be everything everyone wants, but it certainly is better than doing nothing this year and it provides much-needed temporary relief to home health agencies across the country.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise today to express my enthusiastic support for the International Religious Freedom Act of 1998, which was passed by the Senate earlier today. This legislation condemns religious persecution and promotes what is indisputably a fundamental human right--the right to freedom or religion. I am proud to have co-sponsored this legislation, which I might add was passed by the Senate without opposition. That is due in no small part to the efforts of Senators Nickles and Lieberman. I want to commend them and their staffs for all the hard work they've done to craft a bill that is meaningful and effective without being excessively rigid or inflexible. Mr. President, it has amazed me to see how Americans' awareness of religious persecution abroad has grown just in this decade. It is, no doubt, a result of the incredible resources and vast amounts of information that ordinary Americans now have at their fingertips. As more and more people gain access to the Internet, the velocity of information continues to increase. Americans have learned about religious persecution by foreign governments around the globe and they expect our government to take serious action to curb this behavior. Their can be no doubt that we have a responsibility to advocate and encourage freedom of religion in foreign lands. We, as a nation, have always held it to be the most sacrosanct of human rights. Indeed, it is not just enshrined in our Bill of Rights, it is a thread that is woven into the very fabric of our national identity. The International Religious Freedom Act channels U.S. assistance to governments that are not gross violators of human rights, in particular the right to religious freedom. It provides for sanctions or other comparable action against countries that persecute citizens on religious grounds. The bill establishes a Commission on International Religious Persecution to publish yearly recommendations to the White House and the Congress on how to promote religious freedom abroad. It also establishes an Ambassador-at-Large of Religious Freedom within the State Department and a Special Advisor on International Religious Freedom within the National Security Council. As a result, it requires the Administration to produce a yearly ``Annual Report on Religious Freedom Around the World.'' Mr. President, these are reasonable provisions that I believe will help focus our efforts to stand up for religious freedom abroad while at the same time allowing the executive branch a degree of needed flexibility to deal with different facts and circumstances in different instances of persecution. It is an important bill, and I am hopeful that the Congress can send it to the President for signature before adjournment.