(Senate - August 02, 2011)

Text available as:

Formatting necessary for an accurate reading of this text may be shown by tags (e.g., <DELETED> or <BOLD>) or may be missing from this TXT display. For complete and accurate display of this text, see the PDF.

[Pages S5254-S5267]
From the Congressional Record Online through the Government Publishing Office []


      By Mrs. GILLIBRAND (for herself and Mr. Hatch):
  S. 1469. A bill to require reporting on the capacity of foreign 
countries to combat cybercrime, to develop action plans to improve the 
capacity of certain countries to combat cybercrime, and for other 
purposes; to the Committee on Foreign Relations.
  Mr. HATCH. Mr. President, I rise today to reintroduce the 
International Cybercrime Reporting and Cooperation Act with Senator 
Kirsten Gillibrand, which if enacted, will establish a framework for 
global cooperation on the fight against cybercrime. As the United 
States continues to work on combating cybercrime here at home, we must 
simultaneously direct our attention to the international arena. With 
bipartisan support and valued input from affected industry, we have 
worked together on drafting a bill that encompasses reporting measures, 
action plans, and multilateral efforts in support of government 
cooperation to dismantle this global threat.
  This bill increases the U.S. Government's focus on combating 
cybercrime internationally by requiring the President, or his designee, 
to annually report to Congress on the assessment of the cybercrime 
fighting efforts of the countries chosen by key federal agencies in 
consultation with private sector stakeholders. The countries to be 
reviewed are those with a significant role in efforts to combat 
cybercrime impacting U.S. Government, entities and persons, or 
disrupting U.S. electronic commerce or intellectual property interests.
  Cyberspace remains borderless, with no single proprietor. 
Accordingly, the United States must take the lead on maintaining the 
openness of the Internet, while securing accountability. If a country 
is a haven for cybercrime, or simply has demonstrated a pattern of 
uncooperative behavior with efforts to combat cybercrime, that nation 
must be held accountable. The government of each country must conduct 
criminal investigations and prosecute criminals when there is credible 
evidence of cybercrime incidents against the U.S. government, our 
private entities or our people.
  With so many U.S. companies doing business overseas, we must do our 
part to safeguard their employees, their jobs, and their clients from 
cyber attacks. Our objective is simple: We need international 
cooperation to increase assistance and prevention efforts of cybercrime 
from those countries deemed to be of cyber concern. Without 
international cooperation, our economy, security, and people will 
continue to be under threat.
  Cybercrime is a tangible threat to the security of our global 
economy, which is why we need to coordinate our fight worldwide. Until 
countries begin to take the necessary steps to fight criminals within 
their borders, cybercrime havens will continue to flourish. Countries 
that knowingly permit cybercriminals to attack within their borders 
will now know that the United States is watching, the global community 
is watching, and there will be consequences for not acting.
      By Mr. HATCH (for himself and Mr. Coburn):
  S. 1476. A bill to reduce the size of the Federal workforce and 
Federal employee cost relating to pay, bonuses, and travel; to the 
Committee on Homeland Security and Governmental Affairs.
  Mr. HATCH. Mr. President, after a contentious several months 
navigating the increase in the debt ceiling, Congress will be returning 
home in the next few days. I think many of us are anxious to go back to 
the States, where we will hear from our fellow citizens about their 
thoughts on what we are doing well and where we are falling short.
  Getting out of Washington and returning to our States will be a 
relief, but I am fully aware that after this brief respite, we will 
come back to Washington in the fall with many more contentious issues 
still on our plates.
  Our Nation is still on an unsustainable fiscal path, even with 
today's temporary resolution of the issues surrounding the debt 
ceiling. In addition, we have a government that has grown far too large 
and has taken on far too many obligations.
  Today, with all these concerns in mind, I am joined by Senator Tom 
Coburn in introducing the Federal Workforce Reduction and Reform Act of 
2011. If enacted, this bill will go a long way toward reducing the size 
of the Federal Government and helping to get our Nation's fiscal house 
in order.
  Specifically, our bill would extend the current pay freeze for 
Federal civilian employees for another 3 years. Bonuses paid Federal 
employees would also be frozen during that time. Currently, Federal 
workers receive an automatic cost-of-living adjustment every year and 
are eligible for relocation, retention, and performance bonuses as 
  While I don't begrudge government employees their compensation, these 
automatic increases come with significant costs and far outpace those 
typically offered in the private sector. By simply extending the 
current pay freeze for another 3 years, we will save the Federal 
Government roughly $140 billion over 10 years.
  In addition, our bill would require the President, in consultation 
with the Office of Management and Budget and the Office of Personnel 
Management, to reduce the size of the Federal workforce by 15 percent--
roughly 300,000 employees--over the next 10 years. This could easily be 
accomplished through attrition and would save taxpayers over $225 
billion over that time.
  The bill would require a similar reduction in the Federal contract 
workforce as well. We have nothing against Federal agencies contracting 
services out to private venders. However, the significant increase in 
this practice

[[Page S5255]]

over the last several years has masked the size of the Federal 
Government. Indeed, when you include the contract workforce, the 
Federal Government is even larger than it appears.
  Our bill would require that the President work with OMB and OPM to 
count the number of employees working on Federal contracts and reduce 
that number by 15 percent over the next 10 years. This would provide an 
even greater reduction in the size of the Federal Government and save 
taxpayers another $230 billion over the next decade.
  Finally, this bill would reduce the travel budgets of Federal 
agencies by 75 percent over time. All told, the Federal Government 
spends over $15 billion a year on travel expenses. Most businesses 
respond to difficult financial times by reducing or eliminating 
unnecessary expenses. Most private sector leaders would tell you that 
travel expenses are one of the first things on the chopping block. 
Furthermore, improvements in teleconferencing technology and web-based 
communication have made much of the government-sponsored travel that 
was required in the past unnecessary.
  Our bill would cut Federal travel expenses in half for the first 2 
years, and then by three quarters thereafter. This will save American 
taxpayers something in the neighborhood of $40 billion over 10 years.
  Mr. President, our Nation is currently in the midst of a fundamental 
debate over the constitutional limits on the Federal Government. The 
President and his allies see no bounds for a living Constitution, while 
conservatives like myself believe that Federal power has far exceeded 
the Founders' limits and is a genuine threat to personal liberty.
  While this debate will likely not be resolved anytime soon, most of 
us can agree that we need to take immediate steps to address our 
Nation's looming fiscal crisis. The deal that was approved today was a 
step in the right direction, but it was only one step. We must do more, 
and we can do more, to right our fiscal ship. Some may see things 
differently, but I don't see any way that we can restore the integrity 
of the Nation's fiscal position without significantly reducing the size 
and cost of the Federal Government. The bill we are introducing today 
would be an important and measurable step toward that goal.
  According to the numbers and methodology used by the National 
Commission on Fiscal Responsibility and Reform, these changes combined 
will save American taxpayers more than $600 billion over 10 years. 
These are significant numbers. They represent more than half of the 
deficit reduction required in the first part of the deal agreed to 
today, and they could easily be realized if we enact this small handful 
of relatively simple reforms.
  I want to thank Senator Coburn--who continues to be a leader in the 
fight to bring us back to fiscal sanity--for his help and support on 
this bill. His has been a tireless voice against government excess and 
I am proud to join with him in this fight.
  I urge all my colleagues to support the Federal Workforce Reduction 
and Reform Act of 2011.
      By Mr. LEVIN (for himself and Mr. Grassley):
  S. 1483. A bill to ensure that persons who form corporations in the 
United States disclose the beneficial owners of those corporations, in 
order to prevent wrongdoers from exploiting United States corporations 
in ways that threaten homeland security, to assist law enforcement in 
detecting, preventing, and punishing terrorism, money laundering, and 
other misconduct involving United States corporations, and for other 
purposes; to the Committee on Homeland Security and Governmental 
  Mr. LEVIN. Today, I along with my colleague, Senator Grassley, am re-
introducing the Incorporation Transparency and Law Enforcement 
Assistance Act, a bill designed to combat terrorism, money laundering, 
tax evasion, and other wrongdoing facilitated by U.S. corporations with 
hidden owners. This commonsense bill would end the practice of our 
States forming over about 2 million new corporations each year for 
unidentified persons, and instead require the States to ask for the 
identities of the persons establishing those corporations. With those 
names on record, U.S. law enforcement faced with corporate misconduct 
would then have a trail to chase instead of what today is too often a 
dead end.
  Our bill is supported by key law enforcement organizations, including 
the Federal Law Enforcement Officers Association, the Fraternal Order 
of Police, the National Association of Assistant United States 
Attorneys, the National Narcotic Officers' Associations Coalition, the 
United States Marshals Service Association, the Society of Former 
Special Agents of the Federal Bureau of Investigation, and the 
Association of Former ATF Agents. It is also endorsed by a number of 
small business and public interest groups, including the Main Street 
Alliance, Sustainable Business Network of Washington, Global Financial 
Integrity, Global Witness, Public Interest Research Group, Project on 
Government Oversight, Jubilee USA, Citizens for Tax Justice, Tax 
Justice Network USA, and the FACT Coalition.
  This is the third time this bill has been introduced. In the 110th 
Congress, when the bill was introduced for the first time and he was a 
member of the U.S. Senate, President Obama served as an original 
cosponsor. It's an issue that has become more urgent with time.
  Right now, it takes more information to get a drivers license or open 
a U.S. bank account than to form a U.S. corporation. Under current law, 
U.S. corporations can be established anonymously, by hidden owners who 
don't reveal their identity. Our bill would change that by requiring 
any State that accepts anti-terrorism funding from DHS to add a new 
question to their existing incorporation forms asking applicants who 
want to set up a new U.S. corporation or limited liability company to 
answer a simple but important question: who are the actual owners?
  That is it. One new question on an existing form. It is not a 
complicated question, yet the answer could play a key role in helping 
law enforcement do their job. Our bill would not require States to 
verify the information, but penalties would apply to persons who submit 
false information. States, or licensed formation agents if a State has 
delegated the task to them, would supply the ownership information to 
law enforcement upon receipt of a subpoena or summons.
  We have all seen the news reports about U.S. corporations involved in 
wrongdoing, from facilitating terrorism to money laundering, financial 
fraud, tax evasion, corruption, and more. Let me give you a few 
  We now know that some terrorists use U.S. shell corporations to carry 
out their activities. Viktor Bout, an arms dealer who has been indicted 
and incarcerated in the United States for conspiracy to kill U.S. 
nationals, used shell corporations around the world in his work, 
including a dozen formed in Texas, Delaware, and Florida. Mr. Bout was 
recently extradited from Thailand to answer for his conduct at which 
time Attorney General Eric Holder stated: ``Long considered one of the 
world's most prolific arms traffickers, Mr. Bout will now appear in 
federal court in Manhattan to answer to charges of conspiring to sell 
millions of dollars worth of weapons to a terrorist organization for 
use in trying to kill Americans.'' It is unacceptable that Mr. Bout was 
able to set up shell corporations in three of our States and use them 
in illicit activities without ever being asked who owned those 
  In another case, a New York company called the Assa Corporation owned 
a Manhattan skyscraper and, in 2007, wire transferred about $4.5 
million in rental payments to a bank in Iran. U.S. law enforcement 
tracking the funds had no idea who was behind that shell corporation, 
until another government disclosed that it was owned by the Alavi 
Foundation which was known to have ties to the Iranian military. In 
other words, a New York corporation was being used to ship millions of 
U.S. dollars to Iran, a notorious supporter of terrorism.
  U.S. corporations with hidden owners have also been involved in 
financial crimes. In 2011, a former Russian military officer, Victor 
Kaganov, pled guilty to operating an illegal money transmitter business 
from his home in

[[Page S5256]]

Oregon, and using Oregon shell corporations to wire more than $150 
million around the world on behalf of Russian clients. U.S. Attorney 
Dwight Holton of the District of Oregon used stark language when 
describing the case: ``When shell corporations are illegally 
manipulated in the shadows to hide the flow of tens of millions of 
dollars overseas, it threatens the integrity of our financial system.''
  Another recent case involves Florida attorney Scott Rothstein who, in 
2010, pled guilty to fraud and money laundering in connection with a 
$1.2 billion Ponzi investment scheme, in which he used 85 U.S. limited 
liability companies to conceal his participation or ownership stake in 
various real estate and business ventures.
  Tax evasion is another type of misconduct which all too often 
involves the use of U.S. corporations with hidden owners. In 2006, for 
example, the Subcommittee showed how Kurt Greaves, a Michigan 
businessman, worked with Terry Neal, an offshore promoter, to form 
shell corporations in Nevada, Canada, and offshore secrecy 
jurisdictions, to hide more than $400,000 in untaxed business income. 
In 2004, both Mr. Greaves and Mr. Neal pled guilty to Federal tax 
evasion. Also in 2006, the Subcommittee showed how two brothers from 
Texas, Sam and Charles Wyly, created a network of 58 trusts and shell 
corporations to dodge the payment of U.S. taxes, including using a set 
of Nevada corporations to move offshore over $190 million in stock 
options without paying any taxes on that compensation.
  Still another area of abuse involves the misuse of U.S. corporations 
in handling corruption proceeds. One example involves Teodoro Obiang, 
who is the son of the President of Equatorial Guinea, holds office in 
that country, and is currently under investigation by the U.S. Justice 
Department, along with his father, for corruption and other misconduct. 
Between 2004 and 2008, Mr. Obiang used U.S. lawyers to form multiple 
California shell corporations with names like Beautiful Vision, 
Unlimited Horizon, and Sweet Pink; open bank accounts in the names of 
those corporations; and move millions of dollars in suspect funds 
through those and other U.S. banks.
  One last example involves 800 U.S. corporations whose hidden owners 
have stumped U.S. law enforcement which, as a result, has given up 
investigating their suspect conduct. In October 2004, the Homeland 
Security Department's division of Immigration and Customs Enforcement 
or ICE identified a single Utah corporation that had engaged in $150 
million in suspicious transactions. ICE found that the corporation had 
been formed in Utah and was owned by two Panama entities which, in 
turn, were owned by a group of Panama holding corporations, all located 
in the same Panama City office. By 2005, ICE had located 800 additional 
U.S. corporations in nearly all 50 states associated with the same 
shadowy group in Panama, but was unable to obtain the name of a single 
natural person who owned one of the corporations. ICE learned that 
those corporations were associated with multiple investigations into 
tax fraud and other wrongdoing, but no one had been able to find the 
corporate owners. The trail went cold, and ICE closed the case. Yet it 
may be that many of those U.S. corporations are still operative.
  These examples of U.S. corporations with hidden owners involved in or 
facilitating terrorism, financial crime, tax evasion, corruption, or 
other misconduct provide ample evidence of the need for legislation to 
address the problem.
  The Federal Law Enforcement Officers Association or FLEOA, which 
represents more than 26,000 federal law enforcement officers and is a 
strong supporter of the bill, has stated that ``the unfortunate lax 
attitude demonstrated by certain states has enabled large criminal 
enterprises to exploit those State's flawed filing systems.'' FLEOA has 
stated further: ``[W]hile all Americans are inspired by the spirit of 
free enterprise, our membership does not want to see the United States 
adopt the financial hideaway image of Switzerland. We regard corporate 
ownership in the same manner as we do vehicle ownership. Requiring the 
driver of a vehicle to have a registration and insurance card is not a 
violation of their privacy. This information does not need to be 
published in a Yellow Pages, but it should be available to law 
enforcement officers who make legally authorized requests pursuant to 
official investigations.''
  The National Association of Assistant United States Attorneys which 
represents more than 1,500 federal prosecutors, urges Congress to take 
legislative action to remedy inadequate state incorporation practices. 
NAAUSA has written: ``[M]indful of the ease with which criminals 
establish `front organizations' to assist in money laundering, 
terrorist financing, tax evasion and other misconduct, it is shocking 
and unacceptable that many State laws permit the creation of 
corporations without asking for the identity of the corporation's 
beneficial owners. Your legislation will guard against that from 
happening, and no longer permit criminals to exploit the lack of 
transparency in the registration of corporations.''
  Just last week, the Administration released a new Strategy to Combat 
Transnational Organized Crime that focused, in part, on the problem of 
corporations with hidden owners. It stated that transnational organized 
criminal networks ``rely on industry experts, both witting and 
unwitting, to facilitate corrupt transactions and to create the 
necessary infrastructure to pursue their illicit schemes, such as 
creating shell corporations, opening offshore bank accounts in the 
shell corporation's name, and creating front businesses for their 
illegal activity and money laundering.'' The Strategy established as 
one of its action plans to ``[w]ork with Congress to enact legislation 
to require disclosure of beneficial ownership information of legal 
entities at the time of company formation in order to enhance 
transparency for law enforcement and other purposes.''
  We need legislation not only to stop the abuses being committed by 
U.S. corporations with hidden owners, but also to meet our 
international commitments. In 2006, the leading international anti-
money laundering body in the world, the Financial Action Task Force on 
Money Laundering, known as FATF, issued a report criticizing the United 
States for its failure to comply with a FATF standard requiring 
countries to obtain beneficial ownership information for the 
corporations formed under their laws. This standard is one of 40 FATF 
standards that this country has publicly committed itself to 
implementing as part of its efforts to promote strong anti-money 
laundering laws around the world.
  FATF gave the United States two years, until 2008, to make progress 
toward coming into compliance with the FATF standard on beneficial 
ownership information. That deadline passed three years ago, and we 
have yet to make any real progress. Enacting the bill we are 
introducing today would bring the United States into compliance with 
the FATF standard by requiring the States to obtain beneficial 
ownership information for the corporations formed under their laws. It 
would ensure that the United States meets its international commitment 
to comply with FATF anti-money laundering standards.
  The bill being introduced today is the product of years of work by 
the Senate Permanent Subcommittee on Investigations, which I chair. 
Over ten years ago, in 2000, the Government Accountability Office, at 
my request, conducted an investigation and released a report entitled, 
``Suspicious Banking Activities: Possible Money Laundering by U.S. 
Corporations Formed for Russian Entities.'' That report revealed that 
one person was able to set up more than 2,000 Delaware shell 
corporations and, without disclosing the identity of the beneficial 
owners, open U.S. bank accounts for those corporations, which then 
collectively moved about $1.4 billion through the accounts. It is one 
of the earliest government reports to give some sense of the law 
enforcement problems caused by U.S. corporations with hidden owners. 
The alarm it sounded years ago is still ringing.
  In April 2006, in response to a second Subcommittee request, GAO 
released a report entitled, ``Corporation Formations: Minimal Ownership 
Information Is Collected and Available,'' which reviewed the corporate 
formation laws in all 50 States. GAO disclosed that the

[[Page S5257]]

vast majority of the States do not collect any information at all on 
the beneficial owners of the corporations and limited liability 
companies, or LLCs, formed under their laws. The report also found that 
several States have established automated procedures that allow a 
person to form a new corporation or LLC in the State within 24 hours of 
filing an online application without any prior review of that 
application by State personnel. In exchange for a substantial fee, at 
least two States will form a corporation or LLC within one hour of a 
request. After examining these State incorporation practices, the GAO 
report described the problems that the lack of beneficial ownership 
information has caused for a range of law enforcement investigations.

  In November 2006, our Subcommittee held a hearing on the problem. At 
that hearing, representatives of the U.S. Department of Justice, the 
Internal Revenue Service, and the Department of Treasury's Financial 
Crimes Enforcement Network or FinCEN testified that the failure of 
States to collect adequate information on the beneficial owners of the 
legal entities they form had impeded federal efforts to investigate and 
prosecute criminal acts such as terrorism, money laundering, securities 
fraud, and tax evasion. At the hearing, the Justice Department 
testified: ``We had allegations of corrupt foreign officials using 
these [U.S.] shell accounts to launder money, but were unable--due to 
lack of identifying information in the corporate records--to fully 
investigate this area.'' The IRS testified: ``Within our own borders, 
the laws of some states regarding the formation of legal entities have 
significant transparency gaps which may even rival the secrecy afforded 
in the most attractive tax havens.'' As part of its testimony, FinCEN 
described identifying 768 incidents of suspicious international wire 
transfer activity involving U.S. shell corporations.
  The next year, in 2007, in a ``Dirty Dozen'' list of tax scams active 
that year, the IRS highlighted shell corporations with hidden owners as 
number four on the list. It wrote:

       4. Disguised Corporate Ownership: Domestic shell 
     corporations and other entities are being formed and operated 
     in certain states for the purpose of disguising the ownership 
     of the business or financial activity. Once formed, these 
     anonymous entities can be, and are being, used to facilitate 
     underreporting of income, non-filing of tax returns, listed 
     transactions, money laundering, financial crimes and possibly 
     terrorist financing. The IRS is working with state 
     authorities to identify these entities and to bring their 
     owners into compliance.

  It was also in 2007, that we first introduced our bipartisan 
legislation, which was S. 2956 back then, to stop the formation of U.S. 
corporations with hidden owners. It was a Levin-Coleman-Obama bill. 
When asked about the bill in 2008, then DHS Secretary Michael Chertoff 
wrote: ``In countless investigations, where the criminal targets 
utilize shell corporations, the lack of law enforcement's ability to 
gain access to true beneficial ownership information slows, confuses or 
impedes the efforts by investigators to follow criminal proceeds.''
  In 2009, the Senate Homeland Security and Governmental Affairs 
Committee held two hearings which examined not only the problem, but 
also possible solutions, including our by then revised bill, S. 569. At 
the first hearing entitled, ``Examining State Business Incorporation 
Practices: A Discussion of the Incorporation Transparency and Law 
Enforcement Assistance Act,'' held in June 2009, DHS testified that 
``shell corporations established in the United States have been 
utilized to commit crimes against individuals around the world.'' The 
Manhattan District Attorney's office testified: ``For those of us in 
law enforcement, these issues with shell corporations are not some 
abstract idea. This is what we do and deal with every day. We see these 
shell corporations being used by criminal organizations, and the record 
is replete with examples of their use for money laundering, for their 
use in tax evasion, and for their use in securities fraud.''
  At the second hearing, ``Business Formation and Financial Crime: 
Finding a Legislative Solution,'' held in November 2009, the Justice 
Department again testified about criminals using U.S. shell 
corporations. It also noted that ``each of these examples involves the 
relatively rare instance in which law enforcement was able to identify 
the perpetrator misusing U.S. shell corporations. Far too often, we are 
unable to do so.'' The Treasury Department testified that ``the ability 
of illicit actors to form corporations in the United States without 
disclosing their true identity presents a serious vulnerability and 
there is ample evidence that criminal organizations and others who 
threaten our national security exploit this vulnerability.''
  The 2009 hearings also presented evidence of dozens of Internet 
websites advertising corporate formation services that highlighted the 
ability of corporations to be formed in the United States without 
asking for the identity of the beneficial owners. These websites 
explicitly pointed to anonymous ownership as a reason to incorporate 
within the United States, and often listed certain States alongside 
notorious offshore jurisdictions as preferred locations in which to 
form new corporations, essentially providing an open invitation for 
wrongdoers to form entities within the United States.
  One website, for example, set up by an international incorporation 
firm, advocated setting up corporations in Delaware by saying: 
``DELAWARE--An Offshore Tax Haven for Non US Residents.'' It cited as 
one of Delaware's advantages that: ``Owners' names are not disclosed to 
the state.'' Another website, from a U.K. firm called 
``,'' listed the advantages to 
incorporating in Nevada. Those advantages included: ``Stockholders are 
not on Public Record allowing complete anonymity.''
  During the 2009 hearings, I presented evidence of how one Wyoming 
outfit was selling so-called shelf corporations--corporations formed 
and then left ``on the shelf'' for later sale to purchasers who could 
then pretend the corporations had been in operation for years. More 
recently, a June 2011 Reuters news article wrote a detailed expose of 
how that same outfit, called Wyoming Corporate Services, has formed 
thousands of U.S. corporations all across the country, all with hidden 
owners. The article quoted the website as follows: ``A corporation is a 
legal person created by state statute that can be used as a fall guy, a 
servant, a good friend or a decoy. A person you control . . . yet 
cannot be held accountable for its actions. Imagine the 
  The article described a small house in Cheyenne, Wyoming, which 
Wyoming Corporate Services used to provide a U.S. address for more than 
2,000 corporations that it had helped to form. The article described 
``the walls of the main room'' as ``covered floor to ceiling with 
numbered mailboxes labeled as corporate suites.'' The article reported 
that among the corporations using the address was a shell corporation 
controlled by a former Ukranian prime minister, Pavlo Lazarenko, who 
had been convicted of money laundering and extortion; a corporation 
indicted for helping online-poker operators evade a U.S. ban on 
Internet gambling; and two corporations barred from U.S. federal 
contracting for selling counterfeit truck parts to the Pentagon. The 
article observed that Wyoming Corporate Services continued to sell 
shelf corporations that existed solely on paper but could show a 
history of regulatory and tax filings, despite having had no real U.S. 
operations. That's what is going on right now, here in our own 
backyard, with respect to U.S. corporations.

  Despite the evidence of U.S. corporations being misused by organized 
crime, terrorists, tax evaders, and other wrongdoers, and despite years 
of law enforcement complaints, many of our States are reluctant to 
admit there is a problem in establishing U.S. corporations and LLCs 
with hidden owners. Too many of our States are eager to explain how 
quick and easy it is to set up corporations within their borders, 
without acknowledging that those same quick and easy procedures enable 
wrongdoers to utilize U.S. corporations in a variety of crimes and tax 
dodges both here and abroad.
  Beginning in 2006, the Subcommittee worked with the States to 
encourage them to recognize the homeland security problem they'd 
created and to come up with their own solution. After the 
Subcommittee's 2006 hearing on this issue, for example, the National 
Association of Secretaries of State or

[[Page S5258]]

NASS convened a 2007 task force to examine state incorporation 
practices. At the request of NASS and several States, I delayed 
introducing legislation while they worked on a proposal to require the 
collection of beneficial ownership information. My Subcommittee staff 
participated in multiple conferences, telephone calls, and meetings; 
suggested key principles; and provided comments to the Task Force.
  In July 2007, the NASS task force issued a proposal. Rather than cure 
the problem, however, the proposal had many deficiencies, leading the 
Treasury Department to state in a letter that the NASS proposal ``falls 
short'' and ``does not fully address the problem of legal entities 
masking the identity of criminals.''
  Among other shortcomings, the NASS proposal would not require States 
to obtain the names of the natural individuals who would be the 
beneficial owners of a U.S. corporation or LLC. Instead, it would allow 
States to obtain a list of a corporation's ``owners of record'' who can 
be, and often are, offshore corporations or trusts. The NASS proposal 
also did not require the States themselves to maintain the beneficial 
ownership information, or to supply it to law enforcement upon receipt 
of a subpoena or summons. Instead, law enforcement would have to get 
the information from the suspect corporation or one of its agents, 
thereby tipping off the corporation to the investigation. The proposal 
also failed to require the beneficial ownership information to be 
updated over time. These and other flaws in the proposal were 
identified by the Treasury Department, the Department of Justice, and 
others, but NASS decided to continue on the same course.
  NASS enlisted the help of the National Conference of Commissioners on 
Uniform State Laws or NCCUSL, which produced a proposed model law for 
States that wanted to adopt the NASS approach. NCCUSL presented its 
proposal at the Homeland Security and Governmental Affairs Committee's 
June 2009 hearing, where it was subjected to significant criticism. The 
Manhattan District Attorney's office, for example, testified: ``I say 
without hesitation or reservation--that from a law enforcement 
perspective, the bill proposed by NCCUSL would be worse than no bill at 
all. And there are two very basic reasons for this. It eliminates the 
ability of law enforcement to get corporate information without 
alerting the target of the investigation that the investigation is 
ongoing. That is the primary reason. It also sets up a system that is 
time-consuming and complicated.''
  The Department of Justice testified: ``Senator, I would submit to you 
that in a criminal organization everyone knows who is in control and 
this will not be an issue of determining who is in control. What we are 
concerned about here from the law enforcement perspective are the 
criminals and the criminal organizations and so what we are asking is 
that when criminals use shell companies, they provide the name of the 
beneficial owner. That is the person who is in control, the criminal in 
control, as opposed to the NCCUSL proposal where they are suggesting 
that instead two nominees are provided--two nominees between law 
enforcement and the criminal in control.''
  Despite these criticisms, NCCUSL finalized its model law in July 
2009, issuing it under the title, ``Uniform Law Enforcement Access to 
Entity Information Act.'' At the November 2009 hearing, law enforcement 
again criticized the NCCUSL model law. At the hearing, Senator Levin 
asked: ``Now the NCCUSL, in their proposal just requires a records 
contact and that records contact could simply be an owner of record, 
which could be a shell corporation, putting us right back into a circle 
which leads absolutely nowhere in terms of finding the beneficial 
owners. Would you agree that the approach of NCCUSL in this regard is 
not acceptable, Ms. Shasky?'' The Justice Department representative, 
Jennifer Shasky, responded: ``Yes, Senator. To allow companies to 
provide anything less than the beneficial owner information merely 
provides criminals with an opportunity to evade responsibility and put 
nominees between themselves and the true perpetrator.'' With regard to 
NCCUSL's proposal, the Treasury representative, David Cohen, testified: 
``[T]here is not an obligation for that live person to not be a 
nominee. And what I think is important in the legislation is that we 
get at the true beneficial owner and not someone who may be a 
  In addition to its flaws, the NCCUSL model law has proven unpopular 
with the States for whom it was written. Despite the effort and fanfare 
attached to this uniform law, after two years of sitting on the books, 
not a single State has adopted it or given any indication of doing so.
  It is deeply disappointing that the States, despite the passage of 
five years since FATF first called upon the United States to meet its 
commitment to collect beneficial ownership information, have been 
unable to devise an effective proposal. Part of the difficulty is that 
the States have a wide range of practices, differ on the extent to 
which they rely on incorporation fees as a major source of revenue, and 
differ on the extent to which they attract non-U.S. persons as 
incorporators. In addition, the States are competing against each other 
to attract persons who want to set up U.S. corporations, and that 
competition creates pressure for each individual State to favor 
procedures that allow quick and easy incorporations, with no questions 
asked. It's a classic case of competition causing a race to the bottom, 
making it difficult for any one State to do the right thing and request 
the identity of the persons behind the incorporation efforts.
  That is why Federal legislation in this area is critical. Federal 
legislation is needed to level the playing field among the States, set 
minimum standards for obtaining beneficial ownership information, put 
an end to the practice of States forming millions of legal entities 
each year without knowing who is behind them, and bring the United 
States into compliance with its international commitments.
  The bill's provisions would require the States to obtain from 
incorporation applicants a list of the beneficial owners of each 
corporation or LLC formed under their laws, to maintain this 
information for a period of years after a corporation is terminated, 
and to provide the information to law enforcement upon receipt of a 
subpoena or summons. The bill would also require corporations and LLCs 
to update their beneficial ownership information on a regular basis. 
The ownership information would be kept by the State or, if a State 
maintains a formation agent licensing system and delegates this task, 
by a State's licensed formation agents.
  The particular information that would have to be provided for each 
beneficial owner is the owner's name, address, and unique identifying 
number from a State drivers license or U.S. passport. The bill would 
not require States or their licensed formation agents to verify this 
information, but penalties would apply to persons who submitted false 
  In the case of U.S. corporations formed by individuals who do not 
possess a drivers license or passport from the United States, the bill 
would require the incorporation application to include a written 
certification from a formation agent residing within the State 
attesting to the fact that the agent had obtained and verified the 
identity of the non-U.S. beneficial owners of the corporation, by 
obtaining their names, addresses, and identifying information from a 
non-expired non-U.S. passport. The formation agent would be required to 
retain this information in the State for a specified period of time and 
produce it upon receipt of a subpoena or summons from law enforcement.
  To ensure that its provisions are tightly targeted, the bill would 
exempt a wide range of corporations from the disclosure obligation. It 
would exempt, for example, virtually all highly regulated corporations, 
because we already know who owns them. That includes all publicly-
traded corporations, banks, broker-dealers, commodity brokers, 
registered investment funds, registered accounting firms, insurers, 
utilities, and charities that file returns with the IRS. The bill would 
also exempt corporations with a substantial U.S. presence, including at 
least 20 employees physically located in the United States, since those 
individuals could provide law enforcement with the leads needed to 
trace a corporation's true owners. In addition, the bill would exempt 
corporations whose beneficial

[[Page S5259]]

ownership information would not benefit the public interest or assist 
law enforcement. These exemptions dramatically reduce the number of 
corporations who would be required to provide beneficial ownership 
information to ensure that the bill's disclosure obligation is focused 
on only those whose owners' identities are currently hidden.
  The bill does not take a position on the issue of whether the States 
should make the beneficial ownership information available to the 
public. Instead, the bill leaves it entirely up to the States to decide 
whether, under what circumstances, and to what extent to make 
beneficial ownership information available to the public. The bill 
explicitly permits the States to place restrictions on providing 
beneficial ownership information to persons other than government 
officials. The bill focuses instead on ensuring that law enforcement 
with a subpoena or summons is given ready access to the beneficial 
ownership information.
  Relative to the costs of compliance, the bill provides States with 
access to two separate funding sources, neither of which involves 
appropriated funds. For the first three years after the bill's 
enactment, the bill directs both the Treasury and Justice Departments 
to make funds available from their individual forfeiture programs to 
States seeking to comply with the requirements of the Act. These 
forfeiture funds are not appropriated taxpayer dollars; instead they 
are the proceeds of forfeiture actions taken against persons involved 
in money laundering, drug trafficking, or other wrongdoing. The two 
forfeiture funds typically contain between $300 and $500 million at a 
time. The bill would direct a total of $30 million over three years to 
be provided to the States from the two funds to carry out the Act. 
These provisions would ensure that States have adequate funds for the 
modest compliance costs involved with adding a new question to their 
incorporation forms requesting the names of the covered corporations' 
beneficial owners.
  It is common for bills establishing minimum Federal standards to seek 
to ensure State action by making some Federal funding dependent upon a 
State's meeting the specified standards. Our bill, however, states 
explicitly that nothing in its provisions authorizes DHS to withhold 
funds from a State for failing to modify its incorporation practices to 
meet the beneficial ownership information requirements in the Act. 
Instead, the bill calls for a GAO report in 2015 to identify which 
States, if any, have failed to strengthen their incorporation practices 
as required by the Act. After getting this status report, a future 
Congress can decide what steps to take, including whether to reduce any 
funding going to noncompliant States.
  The bill also contains a provision that would require corporations 
bidding on Federal contracts to provide the same beneficial ownership 
information to the Federal Government as provided to the relevant 
State. The Subcommittee has become aware of instances in which the 
Federal Government has found itself doing business with U.S. 
corporations whose owners are hidden. It's important that when the 
Federal Government contracts to do business with someone, it knows who 
it is dealing with.
  Finally, the bill would require the Treasury Department to issue a 
rule requiring U.S. formation agents to establish anti-money laundering 
programs to ensure they are not forming U.S. corporations or LLCs for 
wrongdoers. The bill requires the programs to be risk based so that 
formation agents can target their preventative efforts toward persons 
who pose a high risk of being involved with money laundering. GAO would 
also be asked to conduct a study of existing State formation procedures 
for partnerships, trusts, and charitable organizations.
  We have worked with the Departments of Homeland Security, Treasury, 
and Justice to craft a bill that would address, in a fair and 
reasonable way, the homeland security problems created by States 
allowing the formation of millions of U.S. corporations and LLCs with 
hidden owners. What the bill comes down to is a simple requirement that 
States change their incorporation applications to add a single question 
requesting identifying information for the true owners of the 
corporations they form. That is not too much to ask to protect this 
country and the international community from wrongdoers seeking to 
misuse U.S. corporations.

  For those who say that, if the United States tightens its 
incorporation rules, new corporations will be formed elsewhere, it is 
appropriate to ask exactly where they will go. Every country in the 
European Union is already required to have their formation agents 
collect beneficial information for the corporations formed by those 
agents. Most offshore jurisdictions also already require request this 
information to be collected, including the Bahamas, Cayman Islands, and 
the Channel Islands. Countries around the world already request 
beneficial ownership information, in part because of their commitment 
to FATF's international anti-money laundering standards. Our 50 States 
should be asking for the same ownership information, but there is no 
indication that they will any time in the near future, unless required 
to do so.
  I wish Federal legislation weren't necessary. I wish the States could 
solve this homeland security problem on their own, but ongoing 
competitive pressures make it unlikely that the States will do the 
right thing. It is been more than five years since our 2006 hearing on 
this issue and more than two years since the States came up with a 
model law on the subject, with no progress to speak of, despite 
repeated pleas from law enforcement.
  Federal legislation is necessary to reduce the vulnerability of the 
United States to wrongdoing by U.S. corporations with hidden owners, to 
protect interstate and international commerce from criminals misusing 
U.S. corporations, to strengthen the ability of law enforcement to 
investigate suspect U.S. corporations, to level the playing field among 
the States, and to bring the United States into compliance with its 
international anti-money laundering obligations.
  There is also an issue of consistency. For years, I have been 
fighting offshore corporate secrecy laws and practices that enable 
wrongdoers to secretly control offshore corporations involved in money 
laundering, tax evasion, and other misconduct. I have pointed out on 
more than one occasion that corporations were not created to hide 
ownership, but to protect owners from personal liability for corporate 
acts. Unfortunately, today, the corporate form has too often been 
corrupted into serving those who wish to conceal their identities. It 
is past time to stop this misuse of the corporate form. But if we want 
to stop inappropriate corporate secrecy offshore, we need to stop it 
here at home as well.
  For these reasons, I urge my colleagues to join us in supporting this 
legislation and putting an end to incorporation practices that promote 
corporate secrecy and render the United States and other countries 
vulnerable to abuse by U.S. corporations with hidden owners.
  Mr. President, I ask unanimous consent that a bill summary be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 Summary of Incorporation Transparency and Law Enforcement Assistance 

                             August 2, 2011

       To protect the United States from U.S. corporations being 
     misused to support terrorism, money laundering, tax evasion, 
     or other misconduct, the Levin-Grassley Incorporation 
     Transparency and Law Enforcement Assistance Act would:
       Beneficial Ownership Information. Require the States 
     directly or through licensed formation agents to obtain the 
     names of beneficial owners of corporations or limited 
     liability companies (LLCs) formed under a State's laws, 
     ensure this information is updated, and provide the 
     information to law enforcement upon receipt of a subpoena or 
       Identifying Information. Require corporations to provide 
     beneficial owners' names, addresses, and a U.S. drivers 
     license or passport number; or if the owners do not have 
     either a U.S. drivers license nor passport, information from 
     their non-U.S. passports.
       Federal Contractors. Require corporations bidding on 
     federal contracts to provide the same beneficial ownership 
     information to the federal government.
       Shelf Corporations. Require formation agents selling 
     ``shelf corporations''--companies formed for later sale to a 
     third party--to identify the beneficial owners of those 
       Penalties for False Information. Establish penalties for 
     persons who knowingly provide false information, or willfully 
     fail to provide required information, on beneficial 

[[Page S5260]]

       Exemptions. Exempt from the disclosure obligation regulated 
     corporations, including publicly traded companies, banks, 
     broker-dealers, insurers, registered investment funds, and 
     charities; corporations with a substantial U.S. presence; and 
     corporations whose beneficial ownership information would not 
     benefit the public interest or assist law enforcement.
       Funding. Provide $30 million over three years to States 
     from existing Treasury and Justice Department forfeiture 
     funds to pay for the costs of complying with the Act.
       State Compliance Report. Specify that nothing in the Act 
     authorizes funds to be withheld from any State for failure to 
     comply with the Act, but also require a GAO report by 2015 
     identifying which States are not in compliance so a future 
     Congress can determine what steps to take.
       Transition Period. Give the State' s three years, until 
     October 2014, to require beneficial ownership information for 
     corporations and LLCs formed under their laws.
       Anti-Money Laundering Safeguards. Require paid formation 
     agents to establish anti-money laundering programs to guard 
     against supplying U.S. corporations or LLCs that facilitate 
     misconduct. Attorneys using paid formation agents would be 
     exempt from this requirement.
       GAO Study. Require GAO to complete a study of State 
     beneficial ownership information requirements for 
     partnerships, charities, and trusts.
      By Mr. UDALL of New Mexico (for himself, Mr. Heller, Mr. 
        Bingaman, and Mrs. Feinstein):
  S. 1485. A bill to amend the Tariff Act of 1930 to include ultralight 
vehicles under the definition of aircraft for purposes of the aviation 
smuggling provisions under that Act, and for other purposes; to the 
Committee on Finance.
  Mr. UDALL of New Mexico. Mr. President, today I rise to introduce the 
Ultralight Aircraft Smuggling Prevention Act, legislation that will 
crack down on smugglers who use ultralight aircraft, also known as 
ULAs, to bring drugs across the U.S.-Mexico border. I am pleased to be 
working on this in a bipartisan manner with Senator Heller, who 
introduced a very similar bill last year in the House with 
Congresswoman Gabrielle Giffords. That bill passed overwhelmingly by a 
412-3 vote. I hope we can have a similar bipartisan result here in the 
  ULAs are single-pilot aircraft capable of flying low, landing and 
taking off quickly, and are typically used for sport or for recreation. 
However, because of increased detection and interdiction of more 
traditional smuggling conveyances, ULAs have increasingly been employed 
along the Southwest border by Mexican drug trafficking organizations to 
smuggle drugs into the United States.
  The use of ULAs by drug smugglers presents a unique challenge for 
Border Patrol and prosecutors. Every year hundreds of ULAs are flown 
across the Southwest border and each one can carry hundreds of pounds 
of narcotics. Under existing law, ULAs are not categorized as aircraft 
by the Federal Aviation Administration, so they do not fall under the 
aviation smuggling provisions of the Tariff Act of 1930. This means 
that a drug smuggler piloting a small airplane is subject to much 
stronger criminal penalties than a smuggler who pilots a ULA.
  Our bill will close this unintended loophole and establish the same 
penalties if convicted--a maximum sentence of 20 years in prison and a 
$25,000 fine--for smuggling drugs on ULAs as currently exist for 
smuggling on airplanes or in automobiles. This is a common sense 
solution that will give our law enforcement agencies and prosecutors 
additional tools they need to combat drug smuggling.
  The bill would also add an attempt and conspiracy provision to the 
aviation smuggling law to allow prosecutors to charge people other than 
the pilot who are involved in aviation smuggling. This would give them 
a new tool to prosecute the ground crews who aid the pilots as well as 
those who pick up the drug loads that are dropped from ULAs in the U.S. 
Finally, the bill directs the Department of Defense and Department of 
Homeland Security to collaborate in identifying equipment and 
technology used by DOD that could be used by U.S. Customs and Border 
Protection to detect ULAs.
  In addition to Senator Heller, I am pleased to be joined by Senators 
Bingaman and Feinstein in introducing this legislation. I urge my 
colleagues to support the Ultralight Aircraft Smuggling Prevention Act.
  Mr. President, I ask unanimous consent that the text of the bill and 
an article be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1485

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,


       This Act may be cited as the ``Ultralight Aircraft 
     Smuggling Prevention Act of 2011''.

                   THE TARIFF ACT OF 1930.

       (a) In General.--Section 590 of the Tariff Act of 1930 (19 
     U.S.C. 1590) is amended--
       (1) by redesignating subsection (g) as subsection (h); and
       (2) by inserting after subsection (f) the following:
       ``(g) Definition of Aircraft.--As used in this section, the 
     term `aircraft' includes an ultralight vehicle, as defined by 
     the Administrator of the Federal Aviation Administration.''.
       (b) Criminal Penalties.--Subsection (d) of section 590 of 
     the Tariff Act of 1930 (19 U.S.C. 1590(d)) is amended in the 
     matter preceding paragraph (1), by inserting ``, or attempts 
     or conspires to commit,'' after ``commits''.
       (c) Effective Date.--The amendments made by this section 
     apply with respect to violations of any provision of section 
     590 of the Tariff Act of 1930 on or after the 30th day after 
     the date of the enactment of this Act.


       The Assistant Secretary of Defense for Research and 
     Engineering shall, in consultation with the Under Secretary 
     for Science and Technology of the Department of Homeland 
     Security, identify equipment and technology used by the 
     Department of Defense that could also be used by U.S. Customs 
     and Border Protection to detect and track the illicit use of 
     ultralight aircraft near the international border between the 
     United States and Mexico.

               [From the Los Angeles Times, May 19, 2011]

    Ultralight Aircraft Now Ferrying Drugs Across U.S.-Mexico Border

 Mexican organized crime groups are using ultralight aircraft to drop 
 marijuana bundles in agricultural fields and desert scrub across the 
 U.S. border. The incursions are hard to detect and are on the upswing.

                          (By Richard Marosi)

       They fly low and slow over the border, their wings painted 
     black and motors humming faintly under moonlit skies. The 
     pilots, some armed in the open cockpits, steer the horizontal 
     control bar with one hand and pull a latch with the other, 
     releasing 250-pound payloads that land with a thud, leaving 
     only craters as evidence of another successful smuggling run.
       Mexican organized crime groups, increasingly stymied by 
     stepped-up enforcement on land, have dug tunnels and 
     captained boats to get drugs across the U.S.-Mexico border. 
     Now they are taking to the skies, using ultralight aircraft 
     that resemble motorized hang gliders to drop marijuana 
     bundles in agricultural fields and desert scrub across the 
     Southwest border.
       What began with a few flights in Arizona in 2008 is now 
     common from Texas to California's Imperial Valley and, mostly 
     recently, San Diego, where at least two ultralights suspected 
     of carrying drugs have been detected flying over Interstate 
     8, according to U.S. border authorities.
       The number of incursions by ultralights reached 228 in the 
     last federal fiscal year ending Sept. 30, almost double from 
     the previous year. Seventy-one have been detected in this 
     fiscal year through April, according to border authorities.
       Flying at night with lights out, and zipping back across 
     the border in minutes, ultralight aircraft sightings are 
     rare, but often dramatic. At least two have been chased out 
     of Arizona skies by Black Hawk Customs and Border Protection 
     helicopters and F-16 jet fighters. Last month, a pair of 
     visiting British helicopter pilots almost crashed into an 
     ultralight during training exercises over the Imperial 
       The smuggling work is fraught with danger. High winds can 
     flip the light aircraft. Moonlight provides illumination, but 
     some pilots wear night-vision goggles. Others fly over major 
     roads to orient themselves. Drop zones are illuminated by 
     ground crews using strobe lights or glow sticks. There is 
     little room for error.
       At least one pilot has been paralyzed; another died in a 
       In Calexico, Det. Mario Salinas was walking to his car one 
     morning last year when he heard something buzzing over the 
     Police Department on 5th Street. ``I hear this weird noise, 
     like a lawn mower. I look up and I see this small plane,'' 
     said Salinas, who pursued the aircraft before it eluded him 
     as it flew over the desert.
       The ultralight activity is seen as strong evidence that 
     smugglers are having an increasingly difficult time getting 
     marijuana over land crossings. Authorities noticed a surge in 
     flights in Imperial County after newly erected fencing along 
     California's southeast corner blocked smugglers from crossing 
     desert dunes in all-terrain vehicles.
       U.S. Border Patrol agents, accustomed to scouring for 
     footprints and tracks in the sand, have had to adapt. They 
     are now instructed to turn off their engines and roll

[[Page S5261]]

     down their windows so they can listen for incursions by air.
       ``We're trained to look down and at the fence. Now we have 
     to look up for tell-tale signs of ultralight traffic,'' said 
     Roy D. Villarreal, deputy chief patrol agent of the El Centro 
     sector in the Imperial Valley.
       Although the new trend poses serious challenges, 
     authorities point out that ultralights are a decidedly 
     inefficient way of getting drugs across the border. 
     Traffickers who once moved thousands of pounds of drugs 
     across the border now appear to be packing their loads by the 
     pound, not the ton, authorities say.
       The ultralights--lightweight planes typically used as 
     recreational aircraft--are customized for smuggling purposes. 
     All-terrain wheels are added for bumpy landings. Second seats 
     are ripped out to add fuel capacity. Drugs are loaded onto 
     metal baskets affixed to the bottom of the framing. From 150 
     to 250 pounds of marijuana are generally carried, depending 
     on the weight of the pilot. Some ultralights are shrouded in 
     black paint, with even the plastic tarp covers for the 
     marijuana blackened for stealth entries.
       Radar operators at Riverside County's Air and Marine 
     Operations Center, where general aviation air traffic across 
     the country is monitored, have trouble detecting the 
       Flying as low as 500 feet, their small frames are hard to 
     distinguish from trucks. Many appear, then disappear from 
     radar screens. Others never appear at all, and the ultralight 
     trend has prompted border authorities to develop new radar 
     technologies specifically designed to detect the aircraft.
       ``There are indications of larger amounts of activity,'' 
     said Tony Crowder, director of the Air and Marine Operations 
     Center, which is housed at March Air Reserve Base.
       The close cooperation among radar operators, helicopter 
     pilots and agents on the ground has resulted in some 
       Ultralight pilots no longer land on U.S. soil after 
     authorities began responding quickly to offloading sites. The 
     Mexican Army has seized four ultralights around Baja 
     California in recent weeks after being tipped off by U.S. 
      By Mr. ROBERTS (for himself, Mr. Nelson of Florida, Mr. Crapo, 
        Mr. Wyden, Mr. Toomey, and Mr. Heller):
  S. 1486. A bill to amend title XVIII of the Social Security Act to 
clarify and expand on criteria applicable to patient admission to and 
care furnished in long-term care hospitals participating in the 
Medicare program, and for other purposes; to the Committee on Finance.
  Mr. ROBERTS. Mr. President, I rise today to introduce the Long-Term 
Care Hospital Improvement Act of 2011, with the support of my colleague 
Mr. Nelson of Florida. This legislation develops new federal standards 
and certification criteria for Long Term Acute Care Hospitals, LTCHs.
  We are also joined by Senators Crapo, Wyden, Toomey and Heller, in 
introducing this bill. We hope to get the support of many more of our 
  This legislation has the support of the major hospital associations, 
including the American Hospital Association, AHA, the Federation of 
American Hospitals, FAH, and the Acute Long Term Hospital Association, 
  As many of you know, Long-Term Acute Care Hospitals, referred to as 
LTCHs, specialize in treating medically complex patients who need 
longer than usual hospital stays, on average 25 days. By comparison, 
the average stay for a patient in a general acute hospital is only 5-6 
  LTCHs, like rehabilitation hospitals and nursing homes, often care 
for patients who are discharged from a general hospital. Because of 
that, LTCHs are sometimes referred to as post-acute care providers. 
However, LTCHs are fully licensed and certified as acute care 
hospitals. There are approximately 425 LTCHs in the nation, compared to 
approximately 12,000 nursing homes and 1,400 rehabilitation hospitals. 
LTCH patients are very ill, with many suffering from complex 
respiratory issues, including those who are ventilator dependent, or 
other complex medical issues. LTCHs account for about of Medicare 
  The bill that I am introducing today implements a comprehensive set 
of federal criteria that will supplement existing Medicare 
classification criteria for LTCHs. These criteria are designed to 
ensure that LTCHs are treating high acuity patients who need extended 
hospital stays. Analysis by the Moran Company estimates that these 
criteria could generate approximately $374 million over 5 years and 
$2.7 billion over 10 years. The bill is expected to result in a net 
savings of $500 million over 10 years. I plan to work with CBO to 
confirm that estimate.
  This legislation will generate savings for the Medicare program; 
promote patients being cared for in the most appropriate setting; and, 
protect access to LTCH care for medically acute beneficiaries who need 
extended stays due to their complex condition.
  This is not a new concept and the American Hospital Association has 
been working on this issue for years. In August 2010, the AHA initiated 
a workgroup representing a cross section of the nation' LTCHs and 
larger general hospital systems including Geisinger Medical System, 
Pennsylvania, and Partners HealthCare System, Inc., Boston. The goals 
of the AHA workgroup were to develop policy recommendations for uniform 
LTCH patient and facility criteria; distinguish LTCH hospitals from 
general acute hospitals and all post-acute settings; assess fiscal 
impact, with goal of showing overall Medicare savings; develop 
consensus among AHA's LTCH members; and achieve relief from the LTCH 
``25 percent Rule.''
  We believe that we have accomplished these goals with my legislation. 
Additionally, for a body that just voted on a debt ceiling increase, 
this bill has the potential to achieve significant savings.
  I hope that my colleagues will agree with me and that this 
legislation is something that they can support. I urge my colleagues to 
join me in cosponsoring the Long-Term Care Hospital Improvement Act of 
      By Mr. WYDEN:
  S. 1491. A bill to amend the Public Utility Regulatory Policies Act 
of 1978 to expand the electric rate-setting authority of States; to the 
Committee on Energy and Natural Resources.
  Mr. WYDEN. Mr. President, today I rise to introduce the PURPA PLUS 
  In my home State we have numerous emerging small renewable energy 
technologies, such as wave energy buoys, hydropower turbines in 
irrigation canals, biomass burning cogeneration facilities and rooftop 
solar installations. Like Oregon, many States have sought to advance 
new electricity technologies by providing these kinds of projects with 
higher power purchase rates for their power than utility companies 
normally pay for electricity. These incentive rates allow individuals 
and small businesses to recover money they invest in solar panels or 
other electricity generation projects over a reasonable period of time.
  The PURPA PLUS Act simply provides States the clear legal authority 
to set these incentive rates for small renewable energy projects. 
Currently, the Federal Energy Regulatory Commission, FERC, has 
exclusive jurisdiction over wholesale energy prices. Under the Public 
Utility Regulatory Policies Act, PURPA, FERC regulates the price that 
utility companies pay for electricity from small, independent power 
providers and that rate can be no higher than what it would normally 
cost a utility company to buy additional power, known as ``avoided 
cost''. My bill would transfer the authority for setting power purchase 
rates for small power projects of less than 2 megawatts from FERC to 
the States. This transfer is voluntary. If a State chose to exercise 
this authority to promote small wind energy development, or solar, or 
cogeneration projects, it could. If a State chose not to use this 
authority, FERC would continue to regulate these projects as before. By 
capping the project size at 2 megawatts, the bill only extends this new 
authority for small projects that are providing very small amounts of 
power to the local utility company. It would leave regulation of large 
wind farms, hydroprojects and other large renewable energy projects 
that often sell their power to out-of-state customers unchanged. 
Conversely, it shouldn't be necessary for the Federal Government to get 
involved in setting rates for solar panels on top of a house or 
apartment building.
  At a time when both State legislatures and the Federal Government are 
tightening their purse strings on grants, loans and tax incentives for 
the development of renewable energy projects, this legislation would 
give State public utility commissions another tool to promote small 
renewable resources. In Oregon, the State legislature and State utility 
commission have already established a pilot program to spur residential 
rooftop solar projects.

[[Page S5262]]

Oregon's utility commission also has a program that allows net metering 
of renewable customer-produced energy where customers are charged for 
the extra energy they buy from the utility company minus the amount of 
electricity produced themselves. This bill will simply provide these 
programs stronger legal footing, and allow States to expand these sorts 
of programs if they wish.
  While I acknowledge that the power from these small projects may be 
more expensive than a large central generation station powered by coal 
or gas, I believe that States should be able to consider the associated 
benefits of small renewable power and set higher prices when the 
benefits outweigh the costs if they choose. Benefits of small renewable 
energy projects include local job creation, less investment in high-
voltage transmission lines, diversity in an area's power generation 
portfolio, and the environmental benefits of green energy.
  The bill has the support of the National Association of Regulatory 
Utility Commissioners, which represents the individual State 
commissions, as well as the Solar Energy Industry Association, the 
Distributed Wind Energy Association, the Clean Coalition and the Oregon 
Public Utility Commission. I am very pleased to be introducing this 
bill with my colleague on the Energy and Natural Resources Committee, 
Senator Coons. I hope that many of our colleagues will join us in 
supporting this bill.
      By Mr. REID (for himself and Mr. Heller):
  S. 1492. A bill to provide for the conveyance of certain Federal land 
in Clark County, Nevada, for the environmental remediation and 
reclamation of the Three Kids Mine Project Site, and for other 
purposes; to the Committee on Energy and Natural Resources.
  Mr. REID. Mr. President, I rise today to introduce the Three Kids 
Mine Reclamation Act of 2011. My legislation transfers approximately 
900 acres of federal land to the city of Henderson to facilitate the 
remediation and redevelopment of a dangerous abandoned mine site near 
Lake Mead.
  The Three Kids mine was originally developed during World War I to 
provide manganese needed to harden steel used by the U.S. military. The 
mine and mill continued to support the building of warships and tanks 
through 1961 after which it was mostly abandoned and used occasionally 
as a storage site for federal manganese reserves. The Three Kids site 
was forgotten for decades until the population explosion in southern 
Nevada put the mine right in people's backyards.
  The Three Kids Mine site is littered with hazards that include three 
large mine pits that are hundreds of feet deep, ruins from the mine 
facility, and a sludge pool of mine tailings made up of arsenic, lead, 
and diesel fuel. As a result of how the mine was developed and managed, 
approximately 75 percent of the area is federal land managed by the 
Bureau of Land Management, BLM, and the Bureau of Reclamation, while 
part of the site is privately owned. Unfortunately, because of the 
complicated land ownership pattern and the immense cost of clean-up, 
the Federal Government was never able to initiate the reclamation 
  To turn the Three Kids Mine site into a job-creating opportunity 
while also cleaning up this public health and safety hazard, my 
legislation directs the BLM to convey the Federal portions of the site 
to the Henderson Redevelopment Agency for the fair market value after 
taking into consideration the cost of cleanup for the whole mine site. 
The city of Henderson will then be able to take advantage of Nevada 
redevelopment laws and work with local developers to finance and 
implement a plan to remediate the abandoned toxic mine site. Local 
officials and developers will finally be able to turn this wasteland 
into safe, productive land for the local community. The project will 
take decades from start to finish, but the city and the developers are 
committed to the effort and worked hard to put together a viable plan 
to fix this old problem without costing taxpayers a dime for cleanup.
  Keeping our communities safe, healthy, and livable is critical. 
Removing this physical and environmental hazard from southern Nevada is 
a high priority for the city of Henderson and our delegation. I 
appreciate your help and I look forward to working with the Senate 
Energy Committee to move this legislation forward in the near future.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1492

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,


       This Act may be cited as the ``Three Kids Mine Remediation 
     and Reclamation Act''.


       In this Act:
       (1) Federal land.--The term ``Federal land'' means the 
     approximately 948 acres of Bureau of Reclamation and Bureau 
     of Land Management land within the Three Kids Mine Project 
     site, as depicted on the map.
       (2) Hazardous substance; pollutant or contaminant; release; 
     remedy; response.--The terms ``hazardous substance'', 
     ``pollutant or contaminant'', ``release'', ``remedy'', and 
     ``response'' have the meanings given those terms in section 
     101 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9601).
       (3) Henderson redevelopment agency.--The term ``Henderson 
     Redevelopment Agency'' means the redevelopment agency of the 
     City of Henderson, Nevada, established and authorized to 
     transact business and exercise the powers of the agency in 
     accordance with the Nevada Community Redevelopment Law (Nev. 
     Rev. Stat. 279.382 to 279.685).
       (4) Map.--The term ``map'' means the map entitled ``Three 
     Kids Mine Project Area'' and dated August 2, 2011.
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (6) State.--The term ``State'' means the State of Nevada.
       (7) Three kids mine project site.--The term ``Three Kids 
     Mine Project Site'' means the approximately 1,262 acres of 
     land that is--
       (A) comprised of--
       (i) the Federal land; and
       (ii) the approximately 314 acres of adjacent non-Federal 
     land; and
       (B) depicted as the ``Three Kids Mine Project Site'' on the 


       (a) In General.--Notwithstanding sections 202 and 203 of 
     the Federal Land Policy and Management Act of 1976 (43 U.S.C. 
     1712, 1713) and section 120 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9620), and any other provision of law, as 
     soon as practicable after the conditions described in 
     subsection (b) have been met, and subject to valid existing 
     rights, the Secretary shall convey to the Henderson 
     Redevelopment Agency all right, title, and interest of the 
     United States in and to the Federal land.
       (b) Conditions.--
       (1) Appraisal; fair market value.--
       (A) In general.--As consideration for the conveyance under 
     subsection (a), the Henderson Redevelopment Agency shall pay 
     the fair market value of the Federal land, if any, as 
     determined under subparagraph (B) and as adjusted under 
     subparagraph (E).
       (B) Appraisal.--The Secretary shall determine the fair 
     market value of the Federal land based on an appraisal--
       (i) that is conducted in accordance with nationally 
     recognized appraisal standards, including--

       (I) the Uniform Appraisal Standards for Federal Land 
     Acquisitions; and
       (II) the Uniform Standards of Professional Appraisal 
     Practice; and

       (ii) that does not take into account any existing 
     contamination associated with historical mining on the 
     Federal land.
       (C) Remediation and reclamation costs.--
       (i) In general.--The Secretary shall prepare a reasonable 
     estimate of the costs to assess, remediate, and reclaim the 
     Three Kids Mine Project Site.
       (ii) Considerations.--The estimate prepared under clause 
     (i) shall be--

       (I) based on the results of a comprehensive Phase II 
     environmental site assessment of the Three Kids Mine Project 
     Site prepared by the Henderson Redevelopment Agency or a 
     designee that has been approved by the State; and
       (II) prepared in accordance with the current version of the 
     ASTM International Standard E-2137-06 entitled ``Standard 
     Guide for Estimating Monetary Costs and Liabilities for 
     Environmental Matters.''

       (iii) Assessment requirements.--The Phase II environmental 
     site assessment prepared under clause (ii)(I) shall, without 
     limiting any additional requirements that may be required by 
     the State, be conducted in accordance with the procedures 

       (I) the most recent version of ASTM International Standard 
     E-1527-05 entitled ``Standard Practice for Environmental Site 
     Assessments: Phase I Environmental Site Assessment Process''; 
       (II) ASTM International Standard E-1903-97entitled 
     ``Standard Guide for Environmental Site Assessments: Phase II 
     Environmental Site Assessment Process'' (2002).

       (iv) Review of certain information.--

       (I) In general.--The Secretary shall review and consider 
     cost information proffered

[[Page S5263]]

     by the Henderson Redevelopment Agency and the State in the 
     preparation of the estimate under this subparagraph.
       (II) Final determination.--If there is a disagreement among 
     the Secretary, Henderson Redevelopment Agency, and the State 
     over the reasonable estimate of costs under this 
     subparagraph, the parties shall jointly select 1 or more 
     experts to assist the Secretary in making the final estimate 
     of the costs.

       (D) Deadline.--Not later than 30 days after the date of 
     enactment of this Act, the Secretary shall begin the 
     appraisal and cost estimates under subparagraphs (B) and (C), 
       (E) Adjustment.--The Secretary shall administratively 
     adjust the fair market value of the Federal land, as 
     determined under subparagraph (B), based on the estimate of 
     remediation, and reclamation costs, as determined under 
     subparagraph (C).
       (2) Mine remediation and reclamation agreement executed.--
       (A) In general.--The conveyance under subsection (a) shall 
     be contingent on the Secretary receiving from the State 
     written notification that a mine remediation and reclamation 
     agreement has been executed in accordance with subparagraph 
       (B) Requirements.--The mine remediation and reclamation 
     agreement required under subparagraph (A) shall be an 
     enforceable consent order or agreement administered by the 
     State that--
       (i) obligates a party to perform the remediation and 
     reclamation work at the Three Kids Mine Project Site 
     necessary to complete a permanent and appropriately 
     protective remedy to existing environmental contamination and 
     hazardous conditions; and
       (ii) contains provisions determined to be necessary by the 
     State, including financial assurance provisions to ensure the 
     completion of the remedy.
       (3) Notification from agency.--As a condition of the 
     conveyance under subsection (a), the Secretary shall receive 
     from the Henderson Redevelopment Agency written notification 
     that the Henderson Redevelopment Agency is prepared to accept 
     conveyance of the Federal land under that subsection.


       (a) In General.--Subject to valid existing rights, for the 
     10-year period beginning on the earlier of the date of 
     enactment of this Act or the date of the conveyance required 
     by this Act, the Federal land is withdrawn from all forms 
       (1) entry, appropriation, operation, or disposal under the 
     public land laws;
       (2) location, entry, and patent under the mining laws; and
       (3) disposition under the mineral leasing, mineral 
     materials, and the geothermal leasing laws.
       (b) Existing Reclamation Withdrawals.--Subject to valid 
     existing rights, any withdrawal under the public land laws 
     that includes all or any portion of the Federal land for 
     which the Bureau of Reclamation has determined that the 
     Bureau of Reclamation has no further need under applicable 
     law is relinquished and revoked solely to the extent 
       (1) to exclude from the withdrawal the property that is no 
     longer needed; and
       (2) to allow for the immediate conveyance of the Federal 
     land as required under this Act.


       Notwithstanding section 203 of the Federal Land Policy and 
     Management Act of 1976 (43 U.S.C. 1713), the boundary of the 
     River Mountains Area of Critical Environmental Concern (NVN 
     76884) is adjusted to exclude any portion of the Three Kids 
     Mine Project Site consistent with the map.


       Upon making the conveyance under section 3, notwithstanding 
     any other provision of law, the United States is released 
     from any and all liabilities or claims of any kind or nature 
     arising from the presence, release, or threat of release of 
     any hazardous substance, pollutant, contaminant, petroleum 
     product (or derivative of a petroleum product of any kind), 
     solid waste, mine materials or mining-related features 
     (including tailings, overburden, waste rock, mill remnants, 
     pits, or other hazards resulting from the presence of mining 
     related features) at the Three Kids Mine Project Site in 
     existence on or before the date of the conveyance.
      By Ms. MURKOWSKI:
  S. 1495. A bill to amend the school dropout prevention program in the 
Elementary and Secondary Education Act of 1965; to the Committee on 
Health, Education, Labor, and Pensions.
  Ms. MURKOWSKI. Mr. President, I rise today to introduce Early 
Intervention for Graduation Success Authorization Act. This legislation 
would, if enacted, amend the current School Dropout Prevention 
provisions of the Elementary and Secondary Education Act. It would 
focus attention on identifying and helping students who are at risk to 
not graduate from high school as early as pre-kindergarten and through 
elementary and middle school.
  Some may ask, ``Why are you concentrating on toddlers and elementary 
school children when you are trying to solve the high school dropout 
crisis facing our Nation? Why not focus attention and our Nation's 
scarce resources on high school students, or even middle school 
  The reason is simple. Early on is when children's troubles in school 
begin, and an ounce of prevention is worth a pound of cure. High school 
and middle school students do not just wake up one day and say, ``I 
think I'll drop out of school today.'' Twenty-five years of research 
tells us that dropping out is a long process of frustration, 
alienation, and even boredom, it is not a sudden decision. We know that 
students with disabilities, minority and poor children, and students 
whose home lives are, in all sorts of ways, difficult have lower 
graduation rates than their peers. The challenges children face today 
are all too prevalent, and we know the factors that make it harder for 
them to succeed in school. We know this.
  It only makes sense that we re-work the program that is intended to 
help schools increase their graduation rates so that it actually helps 
schools help children when we can make the most difference. We need to 
act before these children have fought for years just to stay afloat, 
and before they are too tired, frustrated, alienated, and angry to 
fight anymore.
  Factors that have been shown to present a significant risk factor 
even in elementary school include: low achievement, grade retention, 
poor attendance, misbehavior and aggression, and low socioeconomic 
status. Family background characteristics play a role as well, such as 
family disruption, not living with parents, and parents' low 
educational attainment. Even low birth weight has been shown by 
numerous studies to be linked with poor educational outcomes.
  My ``Early Intervention for Graduation Success'' bill would focus 
Federal funds on states that have the lowest graduation rates. State 
education agencies would be required to develop or update their plans 
to increase graduation rates. They would also be required to work with 
health, social services, juvenile justice, and other relevant state 
agencies to help school districts and early childhood education 
providers better identify which of their students have research-based 
risk factors. In turn, schools and early learning providers would be 
required to develop and update individual learning plans for these 
students and ensure that the next school of enrollment has the child's 
  My bill also gives States and partnerships a menu of research-based 
activities from which to choose to improve services to students, 
including professional development, program quality improvement, 
curriculum alignment, community integration and support services, and 
setting high expectations for academic achievement.
  In short, my bill helps States and schools to give students the 
support they need to achieve their dreams, and inspires them to dream 
big, right from the very start.
  We can continue to spend millions of dollars every year on intensive 
services for teenagers who are far behind in school, who are frustrated 
beyond all measure, and who gave up on success long ago. We may even 
have some limited success helping some young people get back on track 
and graduate from high school. Or, we can start at the beginning, 
making sure that the children who already have challenges get the help 
they need to succeed.
  I look forward to passage of this bill or incorporating it into the 
reauthorization of the Elementary and Secondary Education Act.
      By Ms. COLLINS (for herself, Mr. Lieberman, and Mr. Begich):
  S. 1496. A bill to amend title 46, United States Code, to prohibit 
the delegation by the United States of inspection, certification, and 
related services to a foreign classification society that provides 
comparable services to Iran, North Korea, North Sudan, or Syria, and 
for other purposes; to the Committee on Commerce, Science, and 
  Ms. COLLINS. Mr. President, I rise to introduce the Ethical Shipping 
Inspections Act of 2011. This bill would prohibit the Secretary of 
Homeland Security and U.S. Coast Guard from delegating vessel 
inspection and certification authority to a foreign-based 
classification society that also provides these services on behalf of 
the governments of Iran, North Korea, North Sudan, or Syria.

[[Page S5264]]

  I am joined in the effort to close this critical loophole by my 
colleagues, Senators Lieberman and Begich. With the introduction of the 
Ethical Shipping Inspections Act of 2011, we seek to end U.S. 
relationships with foreign-based classification societies that also 
represent nations like the Islamic Republic of Iran.
  Each year, non-governmental classification societies conduct more 
than 4,500 statutory inspections of U.S. flagged vessels to verify that 
these vessels meet international maritime conventions and national 
regulatory requirements. World-wide, more than 100 governments have 
established relationships with classification societies. In addition, 
the vast majority of commercial ships are built to and surveyed for 
compliance with the standards developed by classification societies.
  The relationship between classification societies and the U.S. 
Government was established in statute in the Merchant Marine Act of 
1920, when the Secretary of the Department overseeing the U.S. Coast 
Guard was granted the authority to delegate certain inspection and 
certification services to the American Bureau of Shipping, ABS, or 
another recognized Class Society. In 1996 Congress expanded this 
program to allow foreign-based classification societies to also serve 
on behalf of the U.S. Government in this capacity. Today, there are 
four foreign-based classification societies that have established 
Memorandums of Understanding with the U.S. Coast Guard to conduct these 
inspections on the Coast Guard's behalf.
  While this act would allow this relationship between the U.S. 
Government and foreign-based classification societies to continue, it 
would eliminate a loophole in the law that allows the foreign-based 
classification societies that represent the United States to also 
represent the governments of Iran, North Korea, North Sudan, or Syria. 
Ironically, the current law provides more latitude to foreign-based 
societies than we allow the American Bureau of Shipping. As a U.S.-
based non-profit, non-governmental organization, ABS is restricted from 
providing such services in Iran under existing Iranian Transaction 
Regulations. Yet, the Iran Sanctions Act of 1996, as amended by the 
Comprehensive Iran Sanctions, Accountability, and Divestment Act of 
2010, does not prevent foreign-based classification societies from 
representing both the U.S. and Iranian governments.
  With this in mind, my colleagues and I have introduced this 
legislation to prohibit the U.S. from obtaining vessel inspection, 
certification, and related services from a foreign-based class society 
that also provides these services on behalf of the Iranian, North 
Korean, North Sudanese, or Syrian governments. For the United States to 
maintain such relationships runs directly contrary to the spirit of 
United States policy.
  It is important that we all understand the special nature of the 
relationship between classification societies and our Government and 
take action to ensure that our Government is represented by 
classification societies in a manner befitting of our nation's values 
and consistent with U.S. foreign policy. For these reasons, my 
colleagues and I believe it is imperative that we amend the law to 
prohibit this activity, and we urge our colleagues to support this 
important legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1496

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,


       This Act may be cited as the ``Ethical Shipping Inspections 
     Act of 2011''.


       Section 3316 of title 46, United States Code, is amended by 
     adding at the end the following new subsection:
       ``(e) The Secretary may not make a delegation, and shall 
     revoke an existing delegation made, to a foreign 
     classification society pursuant to subsection (b) or (d) to 
     provide inspection, certification, or related services if the 
     Secretary of State determines that the foreign classification 
     society provides comparable services--
       ``(1) in Iran, North Korea, North Sudan, or Syria; or
       ``(2) for the government of Iran, North Korea, North Sudan, 
     or Syria.''.
      By Mr. AKAKA (for himself, Mr. Inouye, and Mr. Bingaman):
  S. 1504. A bill to restore Medicaid eligibility for citizens of the 
Freely Associated States; to the Committee on Finance.
  Mr. AKAKA. Mr. President, I rise today to introduce the Medicaid 
Restoration for Citizens of Freely Associated States Act of 2011. This 
bill would reinstate eligibility for critical Federal health benefits 
for citizens of certain Pacific Island nations who have been invited by 
the Federal Government to live in the United States, but for whom the 
costs of services have fallen to individual states, Hawaii in 
particular. I would like to thank Senators Inouye and Bingaman for 
joining me in introducing this bill.
  The Freely Associated States, the Republic of the Marshall Islands, 
the Federated States of Micronesia, and the Republic of Palau, are 
island nations that have a unique political relationship with the 
United States.
  At the end of World War II, the United Nations established the 
``Trust Territory of the Pacific Islands,'' which was administered by 
the United States between 1947 and 1986. It included the islands that 
now make up the FAS nations, as well as other Pacific islands liberated 
from Japan after World War II.
  This U.S. Trusteeship presented the Federal Government with new 
strategic and military opportunities, allowing the United States to 
establish military bases and station forces in the Trust Territory and 
close off areas for security reasons. It also bestowed upon the United 
States the responsibility to promote economic development and self-
reliance for the territory.
  In the 1980s, the United States entered into a new phase in its 
relationship with the FAS through the Compact of Free Association and 
the Palau Compact of Free Association. The Compacts allow FAS citizens 
to freely enter, reside, and work in the United States and authorize 
their participation in certain Federal programs.
  As a part of the Compacts, FAS citizens were extended Medicaid 
  Unfortunately, when the Personal Responsibility and Work Opportunity 
Act of 1996 was enacted, FAS citizens lost many of their public 
benefits, including Medicaid coverage.
  Subsequently, state and territorial governments have been the sole 
sources of funding for meeting the social service and public health 
needs of this ever growing population. And FAS migrants to Hawaii often 
arrive with serious medical needs, requiring costly health care 
services such as dialysis and chemotherapy.
  These costs will continue to rise, even as the State's resources are 
increasingly constrained.
  Restoration of Medicaid eligibility for these individuals is crucial 
for states where many FAS citizens reside. In the Pacific, this 
includes Hawaii, Guam, and the Northern Mariana Islands.
  In the continental U.S., this includes California, Oregon, 
Washington, and Arkansas. Health care providers that operate in areas 
with high rates of uninsured are having difficulties meeting the health 
care needs of their communities. Uninsured FAS citizens who seek health 
care services contribute to the uncompensated costs that are creating 
an ever-greater burden on health care providers.
  I ask my colleagues for their support of the Medicaid Restoration for 
Citizens of Freely Associated States Act of 2011. The decision to allow 
citizens of the Freely Associated States to come to the United States 
was a federal decision, with national benefits.
  That we also accept the cost of that decision is a matter of fairness 
and responsibility.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1504

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,


       This Act may be cited as the ``Medicaid Restoration for 
     Citizens of Freely Associated States Act of 2011''.

[[Page S5265]]

                   ASSOCIATED STATES.

       (a) In General.--Section 402(b)(2) of the Personal 
     Responsibility and Work Opportunity Reconciliation Act of 
     1996 (8 U.S.C. 1612(b)(2)) is amended by adding at the end 
     the following:
       ``(G) Medicaid exception for citizens of freely associated 
     states.--With respect to eligibility for benefits for the 
     program defined in paragraph (3)(C) (relating to medicaid), 
     paragraph (1) shall not apply to any individual who lawfully 
     resides in the United States (including territories and 
     possessions of the United States) in accordance with--
       ``(i) section 141 of the Compact of Free Association 
     between the Government of the United States and the 
     Government of the Federated States of Micronesia, approved by 
     Congress in the Compact of Free Association Amendments Act of 
       ``(ii) section 141 of the Compact of Free Association 
     between the Government of the United States and the 
     Government of the Republic of the Marshall Islands, approved 
     by Congress in the Compact of Free Association Amendments Act 
     of 2003; or
       ``(iii) section 141 of the Compact of Free Association 
     between the Government of the United States and the 
     Government of Palau, approved by Congress in Public Law 99-
     658 (100 Stat. 3672).''.
       (b) Exception to 5-Year Limited Eligibility.--Section 
     403(d) of such Act (8 U.S.C. 1613(d)) is amended--
       (1) in paragraph (1), by striking ``or'' at the end;
       (2) in paragraph (2), by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following new paragraph:
       ``(3) an individual described in section 402(b)(2)(G), but 
     only with respect to the designated Federal program defined 
     in section 402(b)(3)(C).''.
       (c) Definition of Qualified Alien.--Section 431(b) of the 
     Personal Responsibility and Work Opportunity Reconciliation 
     Act of 1996 (8 U.S.C. 1641(b)) is amended--
       (1) in paragraph (6), by striking ``or'' at the end;
       (2) in paragraph (7), by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(8) an individual who lawfully resides in the United 
     States (including territories and possessions of the United 
     States) in accordance with a Compact of Free Association 
     referred to in section 402(b)(2)(G).''.
       (d) Conforming Amendments.--Section 1108 of the Social 
     Security Act (42 U.S.C. 1308) is amended--
       (1) in subsection (f), in the matter preceding paragraph 
     (1), by striking ``subsection (g)'' and inserting 
     ``subsections (g) and (h)''; and
       (2) by adding at the end the following:
       ``(h) The limitations of subsections (f) and (g) shall not 
     apply with respect to medical assistance provided to an 
     individual described in section 431(b)(8) of the Personal 
     Responsibility and Work Opportunity Reconciliation Act of 
       (e) Effective Date.--The amendments made by this section 
     take effect on the date of enactment of this Act and apply to 
     benefits for items and services furnished on or after that 
      By Mr. HATCH (for himself, Mr. Burr, Mr. McCain, and Mr. Graham):
  S. 1507. A bill to provide protections from workers with respect to 
their right to select or refrain from selecting representation by a 
labor organization; to the Committee on Health, Education, Labor, and 
  Mr. HATCH. Mr. President, today I have introduced the Employee Rights 
Act, a comprehensive workers' rights bill that would address many 
issues plaguing America's workers.
  Our Nation's labor laws were designed to preserve the rights of 
employees to join labor unions and engage in collective bargaining. 
Contrary to what some may think, I am not anti-union and I do not want 
to stand in the way of unionization if the decision to unionize is 
truly the will of the employees. However, I believe that the right not 
to join a union is equally important. It is this right that far too 
often goes overlooked under our current laws, and particularly under 
policies implemented by unelected bureaucrats at various administrative 
  I am under no illusions that this legislation will be 
noncontroversial. There will most certainly be opposition. Indeed, I 
fully expect the unions and their supporters to come out against the 
Employee Rights Act, and characterize it as a radical, anti-union bill.
  But, that just isn't the case. There is not a single provision in 
this bill that will empower employers at the expense of the union. The 
only parties whose position will be improved by the Employee Rights Act 
are employees. Anyone whose real concern is preserving the rights of 
individual workers should support this bill.
  Let me take a few minutes to go over the specific provisions.
  First, the bill would conform and equalize unfair labor practices by 
unions with those of employers under the National Labor Relations Act. 
Currently, under Section 8 of the NLRA, employers face penalties if 
they ``interfere with, restrain, or coerce employees'' in the exercise 
of their rights under the Act. The same section punishes labor 
organizations only if they ``restrain or coerce'' employees in the 
exercise of those same rights.
  There is no reasonable or logical justification for this difference, 
and workers should have the benefit of equal protection against abuse 
from both sides. That is why, under the Employee Rights Act, both sides 
will be held to the higher standard.
  Next, my bill would ensure that employees are guaranteed a right to a 
federally supervised, secret ballot vote before a union can be 
certified. According to the NLRB, 38 percent of all unions certified in 
2009 did not have to go through a secret ballot election. Instead, 
these unions were able to use card checks to unionize employees. True 
enough, in such cases, employers voluntarily opted to recognize the 
union without demanding a secret ballot election. But what about the 
workers who wanted a secret ballot vote?
  There is, of course, a long-standing debate over the integrity and 
appropriateness of card check elections. But even the most committed 
union supporter must admit that the card check process is unregulated 
and less reliable than a secret ballot vote. Indeed, that's exactly why 
the unions prefer it. Anyone who claims otherwise is either lacking in 
common sense, on a union's payroll, or both.
  We have all heard the accounts of unions obtaining signatures through 
deception and intimidation. And, we've all heard about union organizing 
campaigns and boycotts that have all but forced employers to give up 
their right to demand a secret ballot vote. Well, Mr. President, under 
the Employee Rights Act, that right will belong to the employees, and 
it will be guaranteed.
  For the record, the American people agree with me on this issue. 
Earlier this year, the Opinion Research Corporation conducted a poll of 
1,000 adults that addressed a number of these issues. All told, 75 
percent--three out of every four--were somewhere between strongly 
supportive and somewhat supportive of a rule requiring that all 
employees be given the right to a secret ballot election when deciding 
whether to join a union.
  There is no way around it. If you are pro-worker, and not just pro-
union, you have to support the right to a secret ballot.
  Next, my bill would require every unionized workplace to conduct a 
secret ballot election every three years to determine whether a 
majority of employees still want to be represented by the union.
  According to the Bureau of Labor Statistics, less than 10 percent of 
current union members voted for the union at their workplace. Most 
union members simply took jobs at sites that were already unionized, 
many of which require union membership as a condition of employment.
  Under current law, if any of these employees want to decertify a 
union, they must go through an arduous process. It is a nearly 
impossible task. In addition to overcoming the many procedural hurdles 
provided by laws and regulations, they are required to speak out 
publicly against the union and subject themselves to public criticism, 
if not outright intimidation. Not surprisingly, very few even make the 
  As a result, millions of American workers belong to unions they never 
voted for and will never get to vote for. No one who claims to support 
the rights of workers can argue that this is a good thing. Every 
citizen is guaranteed an opportunity to vote out their representatives 
in State, local, and Federal Government. Yet, a union, once certified, 
is in place for perpetuity. This just shouldn't be the case.
  Once again, I am not alone in my thinking. In the same survey I cited 
earlier, 75 percent, again, 3/4 of those polled, supported a change 
that would require unions to be periodically recertified.
  This proposal is not outlandish or punitive. It is simply common 
sense. It is fair to both employers and unions, and,

[[Page S5266]]

far more importantly, it is fair to workers.
  Another provision of the bill would put a stop to the NLRB's current 
proposal to shorten the required length of time between the filing of a 
union certification petition and an election, commonly referred to as 
the quickie or snap election proposal.
  With this proposed rule, which is set to be finalized later this 
year, the pro-union NLRB hopes to help unions catch unwitting employers 
unprepared. Although there is no specific timeline in the proposal, 
experts have concluded that, if the regulation is finalized, union 
elections could occur within 7 days of a union filing a petition. Even 
worse, the proposal would eliminate many of the pre-election 
opportunities to appeal the petition and to resolve fundamental issues, 
like the size and scope of the bargaining unit.
  There is no need for this new rule. According to the NLRB, the 
average time between the filing of a petition and an election is 39 
days. This gives both the union and the employer an opportunity to 
communicate their perspective on union membership to employees and 
ensures that workers are able to make informed decisions.
  Though the current rule is eminently reasonable and appears to be 
working well for everyone, including the unions who already win the 
majority of elections, the Obama Administration can't risk losing the 
support of Big Labor. Richard Trumka, President of the AFL-CIO, 
recently remarked that this and other similar so-called reforms are 
effectively consolation prizes for the Democrats' loss in the fight to 
pass the deceptively-named Employee Free Choice Act.
  Indeed, the Obama administration, for obvious reasons, has 
consistently been all too eager to stack the deck in favor of the 
unions. Since they haven't been able to do it through the legislative 
process, they're trying to do so via regulation.
  Sadly, employees are caught in the middle. The NLRB doesn't care if 
they have enough time to consider all their options. They simply want 
to make sure the unions win more elections. To combat this, the 
Employee Rights Act would preserve substantive and procedural 
protections in the election process and ensure that workers have an 
opportunity to make informed decisions.
  The bill would also prevent a union from ordering a strike or work 
stoppage unless it obtains the consent of a majority of the affected 
workforce through a secret ballot vote.
  This is important because the rules governing when and how a union 
can order a strike are not uniform. They are determined by each union's 
constitution. There is no federal rule whatsoever requiring that unions 
obtain majority support before they can force members into unemployment 
and possible replacement.
  Many would be surprised to learn that union strike funds, kept to 
provide financial assistance for striking union members, rarely pay 
more than 20 percent of an employee's salary during a work stoppage. 
And, more often than not, a member cannot receive any compensation for 
lost wages unless they participate on a picket line.
  Isn't it only fair to give workers an opportunity to weigh in before 
a union orders a strike? Most people seem to think so. According to the 
same poll I mentioned earlier, 74 percent of Americans support this 
  Another provision of the Employee Rights Act would prevent an 
employee's union dues or fees from being used for purposes unrelated to 
the union's collective bargaining functions--including political 
contributions and expenditures--without that member's written consent.
  Exit polls have shown that America's union members are almost evenly 
split between Democrats and Republicans, yet more than 90 percent of 
union political contributions go to Democrats. This is, not to put too 
fine a point on it, the reason why I expect strong opposition to this 
  However I would like anyone who would oppose this provision to 
explain to me why it is fair to force workers to contribute to 
political campaigns at all, regardless of the party on the receiving 
end. Once again, the only people who would object to empowering 
individual workers in this way are those who have a vested interest in 
the status quo.
  When asked about this issue, 78 percent of those polled agreed with 
this idea.
  The Employee Rights Act would do several more things. It would make 
unions liable for lost wages, unlawfully collected union dues, and even 
liquidated damages if they coerce, intimidate, or discipline workers 
for exercising their rights under the NLRA, including the right to file 
a decertification petition. Any union found to have unlawfully 
interfered with the filing of a decertification petition would be 
barred from filing objections to the subsequent decertification vote.
  The bill would also strengthen prohibitions on the use or threat of 
violence to achieve union goals, overturning an egregious Supreme Court 
decision that all but exempted unions from Federal racketeering 
  It would allow all affected workers, union and non-union alike, the 
same rights as union members to vote to ratify a collective bargaining 
agreement or to begin a strike.
  These are not outlandish proposals. They would simply introduce some 
long-overdue common sense into our labor laws. Not surprisingly, polls 
have demonstrated that each of these ideas has broad support among the 
  We have had many fierce debates in this chamber about the role of 
labor unions in our nation's economy. In fact, I have been on the floor 
several times in the last week decrying the steps taken by the Obama 
Administration when it comes to helping out Big Labor.
  But truthfully, I'm not interested in stopping unions from organizing 
or preventing collective bargaining. I simply want to protect the 
rights of individual workers and ensure that, if they do opt for union 
representation, that choice is freely made and fairly determined.
  For too long, American workers have been treated by union leaders as 
little more than human ATMs. They claim to be progressives, supportive 
of equality and democracy and the working man. This bill is consistent 
with those principles, providing working men and women with a real and 
meaningful voice in decisions regarding unionization. It is supported 
by the National Right to Work Committee, and I am proud to have 
Congressman Tim Scott of South Carolina introducing companion 
legislation in the House.
  I urge all of my colleagues to support the Employee Rights Act.
      By Mr. WYDEN:
  S. 1509. A bill to provide incentives for States to improve the well-
being of children in the child welfare system through systemic reforms 
and innovations, increased collaboration between State agencies, and 
incorporation of higher standards of accountability; to the Committee 
on Finance.
  Mr. WYDEN. Mr. President, I am pleased today to introduce the 
Promoting Accountability and Excellence in Child Welfare Act, a bill 
that would pave the way for new innovations that improve the lives and 
well-being of vulnerable children and their families.
  The Federal government spends roughly ten times as much money on 
foster care as it does on preventative services, when foster care is, 
in nearly every case, the worst possible outcome for a child. The 
Promoting Accountability and Excellence in Child Welfare Act would 
establish a 5-year grant program to give States and localities greater 
flexibility to implement comprehensive reforms to existing child 
welfare programs provided they can demonstrate success in improving 
child well-being. This flexibility would allow States to use early-
intervention techniques to prevent youth from entering foster care, 
heightened reunification or adoption practices to decrease a child's 
time in care, and strengthened support services to ensure that children 
and youth do not fall behind their peers while they remain in foster 
care. Importantly, this act establishes strong performance measures 
that allow successful practices to serve as scalable models.
  Children and families that come into contact with the child welfare 
system are often served through multiple local, State, and Federal 
agencies including the Department of Health and Human Services, the 
Department of Justice, the Department of Education, the Department of 
Labor and the Department of Housing and Urban Development. Too often, 
these agencies operate in silos, with the effects playing

[[Page S5267]]

out at the State, local, and even individual level. This act promotes 
collaboration by requiring an inter-agency working group to identify 
existing Federal resources and streamline them to reduce duplication 
and allow grantees to access additional services and funding streams.
  States and localities have proven their ability to save money through 
innovation while also working to promote the best interest of children 
and families and the Federal government often turns to state best 
practices to improve national laws. The history of subsidized 
guardianship serves as one such example. Due to an all-time high in the 
number of children in State foster care, in 1996 Illinois was granted 
the authority to allow grandparents, aunts, uncles and other adult 
relatives to receive Federal foster care payments if they opened their 
homes permanently to their relative children in foster care. Raising a 
child is expensive and these modest payments gave relatives the 
financial means to care for their kin.
  Allowing children and youth to remain with relatives is not only a 
compassionate way to prevent unnecessary disruptions in a child's life 
and keep families together, it also saves money. The Illinois 
demonstration proved that children and youth did better living with 
relative caregivers than they did when they remained in foster care. In 
addition, offering guardianship assistance to relatives actually 
increased the odds that they would be adopted. Due to the success of 
kinship care in Illinois and other States, the Federal government now 
realizes a cost savings by reimbursing States for a portion of the cost 
of offering guardianship assistance. The Promoting Accountability and 
Excellence in Child Welfare Act would further enable such innovations 
and savings while improving child well-being.
  Furthermore, the legislation directs the Secretary of Health and 
Human Services to report to Congress with recommendations on how to 
update Federal foster care financing. Under current law, eligibility 
for Federal foster care assistance remains tied to the obsolete AFDC 
program, meaning each year fewer children in foster care are eligible 
for Federal funding. As a result, States are required to take on an 
ever-increasing share of foster care financing. This structure forces 
States to compensate by drawing funds from other programs such as 
Temporary Assistance to Needy Families, TANF, and the Social Security 
Block Grant, SSBG, to provide for children in care.
  As a country, we cannot afford to let children fall through the 
cracks of the many systems that exist to serve them. By targeting our 
resources, improving collaboration, spurring innovation, and, above 
all, holding ourselves accountable, we can systemically serve the best 
interest of at-risk children, their families and communities, and the 
Nation as a whole.