Richard Lugar

Mr. LUGAR

Mr. LUGAR. Mr. President, I would like to announce that the Senate Committee on Agriculture Nutrition, and Forestry will hold a business meeting on Wednesday, January 22, 1997 at 9:30 a.m. in SR-328A. The purpose of the meeting will be to approve subcommittee assignments, committee rules, and committee budget.

Mr. LUGAR

Mr. LUGAR. Mr. President, I am pleased to introduce three bills aimed at eliminating the burden that estate and gift taxes place on our economy. My first bill would repeal the estate and gift taxes outright. My second bill would phase out the estate tax over 5 years by gradually raising the unified credit each year until the tax is repealed after the fifth year. My third bill would immediately raise the effective unified credit from $600,000 to $5 million in an effort to address the disproportionate burden that the estate tax places on farmers and small businesses. I believe the best option is a simple repeal of the estate tax. I am hopeful that during this Congress, as Members become more aware of the effects of this tax, we can eliminate it from the Tax Code. However, even if the estate tax is not repealed, the unified credit must be raised. The credit has not been increased since 1987 when it was established at the $600,000 level. Since then, inflation has caused a growing percentage of estates to be subjected to the estate tax. My second bill is intended to highlight this point and provide a gradual path to repeal. Finally, my third bill focuses on relieving the estate tax burden that falls disproportionately on farmers and small business owners. By raising the exemption amount from $600,000 to $5 million, 96 percent of estates with farm assets and 90 percent of estates with noncorporate business assets would not have to pay estate taxes, according to the IRS. The estate tax began as a temporary tax in 1916, limited to 10 percent of one's inheritance. The tax intended to prevent the accumulation of wealth in the hands of a few families. Today, however, the effect is often the opposite. The estate tax forces many family- owned farms and small businesses to sell to larger corporations, further concentrating the wealth. The estate tax has mushroomed into an exorbitant tax on death that discourages savings, economic growth and job formation by blocking the accumulation of entrepreneurial capital and by breaking up family businesses and farms. With the highest marginal rate at 55 percent, more than half of an estate can go directly to the government. By the time the inheritance tax is levied on families, their assets have already been taxed at least once. This form of double taxation violates perceptions of fairness in our tax system. In addition to tax liabilities, families often must pay lawyers, accountants and planners to untangle one of the most complicated areas of our tax code. In 1996, a Gallup poll estimated that a small family- owned business spent an average of $33,138 for lawyers and accountants to settle estates with the IRS. Larger family-owned businesses averaged $70,000. Families averaged 167 hours complying with the Byzantine rules of the estate tax, and the IRS estimates that they must audit nearly 40 percent of estate tax returns--a much higher rate than the 1.7 percent audit rate on incomes taxes. Let us consider the consequences of the estate tax on the American economy. The estate tax is counterproductive because it falls so heavily on our most dynamic job creators--small businesses. About two out of every three new jobs in this country are created by small business. From 1989 to 1991, a period of unusually slow economic growth, virtually all new net jobs were created by firms with fewer than twenty employees. Recent economic studies and surveys of small business owners support the thesis that the estate tax discourages economic growth. A 1994 study by the Tax Foundation concluded that the estate tax may have roughly the same effect on entrepreneurial incentives as would a doubling of income tax rates. A 1996 report prepared by Price Waterhouse found that even more family business owners were concerned about estate taxes than about capital gains taxes. A Gallup poll found that one-third of family-owned businesses expect to sell their family's firm to pay estate tax liability. Sixty-eight percent said the estate tax makes them less likely to make investments in their business, and 60 percent said that without an estate tax, they would have expanded their workforce. If we are sincere about boosting economic growth, we must consider what effect the estate tax has on a business owner deciding whether to invest in new capital goods or hire a new employee. We must consider its affect on a farmer deciding whether to buy new land, additional livestock or a new tractor. If you know that when you die your children will probably have to sell the business you build up over your lifetime, does that make you more likely to take the risk of starting a new business or enlarging your present business? It is apparent that the estate tax does discourage business and farm investments. One might expect that for all the economic disincentives caused by the estate tax, it must at least provide a sizable contribution to the U.S. Treasury. But in reality, the estate tax only accounts for about 1 percent of federal taxes. It cannot be justified as an indispensable revenue raiser. Given the blow delivered to job formation and economic growth, the estate tax may even cost the Treasury money. Our nation's ability to create new jobs, new opportunities and wealth is damaged as a result of our insistence on collecting a tax that earns less than 1 percent of our revenue. But this tax affects more than just the national economy. It affects how we as a nation think about community, family and work. Small businesses and farms represent much more than assets. They represent years of toil and entrepreneurial risk taking. They also represent the hopes that families have for their children. Part of the American Dream has always been to build up a business, farm or ranch so that economic opportunities and a way of life can be passed on to one's children and grandchildren. I have some personal experience in this area. My father died when I was in my early thirties, leaving his 604-acre farm in Marion County, Indiana, to his family. I managed the farm, which built up considerable debts during my father's illness at the end of his life. Fortunately, after a number of years, we were successful in working out the financial problems and repaying the money. We were lucky. That farm is profitable and still in the family. But many of today's farmers and small business owners are not so fortunate. Only about 30 percent of businesses are transferred from parent to child, and only about 12 percent of businesses make it to a grandchild. The strongest negative effects of the estate tax are felt by the American family farmer. Currently, proprietorships and partnerships make up about 95 percent of farms and ranches. In the vast majority of cases, family farms do not produce luxurious lifestyles for their owners. Farmers have large assets but relatively little income. The income of a family-run farm depends on modest returns from sizable amounts of invested capital. Much of what the farmer makes after taxes in reinvested into the farm, bolstering the estate-tax-derived ``paper value'' even more. As happens so often, family farms cannot maintain the cash assets necessary to pay estate taxes upon the death of the owner. Frequently, selling part of a farm is not an option, either because there is no suitable buyer or because reducing acreage would make the operation inviable. In these cases, a fire-sale of the family farm or business is required to pay the estate tax. Devastating to any business, such a forced sale hits farm families particularly hard because they frequently must sell at a price far below the invested value. Entire lifetimes of work are liquidated, and the skills of family members experienced in agriculture are lost to the American economy. Mr. President, I introduce today a set of bills to repeal the estate tax in an effort to expand investment incentives and job creation and to reinvigorate an important part of the American Dream. I am hopeful that Senators will join me in the effort to free small businesses, family farms and our economy from this counterproductive tax.

Mr. LUGAR

Mr. LUGAR. Mr. President, I introduce the ``United States Voluntary and Material Assistance Act of l996.'' This bill establishes a program for the voluntary transfer of nonlethal equipment and goods donated by the private sector and made available as surplus personal property by Federal agencies. The recipients of these donations are eligible foreign countries who make legitimate requests through the program. My bill combines the surpluses generated from our wealth, the innate generosity of the American people, our entrepreneurial dynamism, and our humanitarianism into a cost-effective program of public-private assistance to serve our foreign policy and commercial interests. The bill I am introducing today would look to both Federal agencies and the private sector for donations of usable goods and equipment for shipment abroad. The disposition of surplus personal property from the Federal Government is managed and regulated under the Federal Property and Administrative Services Act of l949, and amendments thereto. The system of priorities that now exists for disposing surplus Federal property would not be altered by this new program. My bill would simply add foreign recipients to the list of eligible domestic recipients. It would place foreign countries at the end of the current pecking order of eligibility behind domestic claimants for receiving surplus Federal property. U.S. private organizations and individuals presently donate surplus property to virtually any recipient they want. Many prefer to donate their goods to domestic groups or to private voluntary organizations. However some wish to ship their donated goods to foreign recipients. Nothing in my proposed bill would mandate any change in the manner private sector organizations now donate their surplus properties. In fact, private organizations wishing to donate charitable goods abroad now find the process difficult, time consuming, and expensive. This bill would make it easier, faster, and less costly to do so. Mr. President, this legislation will bring benefits to many participants. It will provide us with another tool to conduct American foreign policy. It will benefit private enterprises such as businesses, farms, associations, schools, and others who make charitable donations to the program. It will strengthen private voluntary groups and non- governmental organizations who receive and transfer donated items, and it will bring help to recipient countries and requesting organizations in those countries. The bill is, I believe, a winner for all parties involved. If enacted, this bill would add another cost-effective tool for carrying out U.S. foreign policy. It will help fill some of the gap created by the steady reductions in our official foreign assistance program. My bill would provide donated equipment and goods at much lower costs than official foreign assistance, thereby further reducing the burden on American taxpayers. Because the goods are donated and not procured, because the shipping costs can be negotiated downward through competitive bidding, because the program requires very little management and bureaucratic infrastructure, and because it will rely heavily on volunteers and nongovernmental organizations, the cost of providing foreign assistance will be significantly reduced. Mr. President, some small-scale model programs now providing donated humanitarian goods abroad claim they provide more than ten dollars' worth of items for every one dollar invested. In cases where transportation costs are low and the value of the donated goods are high, there can be a better than 100 to 1 ratio in the value of donations supplied to the cost of the program. In addition to the cost effectiveness, this program inspires and reinforces the generosity and volunteer spirit of the American people. It encourages extensive grassroots involvement to make the program a success. There are numerous private groups and individuals already lending voluntary assistance overseas. Many are supported by the Federal Government, others operate on their own funds or with funds privately raised. A modestly funded program providing humanitarian assistance to the Newly Independent States of the former Soviet Union, for example, involves charitable contributions and shipments of donated goods from more than 700 cities in all 50 States and from virtually every congressional district. Thousands of American citizens willing to give of their time, talents, and resources make this program work. The program I am proposing will involve less bureaucracy, less redtape, less funding, and more voluntarism. Because of this, spare equipment and disposable goods can be provided more quickly and at lower costs than traditional official foreign assistance. Participation in international assistance efforts by the private sector is generally limited to collecting and making donations or preparing goods for shipment. My bill seeks to expand and strengthen their participation by creating a viable second track for assistance alongside the government-to-government track. While overall responsibility for management of the program will reside with a program coordinator in the Department of State, several provisions in my bill strengthen and encourage the role of the private sector. The coordinator is authorized to enlist the services of private organizations and voluntary organizations to collaborate in all phases of the program. Finally, the bill enhances the role of private organizations and voluntary groups by authorizing their involvement in identifying and verifying requests from abroad, receiving donations, and distributing and monitoring items once they are delivered. Donations of excess goods to eligible countries can bring many tangible and nontangible benefits to American business. Many American firms already donate large quantities of usable medical, agricultural, educational, pharmaceutical, and other equipment and consumables to foreign countries. This is testimony to the generosity and pragmatism of American business. The practicality of donating surplus goods is extensive. Apart from the positive public relations that voluntary donations can bring, the disposal of surplus goods can reap other concrete advantages for American business. Donations of goods can help open valuable storage space and reduce related costs for both the Federal Government and private donors who wish to upgrade, restructure, or reinventory their stocks of equipment and products. It can generate financial benefits to private businesses by reducing tax liabilities derived from charitable donations not fully depreciated. American businesses can also enjoy market advantages by making donations to countries where they have little or no market presence. This can be a considerable advantage for companies wishing to establish an international market presence, to learn about foreign markets, establish or expand business networks, or generate interest in their products. Acts of good will can have a self-serving motive. Let me spell out some of the major features of this bill. First, my bill would establish a program coordinator in the Department of State who would be responsible for the overall management of the program. The coordinator will be more than a recycler of surplus property. He will have the responsibility for responding to legitimate requests from abroad by developing a system for identifying, receiving, and shipping donations. He will be charged with overseeing the receipt, classification, storage, shipment, and use of donated properties to the program. Finally, he will be charged with ensuring quality control of the donations and surplus properties so that the program does not become a repository for unwanted goods. He would be charged with assisting private voluntary organizations and nongovernmental organizations in the implementation of the program. My bill will permit only non-lethal property donations or surplus items under the program. No item designed for military, religious, or political use will be allowed. The program will not generate needs but would attempt to satisfy those requests which have been authenticated through our overseas missions, Peace Corps, or private voluntary organizations. The search for usable items in the United States will take place only after the coordinator has received a legitimate request from abroad and entered it into the program. Once identified, a donation must be certified as acceptable for their intended use. This program must not and will not be an outlet for damaged goods which only add to the cost of the program and undermine its objectives. In addition to quality assurances, the bill requires that the coordinator develop a policy to ensure that the donations and Federal surpluses be used, operated, and maintained by the recipient in a manner that was intended when requested and transferred. Only those countries now eligible for U.S. foreign assistance can participate. Additional requirements to enhance the integrity of the program are built into the program. The transferred items cannot be resold for profit by or in the recipient country and no transfer will be permitted to countries which impose special import duties on the donated properties. The bill suggests that the President and the coordinator test the efficacy of the program in pilot programs in sub-Saharan Africa. While there are needs around the world, the needs of sub-Saharan Africa countries are most serious and extensive. It is my hope that a significant effort can be devoted to this underdeveloped region of the world. Finally, the bill authorizes a modest appropriations for fiscal years l997 and l998 of $20 and $25 million respectively. These funds will be used to establish the program, and pay for personnel, related infrastructure, and transportation costs involved in shipping donations abroad. I hope the United States Voluntary and Material Assistance Act of l996 will draw the support of the U.S. Senate and the Congress.

Mr. LUGAR

Mr. LUGAR. Mr. President. I rise to introduce the Department of Agriculture Responsibility and Accountability Act of 1996. This bill establishes an Information Technology System Control Board to manage the U.S. Department of Agriculture's [USDA] technology planning and procurement processes. The Board will give the Department a strong centralized decision-making body to eliminate the duplication and inefficiencies associated with the independent agency-based approach that has plagued the Department for years, delivered poor service, and squandered hundreds of millions of taxpayer dollars. The Office of Management and Budget estimates the Department of Agriculture will spend $1.4 billion on information technology and automated data processing equipment in fiscal year 1997. The Information Technology System Control Board will oversee all information technology spending at the Department. The Board, consisting of the Secretary and two appointees, will assume control of information technology planning and acquisition until the year 2002, guiding the creation of a technical architecture to take the Department into the 21st century. Finally, the Board will determine how best to accomplish the missions of the various agencies and the Department before purchasing information technology systems. The General Accounting Office, the Department of Agriculture's Office of Inspector General, and independent contractor reviews since 1989 have identified ongoing problems with USDA's administration of information resource management programs, including the multiagency program called Info Share and computer and telecommunication purchases. Since the USDA Reorganization Act was enacted in 1994, USDA management has continued their historic trend of purchasing telecommunication and information systems that: fail to link information technology budgeting and purchases to strategic business needs; fail to integrate information management strategies with financial and programmatic information and reporting requirements; fail to define information technology requirements through business process reengineering; fail to achieve departmentwide efficiencies by standardizing administrative functions; and, fail to address the cultural changes necessary to migrate from a piecemeal approach to a standardized, collaborative delivery system in field service centers. The Department continues to acquire hardware, software, and other equipment that does not match user needs, provides inefficient delivery of services to USDA customers, and creates unnecessary duplication. Many duplicated product and service acquisitions could have been avoided by departmentwide consolidation and sharing. Procurement activities do not allow the Farm Services Agency, Natural Resources Conservation Service and Rural Development to exchange information electronically in the agency headquarter and field offices. The Department lacks leadership to direct the changes necessary to establish a working field service center infrastructure. In April 1993, USDA established the Info Share program to reframe the business activities of individual agencies into a consolidated strategy to meet the goals outlined for one-stop-shopping field service centers. In August 1993, the General Services Administration delegated procurement authority for USDA to spend up to $2.6 billion on Info Share. Besides the General Accounting Office, the Office of Management and Budget, and the USDA Office of the Inspector General, the National Institute of Standards and Technology criticized USDA's approach to purchasing computer equipment, hardware, and software before defining the future mission objectives of its agencies in a May 1994 report. The report stated that Federal agencies should first determine how best to accomplish their mission and then acquire technology solutions to meet their needs. Info Share was to be the cure-all for USDA's management and acquisition control problems. The USDA Office of Inspector General sharply criticized the Info Share Program in a May 1995 report. The inspector general reported that USDA agencies were proceeding with their own information technology projects for information sharing between agencies with an apparent lack of funding and acquisition controls. The Office of Management and Budget complained to the Office of Budget and Program Analysis [OBPA] about inaccurate acquisition cost reporting and the need for a formal approval process for information technology purchases. Despite heavy pressures for Info Share to succeed, by December 1995 Info Share had failed. The failure was due to an evident lack of upper management leadership, inadequate planning, failure to obtain consensus on program objectives, and poor program management. USDA's leadership, despite commitments made by Secretary Glickman, again failed to focus on the necessary development of departmentwide computer and information standards and a comprehensive analysis of emerging business requirements. The Info Share Program has now been replaced by a decentralized agency-led initiative under the National Food and Agriculture Council. As a result, individual agencies are again independently deciding what is best for their individual needs, abandoning the departmentwide effort necessary to consolidate administrative and information technology systems. According to an August 1994 GAO Report, ``USDA Restructuring--Refocus Info Share Program on Business Processes Rather Than Technology'', USDA is not performing key business process reengineering [BPR] steps necessary for a successful reorganization of the Department. BPR is a management technique used fundamentally to rethink and redesign business processes to achieve dramatic changes in overall performance. It is also used to change how employees think and work to improve customer satisfaction. The success of the field service center initiative depends on cross-training field office employees to operate as educated contacts for all USDA programs. The lack of training is making it difficult for field office employees who remain after downsizing efforts to provide quality service to their customers. USDA's focus on improving computer automation prior to concentrating on the skills of its work force has hamstrung program delivery. During farm bill deliberations, it was determined that reforms were needed to rein in the uncontrolled and obscured use of CCC funds for information technology. Commodity Credit Corporation [CCC] borrowing authority has been historically abused within the Department. Transfers and expenditures of CCC funds have too often been obscured from congressional oversight and at times have been of questionable legality. As a result, the FAIR Act established spending caps on the use of CCC funds for purchases or services for automated data processing or information technology, and for all reimbursable agreements--contracts--funded by the CCC. Finally, the CCC was required to report to Congress on a quarterly basis all expenditures of over $10,000 for these expenditures. This new level of transparency was designed to increase accountability by forcing USDA managers to fully examine information technology purchases and link purchase plans with work force needs. Despite repeated calls for leadership, USDA does not have the necessary management to link the Department's ability to define its work force to its information technology purchases. The Department has yet to determine how to provide quality services with a reduced work force and changing mission requirements. In addition, USDA is still using its Info Share initiative, now guided by the National Food and Agriculture Committee, as a vehicle to acquire new information technology, rather than develop a method to improve the way USDA does business and prepare the Department for the challenges of the 21st century. On May 31, 1996, House Agriculture Committee Chairman Pat Roberts and I wrote to the Secretary stating that the USDA should not make additional investments in information technology products that are exclusive to one agency unless USDA can show that the investments will provide technology that will be shared among agencies. We also shared our concern that funds were being spent without adequate consideration of USDA's future business requirements. The Department responded with a less than adequate catalog of ongoing initiatives designed for individual agency program use rather than a departmentwide information technology architecture. Despite efforts by USDA to meet the goal of information sharing as mandated by the USDA Reorganization Act of 1994 and Info Share, the Farm Services Agency, Rural Development, and Natural Resources Conservation Service field offices remain unable to operate in a common computing environment. This has resulted in the delivery of poor services to its customers. If USDA is ever to successfully share information, the Department must prevent agencies from planning and building their own individual networks. For example, last year the Farm Services Agency [FSA] spent $36 million in Commodity Credit Corporation [CCC] funds to purchase new minicomputers for FSA field offices during the debate of the Federal Agriculture Improvement and Reform Act of 1996. The FAIR Act resulted in a 7-year phaseout of farm subsidy programs, significantly reducing work force requirements and workload of the Farm Service Agency. Less than a year later, FSA is proposing another upgrade that does not meet the requirements necessary for information sharing with other field office agency computer systems. Why did FSA spend $36 million on a new system if the agency knew it would be outdated only 9 months later? USDA estimates the upgrade alternative will result in acquisition costs of $125.8 million for FSA alone. Estimates of costs to be incurred by the Natural Resources Conservation Service and Rural Development to acquire similar equipment have not been made. This ill-conceived approach will result in an investment of $11,604 per computer in FSA offices that may not have employees to run those computers after work force downsizing occurs. This is yet another example of poor planning and waste of taxpayer dollars resulting from a lack of direction. Despite repeated reviews by the General Accounting Office and the USDA Office of the Inspector General, and considerable concern of Congress, the Director of the Office of Information Resource Management has not determined how to address the information sharing needs of the Department. Therefore, USDA risks wasting millions by building new networks that are redundant, do not address future business needs, and do not provide the information sharing capabilities necessary among agencies. The creation of the Information Technology System Control Board will put the Department back on track and save millions of taxpayer dollars. My bill also makes necessary changes to the buyout authority granted to USDA in the 1997 Agriculture Appropriation Conference Report. The buyout authority gives the Department the authority to offer $25,000 bonuses to retirement-age employees, and those eligible for early retirement. This golden handshake approach to Department downsizing pays off employees who are already preparing to retire. In addition, it comes at the expense of conservation programs. The Senate Agriculture Committee recently learned that the Department may transfer an estimated $43 million from unobligated Conservation Reserve Program funds to pay for buyouts for 1,341 Farm Services Agency employees. The bill mandates that buyouts can only be paid from appropriations made available for salaries and expenses and prohibits the use of mandatory funds, including Commodity Credit Corporation funds, for buyout plans. In addition, the bill limits the Department's buyout authority to 1 year. These changes are important to monitor the Department's work force downsizing efforts by compelling USDA to properly plan for future work force reductions. I cannot overstate my concern that the Department has failed to adequately assess the impact that the FAIR Act will have on the people who use the services of the Department and on the Department's work force requirements. Department management lacks strong central leadership in planning for information technology for the 21st century, continues to acquire equipment, hardware, software, and computers that do not match user needs, continues to provide inefficient delivery of services to USDA customers, and continues to allow unnecessary duplication. Since I am introducing my bill at the end of this session, obviously it cannot become law before the 105th Congress convenes next year. However, I intend to pursue this important issue in the next Congress, and I will reintroduce this bill. I ask my colleagues to support this important endeavor and I ask unanimous consent that the text of the summary and the bill be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President. I rise to introduce the Department of Agriculture Responsibility and Accountability Act of 1996. This bill establishes an Information Technology System Control Board to manage the U.S. Department of Agriculture's [USDA] technology planning and procurement processes. The Board will give the Department a strong centralized decision-making body to eliminate the duplication and inefficiencies associated with the independent agency-based approach that has plagued the Department for years, delivered poor service, and squandered hundreds of millions of taxpayer dollars. The Office of Management and Budget estimates the Department of Agriculture will spend $1.4 billion on information technology and automated data processing equipment in fiscal year 1997. The Information Technology System Control Board will oversee all information technology spending at the Department. The Board, consisting of the Secretary and two appointees, will assume control of information technology planning and acquisition until the year 2002, guiding the creation of a technical architecture to take the Department into the 21st century. Finally, the Board will determine how best to accomplish the missions of the various agencies and the Department before purchasing information technology systems. The General Accounting Office, the Department of Agriculture's Office of Inspector General, and independent contractor reviews since 1989 have identified ongoing problems with USDA's administration of information resource management programs, including the multiagency program called Info Share and computer and telecommunication purchases. Since the USDA Reorganization Act was enacted in 1994, USDA management has continued their historic trend of purchasing telecommunication and information systems that: fail to link information technology budgeting and purchases to strategic business needs; fail to integrate information management strategies with financial and programmatic information and reporting requirements; fail to define information technology requirements through business process reengineering; fail to achieve departmentwide efficiencies by standardizing administrative functions; and, fail to address the cultural changes necessary to migrate from a piecemeal approach to a standardized, collaborative delivery system in field service centers. The Department continues to acquire hardware, software, and other equipment that does not match user needs, provides inefficient delivery of services to USDA customers, and creates unnecessary duplication. Many duplicated product and service acquisitions could have been avoided by departmentwide consolidation and sharing. Procurement activities do not allow the Farm Services Agency, Natural Resources Conservation Service and Rural Development to exchange information electronically in the agency headquarter and field offices. The Department lacks leadership to direct the changes necessary to establish a working field service center infrastructure. In April 1993, USDA established the Info Share program to reframe the business activities of individual agencies into a consolidated strategy to meet the goals outlined for one-stop-shopping field service centers. In August 1993, the General Services Administration delegated procurement authority for USDA to spend up to $2.6 billion on Info Share. Besides the General Accounting Office, the Office of Management and Budget, and the USDA Office of the Inspector General, the National Institute of Standards and Technology criticized USDA's approach to purchasing computer equipment, hardware, and software before defining the future mission objectives of its agencies in a May 1994 report. The report stated that Federal agencies should first determine how best to accomplish their mission and then acquire technology solutions to meet their needs. Info Share was to be the cure-all for USDA's management and acquisition control problems. The USDA Office of Inspector General sharply criticized the Info Share Program in a May 1995 report. The inspector general reported that USDA agencies were proceeding with their own information technology projects for information sharing between agencies with an apparent lack of funding and acquisition controls. The Office of Management and Budget complained to the Office of Budget and Program Analysis [OBPA] about inaccurate acquisition cost reporting and the need for a formal approval process for information technology purchases. Despite heavy pressures for Info Share to succeed, by December 1995 Info Share had failed. The failure was due to an evident lack of upper management leadership, inadequate planning, failure to obtain consensus on program objectives, and poor program management. USDA's leadership, despite commitments made by Secretary Glickman, again failed to focus on the necessary development of departmentwide computer and information standards and a comprehensive analysis of emerging business requirements. The Info Share Program has now been replaced by a decentralized agency-led initiative under the National Food and Agriculture Council. As a result, individual agencies are again independently deciding what is best for their individual needs, abandoning the departmentwide effort necessary to consolidate administrative and information technology systems. According to an August 1994 GAO Report, ``USDA Restructuring--Refocus Info Share Program on Business Processes Rather Than Technology'', USDA is not performing key business process reengineering [BPR] steps necessary for a successful reorganization of the Department. BPR is a management technique used fundamentally to rethink and redesign business processes to achieve dramatic changes in overall performance. It is also used to change how employees think and work to improve customer satisfaction. The success of the field service center initiative depends on cross-training field office employees to operate as educated contacts for all USDA programs. The lack of training is making it difficult for field office employees who remain after downsizing efforts to provide quality service to their customers. USDA's focus on improving computer automation prior to concentrating on the skills of its work force has hamstrung program delivery. During farm bill deliberations, it was determined that reforms were needed to rein in the uncontrolled and obscured use of CCC funds for information technology. Commodity Credit Corporation [CCC] borrowing authority has been historically abused within the Department. Transfers and expenditures of CCC funds have too often been obscured from congressional oversight and at times have been of questionable legality. As a result, the FAIR Act established spending caps on the use of CCC funds for purchases or services for automated data processing or information technology, and for all reimbursable agreements--contracts--funded by the CCC. Finally, the CCC was required to report to Congress on a quarterly basis all expenditures of over $10,000 for these expenditures. This new level of transparency was designed to increase accountability by forcing USDA managers to fully examine information technology purchases and link purchase plans with work force needs. Despite repeated calls for leadership, USDA does not have the necessary management to link the Department's ability to define its work force to its information technology purchases. The Department has yet to determine how to provide quality services with a reduced work force and changing mission requirements. In addition, USDA is still using its Info Share initiative, now guided by the National Food and Agriculture Committee, as a vehicle to acquire new information technology, rather than develop a method to improve the way USDA does business and prepare the Department for the challenges of the 21st century. On May 31, 1996, House Agriculture Committee Chairman Pat Roberts and I wrote to the Secretary stating that the USDA should not make additional investments in information technology products that are exclusive to one agency unless USDA can show that the investments will provide technology that will be shared among agencies. We also shared our concern that funds were being spent without adequate consideration of USDA's future business requirements. The Department responded with a less than adequate catalog of ongoing initiatives designed for individual agency program use rather than a departmentwide information technology architecture. Despite efforts by USDA to meet the goal of information sharing as mandated by the USDA Reorganization Act of 1994 and Info Share, the Farm Services Agency, Rural Development, and Natural Resources Conservation Service field offices remain unable to operate in a common computing environment. This has resulted in the delivery of poor services to its customers. If USDA is ever to successfully share information, the Department must prevent agencies from planning and building their own individual networks. For example, last year the Farm Services Agency [FSA] spent $36 million in Commodity Credit Corporation [CCC] funds to purchase new minicomputers for FSA field offices during the debate of the Federal Agriculture Improvement and Reform Act of 1996. The FAIR Act resulted in a 7-year phaseout of farm subsidy programs, significantly reducing work force requirements and workload of the Farm Service Agency. Less than a year later, FSA is proposing another upgrade that does not meet the requirements necessary for information sharing with other field office agency computer systems. Why did FSA spend $36 million on a new system if the agency knew it would be outdated only 9 months later? USDA estimates the upgrade alternative will result in acquisition costs of $125.8 million for FSA alone. Estimates of costs to be incurred by the Natural Resources Conservation Service and Rural Development to acquire similar equipment have not been made. This ill-conceived approach will result in an investment of $11,604 per computer in FSA offices that may not have employees to run those computers after work force downsizing occurs. This is yet another example of poor planning and waste of taxpayer dollars resulting from a lack of direction. Despite repeated reviews by the General Accounting Office and the USDA Office of the Inspector General, and considerable concern of Congress, the Director of the Office of Information Resource Management has not determined how to address the information sharing needs of the Department. Therefore, USDA risks wasting millions by building new networks that are redundant, do not address future business needs, and do not provide the information sharing capabilities necessary among agencies. The creation of the Information Technology System Control Board will put the Department back on track and save millions of taxpayer dollars. My bill also makes necessary changes to the buyout authority granted to USDA in the 1997 Agriculture Appropriation Conference Report. The buyout authority gives the Department the authority to offer $25,000 bonuses to retirement-age employees, and those eligible for early retirement. This golden handshake approach to Department downsizing pays off employees who are already preparing to retire. In addition, it comes at the expense of conservation programs. The Senate Agriculture Committee recently learned that the Department may transfer an estimated $43 million from unobligated Conservation Reserve Program funds to pay for buyouts for 1,341 Farm Services Agency employees. The bill mandates that buyouts can only be paid from appropriations made available for salaries and expenses and prohibits the use of mandatory funds, including Commodity Credit Corporation funds, for buyout plans. In addition, the bill limits the Department's buyout authority to 1 year. These changes are important to monitor the Department's work force downsizing efforts by compelling USDA to properly plan for future work force reductions. I cannot overstate my concern that the Department has failed to adequately assess the impact that the FAIR Act will have on the people who use the services of the Department and on the Department's work force requirements. Department management lacks strong central leadership in planning for information technology for the 21st century, continues to acquire equipment, hardware, software, and computers that do not match user needs, continues to provide inefficient delivery of services to USDA customers, and continues to allow unnecessary duplication. Since I am introducing my bill at the end of this session, obviously it cannot become law before the 105th Congress convenes next year. However, I intend to pursue this important issue in the next Congress, and I will reintroduce this bill. I ask my colleagues to support this important endeavor and I ask unanimous consent that the text of the summary and the bill be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President, today I would like to salute the efforts of a distinguished student organization that has been at the forefront of enhanced United States-Japanese cultural dialogue and understanding since 1934. I refer to the Japan-America Student Conference [JASC], which was founded 63 years ago by a group of conscientious Japanese and American students concerned about the cultural misunderstanding plaguing their countries' relations. The JASC continues to play a significant role in facilitating exchanges between American and Japanese university students. Over the years, the annual JASC student exchanges have produced a remarkable collection of American and Japanese leaders in business, government, journalism, and academia, leaders whose familiarity with their counterparts' culture has been instrumental to their professional success. This year, as we celebrate the 63rd anniversary of student exchanges under the auspices of the Japan-America Student Conference, I commend its leadership and all its participants for their dedication to the cause of cultural enlightenment and enrichment in United States- Japanese relations. As a completely student-designed and student-implemented program, JASC organizes an annual conference to promote its mission of ``Pursuing World Peace through Education, Cooperation, and Personal Commitment.'' Conference locations alternate between Japan and America and typically involve 30 to 40 university students from each country who come together for a full month to live, travel, work, debate, study, and socialize in the host country. Intensive round-table discussions on topics of fundamental importance to Japanese-American relations complement field studies in which delegates meet with government officials, educators, business executives, journalists, and other prominent citizens of the host country. Homestays with local families allow visiting students insight into the customs of the host country, while Japanese-American sharing of rooms in dormitories ensures intimate cross-cultural links. Following its tradition of consistently hosting outstanding Japanese and American students, this year's conference will focus on ``Exploring Our Roles in the Emerging Asia-Pacific Community.'' Students will explore issues in culture, trade, philosophy, science, diplomacy, history, and politics in an attempt to understand the fundamental changes forming Japanese-American relations on the verge of the 21st century. Because 1996's Conference took place in the United States, the Japanese cities of Tokyo and Kyoto will host next year's JASC from July 20 to August 19. In accordance with JASC's standard practice, this year's participants were chosen by the organization's American and Japanese student executive committees consisting of students from each country elected by their peers. Although the respective Japanese and American Executive Committees receive guidance and financial assistance from the Boards of Directors of JASC in Washington and the International Education Center in Tokyo, students in the two committees independently plan and manage the conferences. Mr. President, JASC represents an effective and efficient means to address the intellectual deficit in Japan-United States relations. Although roughly 43,000 Japanese students are currently enrolled in American universities, less than 2,000 Americans are studying at institutions of higher learning in Japan. This gap must be reduced because we have as much to learn from the Japanese as they do from us. Therefore, I want to commend the Japan-America Student Conference for long dedication to improving ties between Japan and the United States.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise to draw the attention of the Senate to the signing by the Governments of Hungary and Romania of a basic bilateral treaty intended to normalize relations and resolve longstanding border disputes and ethnic rivalries between the two countries. The Prime Ministers of Hungary and Romania signed the bilateral treaty on September 16 marking an important step toward insuring peace and stability in Central Europe. Their signing represents the culmination of several years of difficult negotiations and, when ratified by both countries, will help ease centuries of conflict and tension between these neighbors. The treaty obligates both countries to respect the basic civil rights and cultural identities of minorities in each country. Educational and linguistic guarantees and other communal protections are enshrined in the treaty. When ratified and faithfully implemented, the resolution of border disputes and respect for the rights of minorities that are embodied in the treaty will be an important model for other countries with comparable ethnic and nationality problems. Further, the treaty will move each country closer to satisfying requirements set for successful integration into western institutions, including membership in the European Union and the North Atlantic Treaty Organization. As Romania and Hungary continue to strengthen their democratic institutions, develop free-market economies, and ensure respect for human rights, their governments and the political parties supporting this process are to be commended for taking the political risk required to reach an agreement on this treaty. It is a significant example of two nations putting the best interests of regional stability ahead of domestic political interests. Therefore, Mr. President, I want to congratulate the governments and peoples of Hungary and Romania for successfully reaching agreement on this historic bilateral treaty.

Mr. LUGAR

Mr. LUGAR. I notice the statement of managers also contends that while the program will be managed by the Environmental Protection Agency during the initial stages of implementing the Food Quality Protection Act, that future funding should be provided by a more appropriate Federal agency. I might point out that section 301(c) of the Food Quality Protection Act mandates that the Secretary of Agriculture ensure the residue data collection activities are carried out in cooperation with the Environmental Protection Agency and the Department of health and Human Services. Would it be the understanding of the Senator from Arkansas and the Senator from Missouri that coordination should continue between the Environmental Protection Agency and the Agricultural Marketing Service to determine how best to manage this program in the future in light of the recent passage of the Food Quality Protection Act?

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to commend a fellow Hoosier, Ronald A. Smith of Rochester, Indiana who will be installed as president of the Nation's largest insurance association--the Independent Insurance Agents of America [IIAA]. Ron is President of Smith, Sawyer & Smith, Inc., an independent insurance agency located in Rochester. Ron's career as an independent insurance agent has been marked with outstanding dedication to his clients, his community, IIAA, the Independent Insurance Agents of Indiana, his colleagues and his profession. At the State level, Ron served as chairman of numerous committees and held several elective offices in the Independent Insurance Agents of Indiana, culminated by a term as president. In recognition of his contributions, his peers named Ron the 1992 Indiana Agent of the Year. Ron began his service to the national organization by serving as Indiana's representative to IIAA's National Board of State Directors from 1987 to 1993. At the same time, he served the national association as chairman of its membership committee and dues study task force and as a member of the agency/company operating practices task force on solvency and McCarran-Ferguson. Ron was elected to IIAA's executive committee in 1993. In the time since then, he has exhibited a spirit of dedication and concern for his 300,000 independent agent colleagues around the country. Outside of IIAA, Ron has served the insurance industry as a member of the board of trustees of the American Institute for CPCU and the Insurance Institute of America and a member of the board of directors for the Insurance Education Foundation, Inc. Ron's selfless attitude also extends to his involvement in Rochester- area community activities. He currently serves on the Rochester Telephone Co. board of directors and is a member of the Rochester Community School Building Corp. In the past, he served as chairman of the Fulton County United Way, president of the Rochester Kiwanis, president of the Rochester Chamber of Commerce, and chairman of the board of trustees of Grace United Methodist Church. I am confident that Ron will serve with distinction and provide leadership as president of the Independent Insurance Agents of America over the next year. I wish Ron and his wife Maureen all the best as IIAA's president and first lady.

Mr. LUGAR

Mr. LUGAR. Mr. President, I am a strong supporter of the programs sponsored by the National Endowment for Democracy and the four core groups that are part of the endowment family. For a very modest investment from the U.S. Government, this nongovernment organization has accomplished remarkable achievements in promoting democratic institutions, advancing the norms of a civil society, and furthering the principle and practice of market economics abroad. NED has contributed significantly to the foreign policy goals of the United States. It is exciting to chronicle the rich and positive role the NED has played in the promotion of American political values since its inception in 1983. It has been helpful in winding down the cold war in Eastern and Central Europe, in facilitating democratic transition, growth and consolidation in Asia and Latin America, and in supporting proponents of human rights and freedom in all geographic regions of the globe and in more than 90 countries. Rather than listing the additional successes of NED, I ask that a statement entitled ``The United States Needs The National Endowment for Democracy'' be inserted in the Record for all Members to read. The statement was drafted by the Forum for International Policy whose president is Brent Scowcroft and whose chairman is Larry Eagleburger. They, along with virtually every individual who served in the positions of National Security Advisor and Secretary of State in every administration since 1983 have endorsed the NED's work and support its full funding. I ask all Members to read this statement carefully. The material follows: The United States Needs the National Endowment for Democracy The United States' only international political foundation, the National Endowment for Democracy (NED), is under threat. Establishment in 1983, the Endowment operates openly and independently to support individuals, groups and institutions who are working to promote and consolidate democracy in their own countries. Although it is federally funded and subject to Congressional oversight, NED is not a government agency. An independent, non-partisan board of directors sets its policies and strategies. The Endowment channels its support directly to grantees or through four core institutes: the Center for International Private Enterprise, the International Republican Institute, the Free Trade Union Institute, and the National Democratic Institute for International Affairs. They, too, are independent of any government direction. The House of Representatives has approved an appropriation for fiscal 1997 of $30 million, reflecting no increase over the current level. The Senate Appropriations Committee, however, has recommended that funding be eliminated entirely on the grounds that the Endowment is a Cold War institution which has outlived its usefulness. That is a short-sighted judgment and should be reversed. In 1983, President Ronald Reagan called for a non- governmental institution along the lines of political foundations in other Western democracies. The National Endowment for Democracy was created to assist the transition to modern, pluralistic, particularly systems in other countries within the context of their own individual histories, cultures and traditions. The United States has fundamental and enduring interests in the promotion of American political values and ensuring the spread of pluralism, freedom and democracy throughout the world. Pursuit of those interests is no less important today than it was at the height of the Cold War. Our own national security and economic prosperity are no less at stake. NED and its core institutes are uniquely able to accomplish this task by the employment of non-governmental structures untainted by direct association with the U.S. Government. At the official level, our choice of instruments to pursue democracy support strategies is limited. The Agency for International Development's (AID) focussed programs have been effective, but they reflect the immediate priorities of any administration in office (or of actively interested members of Congress). Because of the way they are funded and operated, the emphasis of AID programs is too often on short to medium-term results. They are managed by federal employees in accord with bureaucratic rules and regulations. AID's ``official'' programs require us to work with host governments or at least with their tacit acceptance. The State Department, the United States Information Agency, and other federal agencies as well, promote democracy, but they, too, must operate within limits and norms set for official government representatives in foreign lands. NED and its institutes, however, are able to use their resources to nurture the development of grass roots democratic movements and long-term processes which must grow from within. NED operates where there is no official U.S. presence and it is not obligated to work through official channels. NED is not driven by the short-term imperatives which often, quite legitimately, drive government decisions and actions. The Endowment's non-governmental approach has worked. Through its low-cost programs NED does openly and aboveboard what our government is not able to do: it supports monitoring of elections, conferences and exchanges in Russia on party organization, polling methods, publicity and the nuts and bolts of open elections which have been credited with contributing to the success of democratic forces in the recent elections. In the Central Asian Republics it has funded civic education centers. In Slovakia it supports teacher-training workshops to introduce citizenship education into primary and secondary schools. In Bosnia it has kept an important source of news alive. It helps sustain Burma's hard-pressed democratic movement. It supported grass roots education for Palestinian voters. In Mexico it aids a coalition that focuses on electoral reform, political participation and accountability of public officials. NED even funds initiatives to strengthen democracy and human rights movements in Cuba. In many instances, however, despite free elections and outward signs of change, the transition to more deeply-rooted, stable democracy is incomplete or even at risk. It is in our interest to sustain NED's efforts because today's initiatives are no less important than those of the past. Signs that America is prepared to disengage from the important work of fostering democracy are unsettling to our allies and do not serve our national interests. The National Endowment for Democracy has proven itself to be a cost effective, long-term investment in America's security. It would be a mistake to eliminate it. The Senate should restore funding for the National Endowment for Democracy as approved by the House.

Mr. LUGAR

Mr. LUGAR. Mr. President, I would like to announce that the Senate Committee on Agriculture, Nutrition, and Forestry will hold a full committee hearing on Wednesday, October 2, 1996, at 9 a.m. in SR-328A to discuss renewable fuels and the future security of U.S. energy supplies.

Mr. LUGAR

Mr. LUGAR. Mr. President, I am pleased that the Animal Drug Availability Act (S. 773) is before the full Senate for consideration today. As an original cosponsor of this legislation, I recognize the need for reform of the Food and Drug Administration [FDA] animal drug approval process. Producers and manufactures of animal drugs have been concerned with the lengthy time required to gain FDA approval of animal drugs as well as the lack of new drug options available to treat livestock and poultry. The legislation before us today is a consensus bill that is acceptable to FDA, agricultural procedures, pharmaceutical and animal health organizations and has garnered bipartisan support in the Senate. I had written to Senator Kassebaum recently urging prompt action on this legislation and thank her for her efforts to move this bill forward. The bill before us today will provide FDA with greater flexibility to determine when animal drugs are effective for intended uses; streamline approval of combination animal drugs when the drugs have been previously approved separately for the same species and conditions of use; provide FDA with greater flexibility in whether field investigations are necessary to prove efficacy; and require presubmission conferences to help FDA and drug manufacturers to reach agreement on testing requirements before a drug application is submitted to FDA. In addition, the bill streamlines the drug application licenses for feed mills, permits FDA to set import tolerances for drugs used in other countries, and includes a veterinary feed directive provision which will make new therapeutic animal drugs accessible in feed form. I urge my colleagues to support this important bill.

Mr. LUGAR

Mr. LUGAR. Mr. President, as the Senate moves to a conference with the House of Representatives on the Federal Aviation Administration Reauthorization Act of 1996, I am hopeful conferees will give thoughtful consideration to the provisions included in the manager's amendment adopted Tuesday evening. I noted with some concern that a number of provisions in this amendment were new to the bill, and in some cases, not germane to the purpose of the legislation. I hope my colleagues will share my interest in assuring that an appropriate check and balance is maintained as the 104th Congress continues its legislative work. While I support swift enactment of this important measure to reauthorize the Federal Aviation Administration, I am concerned about a provision of the bill included with the manager's amendment amending the Johnson Act. In response to concerns about the rapid growth of legalized gambling in the United States in recent years, Congress recently approved legislation to create a 2-year National Gambling Impact Study Commission. This Commission will conduct a comprehensive review of the social and economic impact of legalized gambling on our Nation, and will provide a report to Congress, the President, Governors, and others, on this important issue. Until we know more about the effects of this recent national trend, I have reservations about changing a Federal law that could allow for further expansion of legalized gambling in the United States. Amendment to the Johnston Act

Mr. LUGAR

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

Mr. LUGAR. Mr. President, I join my colleagues today in paying tribute to Howard Greene and in saying words about our good friend. He has been my good friend for the past 20 years. I came to the Senate, and Bill Hildenbrand and Howard Greene were two people who took me under their wings. My own judgment at the time was that Bill Hildenbrand knew almost everything that needed to be known about Washington. He seemed to be a man of consummate experience, a person who had been involved in campaigns but, likewise, in the running of the Senate from time immemorial. Howard Greene seemed to be his deputy, his teammate, a person of great vigor, who would stride up and down the aisles of this Hall with determination and always with success in finding the person, the bill, the detail that was required. It was exciting to watch them. It gave me confidence that some people had confidence in what was being done, and I thought if I watched carefully I might learn more, and I did from both of these gentlemen. During recent years, Howard's growing responsibilities have been a real pleasure--seeing his own growth as a person, as an administrator, as one who has served Government well, has served the people of the United States, really, with distinction, in large part because he helped all of us to be more effective and to have some idea of what we were doing and how we might do it better. I am delighted to have this opportunity, and I appreciate the leader giving us the opportunity today, to say good words about people who have meant a lot to us, and especially about the person that we honor on this particular afternoon, Howard Greene.

Mr. LUGAR

Mr. LUGAR. Mr. President, today Senator Leahy and I are introducing legislation to amend the Commodity Exchange Act. This bill follows several months of hearings and informal consultations with industry, academics and regulators. The legislation streamlines U.S. futures trading law, conforming it to changing competitive realities. In many ways, regulation has benefited the U.S. futures industry. Prudent regulation enhances customer protection, prevents and punishes fraud and other abuses, and makes futures markets better able to provide risk management, price discovery and investment opportunity. Regulation, however, also has its costs. U.S. futures markets face competition that is, in some cases, less regulated or differently regulated. In the years ahead, our challenge is to balance the need for adequate regulation with the need to offer cost-competitive products. This bill tries to strike such a balance. It requires the Commodity Futures Trading Commission to consider the costs for industry of the regulations it imposes. The bill streamlines the process of introducing new futures contracts, reducing the time that is required to begin trading these new products. It makes similar reforms to the process by which exchanges' rules are reviewed by the CFTC. Where additional authority for the CFTC is needed, the bill provides it. The CFTC will have the authority to require delivery points for overseas futures markets to provide information that is also regularly demanded of American market participants. This is eminently reasonable, and may assist the CFTC and other regulators in the future if situations similar to the current copper market scandal recur. The bill will also provide greater legal certainty for swaps, over- the-counter products that are of increasing importance to many businesses. It is important that these contracts' enforceability be made more certain, so that legal risk does not compound the other risks inherent in any financial transaction. The bill contains a number of other provisions. I have provided a descriptive summary which may be helpful to our colleagues. Mr. President, I ask unanimous consent that this document and the text of the introduced bill be printed in the Record. It is late in the session, and I do not expect the Commodity Exchange Act Amendments of 1996 to become law this year. Senator Leahy and I wanted to introduce it to spur discussion and debate, so that early in the next Congress we can again introduce the bill, with any refinements that may be developed in the interim. We both intend that the bill will be a major focus of attention for the Committee on Agriculture, Nutrition, and Forestry next year. As usual, I am indebted to Senator Leahy for his bipartisan cooperation in this as in so many other endeavors. I am honored that he is an original co-sponsor of the bill.

Mr. LUGAR

Mr. LUGAR. Mr. President, today Senator Leahy and I are introducing legislation to amend the Commodity Exchange Act. This bill follows several months of hearings and informal consultations with industry, academics and regulators. The legislation streamlines U.S. futures trading law, conforming it to changing competitive realities. In many ways, regulation has benefited the U.S. futures industry. Prudent regulation enhances customer protection, prevents and punishes fraud and other abuses, and makes futures markets better able to provide risk management, price discovery and investment opportunity. Regulation, however, also has its costs. U.S. futures markets face competition that is, in some cases, less regulated or differently regulated. In the years ahead, our challenge is to balance the need for adequate regulation with the need to offer cost-competitive products. This bill tries to strike such a balance. It requires the Commodity Futures Trading Commission to consider the costs for industry of the regulations it imposes. The bill streamlines the process of introducing new futures contracts, reducing the time that is required to begin trading these new products. It makes similar reforms to the process by which exchanges' rules are reviewed by the CFTC. Where additional authority for the CFTC is needed, the bill provides it. The CFTC will have the authority to require delivery points for overseas futures markets to provide information that is also regularly demanded of American market participants. This is eminently reasonable, and may assist the CFTC and other regulators in the future if situations similar to the current copper market scandal recur. The bill will also provide greater legal certainty for swaps, over- the-counter products that are of increasing importance to many businesses. It is important that these contracts' enforceability be made more certain, so that legal risk does not compound the other risks inherent in any financial transaction. The bill contains a number of other provisions. I have provided a descriptive summary which may be helpful to our colleagues. Mr. President, I ask unanimous consent that this document and the text of the introduced bill be printed in the Record. It is late in the session, and I do not expect the Commodity Exchange Act Amendments of 1996 to become law this year. Senator Leahy and I wanted to introduce it to spur discussion and debate, so that early in the next Congress we can again introduce the bill, with any refinements that may be developed in the interim. We both intend that the bill will be a major focus of attention for the Committee on Agriculture, Nutrition, and Forestry next year. As usual, I am indebted to Senator Leahy for his bipartisan cooperation in this as in so many other endeavors. I am honored that he is an original co-sponsor of the bill.

Mr. LUGAR

Mr. LUGAR. I join the Sentor in urging the President to fill the vacancy on the FCS Board. The vacancy on the Board has existed for over a year now and the Board's daily oversight of the safety and soundness of the farm credit system would be greatly enhanced with a full Board.

Mr. LUGAR. I look forward to having the opportunity to examine her qualifications. Her reputation is an excellent one.

Mr. LUGAR. Yes, I will yield for a question.

Mr. LUGAR. The Senator is correct that a vacancy has existed on the three-member Farm Credit Administration Board since March 31, 1995. The Senate majority leader, Bob Dole, sent the name of Ann Jorgenson to the President in June 1995 to fill a Republican vacancy at the Farm Credit Administration. The Committee has not received any notification from the White House regarding Ann Jorgenson's nomination. If the President does not formally nominate Ms. Jorgenson, the Committee and the Senate will be unable to act on the appointment this Congress and the Board will continue without its full complement of members.

Mr. LUGAR

Mr. LUGAR. Mr. President, today Senator Leahy and I announced that we will propose legislation to amend the Commodity Exchange Act, which establishes the ground rules for commodity futures trading in the United States. Our decision to proceed with legislation follows a public hearing on June 5 and extensive discussions with industry and federal regulators. I commend Senator Leahy for his bipartisan cooperation in this as in so many other matters. In order that our colleagues and the general public may understand the legislation we plan to introduce, I ask that a statement issued earlier today by the two of us be printed in the Record. I further ask that a letter signed by the two of us and addressed to Acting CFTC Commissioner Tull also be printed in the Record. The material follows: Reforming and Updating the Commodity Exchange Act: Outline of Planned Legislation The Commodity Exchange Act has benefited the American economy. It has helped encourage a dynamic, world-class futures trading industry that allows farmers, ranchers and other business operators to manage risk, provides investment opportunities and offers protection to consumers of its services. From time to time, Congress has re-examined the Act to bring it up to date with changing markets. Such an update is now opportune. On June 5, the Committee on Agriculture, Nutrition, and Forestry heard testimony on the need to update the Commodity Exchange Act. Since then, committee staff have consulted extensively with federal agencies and private industry, seeking to explore the implications of legislative proposals by various groups. As a result of this thorough process, we have decided to introduce legislation to amend the Commodity Exchange Act. Because it is late in the legislative session, it is unlikely the bill we introduce will become law this year. We intend it to spark discussion, with the aim of completing work on revisions to the Act in 1997. In considering possible legislation, we have been ably advised by CFTC staff. While the CFTC is unconvinced that new legislation is needed, commission officials have cooperated with our staff whenever they have been asked. We want to thank them publicly for this assistance. In addition, commission staff have been receptive to addressing some issues through administrative action. Although some reforms we propose are beyond the scope of the commission's current statutory authorities, others could be resolved without legislation. We encourage the CFTC to work toward this end. There is a public interest in a strong, competitive U.S. futures industry because of its critical role in price discovery and business risk management. This public interest implies, and requires, a degree of regulation. In recent years, U.S. futures exchanges have also faced increasing competition from foreign exchanges and from over-the-counter derivative products. U.S. exchanges face some regulatory costs that are not borne by their competitors. The Act, and the Commodity Futures Trading Commission's actions to implement its requirements, must strike an appropriate balance between prudent regulation and the need for a cost-competitive industry. We will introduce legislation in September. The reason for delaying introduction is a provision of the Act called the ``Treasury amendment.'' The amendment excludes certain transactions from the CFTC's jurisdiction and has been the subject of varying interpretations since it was first enacted. Many firms and associations have requested that Congress clarify the Treasury amendment, and we agree that clarification is in order. The CFTC and the Treasury Department have been working to arrive at a common interpretation of the Treasury amendment. We believe it is wise to give them, and other relevant agencies, a chance to complete these discussions before making a legislative proposal. Therefore, we are writing to Secretary Rubin and Acting Chairman Tull to encourage their agencies to complete their discussions and advise us of their progress. If these conclusions suggest a need to modify the Treasury amendment, we will strongly consider incorporating those modifications into the bill we introduce. In order for our colleagues to have an opportunity to examine the legislation before this session of Congress ends, we will need to introduce the bill in the first week Congress returns from the August recess, that is the week ending September 6. Therefore, we would like to receive the Administration's counsel before the Labor Day holiday. It is premature to propose a specific change to the Treasury amendment. However, we can say that we do not intend for the CFTC to become involved in markets where it does not now have any significant role. An example is the ``when- issued'' market in Treasury securities. We invite public comment during August on the legislative proposals we will outline in this statement. The bill we introduce in September will be a discussion document. It might subsequently be scaled back, but it also might be expanded to make additional changes to the Act. It will be neither an opening gambit nor a least common denominator. It will represent our best judgment of how the Act should prudently be changed, but our minds remain open to other approaches. The committee's work on the Commodity Exchange Act has been bipartisan and collegial. Like the 1996 farm bill, the landmark food safety legislation now on the President's desk, and other important laws originated by the committee, this legislative effort is one on which we will work together. A summary of planned legislative provisions follows. Considerations required in regulatory actions.--For each significant regulation it imposes (not including enforcement, emergency and similar actions), the CFTC will be directed to take into account both the anticipated costs and the anticipated benefits of the action it contemplates, and to explain publicly its evaluation of the various costs and benefits. In weighing costs and benefits, CFTC will consider whether the proposed action, taken as a whole, will promote customer protection, market integrity and efficiency, fair competition and sound risk management. The provision will apply to actions commenced after the date of enactment, and will require an evaluation, not a cost-benefit analysis in the strict, quantitative sense. Audit trail.--The bill will clarify the intent of Congress that the audit trail statute does not mandate the development or adoption of any particular technology, but establishes a performance standard. This clarification will be consistent with 1995 Senate testimony by then-Chairman Mary Schapiro. Contract designation.--The legislation will end the requirement that proposed futures contracts be pre-approved by the CFTC before trading can commence. Instead, the bill will provide that exchanges must submit information about contracts they intend to trade to the CFTC, which will have a reasonable but limited period to examine the proposed contract terms. The CFTC will analyze the information with a presumption in favor of allowing the contract to trade. However, within the examination period, the CFTC may require additional information, or delay the start of trading for a limited time, if it finds reason to believe the contract is susceptible to manipulation, violates the Act or is contrary to the public interest. Ultimately, the CFTC would have the ability to prevent a contract from trading, but only after instituting proceedings to disallow the exchange from commencing trading. Comments are invited on the appropriate length for the periods specified above. Similar procedures would apply to other proposed exchange rules. Committee report language will direct the CFTC to report, on an ongoing basis, its evaluation of how well exchange governing bodies meet the statutory requirement for meaningful representation of a diversity of interests. Disciplinary actions and penalties.--The bill will state the sense of Congress that, in deploying enforcement resources, the CFTC should avoid unnecessary duplication of effort in areas where self-regulatory organizations also have enforcement duties, while ensuring a CFTC presence and role sufficient to safeguard market integrity and customer interests. The CFTC will be directed to report to Congress on its enforcement program. The report is to include an analysis of the CFTC's performance in preventing, deterring and disciplining violations of the CEA that involve fraud against individual investors through ``bucket shops'' and similar abuses. The report will be due a year after enactment, and may follow one or more commission round tables on the subject. Exemptive authority.--The bill will direct the CFTC to re- evaluate its Part 36 Rules (which allow exchanges to set up less-regulated professionals-only markets in certain limited circumstances) in light of the need to provide equitable competitive conditions among various participants in derivative product markets. Any revisions to the rules would remain within the CFTC's discretion. The bill will also state the sense of Congress that any revisions should ensure the financial integrity of markets and customer protection. The CFTC will be encouraged to convene a round table meeting or meetings to receive public input on possible improvements in Part 36 Rules. Swaps exemption.--The statute will be amended to enhance the legal certainty of contracts involving swaps and similar products. Products meeting the requirements of the CFTC's 1993 swaps exemption will be exempt from the Act's provisions to the same extent as at present. The provision will not diminish the CFTC's authority to grant additional exemptions. In addition, the bill will end the current prohibition on granting an exemption from CEA regulation to any transactions subject to the Shad-Johnson accord (which establishes CFTC and SEC jurisdiction on such products as stock index futures). Instead, the bill will allow the CFTC to exempt such products, but only with the concurrence of the Securities and Exchange Commission. Comments are invited on additional or alternative means of enhancing the legal certainty of contracts while assuring market integrity. Definition of a hedge.--The statute will be amended to clarify that a hedge may be established to reduce risks other than price risks. The bill will make clear that the change does not affect the ability of exchanges and the CFTC to establish speculative limits, require reporting of large trader positions and otherwise discharge their responsibilities. Delivery by Federally licensed warehouses.--The bill will repeal an outdated provision that allows any federally licensed warehouse to deliver grain against a futures contract, even if it is not a designated delivery point. The current statute could allow market manipulation in some circumstances. Delivery points for foreign futures contracts.--The CFTC will be directed to commence negotiations with appropriate foreign agencies which regulate exchanges that have established delivery points in the U.S., with the goal of securing adequate assurance (through improvements in the foreign regulatory scheme or other means) that the presence of U.S. delivery points for foreign exchange contracts does not create the potential for market manipulation or other disruptions of U.S. markets. The CFTC will also be granted additional powers, if necessary, to obtain needed information on such delivery points. Comments are invited on the appropriate scope of additional authorities, if any, required by the CFTC to ensure that U.S. markets are not subject to manipulation. Delegation of authority.--The bill will state the sense of Congress that the CFTC should review its authorities with a view to delegating additional duties to the National Futures Association or other self-regulatory bodies, requiring a report one year after enactment on the results of the review. Report language will state that among the duties the CFTC may consider delegating are the review of disclosure documents and reparations procedures. The statute will further state the sense of Congress that in making any additional delegations, the CFTC should establish a procedure of spot checks, random audits or other means of ensuring adequate performance, and may also make the delegation on a pilot basis. Treasury amendment.--The bill's provisions to modify the Treasury amendment (an exemption from CEA regulation for the interbank currency markets and some other markets) will be drafted following review of suggestions received by the Administration. Technical changes.--The bill may also include technical changes to the Act such as those suggested by the National Futures Association in its June 5 testimony. U.S. Senate, Committee on Agriculture, Nutrition, and Forestry, Washington, DC, August 1, 1996. Hon. John Tull, Acting Chairman, Commodity Futures Trading Commission, Washington, DC. Dear Mr. Chairman: We were heartened to learn that the Commodity Futures Trading Commission and the Treasury Department have been discussing the so-called ``Treasury amendment'' to the Commodity Exchange Act, with a view toward arriving at a common interpretation of the provision. At a hearing our committee held June 5, the Treasury amendment was cited by several witnesses as a provision of the Act that needed review and clarification. We intend to introduce legislation that will make a number of changes to the Act, and believe it is appropriate to address the Treasury amendment in that bill. It would be highly desirable to have the benefit of the Treasury and the CFTC's joint advice in this regard. In order for our colleagues to have adequate opportunity to review the bill this fall, we intend to introduce it in the first week Congress returns from its August recess, that is the week ending September 6, 1996. We would appreciate hearing from relevant federal agencies their views on the Treasury amendment before the Labor Day holiday, if possible. However, we are confident you share our strong hope that agencies will resolve any differences by that time and arrive at a common understanding, so that the statute's provisions and scope can be made clear. Thank you for your assistance in this matter. A similar letter has been sent to Secretary Rubin. Sincerely yours, Patrick J. Leahy, Ranking Democratic Member. Richard G. Lugar, Chairman.

Mr. LUGAR

Mr. LUGAR. Mr. President, as we end the debate on the welfare reform conference report, I would like to make several acknowledgements of effort in bringing forward this truly historic legislation. First, I want to congratulate Chairman Domenici and Chairman Roth and thank them for their leadership. As chairman of the Agriculture Committee, I am pleased to have been a partner with them in crafting this bill. I also want to thank my staff on the Agriculture Committee for their efforts throughout this 104th Congress to make welfare reform a reality. Staff director Chuck Conner, as always, contributed strong leadership. Dave Johnson and Beth Johnson worked tirelessly to develop proposals that both meet our budget goals and continue to deliver assistance to the needy. They were assisted ably over the past year by Bill Sims, who has returned to the U.S. Secret Service. Special thanks are also due to Joe Richardson of the Congressional Research Service, whose knowledge of the very complicated nutrition assistance programs was invaluable. The legislative process that culminates here in the Senate today sometimes seemed like a rollercoaster ride with no end. Frustration and long hours were common for my staff. But they have my sincere thanks for their efforts. They should be very proud of this landmark bill. In the final analysis, this welfare reform legislation represents the best of our democratic process. After much debate, a proposal of potentially monumental importance is about to be approved overwhelmingly by a Republican-led Congress, and a Democrat President will sign it. I hope we will someday be able to look back at this bill as a major step toward restoring the public's confidence in the ability of its elected leaders to respond to our Nation's pressing needs.

Mr. LUGAR

Mr. LUGAR. Mr. President, yesterday the Senate gave final approval to the Food Quality Protection Act (H.R. 1627). This legislation will reform the scientifically outdated Delaney clause. I ask to have printed in the Record letters of support from commodity groups, the Food Chain Coalition, Farm Bureau, and environmental and consumer organizations as well as a letter from Senator Kassebaum and a statement from the American Crop Protection Association. The letters follow: July 24, 1996. Hon. Richard Lugar, Chairman, Committee on Agriculture, Nutrition, and Forestry, U.S. Senate, Washington, DC. Dear Mr. Chairman: We are writing to urge you to support H.R. 1627 the ``Food Quality Protection Act'' when it is considered by the Committee. The effort to achieve food safety reform, which assures an abundant, affordable, and safe food and fiber supply has been difficult, and we applaud all those who worked to help reach an acceptable compromise. It is important that farmers continue to have the greatest availability of crop production products which are safe, affordable and effective to ensure that they are able to meet the nation's demand for food and fiber. While we had concerns initially with some provisions in the bill, the diligent work by the Committee and assurances from EPA and USDA that the new higher standard of protection will be interpreted with common sense and reason have reassured us that this is meaningful change. The Delaney Clause is outdated and could possibly cause the loss of many crop protection products which pose no significant health or safety risk. This legislation represents the best opportunity in a decade to modernize the Delaney Clause and strengthen federal food safety protection. We will continue to work with you to see that the new legislation accomplishes these goals and urge prompt Senate action. Thank you for your attention to this matter. Sincerely, American Soybean Association, National Association of Wheat Growers, National Cotton Council of America, National Corn Growers Association, National Barley Growers Association.

Mr. LUGAR

Mr. LUGAR. That is correct.