Orrin Hatch

Mr. HATCH

Mr. HATCH. I compliment my colleague from New Jersey and am very proud of him for having cast those many votes. I ask that my remarks be as in morning business.

Mr. HATCH

Mr. HATCH. Madam President, I rise today to speak on the unfortunate withdrawal of the nomination of Miguel Estrada for the United States Court of Appeals for the District of Columbia Circuit. It is truly a sad record that the Senate, for the first time ever, has terminated a circuit court nomination by filibuster rather than by an up-or-down vote. It is particularly troubling that political tactics were used to destroy this extremely qualified nominee. Let me state that a clear majority of this body supported this nomination, as has been demonstrated in the unprecedented seven cloture votes which have taken place. So it is regrettable that a minority of Senators followed their script of extraordinary obstructionism to prevent the Senate from concluding the debate on this nomination and proceeding to a final vote. It goes against all the honorable traditions of this body for Senators to rest behind a veil of procedural votes rather than taking a public stand on the merits of this outstanding nominee. After all, all he or any of us wanted was an up-or-down vote, something we have always given every nominee who has come to the Senate floor and has been called up on the Senate floor. While it is shameful that Miguel Estrada was subjugated to political whims, it is not entirely surprising. Opponents from the very outset, for their own ideological purposes, have been determined to defeat this nomination. Last fall, a Democratic staffer on the Judiciary Committee was quoted in the Nation magazine as saying: Estrada is 40 and if he makes it to the circuit then he will be Bush's first Supreme Court nominee. He could be on the Supreme Court for 30 years and do a lot of damage. We have to stop him now. So it appears that the real reason for the filibuster against Miguel Estrada was the concern by opponents of a possible Justice Estrada on the U.S. Supreme Court. An editorial appearing in the Atlanta Journal-Constitution said it best: The fear with Owen and Estrada is that one or both will be nominated to the United States Supreme Court should a vacancy occur. Senate Democrats are determined to keep off the circuit court bench any perceived conservative who has the credentials to serve on the United States Supreme Court. There is an additional factor not based on any substantive objection to his nomination. I believe some Senate Democrats do not want the current President, a Republican President, to appoint the first Hispanic as the U.S. Circuit Court Judge for the District of Columbia Circuit. Let me read from an editorial published by the Dallas Morning News addressing this point. On February 17, 2003, the News wrote: Democrats haven't liked Mr. Estrada from the beginning. Part of that is due to his ideology--which is decidedly not Democratic. But part of it also has to do with the fellow who nominated him. Democrats don't relish giving President Bush one more thing to brag about when he goes into Hispanic neighborhoods when he goes into his reelection campaign next year. They are even less interested in putting a conservative Republican in line to become the first Hispanic Justice on the Supreme Court. In an effort to prevent Mr. Estrada's confirmation, his opponents resorted to a number of troubling tactics. During his hearing there were frequent attempts to inject political ideology into the judicial nomination process. This was most evident as related to questions about his views on Roe v. Wade, the apparent litmus test for many Senate Democrats. In response to this concern, he offered cases he had taken on as an attorney to illustrate his commitment to following the law instead of imposing any political agenda. He also testified under oath that he would follow Roe and Casey if he were confirmed. But even his outstanding record and testimony before the committee was apparently not enough to satisfy those determined to destroy his nomination. Opponents repeatedly raised red herring issues with two additional demands. One was that Mr. Estrada answer their questions, though the record is clear that his responses were complete. Mr. Estrada spent hours during a day-long hearing answering my Democratic colleagues' questions. He answered written questions submitted after the hearing, although only two, only two committee Democrats bothered to ask him written questions. He gave answers to questions that were substantially similar to answers given by Clinton nominees who were confirmed. Yet my Democratic colleagues continue to complain that he had not answered their questions. Really, their complaint is that in answering their questions, Mr. Estrada did not say anything that gave them a reason to vote against him. Simply put, they were not really interested in his answers to their questions. They were interested only in defeating his nomination. This is why every effort to make Mr. Estrada available to answer additional questions has gone virtually unacknowledged. Only one Democratic Senator met with Mr. Estrada and only one submitted written questions to Mr. Estrada after the floor debate on his nomination began. Their second demand was the unreasonable request that the administration release confidential internal memoranda he authored at the Solicitor General's office. This issue has been fully debated. The short response is that never before has a Presidential administration released confidential appeal, certiorari and amicus recommendations on the scale that my Democratic colleagues sought from Mr. Estrada. They attempted a full-scale fishing expedition, pure and simple, and the Justice Department was right to oppose it. Furthermore, this demand constituted a double standard for Miguel Estrada. The Judiciary Committee confirmed numerous Clinton circuit court nominees who, like Miguel Estrada, had no prior judicial experience. A number of these nominees had worked in the Justice Department or other branches of the Federal Government, but Senate Democrats made no demands for their confidential memoranda or privileged work product. Yet Senate Democrats persisted in this demand, knowing full well that for sound reasons the administration, with the support of all seven living former Solicitors General, both Democrat and Republican--four of them were Democrats--would not and could not accede to that request. When all other tactics failed, opponents turned to their ultimate weapon, the filibuster. Filibusters of judicial nominees allow a vocal majority to prevent the majority of Senators from voting on the confirmation of a Federal judge, a prospective member of our third, coequal branch of Government. It is tyranny of the minority and it is unfair to the nominee, to the judiciary, and to the majority of the Members of this body, and to the President. The unprecedented filibuster of Mr. Estrada was certainly unfair to a majority of Senators who stood ready to fulfill their constitutional responsibility by voting on Mr. Estrada's nomination. It has been more than 2 years since Miguel Estrada was nominated by President Bush, on May 9, 2001, and nearly a year since his hearing before the committee. In all of that time, my Democratic colleagues had unlimited opportunities to make their case. Some of them opposed him. Others supported him. But one thing remained clear through this whole debate: There was no good reason to deny Mr. Estrada an up-or-down vote, the dignity of an up-or-down vote. On the merits, Mr. Estrada was extremely qualified to serve on the court to which he was nominated. The qualifications of Miguel Estrada are well known to the Senate. He represents an American success story. After immigrating to the United States, after overcoming a language barrier and speech impediment, he graduated magna cum laud and Phi Beta Kappa in 1983 from Columbia College. At Harvard Law School he was an editor of the Harvard Law Review and graduated magna cum laude in 1986. Mr. Estrada's professional career has been marked by one success after another. After graduation, he clerked for Second Circuit Judge Amalya Kearse, a Carter appointee and then Supreme Court Justice Anthony Kennedy. He worked as an associate in the distinguished firm of Wachtell Lipton in New York. He then worked as a Federal prosecutor in Manhattan, rising to become deputy chief of the appellate division. In recognition of his appellate skills, he was hired by the Solicitor General's office during the first Bush administration. He stayed with the Solicitor General's office for most of the Clinton administration. When he left the Solicitor General's office, he joined the DC office of Gibson, Dunn & Crutcher, one of the great law firms in this country, where he continued to excel as a partner and rose to the top of the ranks of oral advocates nationwide, having argued 15 cases before the U.S. Supreme Court. The legal bar's wide regard for Mr. Estrada is reflected in his evaluation by the American Bar Association. The ABA evaluates judicial nominees based on their professional qualifications, their integrity, their professional competence, and their judicial temperament. Based on an assessment of all of those factors, the ABA bestowed upon Mr. Estrada its highest rating of ``unanimously well qualified.'' Yet despite the superb record of Miguel Estrada, opponents chose to deny him a simple up-or-down vote, injecting politics into the judicial confirmation process. Opponents have not only treated Miguel Estrada unfairly; they have further damaged this process. One casualty is enough. I hope all Senators will consider the dangerous ramifications of the actions of the Senate in causing Miguel Estrada to withdraw his nomination through the use of the filibuster. This should never happen again. Just one other thing on this. He was asked to comply when he couldn't do it, with a fishing expedition into the Solicitor General's most privileged documents, documents that have never been given in toto as requested by the Democrats, never before. Four Democrat former Solicitors General said they would never give these documents. Those Democrat former Solicitors General and three others said they opposed the release of these documents. If this was a legitimate request, why didn't they ask for similar documents in the case of John Roberts? In other words, Miguel Estrada was treated completely different from other people. Why didn't Senate Democrats ask for these documents in the case of others through the years who worked in the Solicitor General's office? It was just a red herring that some in the media bought off on, to prevent this man from ever having the dignity of an up-or-down vote on the Senate floor. The reason they prevented that is because they knew he would have won and he would have won a bipartisan vote in the Senate. Frankly, filibusters should never occur again. Yet more judicial nominees face continuing filibusters on the Senate floor. We will soon once again put to the test the respect the Members of our body have for our constitutional duty to advise and consent on judicial nominations. We will continue to file for cloture to end debate and to give Priscilla Owen, Bill Pryor, and other judicial nominees that the left is intent on blocking the up-or-down votes they deserve. These are outstanding nominees. Priscilla Owen broke through the glass ceiling, becoming one of the great partners of a major law firm in this country, and broke through the glass ceiling for women, yet she is being treated like dirt on the Senate floor. Also, Bill Pryor, who has more than shown his propensity to always follow the law, even though the law may differ from his own personal, deeply held beliefs. There are, no doubt, factions of far left interest groups that are delighted to see Miguel Estrada has withdrawn his nomination. These same groups no doubt will declare victory and mount even more vigorous campaigns in an effort to ensure that other judicial nominees suffer the same fate. From what I understand, some of my colleagues in the Senate share those sentiments. But let me tell you right now, this is no occasion for celebration. We should be embarrassed that Miguel Estrada, having had enough of serving as a political football instead of as a Federal judge, decided to end his nomination. And we should be embarrassed of the continued attempts to usurp the nomination function from the President and the consent function from the Senate majority. We should not stand back and allow a minority of Senators to prevent an up-or-down vote on any judicial nominee and especially those once they have come to the floor. We should not inflict upon Priscilla Owen, Bill Pryor, or any others the same shabby treatment that led Miguel Estrada to withdraw his nomination. These all deserve better. And nominees in the future deserve better. The majority of the Senate that stands ready to confirm the ones I have mentioned deserve better. Most importantly, the American people expect their Senators to hold up-or-down votes on judicial nominees and deserve the opportunity to hold their Senators accountable for the votes they cast on the President's judicial nominees. I have been around here a long time. Both sides have committed errors with regard to judicial nominees over the years. But nothing has ever reached the dimensions of what has been done to Miguel Estrada. Nothing has even come close. He has been treated in an especially onerous way that no other nominee I know of in the history of the Senate has been treated. He has been singled out primarily because he was viewed as being on the fast track to the Supreme Court, and because he is a conservative Republican Hispanic who might be pro-life and who is on the fast track to the Supreme Court. I don't think anybody who is honest can refute that statement. I think it is pitiful what has happened. I just hope we wake up in this body and start treating people with fairness which the advise and consent clause of the Constitution demands. I hope that works on both sides. There were those who wanted to filibuster on our side during the Clinton years. We stopped it. We were not going to set that precedent, nor were we going to do that type of activity. Frankly, everyone who came to the floor had a vote, and only one, if I recall correctly, was defeated by an up-and-down vote. But at least he had a vote. And Miguel Estrada deserved that just as much as any of the past nominees.

Mr. HATCH. Yes, I yield for a question.

Mr. HATCH. They both did, and both were nominated at the same time, over 2 years ago.

Mr. HATCH. Absolutely right. They were not requested. There was a different standard used with regard to Mr. Estrada--a very unfair standard knowing that the Solicitor General's Office could not allow a fishing expedition into those documents.

Mr. HATCH. That is correct. Four of the seven former Solicitors General who are living today are Democrats, and all seven of them came out and said that these documents should not be given to the Senators of the United States because of their sensitivity and their privileged nature.

Mr. HATCH. It is true that he was confirmed unanimously.

Mr. HATCH. The Senator is correct.

Mr. HATCH. If my friend from Kentucky has concluded.

Mr. HATCH. The illustration should not be limited to just John Roberts and Miguel Estrada. There are a number of people who are on the Federal bench and who have served on the Federal bench who also served in the Solicitor's Office who were never asked those questions, and rightly so. They should never have been asked. It was a red herring that many of my colleagues hid behind to justify this outrageous and, I think, shabby treatment of Miguel Estrada. I yield to my friend for a question.

Mr. HATCH. I yield the floor.

Mr. HATCH

Mr. HATCH. Madam President, I rise today to express my unqualified support for the nomination of Steven Colloton to the Eighth Circuit Court of Appeals and to urge my colleagues to confirm this fine nominee. Mr. Colloton has excellent academic and professional qualifications for the Federal bench. A graduate of the prestigious Yale Law School, Mr. Colloton clerked for two distinguished judges, D.C. Circuit Judge Laurence H. Silberman and U.S. Supreme Court Justice William H. Rehnquist. Mr. Colloton then worked as an attorney with the White House's Office of Legal Counsel at the Department of Justice for a year and then, eager to return to his Midwestern roots, accepted a position as an assistant U.S. attorney in the Northern District of Iowa. Mr. Colloton has impressive courtroom experience. He has argued 18 cases in the Federal courts of appeals, and has briefed several other cases. He has tried approximately 13 criminal cases to verdict. In addition, as an assistant U.S. attorney, Mr. Colloton was in the courtroom regularly to argue motions or evidentiary matters. He oversees an office which includes 25 attorneys. Twenty-seven past presidents of the Iowa State Bar have written of Mr. Colloton, ``[W]e submit that the exceptional quality of Mr. Colloton's experience, together with its relevance to this position, uniquely qualifies him to represent Iowa on the United States Court of Appeals.'' I could not agree more. Mr. Colloton has demonstrated his capacity to excel on the Federal court bench. He possesses the qualifications, the capacity, and the temperament a judge needs to serve on the Eighth Circuit. I thank the Chair. I yield the floor.

Mr. HATCH

Mr. HATCH. Mr. President, I rise today to introduce the Religious Workers' Act of 2003. It provides permanent authority for 5,000 visas per year for non-minister religious workers. These religious workers fulfill a need in the religious communities around this nation. I would like to thank Senators Kennedy and Chambliss for cosponsoring this bill. The provision relating to the ``non-minister'' religious workers was enacted through the Immigration Act of 1990. Prior to 1990, churches, synagogues, mosques, and their affiliated organizations experienced significant difficulties in trying to gain admission for a much needed minister or other persons necessary to provide religious services to the communities. Through the 1990 Act, Congress recognized that religious institutions deserved to be on equal footing as the business and educational institutions in terms of having their human resources needs addressed. I would like to quote from a letter written by the last Mother Theresa to Senator Abraham shortly before her passing, asking for continuation of this visa category when it was about to sunset in 1997. Mother Theresa said: It means so much to our poor people, to have Sisters who understand them and their culture. It takes a long time for a Sister to understand the people and a culture, so now our Society wants to keep our Sisters in their mission countries on a more long-term basis. Please help us and our poor by extending this law. The simple plea of this great humanitarian speak volumes regarding why this law is needed. In addition, I recently received a letter from Bishop Thomas Wenski, Chairman of the U.S. Conference of Catholic Bishops' Committee on Migration. Bishop Wenski tells me that the religious workers covered by this act would provide humanitarian services to the most needy, such as shelter and nutrition. They would care for and minister to the sick, aged, and dying in hospitals. They counsel adolescents and others suffering hardship, and support families in crisis. Bishop Wenski further advises that there is a ``rapid decrease in the number of Americans turning to religious vocations. . . . In these times of uncertainty, it is more important than ever that faith based organizations be able to serve the communities through the essential services provided by religious workers.'' The extension would allow religious organizations to continue their important programs and would provide a measure of stability that religious organizations need to set long term objectives. It is very important that faith-based organizations be able to serve the community through the essential services provided by religious workers. I ask for the support of my colleagues for the Religious Workers' Act of 2003. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. HATCH

Mr. HATCH. Mr. President, I rise today to introduce the Religious Workers' Act of 2003. It provides permanent authority for 5,000 visas per year for non-minister religious workers. These religious workers fulfill a need in the religious communities around this nation. I would like to thank Senators Kennedy and Chambliss for cosponsoring this bill. The provision relating to the ``non-minister'' religious workers was enacted through the Immigration Act of 1990. Prior to 1990, churches, synagogues, mosques, and their affiliated organizations experienced significant difficulties in trying to gain admission for a much needed minister or other persons necessary to provide religious services to the communities. Through the 1990 Act, Congress recognized that religious institutions deserved to be on equal footing as the business and educational institutions in terms of having their human resources needs addressed. I would like to quote from a letter written by the last Mother Theresa to Senator Abraham shortly before her passing, asking for continuation of this visa category when it was about to sunset in 1997. Mother Theresa said: It means so much to our poor people, to have Sisters who understand them and their culture. It takes a long time for a Sister to understand the people and a culture, so now our Society wants to keep our Sisters in their mission countries on a more long-term basis. Please help us and our poor by extending this law. The simple plea of this great humanitarian speak volumes regarding why this law is needed. In addition, I recently received a letter from Bishop Thomas Wenski, Chairman of the U.S. Conference of Catholic Bishops' Committee on Migration. Bishop Wenski tells me that the religious workers covered by this act would provide humanitarian services to the most needy, such as shelter and nutrition. They would care for and minister to the sick, aged, and dying in hospitals. They counsel adolescents and others suffering hardship, and support families in crisis. Bishop Wenski further advises that there is a ``rapid decrease in the number of Americans turning to religious vocations. . . . In these times of uncertainty, it is more important than ever that faith based organizations be able to serve the communities through the essential services provided by religious workers.'' The extension would allow religious organizations to continue their important programs and would provide a measure of stability that religious organizations need to set long term objectives. It is very important that faith-based organizations be able to serve the community through the essential services provided by religious workers. I ask for the support of my colleagues for the Religious Workers' Act of 2003. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. HATCH

Mr. HATCH. Mr. President, along with my good friends and colleagues, Senators Breaux, Smith, Lott, and Snowe, I rise today to introduce the Real Estate Investment Trust Improvement Act of 2003. This legislation would update the tax rules governing real estate investment trusts, commonly referred to as REITs, by making a number of minor but important changes to remove uncertainties in the law and improve their investment climate. Identical legislation has been introduced in the House of Representatives. REITs are publicly traded real estate companies that pass through their earnings to individual shareholders. Congress originally created REITs in 1960 to enable small investors to make investments in large- scale, income producing real estate. By doing so, Congress made commercial real estate more accessible, more liquid, more transparent, and more attuned to investor interests. REITs have evolved to own properties across the country, including office buildings, apartments, shopping centers, and warehouses. As a result, these entities play a key role in helping our economy move forward by promoting investment and creating jobs. The Internal Revenue Code includes detailed rules governing the operations of REITs, the types of income they can earn, and the assets they hold. Congress last amended these provisions in 1999. The REIT Improvement Act is the product of almost two years of discussions with the staffs of the Treasury Department and the Joint Committee on Taxation on how to find solutions to several thorny problem areas where the rules are in need of clarification or modification. The REIT Improvement Act includes three titles: Title I--REIT Corrections; Title II--FIRPTA Corrections; and Title III--REIT Savings. Title I includes several corrections to the REIT tax rules to remove some uncertainties and provide corrections largely arising from enactment of the REIT Modernization Act in 1999. Although these provisions have very little effect on revenue to the Treasury, they are of considerable importance to REITs because they remove uncertainties that interfere with the efficient operation of their businesses. Because publicly-held REITs have to report quarterly to the Securities and Exchange Commission that they are in compliance with the specialized income and asset tests applicable to REITs, the uncertain application of these tax rules creates greater difficulties in REIT business operators than unclear tax rules generally do for other corporations. The most important, time-sensitive provision in this title deals with what is called the ``straight debt'' rule. This rule, which was adopted in the REIT Modernization Act of 1999, prohibits REITs from owning more than 10 percent of the value of any other entity's securities. Although this rule was intended to prevent REITs from owning more than 10 percent of the equity of another corporation, as drafted the rules potentially apply to many situations when individuals and businesses owe some sort of debt, ``security'' defined broadly, to a REIT. There are many situations in which REITs make non-abusive, ordinary loans in the course of business for which they could face loss of REIT status because the loans do not qualify as ``straight debt.'' The most common context for this situation is in the REIT's relationship with its tenants. For example, the REIT might lend the tenant money for leasehold improvements. In some circumstances such a loan could represent more than 10 percent of the tenant's total debt obligations. In such a case, although the amount owed could be small, it could lead to REIT disqualification. The bill we are introducing today would exempt from the 10 percent rule certain categories of loans that are non-abusive and present little or no opportunity for the REIT to participate in the profits of the issuer's business. This includes any loan from a REIT to an individual or to a government, and any debt arising from a real property rent arrangement. Other provisions in this title clarify the related party rent rules that limit the amount of space a taxable subsidiary may lease from its parent REIT, update the hedging definitions in the REIT rules, remove a safe harbor protection for a taxable subsidiary providing customary services to a REIT's tenants, and restore a formula for imposing a tax on REITs that fail to meet the 95 percent gross income test. Finally, the bill would modify a safe harbor to the prohibited transaction rule that imposes a 100 percent tax on the income REITs earn from sales of ``dealer property.'' Currently, the safe harbor is limited to sales of property held for the production of rental income that meet a series of tests. The change proposed in this title would extend the safe harbor to other REIT property, not just that held for the production of rental income. Title II of the bill would modify the Foreign Investment in Real Property Tax Act (``FIRPTA'') to remove barriers to foreign investment in REITs. Today, there is very little foreign investment in REITs. We understand that U.S. money managers routinely receive assignments to place foreign investment capital in the United States under which they have complete discretion to invest in any U.S. stocks except REITs. The reason they are expressly told to avoid REITs is that under FIRPTA, foreign investors that receive REIT capital gains distributions are treated as doing business in the United States. Title II would modify the FIRPTA rules so that a publicly traded REIT's payment of capital gains dividends to a foreign portfolio investor would no longer cause the REIT investor to be considered doing business in the United States. The effect of this would be to threat investments in REITs like investment in other corporations, and the provision would parallel current law governing a portfolio investor's sale of REIT stock. Title III of our bill, REIT Savings, would modify a number so-called ``death trap'' provisions in the REIT tax rules that result in the disqualification of the REIT if various rules are not met. The loss of REIT status would be a catastrophic occurrence that the management of a REIT tries to avoid at all costs, so much so that they expend significant resources to put in place compliance measures to avoid such a result. A better, simpler alternative would be to build in some flexibility to the REIT tax rules and impose monetary penalties, in lieu of REIT disqualification, for the failure to meet these strict rules that lead to REIT disqualification. For example, under current law, a REIT is disqualified if more than 5 percent of its assets are comprised of the securities of any entity, or if it owns more than 10 percent of the voting power or value of any entity. In lieu of disqualification of the REIT status for violations of these rules, our bill would first give REITs an opportunity to comply with the asset tests with respect to any violation that does not exceed 1 percent of their total assets. Assets in excess of the 1 percent de minimis amount would be subject to a tax of the greater of $50,000 or the highest corporate tax rate multiplied by the net income from the assets if the violation was justified by reasonable cause. Under current law, a REIT is disqualified if it does not meet certain other tests relating to its organizational structure, the distribution of its income, its annual elections to the IRS, the transferability of its shares, and other requirements. In lieu of this disqualification, Title III would change the law, assess a monetary penalty of $50,000 for each reasonable cause failure to satisfy these rules. This is a much more reasonable solution. These changes are similar to ``intermediate sanctions'' legislation that Congress approved a few years ago dealing with nonprofit organizations. That legislation imposed monetary penalties on nonprofit organizations for violation of certain tax rules in lieu of a devastating loss of the organizations' tax-exempt status. Those changes, like the ones we are proposing today, recognize that it is far more likely that an entity will be sanctioned under a penalty regime than under draconian rules that entirely disqualify the organization. The REIT Improvement Act would provide reasonable and much needed reforms to the rules governing a key component of our economy. We urge our colleagues to join with us in sponsoring this legislation and supporting its inclusion in tax legislation heading for passage this year.

Mr. HATCH

Mr. HATCH. Mr. President, along with my good friends and colleagues, Senators Breaux, Smith, Lott, and Snowe, I rise today to introduce the Real Estate Investment Trust Improvement Act of 2003. This legislation would update the tax rules governing real estate investment trusts, commonly referred to as REITs, by making a number of minor but important changes to remove uncertainties in the law and improve their investment climate. Identical legislation has been introduced in the House of Representatives. REITs are publicly traded real estate companies that pass through their earnings to individual shareholders. Congress originally created REITs in 1960 to enable small investors to make investments in large- scale, income producing real estate. By doing so, Congress made commercial real estate more accessible, more liquid, more transparent, and more attuned to investor interests. REITs have evolved to own properties across the country, including office buildings, apartments, shopping centers, and warehouses. As a result, these entities play a key role in helping our economy move forward by promoting investment and creating jobs. The Internal Revenue Code includes detailed rules governing the operations of REITs, the types of income they can earn, and the assets they hold. Congress last amended these provisions in 1999. The REIT Improvement Act is the product of almost two years of discussions with the staffs of the Treasury Department and the Joint Committee on Taxation on how to find solutions to several thorny problem areas where the rules are in need of clarification or modification. The REIT Improvement Act includes three titles: Title I--REIT Corrections; Title II--FIRPTA Corrections; and Title III--REIT Savings. Title I includes several corrections to the REIT tax rules to remove some uncertainties and provide corrections largely arising from enactment of the REIT Modernization Act in 1999. Although these provisions have very little effect on revenue to the Treasury, they are of considerable importance to REITs because they remove uncertainties that interfere with the efficient operation of their businesses. Because publicly-held REITs have to report quarterly to the Securities and Exchange Commission that they are in compliance with the specialized income and asset tests applicable to REITs, the uncertain application of these tax rules creates greater difficulties in REIT business operators than unclear tax rules generally do for other corporations. The most important, time-sensitive provision in this title deals with what is called the ``straight debt'' rule. This rule, which was adopted in the REIT Modernization Act of 1999, prohibits REITs from owning more than 10 percent of the value of any other entity's securities. Although this rule was intended to prevent REITs from owning more than 10 percent of the equity of another corporation, as drafted the rules potentially apply to many situations when individuals and businesses owe some sort of debt, ``security'' defined broadly, to a REIT. There are many situations in which REITs make non-abusive, ordinary loans in the course of business for which they could face loss of REIT status because the loans do not qualify as ``straight debt.'' The most common context for this situation is in the REIT's relationship with its tenants. For example, the REIT might lend the tenant money for leasehold improvements. In some circumstances such a loan could represent more than 10 percent of the tenant's total debt obligations. In such a case, although the amount owed could be small, it could lead to REIT disqualification. The bill we are introducing today would exempt from the 10 percent rule certain categories of loans that are non-abusive and present little or no opportunity for the REIT to participate in the profits of the issuer's business. This includes any loan from a REIT to an individual or to a government, and any debt arising from a real property rent arrangement. Other provisions in this title clarify the related party rent rules that limit the amount of space a taxable subsidiary may lease from its parent REIT, update the hedging definitions in the REIT rules, remove a safe harbor protection for a taxable subsidiary providing customary services to a REIT's tenants, and restore a formula for imposing a tax on REITs that fail to meet the 95 percent gross income test. Finally, the bill would modify a safe harbor to the prohibited transaction rule that imposes a 100 percent tax on the income REITs earn from sales of ``dealer property.'' Currently, the safe harbor is limited to sales of property held for the production of rental income that meet a series of tests. The change proposed in this title would extend the safe harbor to other REIT property, not just that held for the production of rental income. Title II of the bill would modify the Foreign Investment in Real Property Tax Act (``FIRPTA'') to remove barriers to foreign investment in REITs. Today, there is very little foreign investment in REITs. We understand that U.S. money managers routinely receive assignments to place foreign investment capital in the United States under which they have complete discretion to invest in any U.S. stocks except REITs. The reason they are expressly told to avoid REITs is that under FIRPTA, foreign investors that receive REIT capital gains distributions are treated as doing business in the United States. Title II would modify the FIRPTA rules so that a publicly traded REIT's payment of capital gains dividends to a foreign portfolio investor would no longer cause the REIT investor to be considered doing business in the United States. The effect of this would be to threat investments in REITs like investment in other corporations, and the provision would parallel current law governing a portfolio investor's sale of REIT stock. Title III of our bill, REIT Savings, would modify a number so-called ``death trap'' provisions in the REIT tax rules that result in the disqualification of the REIT if various rules are not met. The loss of REIT status would be a catastrophic occurrence that the management of a REIT tries to avoid at all costs, so much so that they expend significant resources to put in place compliance measures to avoid such a result. A better, simpler alternative would be to build in some flexibility to the REIT tax rules and impose monetary penalties, in lieu of REIT disqualification, for the failure to meet these strict rules that lead to REIT disqualification. For example, under current law, a REIT is disqualified if more than 5 percent of its assets are comprised of the securities of any entity, or if it owns more than 10 percent of the voting power or value of any entity. In lieu of disqualification of the REIT status for violations of these rules, our bill would first give REITs an opportunity to comply with the asset tests with respect to any violation that does not exceed 1 percent of their total assets. Assets in excess of the 1 percent de minimis amount would be subject to a tax of the greater of $50,000 or the highest corporate tax rate multiplied by the net income from the assets if the violation was justified by reasonable cause. Under current law, a REIT is disqualified if it does not meet certain other tests relating to its organizational structure, the distribution of its income, its annual elections to the IRS, the transferability of its shares, and other requirements. In lieu of this disqualification, Title III would change the law, assess a monetary penalty of $50,000 for each reasonable cause failure to satisfy these rules. This is a much more reasonable solution. These changes are similar to ``intermediate sanctions'' legislation that Congress approved a few years ago dealing with nonprofit organizations. That legislation imposed monetary penalties on nonprofit organizations for violation of certain tax rules in lieu of a devastating loss of the organizations' tax-exempt status. Those changes, like the ones we are proposing today, recognize that it is far more likely that an entity will be sanctioned under a penalty regime than under draconian rules that entirely disqualify the organization. The REIT Improvement Act would provide reasonable and much needed reforms to the rules governing a key component of our economy. We urge our colleagues to join with us in sponsoring this legislation and supporting its inclusion in tax legislation heading for passage this year.

Mr. HATCH

Mr. HATCH. Mr. President, as I understand it, the Presiding Officer would like to deliver his remarks. I ask unanimous consent that he be permitted to speak and then I be permitted to speak.

Mr. HATCH. I asked that the Senator from Texas, who is now presiding, be able to speak and then that I may speak immediately thereafter.

Mr. HATCH. Not very long.

Mr. HATCH. Mr. President, I ask unanimous consent that the remaining time of the distinguished Senator from Alabama, Mr. Sessions, be yielded back.

Mr. HATCH. I ask unanimous consent that immediately following my remarks on these two speeches, that Senator Max Baucus from Montana be permitted to speak.

Mr. HATCH. Mr. President, I rise today to speak in support of legislation implementing the free-trade agreements that have been negotiated between the United States and Chile, S. 1416, and between the United States and Singapore, S. 1417. I appreciated the remarks of my colleague who is the chairman of the Immigration Subcommittee of the Senate Judiciary Committee. I have great admiration for him, and I believe he has given an appropriate warning to the Trade Representative and the administration with regard to some of the criticisms that have been lodged against these agreements. Let me begin by commending the Bush administration for negotiating these agreements with Chile and Singapore. Both Chile and Singapore are countries that represent economic stability and growth in their respective region of the world. These trade agreements will provide new market access for American workers and products including agricultural, manufactured products, telecommunications equipment and other high- technology products. Let me also commend Senators Grassley and Baucus for bringing these agreements through the Finance Committee in the same bipartisan fashion that has characterized all of the recent congressional actions with respect to international trade. I am pleased to work with them on trade matters in the Finance Committee. As chairman of the Judiciary Committee, I note that both of these agreements contain chapters on matters of great importance to our Committee. These include: intellectual property; antitrust; e-commerce; telecommunications; and, last and certainly not least, immigration. In many ways, the substance of the negotiations on matters that fall within the jurisdiction of the Judiciary Committee focused on ways to encourage our trading partners to harmonize their law with current U.S. standards. We should take pride in this dynamic. Let me turn first to S. 1416, the United States-Chile Free Trade Agreement. Despite its status as a relatively new democracy, Chile is regarded by many to be a model for the successful implementation of market-oriented economic reform measures since its first democratic elections in 1989. Although we have seen a slight trade deficit emerge in our trade with Chile over the past few years, I believe a free trade agreement between our countries is likely to stimulate growth in both economies. The United States-Chile FTA will provide new market opportunities for United States workers and businesses. American companies currently operate at a competitive disadvantage in terms of trade with Chile, because many key foreign competitors, such as Canada, Mexico and the European Union already have executed free trade agreements with Chile. In fact, the National Association of Manufacturers estimates that without an FTA with Chile, U.S. exporters lose roughly $800 million per year in sales, which affects approximately 10,000 American jobs. With the adoption of the Chilean agreement, America would see an immediate elimination of tariffs on more than 85 percent of consumer and industrial goods. This will help eliminate the current trade deficit and will provide for increased export opportunities for U.S. companies. Some estimates place the potential annual economic benefits of the United States--Chilean Free Trade Agreement at an impressive $4.2 billion annual increase in the U.S. gross domestic product and a $700 million increase in the Chilean GDP. The Chilean FTA will provide numerous economic opportunities for my State of Utah, which is important to me. Currently, Utahns export approximately $657 million worth of consumer goods to Chile every year. The major sectors of Utah's economy that will benefit most from a Chile FTA are manufacturers of computer machinery and components, high-tech computer software developers, manufacturers of medical devices, and dietary supplement companies. Tariff-free trade with Chile will also result in expanded markets for America's farmers and ranchers, with more than 75 percent of U.S. farm goods becoming tariff-free within 4 years after enactment of the agreement. The agreement would also provide greater access for U.S.- based financial service companies to operate in the Chilean financial markets. This will result in new growth opportunities for U.S. banks, insurance companies, securities firms, and telecommunications companies. Before entering into trade negotiations with the United States, Chile was required to adopt all provisions required for membership in the World Trade Organization. This includes the Trade-Related Aspects of Intellectual Property Rights Provisions, the so-called ``TRIPS'' provisions. The TRIPS provisions protect U.S. patent, copyright, and trademark owners. The United States-Chile Free Trade Agreement is a very important step in building stronger political and economic ties, not only with Chile, but with all of South America. As I see it, Chile is a strategic ally in South America. Chile provides a strong economic and political base in a region of the world that is currently experiencing extreme economic hardships. The adoption of the Chile FTA is an important first step toward the expansion of hemispheric wide-open trade relations throughout North and South America through the proposed Free Trade Agreement of the Americas. The United States-Singapore Free Trade Agreement, S. 1417, would have a similar effect on trade and economic liberalization in Southeast Asia. Like Chile, Singapore is a leader in its region for free trade- oriented reforms. It is very important to note that the United States- Singapore Free Trade Agreement is the first free trade agreement that the United States will have negotiated with an Asian nation. Singapore is a relatively small nation geographically. It encompasses only 246 square miles and has a population of only four million people. Its economy is robust and highly competitive. It is one of the most open, well-regulated and secure markets for investment in Asia. Approximately 1,300 American firms have a significant presence in Singapore and all indications are that the establishment of an FTA with Singapore will provide additional opportunities for American industries through increased market access. An FTA with Singapore also provides an opportunity for expansion in Utah's economy. Singapore currently receives almost 6 percent of Utah's international exports, amounting to more than $263 million. The top exports to Singapore from Utah include electronic machinery, plastics, perfumery, cosmetics, and telecommunications services and equipment. The United States-Singapore Free Trade Agreement provides for reciprocal levels of market access, eventually eliminating the few remaining tariffs on American goods and services, and eliminating or reducing all non-tariff barriers to American exports. The Singapore FTA also requires observation of the TRIPS provisions. The agreement with Singapore will provide opportunities for economic expansion and encourage free trade throughout Southeast Asia. This agreement merits the support of the Senate. The Senate will soon have a chance to vote for, or against, both of these important free trade agreements. Last year a broad bipartisan group of 66 Senators voted for trade promotion authority. One of the chief reasons for adopting fast track procedures is to prevent trade treaties from death by amendment and procedural delays. Although no amendments are in order under the fast track rules, all Members of the Senate retain their ultimate authority to accept or reject any treaties or implementing legislation that the Administration proposes. Because the Trade Act of 2002 calls for up or down votes without opportunity for amendment, it is important that Congress be fully consulted. This should occur at each step of the process. I know that this inability to amend the implementing language of these agreements has concerned many members of the Judiciary Committee. From the perspective of the Judiciary Committee, I can tell my colleagues that the most controversial provisions of these trade agreements are those addressing the temporary entry of professional workers and intra-company transfers. Many members of the Judiciary Committee, Republicans and Democrats alike, have expressed their dismay over the immigration provisions. Many Senators have unequivocally stated their objections to the manner in which the temporary entry provisions were transmitted to Congress. I share many of their concerns. The administration must consult with Congress, and specifically with the Judiciary Committee, on all matters within our committee's jurisdiction. At our mark-up on this implementing language, many members of the Committee made it plain that individual trade agreements are not the best forums for raising matters of general immigration law and policy. I trust that USTR will heed this message in the future. To be fair to USTR, I understand that there were six briefings at the staff level prior to the transmission of the final implementing language. In addition, USTR briefed the committee staff on the proposed implementing language before it was finalized. There were also numerous additional informal consultations among committee staff on both sides of the aisle, and between committee staff and USTR and other administration officials over the last few weeks. Most, although not all, members of the Judiciary Committee sent representatives to these meetings. Finally, the Judiciary Committee held a hearing on July 14 to allow the members of the committee to question USTR's principal negotiators on the draft implementing language for thee two agreements. USTR worked to address the concerns expressed by Judiciary Committee members. Three main issues surfaced: first, time limits on the professional workers' visas; second, numerical limits on such professional workers; and, third protection of American workers. I want to discuss how these matters were resolved in the legislation. With respect to the concern that there is a lack of a time limit for the professional workers' category, I note that contrary to how some may read the implementing language, the legislation does not allow indefinite stays. While it is true that the professional visa provision in the trade bills does not set a time limit, it does have to be renewed every year and is subject to section 214(b) of the Immigration and Nationality Act. This means that at each renewal, the applicant must show that the stay in the US is temporary and that there is not immigrant intent. In that sense, the safeguard against someone circumventing the permanent residence requirements is arguably greater than the safeguard contained in the traditional H1-B visa, which is expressly exempted from section 214(b). Withe respect to the numerical cap, I would emphasize that the allocations for Chile and Singapore come under the overall cap for current H1-B visas. Therefore, there is no net increase of foreign workers because of these agreements. Moreover, the annual limits for Chile and Singapore, set at 1,400 and 5,400 respectively, are statutory ceilings. Our Government does not have to allocate the full amount every year. Some of my colleagues are concerned about the fact that these agreements do not allow labor certification. First of all, I want to clarify that currently there are no labor certification requirements in our immigration laws for any visa category comparable to the ones described in the trade agreements. However, for the temporary professional workers, there is a requirement for certain employers to complete labor condition attestations. Before hiring a foreign worker, the employer must attest, among other things, that prevailing wages will be paid and the foreign workers will not be used as leverage in any labor dispute. In fact, if there is a strike or lock-out, foreign workers are not even permitted to come into the United States. The implementing language also provides appropriate penalties for errors and fraud in the attestations. Contrary to the suggestions made by some of my colleagues, the implementing language does indeed authtorize the Department of Labor to initiate random investigations of anyone who has failed to meet a condition of the attestation. The implementing language does expressly prohibit displacing American workers through lay-offs within 90 days of the filing of a visa application. As for labor certification or numerical limitations on business visitors, traders and investors, or intra-company transferees, we must understand that these visas, if used properly, are not intended to threaten American jobs at all. In fact, business visitors are not even permitted to receive a salary in the U.S. and may only remain for a few months just like tourists. I appreciate the reality that some unscrupulous American employers have used the visa categories I just described to commit immigration and labor fraud. The visas have become ways for some to hire cheap foreign labor, and that has unfairly hurt American workers. I am sensitive to the difficulties faced by out-of-work Americans and their families. However, we need to understand that the existence of temporary worker visas in our laws is not the problem. The problem is the misuse of these visas by those who do not respect our laws. We should not tolerate fraud and abuse of our immigration and labor laws. We should take appropriate actions to curb fraud and abuse in this area. I understand that the Labor Department already has the authority to investigate visa fraud of this nature if a complaint is filed. But, if conferring more investigative authority upon the Labor Department is the key to solving the problem, then Congress should examine that option notwithstanding the lack of any labor certification. I was informed by USTR that the implementing language excluded some language in the current H1-B scheme because those provisions are due to sunset at the end of this fiscal year, but if those provisions are extended, they certainly may be applied to these treaty visas. I would also like my colleagues to keep in mind that these agreements are reciprocal. Every gesture of courtesy extended to Chilean and Singaporean citizens is extended to American citizens. The same is true for all restrictions. A good illustration is the provision calling for disputes to be resolved in a so-called ``international review panel.'' The panel does not bind the U.S. government, and does not interpret U.S. law. It is a forum, however, where American businesses can address their grievances before an impartial reviewer. As Assistant USTR Ralph Ives testified before the Judiciary Committee the July 14 hearing, these review panels do not take the place of U.S. courts, and do not even review individual cases. Instead, they review allegations of patterns or practices by either party of the trade agreements. Finally, some have raised a very good question about whether the Trade Act of 2002 confers authority to include matters of immigration in trade agreements. As early as the Commerce and Navigation Treaty with Great Britain of 1815, immigration provisions have been included in trade agreements that allowed for the entry of foreign nationals to conduct trade. Moreover, section 2102 of the Trade Act of 2002 calls for the President to reduce barriers to trade in services. Implicit in that authority is the mandate to provide access for U.S. businesses, including small to mid-size businesses, to foreign markets. It is clear to me that the language we consider today has benefited from the interaction between Congress and the executive branch. Despite these improvements, some friction remains on the matter of taking up matters affecting general immigration policy as part of the negotiations on particular trade agreements. Anyone present at either the Senate Judiciary Committee or House Judiciary Committee mark-up of the immigration implementing legislation for the Chile and Singapore FTAs got the message: Tread lightly and consult heavily. Before I close, I want to reiterate that I have faith in the American worker. I have no doubt that with the right training, our workers can compete with the best in the world. I also believe that competition is good for America. We have no reason to fear foreign competition in the global economy so long as we are all playing by the same rules and on a level playing field. I introduced The American Competitiveness in the Twenty-First Century Act that authorizes funds collected from H1-B visa application fees to be invested in training American workers in the fields where we have traditionally relied on foreign workers. I ask my colleagues to join me in efforts and prepare American workers to fill the needs of our job market, especially in the fields of math, science, and high technology. It is my hope that, in due time, we will no longer rely on foreign workers to help fill our needs in any sector of the job market. In a global marketplace, American workers and firms must be given the opportunity to conduct business abroad. Indeed, we live in a world economy where free trade is vital to our economy. As I see it, the flexibility to send essential personnel from the United States to another country in order to provide much-needed, service-oriented support is an essential part of international commerce. Consequently, within the parameters of sound immigration policy, the United States must reciprocate the courtesy that we expect our trading partners to extend to American citizens working and trading abroad. I support these two implementing bills. the FTAs with Chile and Singapore are good treaties. On balance, this legislation, despite some of the sensitivities in the area of immigration, will help bring the benefits of these trade treaties to the American public. I think that a review of the record shows that after extensive discussion with both the Senate staff and the House staff, the administration satisfactorily addressed the vast majority of the concerns expressed by Republican and Democratic members of the Judiciary Committee. When all is said and done, these are good trade agreements. One of the lessons I hope the administration has learned is that including immigration-related provisions in individual trade agreements that raise General matters of immigration policy is a very, very sensitive issue to us up here. In the future, I expect the administration will avoid negotiating immigration matters in trade agreements unless the Congress is broadly supportive of the provisions. If there are compelling circumstances to negotiate such agreements, I expect extensive consultation between the administration and Congress at both the Member level and staff level so that all of our concerns can be adequately addressed. The issue of immigration aside, I believe there is a wide consensus that, overall, we have two good trade treaties and two good implementing bills. I urge every Member to vote in favor of the United States-Chile and United States-Singapore Free Trade Agreement implementing language.

Mr. HATCH

Mr. HATCH. Then I object under those circumstances.

Mr. HATCH. Madam President, reserving the right to object--and I will object--let me make clear that when the issue of religion is raised, as it has been in the Pryor matter, and we think improperly so, and it seems to be continuously raised in some of these issues before the Judiciary Committee with various nominees--there are questions or statements like this: One Senator accused Attorney General Pryor of----

Mr. HATCH. --``asserting an agenda of religious belief of your own.'' As long as those types of questions are going to be asked, I am going to have to object.