John Breaux

Mr. BREAUX

Mr. BREAUX. Mr. President, today my colleague Connie Mack and I are introducing legislation that would improve Medicare inpatient psychiatric care by reforming how Medicare pays for services provided in free-standing psychiatric hospitals and distinct-part psychiatric units of general hospitals. The Medicare Psychiatric Hospital Prospective Payment System Act of 1998 would establish over time a prospective payment system (PPS) for these providers. Currently psychiatric hospitals and units are exempt from PPS. Their costs are reimbursed under provisions in the 1982 Tax Equity and Fiscal Responsibility Act, or TEFRA. The Balanced Budget Act (BBA) of 1997 made significant changes to the TEFRA payment system by reducing incentive payments and imposing a limit on what Medicare will pay for services provided in psychiatric facilities, regardless of a facility's costs. The result is that many of these providers will be hit hard by deep and sudden cuts, with no transition period to adjust to the changes. I believe that moving psychiatric hospitals to a prospective payment system will ensure that these changes do not reduce patient access to psychiatric care. Our legislation proposes to transition psychiatric inpatient hospitals to a prospective payment system--a system that will be more efficient, allow for better planning, and lead to improved patient care. This legislation also addresses the short-term viability of many of these facilities to enable patients to continue receiving the specialized care these providers offer. For that reason, our legislation includes immediate financial relief to those psychiatric facilities hardest hit by the BBA: twenty-five percent of facilities in the first year, about thirteen percent in year two, and approximately ten percent in year three. The relief will then be paid back when a prospective payment is implemented in year four to ensure that this bill is budget neutral by the end of year five. Specifically, the Breaux-Mack bill would limit an individual facility's payment reductions to no more than five percent in the first year, seven and one-half percent in the second year, and ten percent in year three. After the third year, a PPS based on per diems would be phased in. In the first two years of the new PPS, the per-diem rates would be adjusted downward to pay back the savings lost to the Medicare program as a result of the ``hold harmless'' provisions of the bill. Consequently, our bill is budget-neutral over five years, yet it provides some measure of relief to those Medicare providers most severely affected by the BBA and guarantees that beneficiaries will not lose vital services. But perhaps the most important feature of our bill is that it moves the last of the TEFRA providers--psychiatric facilities--out of a cost-based payment system and into a system where they will be paid prospectively, like most other Medicare providers. I urge my colleagues to join me in co-sponsoring this important piece of legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, today my colleague Connie Mack and I are introducing legislation that would improve Medicare inpatient psychiatric care by reforming how Medicare pays for services provided in free-standing psychiatric hospitals and distinct-part psychiatric units of general hospitals. The Medicare Psychiatric Hospital Prospective Payment System Act of 1998 would establish over time a prospective payment system (PPS) for these providers. Currently psychiatric hospitals and units are exempt from PPS. Their costs are reimbursed under provisions in the 1982 Tax Equity and Fiscal Responsibility Act, or TEFRA. The Balanced Budget Act (BBA) of 1997 made significant changes to the TEFRA payment system by reducing incentive payments and imposing a limit on what Medicare will pay for services provided in psychiatric facilities, regardless of a facility's costs. The result is that many of these providers will be hit hard by deep and sudden cuts, with no transition period to adjust to the changes. I believe that moving psychiatric hospitals to a prospective payment system will ensure that these changes do not reduce patient access to psychiatric care. Our legislation proposes to transition psychiatric inpatient hospitals to a prospective payment system--a system that will be more efficient, allow for better planning, and lead to improved patient care. This legislation also addresses the short-term viability of many of these facilities to enable patients to continue receiving the specialized care these providers offer. For that reason, our legislation includes immediate financial relief to those psychiatric facilities hardest hit by the BBA: twenty-five percent of facilities in the first year, about thirteen percent in year two, and approximately ten percent in year three. The relief will then be paid back when a prospective payment is implemented in year four to ensure that this bill is budget neutral by the end of year five. Specifically, the Breaux-Mack bill would limit an individual facility's payment reductions to no more than five percent in the first year, seven and one-half percent in the second year, and ten percent in year three. After the third year, a PPS based on per diems would be phased in. In the first two years of the new PPS, the per-diem rates would be adjusted downward to pay back the savings lost to the Medicare program as a result of the ``hold harmless'' provisions of the bill. Consequently, our bill is budget-neutral over five years, yet it provides some measure of relief to those Medicare providers most severely affected by the BBA and guarantees that beneficiaries will not lose vital services. But perhaps the most important feature of our bill is that it moves the last of the TEFRA providers--psychiatric facilities--out of a cost-based payment system and into a system where they will be paid prospectively, like most other Medicare providers. I urge my colleagues to join me in co-sponsoring this important piece of legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, I thank the Senator from Louisiana and congratulate her for all the effort she has put forth in bringing this legislation to this point. I have been in Congress for a long time--something like 26 years now, in the House and in this body--and I have never really seen a first- term Member who has been so dedicated to a major legislative effort as has the Senator from Louisiana, Ms. Landrieu, in bringing this legislation to the floor of the U.S. Senate. Many Members, on their first day, have come in and introduced a bill, issued a press release, and then forgotten about it. This has been an effort by the Senator from Louisiana, Senator Landrieu, of very carefully prodding and very carefully studying and working with Members on both sides of the aisle to put together a bipartisan coalition to bring this legislation to the floor of the Senate. While this is brought to the floor of the Senate in the last days of this session, we all know that there will be another day. The groundwork that she has laid in putting this package and this coalition together is going to be here in the next Congress. So in the next Congress we will start not from scratch but from the groundwork that she has laid in bringing this legislation to the point it is today. I congratulate her for the way she has done it. It is something that I have not seen by a new Member of the Congress in all of the years that I have been here. It is a major accomplishment on her part. I am very pleased to participate in it. Just a brief word on the legislation. I think it is a fair thing to do. Many non-coastal States have Federal property, owned 100 percent by the Federal Government, within their borders. When minerals are extracted or oil and gas are found on those Federal lands, the State in which those lands are located gets as much as 50 percent of the revenue. Coastal States, however, get nothing. That is clearly not fair. Offshore mineral development operations have a major impact on coastal Louisiana. These operations impact our roads, bridges and other infrastructure, our freshwater supply, our housing and other vital public resources. It is only fair that there be a reasonable sharing of those revenues with states that bear these kinds of burdens. The impact coastal states suffer is a burden borne for the good of the whole country and, without it, the whole country would suffer. Therefore, to share in a true partnership with the coastal States is certainly something that this Congress should favorably consider, and I think that we will because of what the Senator has been able to do in a bipartisan fashion. So while it is late this year, it is early for next year. The work that she has done this year will pay off next year.

Mr. BREAUX

Mr. BREAUX. Mr. President, I thank the Senator from Louisiana and congratulate her for all the effort she has put forth in bringing this legislation to this point. I have been in Congress for a long time--something like 26 years now, in the House and in this body--and I have never really seen a first- term Member who has been so dedicated to a major legislative effort as has the Senator from Louisiana, Ms. Landrieu, in bringing this legislation to the floor of the U.S. Senate. Many Members, on their first day, have come in and introduced a bill, issued a press release, and then forgotten about it. This has been an effort by the Senator from Louisiana, Senator Landrieu, of very carefully prodding and very carefully studying and working with Members on both sides of the aisle to put together a bipartisan coalition to bring this legislation to the floor of the Senate. While this is brought to the floor of the Senate in the last days of this session, we all know that there will be another day. The groundwork that she has laid in putting this package and this coalition together is going to be here in the next Congress. So in the next Congress we will start not from scratch but from the groundwork that she has laid in bringing this legislation to the point it is today. I congratulate her for the way she has done it. It is something that I have not seen by a new Member of the Congress in all of the years that I have been here. It is a major accomplishment on her part. I am very pleased to participate in it. Just a brief word on the legislation. I think it is a fair thing to do. Many non-coastal States have Federal property, owned 100 percent by the Federal Government, within their borders. When minerals are extracted or oil and gas are found on those Federal lands, the State in which those lands are located gets as much as 50 percent of the revenue. Coastal States, however, get nothing. That is clearly not fair. Offshore mineral development operations have a major impact on coastal Louisiana. These operations impact our roads, bridges and other infrastructure, our freshwater supply, our housing and other vital public resources. It is only fair that there be a reasonable sharing of those revenues with states that bear these kinds of burdens. The impact coastal states suffer is a burden borne for the good of the whole country and, without it, the whole country would suffer. Therefore, to share in a true partnership with the coastal States is certainly something that this Congress should favorably consider, and I think that we will because of what the Senator has been able to do in a bipartisan fashion. So while it is late this year, it is early for next year. The work that she has done this year will pay off next year.

Mr. BREAUX

Mr. BREAUX. Mr. President, I am pleased to join with the distinguished senior Senator from the State of Mississippi and my colleague on the Migratory Bird Conservation Commission, Senator Cochran, in introducing the Electronic Duck Stamp Act. I believe it is legislation all of our colleagues should support. The Electronic Duck Stamp Act would authorize electronic issuance of the federal migratory bird hunting and conservation stamp. A number of states are setting up electronic licensing systems so their hunters can purchase all their state hunting licenses at one time and in one location. This bill will help coordinate federal and state licensing systems and provide sportsmen and sportswomen the convenience of getting all their hunting licenses, federal and state, in one location. I believe this added convenience will increase ``duck stamp'' sales. This, in turn, will increase the total funds deposited into the Migratory Bird Conservation Fund for the purchase of suitable habitat for migratory birds. These funds are essential to the long-term survival of our migratory bird populations. Mr. President, I urge my colleagues to join us in supporting this worthwhile legislation, and I ask unanimous consent that the full text of this legislation be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, I am pleased to join with the distinguished senior Senator from the State of Mississippi and my colleague on the Migratory Bird Conservation Commission, Senator Cochran, in introducing the Electronic Duck Stamp Act. I believe it is legislation all of our colleagues should support. The Electronic Duck Stamp Act would authorize electronic issuance of the federal migratory bird hunting and conservation stamp. A number of states are setting up electronic licensing systems so their hunters can purchase all their state hunting licenses at one time and in one location. This bill will help coordinate federal and state licensing systems and provide sportsmen and sportswomen the convenience of getting all their hunting licenses, federal and state, in one location. I believe this added convenience will increase ``duck stamp'' sales. This, in turn, will increase the total funds deposited into the Migratory Bird Conservation Fund for the purchase of suitable habitat for migratory birds. These funds are essential to the long-term survival of our migratory bird populations. Mr. President, I urge my colleagues to join us in supporting this worthwhile legislation, and I ask unanimous consent that the full text of this legislation be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, last night, after several years of effort, the Senate passed S. 414, the Ocean Shipping Reform Act, and I strongly urge the President to sign this important piece of legislation into law. The Ocean Shipping Reform Act of 1998 modifies our existing shipping regulatory scheme by bringing it up to date with the industry as it operates today. It provides more flexibility for carriers and shippers to agree on transportation arrangements. It authorizes the privatized publication of rate information. It gives individual carrier conference members more leeway in taking independent actions and in entering service contracts, and thus makes the current system more competitive. Yet the bill also preserves the basic system and principles of common carriage, and maintains protections for ocean transportation users against unfair or unreasonable actions by transportation providers. Importantly, S. 414 preserves the Federal Maritime Commission as an independent regulatory agency, which is vitally important as that agency enforces this program while it additionally ensures that our trades remain free from restrictive foreign shipping practices that impede our oceanborne foreign commerce. The reason this bill was so long in coming is that the Senate took great care to make the legislative process an open one. I was critical of shipping legislation passed in the other body three years ago, because it did not reflect the diversity of concerns reflected in the broad spectrum of shipping interests. It was, as I noted at a Commerce Committee hearing, ``conceived in darkness.'' By contrast, the legislation ultimately agreed to by both the House and Senate is truly a compromise, in which all industry interests were heard from and all sectors had input. No one got everything they wanted in this legislation, and no one's interests were completely disregarded. This legislation is a carefully crafted balance of the many interests at stake. When it was necessary, members of all segments sat down and negotiated a compromise. Not everyone is completely pleased with all aspects of the legislation, but it is incumbent upon us to move forward. I would also like to take this opportunity to thank a number of members of both the House and Senate for their efforts on this bill including; Congressmen Shuster, Oberstar, Gilchrest and Clement in the House, and Senators McCain and Hollings, the Subcommittee Chairwoman Senator Hutchison and of course, Senator Lott in the Senate. I would also like to thank Jim Sartucci of Senator McCain's staff and my counsel, Carl Bentzel, for their long hours of hard work and industry constituent service as they pieced this bill together. Without the efforts of Senate staffers, Amy Henderson, Jeanne Bumpus and Carl Biersack, and Mark Ashby of my staff, and House staffers John Cullather and Rebecca Dye we would not have been able to move this bill. I would also commend the FMC for its objective assessments and contributions to this project, particularly FMC Chairman Hal Creel, General Counsel Tom Panebianco and Legislative Counsel Dave Miles. When we needed expertise, they provided us with help. I am particularly pleased that the Federal Maritime Commission will continue its mission as a nonpartisan, independent agency. The Commission, under Chairman Hal Creel, and with fellow Commissioners Ming Hsu, Joe Scroggins and Del Won, has done an excellent job administering our shipping laws in a firm but even-handed manner. I urge the FMC to keep up the good work, and to keep Congress informed of how the new legislation is working. I am particularly interested in whether the protections afforded the smaller shippers and intermediaries against unreasonable practices prove to be sufficient. To this end, I ask that the FMC pay particular attention to these parties' concerns about the new law and advise us of any recommended amendments to the legislation that may prove to be in order. Again, I encourage the President to sign the Ocean Shipping Reform Act of 1998 into law.

Mr. BREAUX

Mr. BREAUX. Mr. President, today I introduce a bill that would make a technical change in the Internal Revenue Code. We often talk about the need to simplify the Tax Code. The change I propose today would do that. This change is small but very important. It would not alter the substance of current law in any way. It would, however, greatly simplify a common corporate transaction. This small technical change will alone save corporations millions of dollars in unnecessary expenses and economic costs that are incurred when they divide their businesses. The Treasury Department agrees that there is a technical problem with the drafting of the Tax Code. It also agrees that a legislative change like the bill I introduce today is the best way to correct it. Corporations, and affiliated groups of corporations, often find it advantageous, or even necessary, to separate two or more businesses. The division of AT&T from its local telephone companies is an example of such a transaction. The reasons for these corporate divisions are many, but probably chief among them is the ability of management to focus on one core business. At the end of the day, when a corporation divides, the stockholders simply have the stock of two corporations, instead of one. The Tax Code recognizes this is not an event that should trigger tax, as it includes corporate divisions among the tax-free reorganization provisions. One requirement the Tax Code imposes on corporate divisions is very awkwardly drafted, however. As a result, an affiliated group of corporations that wishes to divide must often engage in complex and burdensome preliminary reorganizations in order to accomplish what, for a single corporate entity, would be a rather simple and straightforward spinoff of a business to its shareholders. The small technical change I propose today would eliminate the need for these unnecessary transactions, while keeping the statute true to Congress' original purpose. More specifically, section 355 (and related provisions of the Code) permits a corporation or an affiliated group of corporations to divide on a tax-free basis into two or more separate entities with separate businesses. There are numerous requirements for tax-free treatment of a corporate division, or ``spinoff,'' including continuity of historical shareholder interest, continuity of the business enterprises, business purpose, and absence of any device to distribute earnings and profits. In addition, section 355 requires that each of the divided corporate entities be engaged in the active conduct of a trade or business. The proposed change would alter none of these substantive requirements of the Code. Section 355(b)(2)(A) currently provides an attribution or ``lookthrough'' rule for groups of corporations that operate active businesses under a holding company, which is necessary because a holding company, by definition, is not itself engaged in an active business. This lookthrough rule inexplicably requires, however, that ``substantially all'' of the assets of the holding company consist of stock of active controlled subsidiaries. The practical effect of this language is to prevent holding companies from engaging in spinoffs if they own almost any other assets. This is in sharp contrast to corporations that operate businesses directly, which can own substantial assets unrelated to the business and still engage in tax-free spinoff transactions. In the real world, of course, holding companies may, for many sound business reasons, hold other assets, such as noncontrolling (less than 80 percent) interests in subsidiaries, controlled subsidiaries that have been owned for less than five years (which are not considered ``active businesses'' under section 355), or a host of nonbusiness assets. Such holding companies routinely undertake spinoff transactions, but because of the awkward language used in section 355(b)(2)A), they must first undertake one or more (often a series of) preliminary reorganizations solely for the purpose of complying with this inexplicable language of the Code. Such preliminary reorganizations are at best costly, burdensome, and without any business purpose, and at worst, they seriously interfere with business operations. In a few cases, they may be so costly as to be prohibitive, and cause the company to abandon an otherwise sound business transaction that is clearly in the best interest of the corporation and the businesses it operates. There is no tax policy reason, tax advisors agree, to require the reorganization of a consolidated group that is clearly engaged in the active conduct of a trade or business, as a condition to a spinoff. Nor is there any reason to treat affiliated groups differently than single operating companies. Indeed, no one has ever suggested one. The legislative history indicates Congress was concerned about noncontrolled subsidiaries, which is elsewhere adequately addressed, not consolidated groups. For many purposes, the Tax Code treats affiliated groups as a single corporation. Therefore, the simple remedy I am proposing today for the problem created by the awkward language of section 355(b)(2)(A) is to apply the active business test to an affiliated group as if it were a single entity. 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 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. It 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 98-1l 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 98-1l 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 98-1l 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 98-1l earlier this year. While we applaud the Treasury's decision to withdraw Notice 98-1l 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 98-1l 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. Therefore, 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. President, today I introduce a bill that would make a technical change in the Internal Revenue Code. We often talk about the need to simplify the Tax Code. The change I propose today would do that. This change is small but very important. It would not alter the substance of current law in any way. It would, however, greatly simplify a common corporate transaction. This small technical change will alone save corporations millions of dollars in unnecessary expenses and economic costs that are incurred when they divide their businesses. The Treasury Department agrees that there is a technical problem with the drafting of the Tax Code. It also agrees that a legislative change like the bill I introduce today is the best way to correct it. Corporations, and affiliated groups of corporations, often find it advantageous, or even necessary, to separate two or more businesses. The division of AT&T from its local telephone companies is an example of such a transaction. The reasons for these corporate divisions are many, but probably chief among them is the ability of management to focus on one core business. At the end of the day, when a corporation divides, the stockholders simply have the stock of two corporations, instead of one. The Tax Code recognizes this is not an event that should trigger tax, as it includes corporate divisions among the tax-free reorganization provisions. One requirement the Tax Code imposes on corporate divisions is very awkwardly drafted, however. As a result, an affiliated group of corporations that wishes to divide must often engage in complex and burdensome preliminary reorganizations in order to accomplish what, for a single corporate entity, would be a rather simple and straightforward spinoff of a business to its shareholders. The small technical change I propose today would eliminate the need for these unnecessary transactions, while keeping the statute true to Congress' original purpose. More specifically, section 355 (and related provisions of the Code) permits a corporation or an affiliated group of corporations to divide on a tax-free basis into two or more separate entities with separate businesses. There are numerous requirements for tax-free treatment of a corporate division, or ``spinoff,'' including continuity of historical shareholder interest, continuity of the business enterprises, business purpose, and absence of any device to distribute earnings and profits. In addition, section 355 requires that each of the divided corporate entities be engaged in the active conduct of a trade or business. The proposed change would alter none of these substantive requirements of the Code. Section 355(b)(2)(A) currently provides an attribution or ``lookthrough'' rule for groups of corporations that operate active businesses under a holding company, which is necessary because a holding company, by definition, is not itself engaged in an active business. This lookthrough rule inexplicably requires, however, that ``substantially all'' of the assets of the holding company consist of stock of active controlled subsidiaries. The practical effect of this language is to prevent holding companies from engaging in spinoffs if they own almost any other assets. This is in sharp contrast to corporations that operate businesses directly, which can own substantial assets unrelated to the business and still engage in tax-free spinoff transactions. In the real world, of course, holding companies may, for many sound business reasons, hold other assets, such as noncontrolling (less than 80 percent) interests in subsidiaries, controlled subsidiaries that have been owned for less than five years (which are not considered ``active businesses'' under section 355), or a host of nonbusiness assets. Such holding companies routinely undertake spinoff transactions, but because of the awkward language used in section 355(b)(2)A), they must first undertake one or more (often a series of) preliminary reorganizations solely for the purpose of complying with this inexplicable language of the Code. Such preliminary reorganizations are at best costly, burdensome, and without any business purpose, and at worst, they seriously interfere with business operations. In a few cases, they may be so costly as to be prohibitive, and cause the company to abandon an otherwise sound business transaction that is clearly in the best interest of the corporation and the businesses it operates. There is no tax policy reason, tax advisors agree, to require the reorganization of a consolidated group that is clearly engaged in the active conduct of a trade or business, as a condition to a spinoff. Nor is there any reason to treat affiliated groups differently than single operating companies. Indeed, no one has ever suggested one. The legislative history indicates Congress was concerned about noncontrolled subsidiaries, which is elsewhere adequately addressed, not consolidated groups. For many purposes, the Tax Code treats affiliated groups as a single corporation. Therefore, the simple remedy I am proposing today for the problem created by the awkward language of section 355(b)(2)(A) is to apply the active business test to an affiliated group as if it were a single entity. 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 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. It 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 98-1l 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 98-1l 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 98-1l 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 98-1l earlier this year. While we applaud the Treasury's decision to withdraw Notice 98-1l 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 98-1l 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. Therefore, 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, I rise today in support of S. 2341, the Western Hemisphere Drug Elimination Act, introduced by Senator DeWine, myself and twenty-nine of our distinguished colleagues. Research shows that increased Federal, State and local efforts are needed to enforce the already existing laws, as well as to pass pro- active legislation to deal with ever changing trends in substance abuse. Unfortunately, there is compelling evidence that over the past decade the changing trends indicate that drug use has increased, particularly among young people. My colleagues and I believe that the growth in drug use has some connection to the decline in resources dedicated to drug interdiction efforts outside our borders over this period. While previous budgets have appropriately devoted resources to demand and domestic law enforcement programs, evidence also shows that there must be a returned focus on interdiction and eradication programs. I have continued to support a continued federal commitment to demand reduction and law enforcement programs since ultimately these activities drive the drug trade in the United States. However, we can not reverse the disturbing increases in drug use unless we also dedicate more funds to drug interdiction and restore a more balanced drug control strategy. Mr. President, I believe that this $2.6 billion over 3 years initiative to enhance international eradication, interdiction and crop substitution efforts targets the threat to the United States caused by drug lords. Furthermore, by addressing the very highlights of the bill and appropriating the necessary monies, drug lords and drug traffickers will be more clearly targeted. While this bill is very detailed, let me mention a few of the highlights: It would improve our aircraft, maritime and radar coverage of both drug-source and drug-transit countries; It would enhance drug-eradication and interdiction efforts in source countries; It would enhance the development of alternative crops in drug-source countries; It would support international law enforcement training; It would enhance law enforcement interdiction operations. Mr. President, all too often, the drug smugglers have the upper hand with state-of-the-art boats and aircraft. I might add the United States specifically lacks adequate surface assets and is using aircraft with 1990 technology. I believe that this bill will help turn the tide in the war on drugs by equipping the Coast Guard, Customs, DEA, DOD and other law enforcement agencies with the latest in proven technology. Mr. President, I want my colleagues to take note of the fact that an identical bill H.R.4300 has already been passed in the House of Representatives by a vote of 384-39. I urge my colleagues to support the Western Hemisphere Drug Elimination Act and make it far more difficult for drug lords to bring drugs to our nation. I believe that increasing funds for eradication and interdiction efforts will make a difference.

Mr. BREAUX

Mr. BREAUX. Mr. President, I rise today in support of S. 2341, the Western Hemisphere Drug Elimination Act, introduced by Senator DeWine, myself and twenty-nine of our distinguished colleagues. Research shows that increased Federal, State and local efforts are needed to enforce the already existing laws, as well as to pass pro- active legislation to deal with ever changing trends in substance abuse. Unfortunately, there is compelling evidence that over the past decade the changing trends indicate that drug use has increased, particularly among young people. My colleagues and I believe that the growth in drug use has some connection to the decline in resources dedicated to drug interdiction efforts outside our borders over this period. While previous budgets have appropriately devoted resources to demand and domestic law enforcement programs, evidence also shows that there must be a returned focus on interdiction and eradication programs. I have continued to support a continued federal commitment to demand reduction and law enforcement programs since ultimately these activities drive the drug trade in the United States. However, we can not reverse the disturbing increases in drug use unless we also dedicate more funds to drug interdiction and restore a more balanced drug control strategy. Mr. President, I believe that this $2.6 billion over 3 years initiative to enhance international eradication, interdiction and crop substitution efforts targets the threat to the United States caused by drug lords. Furthermore, by addressing the very highlights of the bill and appropriating the necessary monies, drug lords and drug traffickers will be more clearly targeted. While this bill is very detailed, let me mention a few of the highlights: It would improve our aircraft, maritime and radar coverage of both drug-source and drug-transit countries; It would enhance drug-eradication and interdiction efforts in source countries; It would enhance the development of alternative crops in drug-source countries; It would support international law enforcement training; It would enhance law enforcement interdiction operations. Mr. President, all too often, the drug smugglers have the upper hand with state-of-the-art boats and aircraft. I might add the United States specifically lacks adequate surface assets and is using aircraft with 1990 technology. I believe that this bill will help turn the tide in the war on drugs by equipping the Coast Guard, Customs, DEA, DOD and other law enforcement agencies with the latest in proven technology. Mr. President, I want my colleagues to take note of the fact that an identical bill H.R.4300 has already been passed in the House of Representatives by a vote of 384-39. I urge my colleagues to support the Western Hemisphere Drug Elimination Act and make it far more difficult for drug lords to bring drugs to our nation. I believe that increasing funds for eradication and interdiction efforts will make a difference.

Mr. BREAUX

Mr. BREAUX. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. BREAUX

Mr. BREAUX. Mr. President, today I introduce a bill cosponsored by Senators Mack and Faircloth entitled the Vessel Hull Design Protection Act of 1998. This bill will attempt to stop a very troubling problem facing America's marine manufacturers--the unauthorized copying of boat hull designs. Such piracy threatens the integrity of the United States marine manufacturing industry and the safety of American boaters. A boat manufacturer invests significant resources in creating a safe, structurally sound, high performance boat hull design from which a line of vessels can be manufactured. Standard practice calls for manufacturing engineers to create a hull model, or ``plug'', from which they cast a ``mold''. This mold is then used for mass production of boat hulls. Unfortunately, those intent on pirating such a design can simply use a finished boat hull to develop their own mold. This copied mold can then be used to manufacture boat hulls identical in appearance to the original line, and at a cost well below that incurred by the original designer. This so-called ``hull splashing'' is a significant problem for consumers, manufacturers, and boat design firms. American consumers are defrauded in the sense that they do not benefit from the many aspects of the original hull design that contribute to its structural integrity and safety, and they are not aware that the boat they have purchased has been copied from an existing design. Moreover, if original manufacturers are undersold by these copies, they may no longer be willing to invest in new, innovative boat designs--boat designs that could provide safer, less expensive, quality watercraft for consumers. In the past, a number of States have enacted anti-boat-hull-copying, or ``plug mold'', statutes to address the problem of hull splashing. These States include my State of Louisiana, as well as Alabama, California, Florida, Indiana, Kansas, Maryland, Mississippi, Missouri, Tennessee, and Wisconsin. However, a decision by the U.S. Supreme Court in Bonito Boats v. Thundercraft Boats, Inc., 489 U.S. 141 (1989), invalidated these State statutes on the basis that they infringed on the federal government's exclusive jurisdiction over the protection of intellectual property. In essence, the Supreme Court held that vessel hull design protection may be a legitimate goal, but it is Congress' job to provide it, not the States. The legislation we are introducing today is designed to do that job. Such initiatives as this one are not new to Congress. In 1984, Congress acted to protect the unique nature of design work when it passed the Semiconductor Chip Protection Act. This act was designed to protect the mask works of semiconductor chips, which are essentially the molds from which the chips are made, against unauthorized duplication. I believe that the approach Congress took in that legislation should also be applied to protect boat hull designs. The Boat Protection Act of 1998 would work in concert with current federal law to protect American marine manufacturers from harmful and unfair competition. Mr. President, I want my colleagues to take note of the fact that an identical bill, H.R. 2696, has already been passed in the House of Representatives by unanimous consent. I want to urge my colleagues to support the Vessel Hull Design Protection Act of 1998 and to join in this effort to protect the American public and the marine manufacturing community from the dangers and impropriety of hull splashing. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, it is interesting. During the time I have been in the Senate and Congress, a lot of times when you don't have the facts on your side you have to create an enemy and talk about the enemy. I think this is exactly the case here. It is easy to find an enemy in the oil and gas industry. The oil and gas industry are the first people in the world to admit that they, on any kind of a popularity chart, would probably be right at the bottom--or probably right above the Members of Congress. The oil industry right in front of us, and we would be at the bottom. The point is, if you do not have the facts, you have to get somebody to argue against, somebody who people don't generally like. And I agree, people don't generally like oil and gas companies. So, let's make them the big bogeyman in this and argue about how bad they are. Fortunately, that is not the issue in this case. The issue in this case is really very simple. The issue is, how do you determine the proper value for oil that is discovered on Federal lands, and what is the royalty that companies who explore and develop should pay the Federal Government? It is very clear that companies do not determine how much they have to pay--we do. We passed the OCS Lands Act in 1976 and innumerable other Federal acts in Congress to determine what royalties should be. Congress makes that decision and we have made it many times. The question before the Interior Department in which they, I think, made a mistake is how do you determine the value of the oil. We know what the percentage is. Interestingly, companies made a proposal to the Federal Government and said let us quit fighting over what the value of the oil is; let us just give you the oil. If you are entitled to 15 percent of the oil, and we have 100 barrels, let us just give you 15 barrels of oil and let you go sell it and you determine what the price is by selling it in the marketplace. The Federal Government said we don't want to do that. We think that is too complicated--and it is complicated. The problem before this Congress is what do we do, in trying to work with the Interior Department, in helping to determine what is the proper value. How do we find the proper value for oil? Someone said we ought to have hearings on this. We did. We had a hearing. We had two hearings. We had hearings in the Senate Energy Committee. We had hearings in the House Resources Committee. Minerals Management Service came and testified, members of the oil and gas industry came and testified and talked about how they were trying to work this problem out. I also hosted, along with Senator Hutchison from Texas, Senators Domenici and Bingaman from New Mexico and Senator Landrieu from my State and others, meetings between oil industry representatives and Interior officials to try to get them to sit at the same table and try to come to a resolution of the very complicated technical problem of determining how do you find out what the proper value of a barrel of oil. The oil is brought to the surface in the middle of the Gulf of Mexico. You can determine what the price is, if you look at what it is at the wellhead. One problem in this proposed rule is that we look at different prices and at a different time to determine the value. We don't look at what its value is in the middle of the Gulf of Mexico, but we look at it after it is brought onshore. How do you determine what are the legitimate transportation deductions in reaching the royalty value of crude oil? And, should companies have to pay all of the costs to this point onshore. If it is the Government's oil, shouldn't the Government pay the transportation cost of its share? Therefore, one of the real conflicts is how do you determine a proper transportation deduction? Companies will argue that the entire pipeline system is part of the cost of transporting oil. They say, ``If we do not have this elaborate system out there, we cannot transport it to the place onshore where the Government takes ownership, so that should be deductible.'' Minerals Management says ``No, you should not deduct all of that; it should be less.'' So this is a battle of what you should deduct and how you reach a legitimate price. There is nothing mysterious about this. Nobody is trying to rob anyone of anything. Oil and gas companies have paid more in royalties to the Federal Government than they have received in the price of oil they have taken from the Federal lands in terms of taxes they have paid and royalties that they have paid over the years since we have had an offshore oil and gas industry--companies have paid more to the U.S. Treasury than they have made in finding oil in the Gulf of Mexico. Eventually, in the future, it will turn around. They will start making more money than they have paid. That is why they are in the business. Up until this point they have still paid more to the Federal Treasury in royalties and taxes and benefits to the U.S. Government than they have made in selling the oil that they have found. We tried to have meetings with Minerals Management Service to resolve this. This rider is not the best way to handle it. I would admit that. But I think it is appropriate that when Congress sees something happening that is not consistent with what is good policy and what is the law, then Congress has an obligation to say ``hold it,'' ``stop,'' ``slowdown,'' ``let's continue to try to work this out.'' That is exactly what an appropriation rider has done. We have told Interior Department, in the Interior appropriations bill, that this rule is fundamentally flawed. It is not correct. It is not right. It does not allow for the legitimate deductions in the costs of transportation that should be allowed, and therefore don't go forward with a rule that is fundamentally flawed. Give Congress and the Interior Department time to come to an agreement on what is appropriate and proper. That is the argument. That is the issue. We can talk about how bad the oil companies are. That is a easy thing to say if you don't like oil companies. I happen to like them. They employ hundreds of thousands of people in my State and provide the energy for people to drive to work in the morning. It is part of our national economic security and part of the national defense in our country. They do an important service for this country of ours. So the issue is not whether or not you like oil companies. The issue is very simple, Is this a good rule? The answer is no. Should it be stopped? The answer is yes. Should this amendment be tabled? The answer is also yes. I think when this amendment is tabled it will allow the administration and the Department to continue to work with those who are interested in trying to resolve this and come to a resolution that makes sense. Companies will continue to pay. It is interesting, when they had the hearings over in the House, when the administration testified concerning this argument about how much we are losing in lost revenue. The Director of the Minerals Management Service, when she testified at the House Resources Committee on February 26, 1998, said that these regulations ``are intended to simplify the royalty payments, make valuation methods reflective of modern market conditions, offer the industry more flexibility, reduce administrative costs, and maintain revenue neutrality.'' When MMS proposed the rule, as flawed as it was, it wasn't to increase the amount of money they would get. At least that is what they said. It is simply to ``maintain revenue neutrality.'' Now the argument is we are losing millions of dollars every month. The whole purpose of the rule was to make the way we determine the value of the oil simpler and reflect modern market conditions. It doesn't do that. Therefore we should say stop, slowdown, let's continue to negotiate to come up with something that makes sense. That is what the bill before the Senate does. It should not be changed, and the amendment should be tabled. I yield back the time to the distinguished Senator from New Mexico. Mr. WELLSTONE addressed the Chair.

Mr. BREAUX

Mr. BREAUX. Mr. President, today I introduce a very important bill for small businesses and the self-employed in Louisiana and throughout our country. My bill would restore the 80 percent deduction for business meals and entertainment expenses, thus eliminating a tax burden that has seriously hampered many small businesses in our country. Small business is a powerful economic engine, both nationwide and in Louisiana. Small businesses have helped to create the prosperity that we have all enjoyed in the last few years. They are leaders in the innovation and technology development that will sustain our economy in the 21st century. Nationwide, small business employs 53 percent of the private work force, contributes 47 percent of all sales in the country, and is responsible for 50 percent of the private gross domestic product. For these reasons, I believe the tax code should encourage, not discourage, small business development and growth. For the more than 225,000 self-employed and for the thousands of small businesses in Louisiana, business meals and entertainment take the place of advertising, marketing, and conference meetings. These expenses are a core business development cost. As such, a large percentage of these costs should be deductible. For many years, businesses were allowed to deduct 100 percent of business meals and entertainment expenses. In 1987, this deduction was reduced to 80 percent. The deduction was further reduced in 1994 to 50 percent because of the misconception that these meals were ``three martini lunches.'' Contrary to this perception, studies show that the primary beneficiary of the business meal deduction is not the wealthy business person. Studies indicate that over two-thirds of the business meal spenders have incomes of less than $60,000 and 37 percent have incomes below $40,000. Low to moderately priced restaurants are the most popular types for business meals, with the average check equaling less than $20. In addition, 50 percent of most business meals occur in small towns and rural areas. In 1995, just one year after the deduction was reduced to 50 percent, the White House Conference on Small Business established the restoration of the deduction as one of its top priorities for boosting small business. In Louisiana alone, it is expected that the positive economic impact of this proposal could exceed $67 million in industries, such as the travel and restaurant industry, that employ over 120,000 people. I urge my colleagues to support this legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. Mr. President, today I introduce a very important bill for small businesses and the self-employed in Louisiana and throughout our country. My bill would restore the 80 percent deduction for business meals and entertainment expenses, thus eliminating a tax burden that has seriously hampered many small businesses in our country. Small business is a powerful economic engine, both nationwide and in Louisiana. Small businesses have helped to create the prosperity that we have all enjoyed in the last few years. They are leaders in the innovation and technology development that will sustain our economy in the 21st century. Nationwide, small business employs 53 percent of the private work force, contributes 47 percent of all sales in the country, and is responsible for 50 percent of the private gross domestic product. For these reasons, I believe the tax code should encourage, not discourage, small business development and growth. For the more than 225,000 self-employed and for the thousands of small businesses in Louisiana, business meals and entertainment take the place of advertising, marketing, and conference meetings. These expenses are a core business development cost. As such, a large percentage of these costs should be deductible. For many years, businesses were allowed to deduct 100 percent of business meals and entertainment expenses. In 1987, this deduction was reduced to 80 percent. The deduction was further reduced in 1994 to 50 percent because of the misconception that these meals were ``three martini lunches.'' Contrary to this perception, studies show that the primary beneficiary of the business meal deduction is not the wealthy business person. Studies indicate that over two-thirds of the business meal spenders have incomes of less than $60,000 and 37 percent have incomes below $40,000. Low to moderately priced restaurants are the most popular types for business meals, with the average check equaling less than $20. In addition, 50 percent of most business meals occur in small towns and rural areas. In 1995, just one year after the deduction was reduced to 50 percent, the White House Conference on Small Business established the restoration of the deduction as one of its top priorities for boosting small business. In Louisiana alone, it is expected that the positive economic impact of this proposal could exceed $67 million in industries, such as the travel and restaurant industry, that employ over 120,000 people. I urge my colleagues to support this legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BREAUX

Mr. BREAUX. I yield the floor.

Mr. BREAUX. Thank you for the time. I make one point very quickly, and the point is this: Our friends in agriculture in the northern part of the United States have a problem: They have a crop but they have a very poor price that doesn't allow them to continue. They need help. That is why the loan level is being increased--to try to help those. For those of us who represent the southern areas, our problem is the opposite: Because of the drought, we don't have any crop. It is not a question of local price. There is no crop to sell at any price. One of the sections that is in this bill says that the Secretary may use funds made available under this section to make cash payments that don't go for crop disasters but for income loss. Now, as a representative of an area that has a crop disaster, it seems to me I am being written out of any help at all. If that is the case, I would like to know about it. Maybe my friend from North Dakota can respond, and I yield to him.

Mr. BREAUX. I ask unanimous consent that Senator Conrad may complete the response to my question.

Mr. BREAUX

Mr. BREAUX. Mr. President, I will not take a long time. I know the hour is late. But there are still very important issues that I think Congress needs to pay attention to and to address. I know that all of the news in Washington today has been generally about the problems of the President. While I understand that, it is also very important, I think, for all of us to realize that we cannot pretend to be ostriches and stick our heads in the sand, and not face other very serious problems that many of our constituents are facing around this country. I would like to bring to my colleagues' attention the very serious agricultural disasters that exist as we stand here in Washington today throughout a large portion of the agricultural belt in the United States of America. It is a serious problem. We cannot allow the problems of the moment to distract us from very important duties that we have, as legislators, to do everything within our power to try to help solve the problems of America's farmers. It is really interesting, because while the farmers are having problems throughout the United States, there are different reasons for the disasters which I would like to point out. In the northern and many of the western parts of the country--the northwestern part of our United States--the problems in agriculture are very simple--they have very low prices for their products--while in the South, in the Southwest, and in my State of Louisiana, the problem is also very simple to understand: It is not that the crops have low prices but, rather, that they have no crops. They have no crops because of the drought conditions that have caused an economic, agricultural, farming disaster. While the reasons for the problems for the farmers are quite different, the results are the same. Whether you are a farmer in the northern part of the United States who can't get enough money for your crop to justify your cost of production, or whether you are a farmer in my State of Louisiana, which has no crop because of the extreme drought that has ravaged my State, the end result of the farmer and the family farm is the same; it is loss of income; it is loss of the ability to continue as a family farm. What happens to a family farm affects not only that family farm but it affects the community that they live in. When farmers suffer economic loss, the entire State suffers as well. What I want to mention is the severity of the problem in my State, which is not unlike many other States. We just recently had the Louisiana State University Agricultural Economic Department review the losses that my farmers in Louisiana have faced. Their report as of August 14 is truly astounding. The total State reduction in farm income for the following crops is as follows: For the corn crop, it is over $64 million of loss; For cotton, it is over $50 million of loss; For just soybeans, it is over $72 million; For rice, it is over $14 million; For sugar, it is nearly $45 million; For sorghum, it is over $4 million. The total crop loss they are estimating is $254 million. Sweet potatoes, over $8 million; Commercial vegetables, almost $4 million; The pine seedlings for forest reproduction is estimated at $10 million; Pasture, $90 million; Hay, almost $25 million. The current estimated total as of August 14 was over $390 million. When you factor in the problems with some of the diseases that are being experienced--aflatoxin, for instance--you have to look at about $420 million. This is just in one State. So the loss is truly devastating. These are real problems. These family farm problems affect not only the family farmers, as severe as that is, but they affect the economy, the community, and the people who sell the harvesting equipment, the tractors and combines; the people who sell the seed and the fertilizers; the people who sell shoes and clothes and food in town. If the farmers do not earn a living, they cannot buy the other products; the implement dealer and the car dealer, all suffer. It has a ripple effect throughout the United States of America. The problems in the North--as I said, because of low prices, because of cheap imports being dumped from Canada, because of the overall depressed economy in many parts of Asia and Europe, and particularly in the South, in addition to low prices on the crops, we have no crops. So the question is now not the extent of the problem. We know that. The question is now, What do we do? I just think it is interesting. When we have a hurricane, tornado, or earthquake, there is always a rush to provide economic assistance. There is always on the nightly news when someone is visiting a hurricane-ravaged area or area that has been hurt by a tornado, a reaching out to the people. When you have the earthquake, it is the same result. Somehow it seems like it is different with the farmers because I think it is so gradual. If you have an earthquake, it happens, it is over, the people come in, they leave, and they have made an expression of their concern. But when it is an economic disaster over a longer period of time, it is harder to have people focus on the severity of the problem. I think that is what is true in the agricultural disaster that we are now experiencing in my State. But the loss is just as severe, the hurt is just as severe. When you have to sell the family farm and move, and you can't pay your bills, you are hurting just as much as someone who has lost a family home because of a tornado, earthquake, or hurricane, or some other natural disaster. The question now is, What do we do? It is clear, in my opinion, that the current agricultural programs that are designed to address assistance are too bureaucratic. They do not work. They are outdated. They need something else to be helpful. What I mean by that is, for instance, with the loan program, emergency loans, the Government tells a farmer, well, you have to get turned down by three lending institutions in your local area and then you can come to the Government and get some financial assistance in terms of a Federal loan. If you could get the local loan, you would not need the Federal loan. But somehow you have to show that you could not get the local loan, but that if you get the Federal loan you can pay it back. If you could pay back the Federal loan, you could have paid back the local loan and you would not have had any need for help at the Federal level in the first place. Those programs, well intended as they are, are simply too bureaucratic and do not work in providing real assistance to millions of American farmers. What we are working on is to try to present a package, and this should be bipartisan. Republicans did not cause the problem and Democrats did not cause the problem, but the truth is we are going to have to work together to solve the problem. If we do not work together, chances are it is not going to get solved. This is not a political problem; it is a natural disaster problem. So what we are trying to do is provide some assistance. Some have suggested increasing the loan levels, the artificial target prices, removing the caps on those programs to allow for a higher loan rate in order to give more assistance to farmers. That is a good thing to do. But in my area, it does not really help because my farmers don't have a crop to put in the Federal loan program. So in the South where you have no crop, we support what we are trying to do for our northern farmers. It is very important and I think it is the right thing to do. But in the southern portion of the United States where there is no crop at all and they have not been able to benefit from the program, we are suggesting direct financial assistance. It would go to farmers who do not have their losses covered by any other type of program. If someone has crop insurance, well, they may be helped a little bit. And the amount of help they get under the Crop Insurance Program should not allow them to double dip, but crop insurance is not going to cover their entire losses. So that part of their loss which is not covered by some insurance program should be clearly eligible for direct financial assistance. And for many of our farmers, they can't even afford crop insurance and so they have nothing. So their losses should be also covered, obviously, by any type of direct financial assistance to try to help them survive. It is strictly a question of this one-time aid to help them survive until the next year so they can still be around to plant and grow the crops that help feed most, if not all, of America and much of the rest of the world. Some will say, well, Senator, this is going to be expensive. Where is it going to come from? Well, No. 1, because of the good economic conditions, I think because of many of the things we have been able to do in the Congress, fortunately, the economy of the country is good in other areas, and, fortunately, we do not have a Federal deficit which we used to have--we now have a Federal surplus and we have had estimates of $50-, $60-, $75 billion just in this year--why not look at this disaster as an emergency, and if you have a surplus in the Federal budget, let's consider using that surplus to address a real economic disaster which has huge consequences if we do not do something to help out family farms. Some say, well, we should use the surplus for a tax cut. There is certainly room for a tax cut. I think if it is the right type of tax cut and is helpful to the people who need help, we should move in that direction. Should we use it for saving Social Security? Yes. Certainly, that is a higher priority. But should we also use some of it to help save family farms that are facing an economic disaster beyond their control? They had absolutely nothing to do with it. The answer is yes. This is what Government is all about, trying to help those who are in need and creating an economic climate whereby through hard work and industrial spirit they can produce and be profitable. If something happens not related to anything they have done that causes an economic disaster, I think we in Government have an obligation to participate in finding some solution to that problem. That is why, hopefully, in the coming week we will be able to join forces, Republicans and Democrats, and say, look, no one here caused the problem but, by golly, we had better work together in order to solve it; otherwise, we will not have done our duty. I certainly want to participate in that effort and plan to be very actively involved. Just this week we had a very good meeting with the Secretary of Agriculture, Dan Glickman. The Secretary understands the nature of the problem. He understands the severity of it. He also understands that many of the programs we have on the books simply are not enough to address the problems that we are experiencing this year, and he has pledged his cooperation to try to come up with something that can provide the type of direct financial assistance that is certainly needed in my State of Louisiana. I look forward to accomplishing that in the coming weeks. Mr. President, that concludes my remarks. I yield the floor.

Mr. BREAUX

Mr. BREAUX. Mr. President, thank you.

Mr. BREAUX

Mr. BREAUX. Mr. President, I thank the Chair for recognizing me.

Mr. BREAUX

Mr. BREAUX. Mr. President, I wish to make some comments this morning on the issue of the Patients' Bill of Rights which we have had so much discussion and dialogue about in recent months. As we all know in this body, the House of Representatives has actually passed a Patients' Bill of Rights. The fact that one chamber has passed legislation is the encouraging news. That is the good news. The bad news is that the Senate may not do anything about it. I think that would be unfortunate for all Americans who are concerned about making sure that their families, their children, have adequate access to quality health care in this country. The Patients' Bill of Rights, as I said, is now pending in the Senate. The battle now becomes: Do we bring it up? How do we bring it up? What happens to it? Are we going to let election year politics determine the fate of this very important piece of health care legislation? All of this reminds me of something we just went through not too long ago. For 4 or 5 weeks the Senate debated a tobacco bill. Do we all remember that? Do we all remember what happened to it? It never passed. It never passed because both sides were not able to get together and bridge the gap between what I consider to be relatively minor differences between the various pieces of legislation and we started blaming each other for its failure. So now we are arguing about whose fault it is that it failed instead of debating the issue of who should get credit for getting it passed. I think it is incredibly more important politically and for the good of this country to be able to argue about success and argue about who should get the credit for accomplishing something rather than arguing about failure and whose fault it is that nothing got done. I have a feeling that we are moving in that same direction when it comes to the Patients' Bill of Rights. Are we all going to go home and blame each other for failure? Or are we going to be able to go back home and say we got together and got something accomplished? I think the latter course of action is much better. I was disturbed reading the Washington Post yesterday. There was a short article entitled ``Plans to Regulate HMOs Unlikely to Reach a Vote in the Senate.'' That is very disturbing, I think, for all Members who come here in order to pass legislation and do what is appropriate and proper for their constituents. Even with the little time remaining this session, I think there is a way out of this logjam. I think that many of the issues in the various Patients' Bill of Rights are things that we can reach an agreement on if we are serious about getting a bill passed this year. We need to talk about the information that patients should have and the disclosures health plan should make. We can work that out. We need to talk about access to specialists and pediatricians and direct access for women to their ob/gyn. We can work that out. There are differences in those areas but we should be able to find some common ground on them. We need to talk about a prudent layperson standard for patients who seek care in emergency rooms: When a person goes to the emergency room thinking they're having a heart attack and they find out it is not that bad, should the insurance company be allowed to deny payment? We can work that out by discussing a prudent layperson standard that ensures that managed companies have to pay for that treatment. If the patient thought their health was in serious jeopardy, the health insurance plan should, in fact, have to pay for that treatment. We need to talk about an end to gag rules which prohibit doctors from telling their patients all of the treatment options that are available to them. We should put an end to gag rules once and for all. We can work that out. It seems to me that the most controversial obstacle right now is the issue of whether to expand the right of patients to sue their health plan in state court. One side says we don't want to open up the courts to more litigation. Most of our Republican colleagues have taken a position that patients in ERISA plans should not have a right to sue their managed care plans for damages in state court. On the other hand, there are others who say, no, you have to have access to a state court, you have to have the right to litigate if a patient is denied coverage or is otherwise harmed by a decision their plan makes. Principally people on my side of the aisle have taken that position. While there are differences on many provisions in the various Patients' Bill of Rights, the liability issue seems to be the biggest bottleneck that is preventing this bill from even being considered after it already passed the House. That is unfortunate. If we don't break that logjam, we will go home arguing about whose fault it is that nothing was passed. We can argue about whose fault it was tobacco didn't pass. We can argue about whose fault it was the Patients' Bill of Rights didn't pass. We can argue about whose fault it was appropriations bills weren't passed. We will go home arguing about who should be blamed for failure and not getting anything done for the people who sent us here. I suggest that there is a way of bridging the gap with a realistic compromise that gets the job done for people concerned about patients' rights. I think the approach I suggest makes a great deal of sense. There are some managed care plans now, such as Ochsner Health Plan in Louisiana, the largest HMO in the state, that have an external review process for patients who disagree with a plan's decision. There are some plans around the country that do that already for their managed care patients. They have voluntarily established--there is no law that requires it, but they have voluntarily established a procedure where you have an external review if the patient is denied coverage by a health plan. It works very well. But private health plans are not required to have an internal and external appeals process available to their enrollees and most don't. However, when you talk about the right to sue as being the solution, I really question that. Suppose you are a patient and your health plan says we will not pay for a bone marrow transplant, so someone says, all right, you have the right to sue. The patient will be dead and gone and buried before the litigation is completed, in many cases. That right to sue does not help a person who is in an emergency situation and needs a decision right away. For the vast majority of patients, having access to an internal and external appeals process would prevent the need to go to court in the first place. An external appeals process in particular would give patients the right to have their case heard by an independent, outside panel of experts who have no financial or other connection to the health plan. I suggest that a compromise can be found by looking at the appeals process that already exists for Medicare beneficiaries in HMOs. About 6 million of the 38 million people in Medicare are in some form of managed care. There is a procedure already established by Congress for these beneficiaries when they are denied coverage by their HMO. There is a procedure in place that works. It has been called the gold standard of the appeals process. It is not perfect. Sure, there are problems with the system such as monitoring and enforcement. Even with a good appeals system in place, patients have to know that an appeals process is available to them, how it works and how to access it. I've recently asked the GAO to review Medicare's internal and external appeals processes to determine whether it needs to be improved. But the Medicare appeals process that Congress put in place works well for beneficiaries overall. I suggest that in an effort to bring this Patients' Bill of Rights to the floor and get something passed, to resolve the impasse between no right to sue and absolute right to sue, we should look for a middle ground by taking what we have in Medicare and using it as model for private health plans. We can do that very simply. In fact, I have an amendment drafted that, if a bill comes up, I would like to offer what I think could bridge the gap on this issue. Here is generally how the Medicare appeals process works: Health plans have 14 calendar days to make an initial coverage determination for routine matters. If it is an emergency, a real emergency, the Medicare HMO has to make a determination within 72 hours. That is the first step the insurance company must take in this process. If the plan decides to pay for the treatment, that is the end of it, the patient gets the care. But if a patient is denied coverage after this initial decision made by the company, then the beneficiary or his doctor can request an internal review, and it is an internal review by the company. If it is an emergency, they have to reconsider their decision within 72 hours. If it is a nonemergency, they have 30 days to reconsider their original decision. If they reverse their original decision, that is it, no more appeal, the patient is covered. If a patient is still denied coverage after the internal review by the company, then the patient can access an external appeals process. The external appeals process is done by a panel of outside experts, not by the company. These outside experts are people who have no financial interest in the decision and who look at the case and make a decision. If it is an emergency, the external reviewers have to render a decision within 72 hours. If it is a nonemergency, they have 30 days in which to decide. This is an external review--not by the insurance company, not by the carrier, not by anybody who has a financial interest in the outcome of this decision. Outside, independent experts make that decision. If they find in favor of the patient, that is it. There is no further appeal by the health plan. If the external reviewers find against a patient and say, no, the HMO does not have to pay for that treatment, that patient still has step 4, which is an administrative appeal. That is an appeal to an Administrative Law Judge at the Social Security Administration. The Administrative Law Judge then can make a decision based on what they think the plan provides, whether it is covered or whether it is not covered. If the Administrative Law Judge rules against the Medicare beneficiary, the beneficiary can appeal the decision to the Departmental Appeals Board at the Social Security Administration. Then, there is a fifth step in the process if the Administrative Law Judge or Appeals Board finds in favor of the plan and against the beneficiary. If the patient is denied coverage by the Administrative Law Judge, that patient still has the right to judicial review in U.S. district court where he can push his case and plead that the procedure be covered. He can't sue for damages; he can't sue for punitive damages, or compensatory damages, but he can sue for coverage. If it is a bone marrow transplant, he could sue for the cost of that procedure, or an MRI, or whatever the procedure would be. This is what we do for Medicare. This is what Congress has helped establish for the 15 percent of Medicare patients who are now in HMOs. It is already in existence and in statute and it works. A good thing about this, in addition to the fact that it is already there and we know how it works, is that it prevents most of the cases from ever having to go to court in the first place. Either the first, second, or the third level of review solves the problem, and it is done in a timely fashion. Does anybody think they can go to court and get a decision within 72 hours? You could not even file the papers within 72 hours. You would have depositions, hearings, a trial, an appeal, and then it gets kicked back down, and the patient has died, and you are still litigating whether they should be covered or not. That is not necessarily a good procedure. What I am suggesting to those who say, ``Don't allow suits'' and to those who say, ``You have to have suits in this Patients' Bill of Rights,'' is that there is a middle ground that makes sense. I ask all of my colleagues just to consider that we are so close to the end of this session and neither side is going to get everything it wants; it is just not going to happen. If we hold out for everything we want and not try to compromise, we are going to go home and argue about failure because nothing will pass. There is a better way to serve the people and that is, I suggest, to say on this question of what rights to give patients when they are denied coverage, let's take what we already do in the Medicare Program and establish that as the procedure to be used for managed care plans in the private sector. While it needs some fine- tuning, it works; it has a proven track record. It is not perfect, but it certainly is better than what patients have right now because, in most cases, patients do not have the right to any kind of internal or external appeal if coverage is denied. I suggest that this makes a great deal of sense and could help resolve part of this problem. We can bring this bill up to the floor next week, adopt this amendment, and then ultimately send this to the President, who I think would be certainly willing to sign something that may not be 100 percent what he wants, maybe not 100 percent of what anyone wants, but it is 100 percent more than we are going to get if we do nothing. This is a suggestion that I hope our colleagues will seriously consider. Mr. President, I yield the floor and suggest the absence of a quorum.