Arlen Specter

Mr. SPECTER

Mr. SPECTER. Mr. President, I have sought recognition to offer three amendments which I think will provide some balance to the legislation that is now pending before the Senate. I believe that there is a need for some modification of our securities acts, but I think it has to be very, very carefully crafted. As I take a look at what is occurring in the courts, compared to what happens in our legislative process, I think that the very deliberative rule in the courts, case by case, with very, very careful analysis, has to take precedence over the procedures which we use in the Congress where hearings are attended, sometimes by only one or two Senators, and then provisions are added in markup very late in the process. Legislation does not receive the kind of very thoughtful encrustation that comes through common law development and interpretation of the securities acts. I have represented both sides in securities litigation before coming to the U.S. Senate in the private practice of law. I would remind my colleagues that before we proceed to make such enormous changes by this legislation, we need to recall the importance of protecting investors, especially small investors, small unsophisticated investors, in some cases, who put a substantial part of their savings, perhaps all of their life savings, into securities, and how much is involved in the accretion of capital through corporations, through common stock, compared to what is the thrust of this legislation, really looking to curb some lawsuits which should not be brought, some frivolous lawsuits which ought not to have been filed, and perhaps some of the excesses in the plaintiffs' bar, as there may be excesses in any group. What we are looking at is the value of shares traded in 1993 on the stock exchanges, the most recent year available for analysis. Mr. President, the $6.63 trillion traded on the stock exchanges in 1993 is more than half of the gross national product of the United States in 1963. The value of initial public offerings in 1993, was $57.444 billion. If we take a look at the comparison as to how much is spent on attorney's fees, according to a 1990 article in the Class Action Reports, a review of some 334 securities class action cases decided between 1980 and 1990, a group of cases in which there was a recovery of $4.281 billion, only some 15.2 percent of that recovery went to fees and costs, a total of some $630 million. In those cases, according to the court records, the attorneys for the plaintiffs spent 1,691,642 hours. Statistics have already been presented on the floor of the Senate which show a decrease in securities litigation. I submit that it is very important to be able to continue to protect investors--especially small investors--from stock fraud. We know that in the crash of the Depression, 1929 and thereafter, tremendous savings were lost at that time. These losses gave rise to the legislation in 1933 and 1934 to protect investors and the securities markets. Without speaking at length on the subject, I would point to a few cases where there were very substantial losses to the public and in which private actions were brought to enforce the securities laws. For example, the ongoing Prudential Securities litigation, with over $1 billion in losses, perhaps as much as double that; the Michael Milken cases, where there were recoveries in the range of $1.3 billion, involving Drexel, Burnham & Lambert, recovered by the Federal Deposit Insurance Corporation under the securities laws; we all know the famous Charles Keating case, involving his former company, Lincoln Savings & Loan, involving some $262 million recovered and some $288 million lost; the $2 billion lost in the Washington Public Power Supply System case--mentioning only a few. The concern that I have on the legislation as it is currently pending is that there is an imbalance which will discourage this very important litigation to protect the shareholders. I have supported the managers of the bill on a number of the amendments which have been filed, but I am going to submit a series of three amendments which, I submit, will make the bill more balanced.

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

Mr. SPECTER

Mr. SPECTER. Mr. President, I thank the Chair. Mr. President, I have sought recognition to comment briefly on the pending legislation and to offer a motion on behalf of Senator Biden, Senator Shelby, Senator Feingold, and myself to refer the bill to the Committee on the Judiciary in order to consider some very important issues which have not had a hearing in the Banking Committee, because the Banking Committee under its own procedures does not customarily take up questions on the Federal Rules of Civil Procedure regarding which the pending legislation makes a great number of very significant changes. The rules which govern court procedure are customarily fashioned by judges, and they are established by the Supreme Court of the United States with an advisory committee which considers the details of these provisions. They are complicated on matters such as how pleadings are formulated, how specific you have to be, and what to say to get in court before you are entitled to discovery; what rules govern when you take depositions, for example; that is, when questions are asked by one side of the parties on the other side. What happens with respect to sanctions when lawyers do not operate in good faith or bring frivolous lawsuits, or what happens on class representation. These are the kinds of questions which I have had some experience with, although not recently. But I had experience when I practiced civil law before coming to the U.S. Senate. And on the Judiciary Committee, having been a member there for 14\1/2\ years, I have had some continuing familiarity with these issues, but nothing compared to the individuals who are in the courts every day. On that subject, I discussed some of the issues raised by this bill with a longstanding friend of mine going back to college days at the University of Pennsylvania, Judge Edward R. Becker, who is now a very distinguished jurist on the U.S. Court of Appeals for the Third Circuit, and one of the premier Federal judges in the country. Judge Becker was appointed to the Federal Court in 1971. He served for 10 years as a trial judge day in and day out, and for the past 14 years he has been on the court of appeals and is a recognized expert on Federal procedure, lectures in the field, and is highly regarded as one of the most knowledgeable of the Federal judges. Some of the comments which Judge Becker has made to me in a relatively brief letter illustrate to some extent the problems which are present in the current legislation. I compliment the Senator from California, the Senator from Nevada, and the Senator from Maryland, the ranking member of the committee, the chairman of the committee, and also the Senator from New Mexico, Senator Domenici, and the Senator from Connecticut, Senator Dodd, who have drafted this legislation, for the very constructive work which they have done. But there are many very, very important provisions which have not been subjected to the kind of analysis which comes only with real experience in the courts on a day-in and day-out basis. Having had that experience, I know the difference between the legislative process and the judicial interpretive process. Those judges see these matters day in and day out. They know what happens in a very practical sense. They have a much deeper familiarity with the way they work out than we do in the Congress. As the Presiding Officer knows, and as my colleagues know, frequently in our hearings in the Senate, only one or two Senators are present. When markup occurs it is done as carefully as we can, but not with the kind of craftsmanship which judges employ day in and day out. These are some of the comments which Judge Becker has made which I think are worthy of consideration. They are not dispositive of all of the issues but are illustrative of the kinds of complex matters which we think require a great deal more consideration than we have had so far. This legislation is enormously important. It is enormously important as it governs the securities field where capital is formed so that the free enterprise system can function, so that when representations are made in the prospectuses that sufficient information is given to investors to know what is happening, to see to it that the representations are honest, and that the millions and millions of people who invest in securities are protected--and not that there is any absolute guarantee that they will earn dividends or make money on capital gains because there is a certain amount of risk, but that there are representations honestly made, that they are protected against fraud, and that the procedures balance the concerns of the companies, not subjecting them to frivolous litigation but balance the concerns of the investors. Judge Becker has made this comment, for example, on the rule of procedure which governs the designation of lead counsel: Most of the provisions prescribe things the courts already do--for example, designating lead counsel--or at least can do within the exercise of their discretion. Section 102 constitutes congressional micromanagement with the untoward effect of depriving judges of the flexibility which is indispensable for effective case management. One of the bill's important provisions relates to sanctions, which are important in litigation to ensure that the court has the flexibility to manage the case and that lawyers do not abuse the process, that is, they do not bring frivolous lawsuits, and frivolous lawsuits are brought. We know that as a matter of fact. Really no one contests that. Or no one contests the need for limiting frivolous lawsuits. And there is a generally recognized need that we ought to have reform in this field. Some of the provisions of current law, for example on joint and several [[Page S 8921]] liability, have imposed very extensive liability on accountants who do not know the inner workings of the representations but are held under the concept of joint liability. There needs to be a close look at the kind of liability imposed. So that when you talk about frivolous lawsuits and how to deter them, we do need to have very substantial review of that issue. But I have found that the provision of the bill regarding the rule which requires mandatory sanctions by the court perhaps goes too far, and we do not know that for sure really until we analyze it in some detail. But this is what Judge Becker had to say about that: Mandatory sanctions are a mistake and will only generate satellite litigation. And by satellite litigation, Judge Becker was referring to the situation where, after the case is over, then a whole new litigation process starts as to whether sanctions are really required. Under present law, the judge has discretion to award sanctions, and there has to be a motion made by the party that thinks that the other party has acted inappropriately. Before a party can ask for sanctions, the party must give notice to the other party of its view that something wrong has been done in order to give the allegedly offending party an opportunity to correct it. That is done in litigation to try to have the parties work it out. If somebody does not like what the other party is doing, they say, ``Wait a minute; you ought to stop that.'' It gives that party a chance to reflect on the reasons. If it does not stop, then the party can make a motion for sanctions. But under this legislation, the judge has the obligation on his own to review the record and to impose sanctions. That is contrary to the American system of adversarial litigation where the judge does not have the responsibility for making that determination on his own; one of the parties who feels aggrieved says to the court: Something wrong has been done here, and I make a motion to have it corrected. This is more like the inquisitorial system which the French have where the judge is the moving party. Judge Becker has this to say after commenting on the satellite litigation. The flexibility afforded by the current regime enables judges to use the threat of sanctions to manage cases effectively. Well managed cases almost never result in sanctions. The provision for mandatory review-- That is, without prompting by the parties-- will impose a substantial burden on the courts and prove completely useless in the vast majority of cases. Requiring courts to impose sanctions without a motion by a party also places the judge in an inquisitorial rule which is foreign to our legal culture, which is based on the judge as a neutral arbiter model. The judge then refers to a rule drafted by a very distinguished judge, Judge Patrick Higginbotham of the Court of Appeals for the Fifth Circuit, who is chairman of the Judicial Conference of the Advisory Committee on Civil Rules. And this is what Judge Higginbotham says ought to be done: In any private action arising under this title, when an abusive litigation practice is brought to the District Court's attention by motion or otherwise, the Court should promptly decide, with written findings of fact and conclusions of law, whether to impose sanctions under rule 11 or rule 26(g)(3) of the Federal Rules of Civil Procedure or its inherent power. And that is really giving discretion to the court. Perhaps on analysis the provision in the bill on mandatory would be retained. But I think it is indispensable, Mr. President, that that kind of careful analysis be made. Other provisions set out in the current bill make very substantial changes to the Federal rules. There is a requirement that the potential outcome of the suit be disclosed, and there are special disclosures relating to settlement terms. These provisions have an impact on rule 23, the class action rule. The bill also contains certain unique provisions governing the appointment of lead counsel in class actions, none of which have been given a hearing. I discussed with the chairman of the committee, the Senator from New York, Senator D'Amato, the procedures used by the committee, and I think I am accurate in stating--and he can comment on this if the truth is to the contrary--that this is a provision added very late, and there had not been hearings. There are also changes in the rules relating to discovery under rule 26, and there are differences in rules relating to the specificity of allegations of pleadings, affecting rule 9. Without going into any great detail, these are all matters which really ought to be reviewed by the Judiciary Committee, which has the expertise under our Senate rules for handling matters of this sort. It is not the kind of a matter which is customarily brought before the Banking Committee. This same issue was raised by the Chairman of the Securities and Exchange Commission, Arthur Levitt, in a letter dated May 25, 1995, to Senator D'Amato. Chairman Levitt commented as follows: I also wish to call your attention to a potential problem with the provision relating to rule 11 of the Federal Rules of Civil Procedure. I worry that the standard employed in their draft may have the unintended effect of imposing a loser-pays scheme. The greater the discretion afforded the court, the less likely this unintended consequence may appear. The loser-pays scheme, Mr. President, is one which Great Britain has where the loser has to pay the costs of litigation, and that is a very, very abrupt and drastic change in our litigation procedure. The bill currently provides for mandatory sanctions and contains a presumption that the loser will pay sanctions and that the appropriate sanction is the other party's attorneys' fees. This would have a very major, chilling effect on bringing any litigation. And that presumption can be overcome but it starts off on an unequal footing where the same requirement is not imposed on the defense, on the other side in the litigation. I am sure that there will be consideration of this substantive revision in the course of the analysis of this bill. But this again is something which really ought to have the benefit of a hearing in the Judiciary Committee. Mr. President, I had advised the chairman, the Senator from New York [Mr. D'Amato], that I would not be in the position to vote on this matter until others had a chance to come to the floor, specifically Senator Biden. I know that there are other Senators on the floor who wish to speak at this time. And it would be my hope that we can move to a vote this evening. I do not want to keep Senators here unnecessarily but I believe that Senators are present with the expectation of having a vote on final passage on the highway bill where there is still one matter which is left to be worked out. But I do want to make that stressed statement that until Senator Biden returns we have an opportunity to have debate on this subject. There are some matters I want to discuss with the Senator, the chairman, the Senator from New York, who is necessarily absent at this time. Before yielding the floor--I shall not hold the floor very much longer--there will not be more than one final statement that I will make, as I see my colleague from Utah, rising. I do want to make a brief comment about the bill generally as to information provided to me by the chairman of the Pennsylvania Securities Commission who has raised very substantial problems with the bill. I want to call those to the attention of my colleagues. This is a letter to me from Chairman Robert Lam, dated April 19, 1995, in which Chairman Lam makes this statement. ``I have considered the major elements of both'' Senate bill 240, which is the one currently being considered, and Senate bill 667, which is a different bill introduced by Senators Shelby and Bryan. It is the conclusion of Chairman Lam of the Pennsylvania Securities Commission that the other bill, the one not on the floor, is much preferable. Chairman Lam concludes by saying, Senate bill ``240, on the other hand, tilts the balance too far in favor of corporate interests and would have the practical effect of depriving many defrauded investors the ability to cover their losses.'' In a letter dated June 20, 1995--I shall include both of these letters for the record, so I do not have to take much time. Chairman Lam writes as follows, As presently constituted, S.240 not only would affect negatively Pennsylvania investors but also Pennsylvania taxpayers should the Commonwealth Treasury Department [[Page S 8922]] again become a potential victim of wrongdoing in securities transactions undertaken on behalf of the Commonwealth. The importance of the potential negative effects of this Bill on the Commonwealth is reflected by the Treasury Department's recent suit against Salomon Brothers for damages resulting from alleged wrongful conduct engaged in by Salomon in connection with its bidding on government bonds. And Chairman Lam of the Pennsylvania Securities Commission concludes with this statement. As a participant in the capital formation process, I would like to emphasize that our financial markets run most efficiently when there is a high degree of public confidence in the integrity of the marketplace. Money is merely the medium of exchange between this confidence and the honest entrepreneur. As written, S.240 will not advance the goal of making capital available to growing U.S. companies. It will result in small investors avoiding participation in our capital markets when they discover that they are unable to bring suit against the perpetrators of aiders and abettors of a securities fraud or, upon winning such a suit, fail to be made whole because the Bill adopts the concept of ``caps'' on total defendant liability. I do ask unanimous consent, Mr. President, that the full text of these two letters from Chairman Lam be made a part of the record at the conclusion of my speech.

Mr. SPECTER. In conclusion, Mr. President--the favorite words of any speech, and with finality--I will pursue this motion as the evening progresses and do believe that it is very important that the full range of considerations raised by Chairman Lam be considered, issues that have otherwise been raised, but especially these procedural questions be considered by the Judiciary Committee which under our rules has the jurisdiction to consider them. Motion to Commit

Mr. SPECTER. On behalf of Senator Biden, Senator Shelby, Senator Feingold, and myself, I do move to commit the pending bill, Senate 240, to the Committee of the Judiciary. I thank the Chair and yield the floor. Exhibit 1. Pennsylvania Securities, Commission, April 19, 1995. Hon. Arlen Specter, U.S. Senate, Hart Senate Office Building, Washington, DC. RE: Pending Securities Litigation Reform Bills S. 240 and

Mr. SPECTER. I object.

Mr. SPECTER. Reserving the right to object, there are issues, and I need to discuss them with the chairman which I talked to him about earlier. And also my principal cosponsor, Senator Biden, is not available yet to make an argument.

Mr. SPECTER

Mr. SPECTER. I ask the Senator from Massachusetts to yield 3 minutes.

Mr. SPECTER. I thank the Senator from New Hampshire.

Mr. SPECTER. Mr. President, it is my hope that at least three additional Senators will vote in favor of closing debate so that Dr. Foster can receive a vote on the merits. I believe Dr. Foster is entitled to his day in court. He is entitled to his vote in the Senate. The sole issue which is holding up this confirmation is the issue of abortion. Cutting to the bone, that is it, pure and simple. And I think it is simply wrong to deny Dr. Foster confirmation because he has performed an operation which is lawful under the Constitution of the United States. And you see the pattern emerging. In yesterday's Washington Times, it is Ralph Reed, Jr., who is calling the tune for those who are opposing Dr. Foster, and in today's Washington Post it is Gary Bauer who is handing out plaudits to those in the Senate who are opposing Dr. Foster. I believe it is inappropriate for this body to deny this man a vote on the merits and to deny confirmation for performing a medical procedure, abortions, lawful under the U.S. Constitution. I would remind my colleagues, Mr. President, that there is nothing in the Contract With America, which was the basis of our Republican victory last November, nothing in the Contract With America, on abortion. And that is not a mandate from the American people defining the Republican stand. I would also remind my colleagues that if this body is going to become embroiled in this kind of an ideological battle, we are not going to be able to take up the issues which the American people elected us for. They did not elect us in 1994 on the abortion issue. They elected us to have smaller Government, less spending, reduced taxes, and strong national defense. Those are our core values and, if I may say, our core Republican values. And it is a very dangerous precedent for this body to have an ideological debate. If we are going to subject people who want to be public servants to 60 votes, not the democratic majority, we are going to discourage people like Henry Foster and other qualified individuals from coming to this town, this Government, to serve. If there had been a demand for 60 votes for Justice Clarence Thomas, he would not be sitting on the Supreme Court of the United States today. And I know there have been nominees who have had a past filibuster test. But the appropriate standard, the nonideological standard is to say, ``Is he qualified when he performs a medical procedure which is constitutional?'' I yield the floor.

Mr. SPECTER

Mr. SPECTER. I thank the Senator from Massachusetts. Mr. President, in my view, as a matter of basic fairness, Dr. Henry Foster is entitled to his day in court. He is entitled to a vote on the merits without having a filibuster foreclose an up or down vote. The real challenge in this matter is whether Dr. Foster is disqualified from being Surgeon General of the United States because he has performed abortions, a medical procedure lawful under the Constitution of the United States. This should not be a matter which is debated on the floor of the U.S. Senate with respect to Dr. Foster's confirmation. But that happens to be the fact of the matter. All of the other issues are red herrings. Dr. Foster acquitted himself brilliantly in his testimony before the committee. I met with Dr. Foster extensively, examined his record, and there is no question but on the merits he is well qualified to be Surgeon General of the United States. But the sole issue which confronts his confirmation today is that he has performed abortions, a medical procedure lawful under the Constitution of the United States. We have to remember, Mr. President, that it is not Roe versus Wade, the Justice Blackmun opinion of 1973, which governs here today but it is the decision of the Supreme Court of the United States in Casey versus Planned Parenthood, written by three Justices appointed by Republican Presidents. And the matter ought not to be a partisan issue here. I suggest, Mr. President, that it is a very bad precedent if there is to be a filibuster based on ideology. Judge Thomas, when he was up for confirmation for the Supreme Court of the United States--now Justice Thomas--would have been foreclosed from confirmation had the same procedure, the same tactic been employed in reverse. Judge Thomas was confirmed to be Justice Thomas by a vote of 52 to 48. Had there been an ideological battle, Justice Thomas would not have received 60 votes, and he would not have been confirmed. I suggest that this is a very, very bad precedent, if we are going to start fighting ideology on the floor of the U.S. Senate when it comes to the confirmation of someone who is before this body. Now, Mr. President, we know that in last November's election, there was a sea change by the American people. And we now have a new look in the Congress of the United States. But I think it is important for Senators on both sides of the aisle to focus on the fact that there was nothing in the Contract With America on a woman's right to choose. There was nothing in the Contract With America on the subject of abortion. There was nothing in the Contract With America that is legitimately raised here in the consideration of the nomination of Dr. Henry Foster. And I suggest, Mr. President, that if this body is going to become embroiled on this constitutional issue, a woman's right to choose, a medical procedure sanctioned by the Supreme Court of the United States, we are not going to be able to attend to our core responsibilities. What the 104th Congress was elected to do is to reduce the size of Government, to cut spending, to balance the budget, to lower taxes, to have effective crime control, and have strong national defense. It is true that this issue has come to the floor under a limited time agreement. But when this body takes up the question of abortions on military bases, we will be discussing that for days, weeks, or perhaps months. This is not the kind of issue that ought to embroil the Congress of the United States, the Senate of the United States. The constitutional law has been established in the building across the green by the Supreme Court of the United States and the opinion written by three Justices appointed by Republican Presidents. We ought not allow this ideological issue to obscure the underlying question as to whether Henry Foster is qualified to be Surgeon General of the United States. If we become embroiled in these matters, we will not be doing the job that we were sent to do in the 104th Congress. I urge my colleagues to set aside ideology, to recognize the constitutional right of a woman to choose and not to disqualify this nominee because he is carrying out a medical procedure which is authorized under the Constitution. Cloture ought to be invoked, and this man ought to have his day in court, ought to have his day in the Senate on the merits, and if that is done, I believe he will be confirmed.

Mr. SPECTER

Mr. SPECTER. Mr. President, on June 14, 1995, I filed, on behalf of myself and my distinguished colleague and vice chairman of the Select Committee on Intelligence, Senator Kerrey, a bill which authorizes appropriations for fiscal year 1996 for the intelligence activities and programs of the U.S. Government. The Select Committee on Intelligence approved the bill by a unanimous vote on May 24, 1995, and ordered that it be favorably reported. This bill would: First, authorize appropriations for fiscal year 1996 for (a) the intelligence activities and programs of the U.S. Government; (b) the Central Intelligence Agency Retirement and Disability System; and (c) the Community Management Account of the Director of Central Intelligence; Second, authorize the personnel ceilings as of September 30, 1996, for the intelligence activities of the United States and for the Community Management Account of the Director of Central Intelligence; Third, authorize the Director of Central Intelligence, with Office of Management and Budget approval, to exceed the personnel ceilings by up to 2 percent; Fourth, permit the President to delay the imposition of sanctions related to proliferation of weapons of mass destruction when necessary to protect an intelligence source or method or an ongoing criminal investigation; Fifth, provide for forfeiture of the U.S. Government contribution to the Thrift Savings Plan under the Federal Employees Retirement System [FERS], along with interest, if an employee is convicted of national security offenses; Sixth, restore spousal benefits to the spouse of an employee so convicted if the spouse cooperates in the investigation and prosecution; Seventh, to allow employees of the excepted services to take an active part in certain local elections; Eighth, amend the Fair Credit Reporting Act to permit the Federal Bureau of Investigation to obtain consumer credit reports necessary to foreign counterintelligence investigations under certain circumstances and subject to appropriate controls on the use of such reports; and Ninth, make certain other changes of technical nature to existing law governing intelligence agencies. The classified nature of U.S. intelligence activities prevents the committee from disclosing the details of its budgetary recommendations. However, the committee has prepared a classified supplement to the report, which contains: First, the classified annex to the report; second, and the classified schedule of authorizations which is incorporated by reference in the act and has the same legal status as a public law. The classified annex to the report explains the full scope and intent of the committee's actions as set forth in the classified schedule of authorizations. This classified supplement to the committee report is available for review by any Member of the Senate, subject to the provisions of Senate Resolution 400 of the 94th Congress. The classified supplement is also made available to affected departments and agencies within the intelligence community. scope of committee review As it does annually, the committee conducted a detailed review of the administration's budget request for the National Foreign Intelligence Program [NFIP] for fiscal year 1996. The committee also reviewed the administration's fiscal year 1996 request for a new intelligence budget category, called the Joint Military Intelligence Program [JMIP]. The committee's review included a series of briefings and hearings with the Director of Central Intelligence [DCI], the Acting Deputy Assistant Secretary of Defense for Intelligence and Security, and other senior officials from the intelligence community, numerous staff briefings, review of budget justification materials, and numerous written responses provided by the intelligence community to specific questions posed by the committee. In addition to its annual review of the administration's budget request, the committee performs continuing oversight of various intelligence activities and programs, to include the conduct of audits and reviews by the committee's audit staff. These inquiries frequently lead to actions initiated by the committee with respect to the budget of the activity or program concerned. The committee also reviewed the administration's fiscal year 1996 budget requests for the Tactical Intelligence and Related Activities [TIARA] Program aggregation of the Department of Defense. The committee's recommendations regarding these programs are provided separately to the Committee on Armed Services for consideration within the context of that committee's annual review of the National Defense Authorization Act. followup to the ames espionage case In the wake of last year's controversy surrounding the Ames espionage case, the intelligence community leadership pledged renewed dedication to the counterintelligence mission. In the testimony he gave before the committee at his confirmation hearing in open session, DCI Deutch stated that counterintelligence was one of the four principal purposes toward which the intelligence community should direct its efforts. The committee and CIA Inspector General reports on the Ames espionage case published last year identified several serious shortcomings on the part of the Central Intelligence Agency. The committee held a closed hearing with intelligence community officials on January 25, 1995, to review progress made to date in implementing counterintelligence reforms recommended by the aforementioned reports by DCI Woolsey. The committee also focused on the adequacy of counterintelligence programs and activities in the context of its review and markup of the administration's fiscal year 1996 budget request and provides several recommendations to enhance U.S. capabilities in this critical area in the classified annex accompanying the report. Another issue raised by the Ames case is the apparent failure of the intelligence community to weed out poor performers. That Aldrich Ames was not only retained but promoted despite clear problems with alcohol and marginal performance is testament to a personnel process in need of reform. The committee has included in this bill a provision requiring the DCI to develop for all civilian employees in the intelligence community personnel procedures to provide for mandatory retirement for expiration of time in class and termination based on relative performance, comparable to sections 607 and 608, respectively, of the Foreign Service Act of 1980. focus on high-priority areas Notwithstanding the rhetorical priority placed on critical intelligence topics such as proliferation, terrorism, and counternarcotics, the committee has identified areas where insufficient funds have been programmed for new capabilities, or where activities are funded in the name of high-priority targets which make little or no contribution to the issue. Therefore, in the classified annex accompanying the report, the committee recommends a number of initiatives to enhance U.S. capabilities in the areas of proliferation, terrorism, and counternarcotics. creation of a joint military intelligence program As noted above, this year the administration submitted a modification of the existing budgeting structure for intelligence activities and programs, by adding a third budget category--the Joint Military Intelligence Program--to supplement the existing NFIP and TIARA. The administration acted to resubordinate formerly national and tactical programs under JMIP and created a new management structure to oversee JMIP that includes senior officials of the intelligence community and Defense. The JMIP Program executive is the Deputy Secretary of Defense, who also chairs the new Defense Intelligence Executive Board [DIEB]--a senior management body providing planning, programming, and budget oversight of defense intelligence. JMIP was initially established by Secretary of Defense memorandum dated May 14, 1994, which was superseded by Department of Defense directive 5205.0, dated [[Page S 8617]] April 7, 1995. The administration is submitting the first JMIP budget request to the Congress in fiscal year 1996. The committee does not yet endorse the decision by the Deputy Secretary of Defense and the Director of Central Intelligence [DCI] to develop a new set of funding criteria for intelligence activities. The committee understands the Defense Department's requirement to exercise more top-down oversight and control of defense intelligence programs and to create a management forum for evaluating these activities. Additionally, advances in technology have made the former definitions of national and tactical less meaningful to the budget process. However, the committee has reservations about whether the administration proposal for three intelligence programs is the optimal solution. Further, the committee is not convinced that the presence of the Director of Central Intelligence on the DIEB, or the joint review process undertaken by the DCI and Deputy Secretary of Defense, will ensure that both intelligence community and Defense Department equities are served in the planning, programming, and management of all intelligence activities and programs. The committee plans to review the appropriate budgeting structure for intelligence as part of its review of the roles and missions of the intelligence community later this year. In addition, the committee is concerned that the fiscal year 1996 budget request includes many programs that are budgeted in one intelligence program but more appropriately belong in another intelligence program according to the definitions set forth by the Deputy Secretary of Defense and the DCI. A partial listing of such programs is provided by the committee for illustrative purposes: Programs belonging in NFIP because they serve multiple departments: Cobra Dane, which this fiscal year is programmed in the administration's budget request for the Arms Control and Disarmament Agency. The committee recommends returning funding responsibility for this important arms control monitoring capability to the NFIP; Air Force's Cobra Judy, a specialized shipborne reconnaissance program, funded in TIARA; Navy's P-3C Reef Point, a specialized airborne reconnaissance program, funded in TIARA. Programs belonging in JMIP because they serve multiple DOD components: Army's Guardrail and airborne reconnaissance low programs, funded in TIARA; Air Force's E-8C joint surveillance tracking and reconnaissance system, funded in TIARA; Air Force's space-based infrared system, funded in TIARA. Programs belonging in TIARA because they serve single military departments: Army's European command combat intelligence readiness facility, funded in the NFIP; Navy's fleet ocean surveillance information facility in the European theater, funded in the NFIP. With the exception of Cobra Dane, the committee makes no recommendations this fiscal year to transfer any of these programs, primarily to avoid confusion and the potential for an unintended appropriated-not authorized situation. Further, the committee does not necessarily agree that last year's decision by the administration to consolidate funding for spaceborne and airborne reconnaissance acquisition in the NFIP and JMIP respectively--regardless of the intended customer base--makes sense in light of the new definitions for programming and budgeting intelligence activities and programs. The committee believes that the DCI and Deputy Secretary of Defense should review jointly the budget categories of these and other programs prior to the submission of the fiscal year 1997 budget request and make the appropriate adjustments. Further, the DCI and Deputy Secretary of Defense should consider whether split funding arrangements; that is, funding provided by more than one intelligence budget category, are required for those organizations charged with acquisition of intelligence platforms; that is, the Defense Airborne Reconnaissance Office and the National Reconnaissance Office, on the grounds of improved management efficiency without regard to the consumer base as defined by Executive Order 12333 and Department of Defense Directive 5205.0. The committee requests that a report assessing these issues and outlining any specific programmatic adjustments made in the President's fiscal year 1997 budget request to more accurately reflect the intent of the new budgeting system be provided to the Intelligence and Defense Committees by March 1, 1996. committee recommendations on jmip Unlike the activities of the National Foreign Intelligence Program which the committee also authorizes, many activities funded by the new Joint Military Intelligence Program are unclassified. However, the amount of the total fiscal year 1996 budget request for JMIP, like that for the NEIP, is classified, as is any comprehensive treatment of JMIP elements. Given these facts, and in order to provide for the greatest degree of openness possible, the committee provides in the following sections its unclassified recommendations on JMIP elements. Further recommendations, as well as classified details on these unclassified recommendations, are provided in the classified annex accompanying this bill. airborne reconnaissance priorities The committee believes that it is vital to maintain a robust airborne reconnaissance force that is capable of collection satisfying priority intelligence requirements in peacetime, crisis, and war. The committee also understands that, in a zero sum gain budget environment, choices need to be made between upgrades to current manned system and the development of new unmanned platforms. Due to the increasing demands and requirements placed on our Nation's current generation of manned reconnaissance systems, the committee makes the following recommendations to redirect resources requested for unmanned aerial vehicle development activities to several manned reconnaissance upgrades which the committee views as essential in order to provide mission-capable forces to the warfighting commanders-in-chief [CINC's]. Accordingly, the committee recommends changes to the administration's fiscal year 1996 budget request to terminate one of five unmanned aerial vehicle [UAV] programs currently under development by the Defense Airborne Reconnaissance Program [DARP] and, instead, to reallocate these resources to provide for the upgrade of existing manned reconnaissance platforms. Conventional High Altitude Endurance UAV The committee recommends termination of the conventional high altitude endurance unmanned aerial vehicle [CONV HAE UAV] development effort, a reduction to the DARP in fiscal year 1996 of $117 million. The committee believes that the CONV HAE UAV will not provide an increased capability over the current U-2 airborne reconnaissance fleet and is therefore not required. The U-2 is an operational system currently supporting warfighting and national intelligence requirements. The CONV HAE UAV is an advanced concept technology demonstration [ACTD] project and has not achieved first flight. In fact, the U-2 is a much more capable multisensor reconnaissance aircraft today than the CONV HAE UAV is designed to be. The U-2 fleet provides radar, electro-optical, and film imagery as well as electronic intelligence collection support to national, theater, and tactical commanders. The CONV HAE UAV will have only imagery sensors, and these will be less capable than those on-board the U-2. The U-2 has a much greater payload capacity than the CONV HAE UAV design. The U-2 affords a deeper look capability than planned for the CONV HAE UAV. Further, the committee understands that the CONV HAE UAV operational concept, now under development, is virtually identical to that of the U-2. Cost comparisons are difficult to make because the U-2 is an existing asset flying missions on a daily basis and the CONV HAE UAV is an ACTD and has no flight experience. However, information provided to the committee by the DARP indicates that the flying hour costs of the UAV are comparable to the U-2. The committee believes that development by the DARP of the low observable high altitude endurance unmanned [[Page S 8618]] aerial vehicle [LO HAE UAV] as a complementary system to the U-2 will provide the most capability to national policymakers and the warfighter. The committee strongly suggests that the Department investigate increases in capability that can be achieved in the LO HAE UAV if the goal for unit fly-away cost is increased from $10 to $20 million. The committee requests that the DARO prepare an analysis on this alternative and provide it to the intelligence and defense committees by March 1, 1996. RC-135V/W Rivet Joint Engine Upgrades Rivet Joint is an Air Force reconnaissance program which provides all weather, worldwide signals intelligence collection support to theater commanders. The committee has become concerned with the high OPTEMPO of the RC-135V/W Rivet Joint reconnaissance fleet. The RC-135 airframes currently are logging an extraordinary number of annual flight hours. Additionally, the schedule frequency and the extended mission times of the Rivet Joint program contribute significantly to the fuel and operating costs of the aircraft. Further, the current engines do not meet State III noise levels or EPA emission standards. The committee is aware that the Air Force is considering the establishment of a reengining program for the RC-135 aircraft. Reengining with the CFM-56 engines common to the tanker fleet and commercial airlines would increase RC-135 nominal operating altitudes considerably, thereby greatly enhancing sensor field-of-view and area coverage, decreasing fuel consumption, increasing on-station time, and improving short-field capability for contingency operations. Current tanker support requirements and tanker flying could also be reduced significantly. Therefore, the committee recommends an authorization of $79.5 million in fiscal year 1996 to begin reengining the RC-135 fleet. The committee expects the DARP to budget the additional funds required to continue reengining in fiscal year 1997 and beyond. u-2 upgrades While the committee is supportive of the DARP initiative to define a joint airborne SIGINT architecture [JASA], there is concern about the affordability of this approach for the military departments. The committee is also concerned with the Defense Department's apparent decision not to continue upgrading current platforms while focusing funding exclusively on a new development program. Therefore, the committee recommends an authorization of $20 million in fiscal year 1996 for the DARP to initiate a sensor upgrade program for the U-2 fleet. Further details about the proposed upgrade are contained in the classified annex accompanying this bill. The committee expects the DARP to budget for the remaining funds required to complete this upgrade in fiscal year 1997 and beyond. The committee also believes that this upgrade should be fully compliant with JASA standards. The committee also makes a recommendation to improve the defensive capabilities of the U-2 fleet and provides $13 million in fiscal year 1996 for this purpose. Details of this initiative are included in the classified annex accompanying this bill. As with the proposed sensor upgrade, the committee expects the DARP to budget for the remaining funds required to complete this upgrade in fiscal year 1997 and beyond. defense intelligence counter drug analysis initiatives In line with the committee's efforts to enhance intelligence capabilities in the area of counternarcotics and other high-priority issues, the committee recommends an authorization of an additional $7 million in fiscal year 1996 to the Defense Intelligence Counterdrug Program [DICP]. These funds should be applied against a variety of high-priority, counterdrug analysis, and connectivity programs identified by the DICP program manager. Details of this initiative are included in the classified annex accompanying this bill. information systems security While the administration's fiscal year 1996 budget request for DOD's Information Systems Security Program provides for a significant increase over the amounts requested in fiscal year 1995, the committee notes that information security [INFOSEC] personnel and resources will still have declined by roughly 40 percent since 1987. Meanwhile, in planning for future conflicts, the Department of Defense is deliberately placing increased reliance on information systems to compensate for a reduced force structure. The committee does not believe that the Department of Defense has adequately assessed U.S. information security requirements. Further, it does not believe that there is a coherent plan or program to rectify the vulnerabilities identified by the Joint Security Commission, the Commission on Roles and Missions, and independent organizations such as the Rand Corp. An effective and comprehensive U.S. policy needs to be developed in order to prepare an integrated response that recognizes not only the vulnerabilities of U.S. Government communications, but the vulnerabilities of the underlying public switch network [PSN]. In that regard, it is not clear what benefits can be achieved through increased DOD spending on information security when over 95 percent of DOD communications travel over PSN and the PSN is not protected against attacks that sophisticated adversaries may employ in future conflicts. In sum, a comprehensive U.S. INFOSEC plan urgently needs to be developed. The committee therefore, in its report, requests the DCI and the Secretary of Defense to prepare a comprehensive report which: (a) identifies the key threats to U.S. computers and communications systems, including those of both the Government and the private sector; that is, the public switch network upon which the Government heavily depends; and, (b) provides a comprehensive plan for addressing the threats described in section (a), to include any necessary legislative or programmatic recommendations required to protect Government or private U.S. information systems. The report is to be provided to the Intelligence and Defense Committees not later than March 1, 1996. In the absence of such a plan, the committee remains skeptical regarding the benefits that can be achieved through increased funding for the Department of Defense Information Systems Security Program. commercial off-the-shelf technology It is the sense of the committee that, to the extent practicable, all high performance computing and communications [HPCC] equipment and products purchased with funds authorized in this act should be commercial-off-the-shelf [COTS] or modified COTS. The Department of Defense has already adopted a COTS policy in its purchase of high performance computing and communications systems, with significant cost savings to the taxpayers and with excellent performance results. Moreover, the Department's September 1994 defense technology plan, prepared by the Director of Defense Research and Engineering, recommends the utilization of more commercially viable technologies in the purchase of high performance computer systems. (Computing and Software, Defense Technology Plan.) The committee also believes that the application of a COTS technology policy among the intelligence agencies should be adopted and implemented beginning in fiscal year 1996. The committee is hopeful that a COTS policy for the procurement of high performance computing and communications equipment could save millions of dollars and maintain the quality and performance standards required by the intelligence agencies both now and in the future. Therefore, the committee included in the report a request that the agencies receiving funding authorized in this bill begin the process of adopting COTS technology procurement procedures in their high performance computing and communications programs and report, through the DCI, to the Intelligence and Defense Committees not later than May 1, 1996, regarding compliance with this request. technologies to improve sound processing devices used by the profoundly deaf Recent technological advances have made it possible for the medical community to provide substantial hearing to profoundly deaf individuals who cannot benefit from conventional hearing aids. Surgically implanted electrodes, combined with external speech processing devices, have the demonstrated ability to provide sound information across the frequency range even at low [[Page S 8619]] volume; that is, 30 decibels. Some children and adults, who would have had no option other than to use sign language, now have access to spoken language and can function in school and the workplace without any use of sign language. While the benefits can be enormous, it is also true that the quality of sound provided by cochlear implants is still crude compared to normal hearing. Remarkable progress has been made, but many technical issues remain, including the reliability, size, and the effectiveness of the hardware and software used by manufacturers of sound processing devices. The intelligence community, and the National Security Agency in particular, is a world leader in speech and signal processing. It is quite possible that some of the sophisticated technologies employed by the intelligence community could increase the signal-to-noise ratio in the sound processing devices used by the profoundly deaf. The committee has recently seen how imaging technology developed by the intelligence community can be adapted to cancer screening by the medical community, and it is the committee's hope that similar success can be achieved in this area. In the report accompanying this bill, therefore, the committee requests the intelligence community to contact U.S. manufacturers of cochlear implant devices, review their technical needs, and identify any technologies that might be shared with such manufacturers in order to improve the quality of hearing for the hearing impaired. The committee also requests a report outlining the results of the intelligence community's review, to include identification of any capabilities that should be shared with U.S. manufacturers of cochlear implants, not later than May 1, 1996. Mr. President, I ask that the full text of the bill be printed in the Record. The text of the bill follows:

Mr. SPECTER

Mr. SPECTER. Mr. President, I have sought recognition to speak more fully about my amendment on telecommuting, which passed the Senate yesterday by voice vote. My amendment directs the Secretary of Transportation to research successful telecommuting programs and to inform the general public as to the types of telecommuting programs that are succeeding and the benefits and costs of such programs. This amendment is appropriate in the context of the pending bill, which accelerate the deployment of advanced telecommunications and information technologies. As my colleagues are aware, telecommuting is the practice of allowing people to work either at home or in nearby centers located closer to their home during their normal working [[Page S8471]] hours, substituting telecommunications services, either partially or fully, for transportation to the traditional workplace. I believe that it is in the national interest to encourage the use of telecommuting because it can enable flexible family-friendly employment, reduce air pollution, and conserve energy. Further, as a Senator from a State which has major urban areas like Pittsburgh and Philadelphia, I recognize there is a real need to improve the qualify of life in and around America's cities. According to a July, 1994, Office of Technology Assessment report, between 2 to 8 million American workers already telecommute at least part time. A 1994 survey by the conference board found, however, that in 155 businesses nationwide, only 1 percent of employees telecommute, although 72 percent of the businesses had such an option. According to the Office of Technology Assessment, the most significant barriers to telecommuting are business and worker acceptance and costs. This legislation responds to the need to broaden public awareness of the benefits and costs of telecommuting, and to identify and highlight successful programs that can be duplicated. I believe telecommuting is profamily. I have seen several news articles which featured working mothers and other parents who endorse telecommuting as benefiting child care and flexibility generally. One General Services Administration employee who now telecommutes was interviewed for a June 11, 1995, Washington Post article remarked, ``I just wish they had this much sooner, when my kids were little.'' Telecommuting should also appeal to computer-literate younger Americans, such as those described as Generation X, for whom a balance between work and lifestyle is very important. This new generation of American workers is the most adept at utilizing computers and should welcome the opportunity to spend less time commuting and more time pursuing other interests. It is also important to note that some physically impaired individuals are able to obtain jobs thanks to their ability to telecommute. An April 23, 1995, Boston Globe article detailed a pilot project in Massachusetts, where physically impaired individuals such as the legally blind and quadriplegics do transcription work for doctors and hospitals. One women who suffered crippling injuries in an automobile accident noted that she never thought she'd work again, but that this new telecommuting program ``is like a gift sent from heaven.'' Telecommuting should be of interest because of its potential implications for transportation, particularly the mitigation of traffic congestion. The Energy Department issued a report in June, 1994, in which it stated that telecommuting and its benefits will be concentrated in the largest, most congested urban areas, with 90 percent of the benefits accruing to the 75 largest American cities. Thus, the greatest benefits will occur where they are most needed. Reflecting the direct effects of telecommuting on transportation, the Department of Transportation has reported that in 1992, telecommuting saved 2 million Americans an estimated 3.7 billion vehicle miles, 178 million gallons of gasoline, and 77 hours of commuting time each. The Department also estimated that telecommuting would lead to reductions of hydrocarbons and nitrogen oxides on the order of 100,000 tons in the year 2002 and 1 million tons of carbon monoxide. Rural areas should also benefit from a broader use of telecommuting because more employment opportunities would be available through the information superhighway. My amendment is simple and straightforward. It directs the Secretary of Transportation to identify successful telecommuting programs used by Government agencies and companies and publicize information about such programs in order to broaden public awareness of the benefits of telecommuting. The Secretary would carry out this directive in consultation with the Secretary of Labor and the Administrator of the Environmental Protection Agency, so that work force and environmental concerns will be taken into account. The Secretary of Transportation would also be required to report to Congress on his findings, conclusions, and recommendations with respect to telecommuting within 1 year of enactment. Using such information, Congress may consider whether additional legislation to promote telecommuting is warranted or desirable. I ask unanimous consent that the texts of the Washington Post and Boston Globe articles I have mentioned be printed in the Record.

Mr. SPECTER

Mr. SPECTER. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. SPECTER. I ask unanimous consent there be no reporting of the amendment so I may explain it.

Mr. SPECTER. This amendment directs the Secretary of Transportation, in consultation with the Labor Department and EPA, to identify successful governmental and business telecommuting programs and to disseminate information about such programs, including the benefits of telecommuting, to the general public. The amendment is intended to promote the increased use of telecommuting through a broader awareness of the benefits, including flexibility, profamily employment, reduced traffic congestion, and lower fuel consumption. The Secretary of Transportation will be required to report to Congress on his findings, conclusions, and recommendations regarding telecommuting within 1 year of enactment. It is my understanding this amendment is acceptable on both sides.

Mr. SPECTER. Mr. President, I move to reconsider the vote.

Mr. SPECTER. It has been previously filed.

Mr. SPECTER

Mr. SPECTER. Mr. President, I ask the distinguished Senator from Delaware to yield.

Mr. SPECTER. If I may respond further to my colleague, if that is so, that is something that I would certainly concur ought to be corrected. And I would take a look at that section right now. Mr. President, I suggest the absence of a quorum.

Mr. SPECTER. I do not have the referenced section. Let me get it.

Mr. SPECTER. I do.

Mr. SPECTER. Mr. President, I certainly agree with the distinguished Senator from Delaware that we have to be meticulous on right to counsel. We cite Gideon versus Wainwright, and I was assistant district attorney when that case was decided in 1963. I am glad to say that in our Pennsylvania courts, in Philadelphia, counsel had been provided for indigent defendants long before the Supreme Court of the United States made that a constitutional mandate in the landmark Gideon case, written by Justice Black, which said counsel was required for anyone who is hauled into court to face felony charges. On a very personal note, I got my introduction into criminal law when I was assisting defendants back in March 1958, when I took my first turn defending indigents going down to the prison in the city of Philadelphia and had, as a matter of fact, my first taste of what the role of the trial lawyer was, of criminal prosecutions, and of being in public service. As I understand these provisions of the bill, it will greatly improve the extraordinarily technical and complicated procedure that when a State opts into the expedited procedures, there is additional responsibility on the State under the provisions of section 2261(b) to establish a mechanism for the appointment of compensation and payment of reasonable litigation expenses of competent counsel at the State postconviction proceedings brought by indigent prisoners. On the point about ex parte contacts by defense counsel, I doubt that there is any real quarrel about the requirement that defense lawyers ought to make an application in the presence of opposing counsel and ought to make that application in advance of wanting to hire experts. So it seems to me that whatever the state of the law is this is an advancement in requiring that States under this provision that I just read have competent counsel.

Mr. SPECTER. Even if you had a statutory provision, it would not alter the constitutional mandate of Gideon versus Wainwright. Not that we should trifle with language which would in any way suggest undercutting the constitutional right to counsel, but if a statute in error were to say that, Gideon versus Wainwright would control. You simply cannot have a criminal proceeding where there is not counsel appointed for the defendant.

Mr. SPECTER. I shall be brief, holding to 5 minutes.