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                                                       Calendar No. 490
106th Congress                                                   Report
                                 SENATE
 2d Session                                                     106-260

======================================================================



 
        AMERICAN COMPETITIVENESS IN THE TWENTY-FIRST CENTURY ACT

                                _______
                                

                 April 11, 2000.--Ordered to be printed

                                _______
                                

Mr. Hatch, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 2045]

    The Committee on the Judiciary, to which was referred the 
bill (S. 2045) to amend the Immigration and Nationality Act 
with respect to H-1B nonimmigrant aliens, having considered the 
same, reports favorably thereon with amendments and recommends 
that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Purpose..........................................................1
 II. Legislative history..............................................3
III. Discussion.......................................................4
 IV. Vote of the Committee...........................................20
  V. Section-by-section analysis.....................................21
 VI. Cost estimate...................................................24
VII. Regulatory impact statement.....................................29
VIII.Additional views of Senators Leahy, Kennedy, Biden, Feingold, 
     Torricelli, and Schumer.........................................30
 IX. Changes in existing law.........................................43

                               I. Purpose

    Senate bill 2045, the American Competitiveness in the 21st 
Century Act, is an important piece of legislation that builds 
on the American Competitiveness and Workforce Improvement Act, 
which became law in 1998. That bill increased the annual 
ceiling for admission of H-1B nonimmigrants from 65,000, set in 
the 1990 Immigration Act, to 115,000 in fiscal year 1999 and 
fiscal year 2000, and 107,500 in fiscal year 2001. The bill 
also strengthened enforcement of the terms and conditions of H-
1B visas and levied a $500 per visa fee to fund training and 
scholarships for U.S. workers and students.
    The rationale for the 1998 bill was explained at length in 
the Committee report filed with that legislation. In the 
Information Age, when skilled workers are at a premium, America 
faces a serious dilemma when employers find that they cannot 
grow, innovate, and compete in global markets without increased 
access to skilled personnel. That access, however, was being 
curbed by a cap on H-1B visas put in place almost a decade 
earlier, in 1990, when no one understood the scope of the 
information revolution that was about to hit.
    The Committee also noted then that even apart from 
shortages in particular fields, in our increasingly global 
economy, highly skilled foreign workers are certain to be in a 
position to make unique contributions to the U.S. economy. A 
person from another country may simply be a uniquely talented 
individual with unique knowledge and skills. Such a person may 
also have specialized knowledge about a subject far more 
prominently studied abroad than in the United States. One 
prominent American producer of food products, for example, 
employs an expert on Chinese wheat in its research division, a 
topic regarding which no American is likely to be as well 
informed. Such a person may also be particularly qualified to 
help a company localize services or products to be sold abroad 
based on his or her native knowledge of the language or culture 
of the market where the services or products will be sold. 
Finally, the company may be building a global workforce (for 
example the employer has planned that the person will work in 
the United States to gain experience for a period of years 
before being sent to work overseas for the employer).
    What was true in 1998 remains true today. In fact, in 1998, 
the error Congress made was in underestimating the workforce 
needs of the United States in the year 2000. Despite the 
increase in the H-1B ceiling in 1998, a tight labor market, 
increasing globalization and a burgeoning economy have combined 
to increase demand for skilled workers even beyond what was 
forecast at that time. As a result, the 1998 bill has proven to 
be insufficient to meet the current demand for skilled 
professionals. Even in the first year of the visa increase, the 
1999 cap on H-1B visas was reached in June of last year, at the 
end of 9 months rather than 12. According to the INS, when 
pending applications are factored in, we have already hit the 
fiscal year 2000 cap even though we are only 6 months into the 
new fiscal year. Accordingly, without this legislation, U.S. 
employers will not be able to lawfully hire skilled foreign 
nationals in the United States on H-1B's for the remainder of 
fiscal year 2000. Moreover, without legislative action, the 
problem will worsen in each succeeding fiscal year as extensive 
backlogs develop.
    Our employers' current inability to hire skilled personnel 
presents both a short-term and a long-term problem. The country 
needs to increase its access to skilled personnel immediately 
in order to prevent current needs from going unfilled. To meet 
these needs over the long term, however, the American education 
system must produce more young people interested in, and 
qualified to enter, key fields, and we must increase our other 
training efforts, so that more Americans can be prepared to 
keep this country at the cutting edge and competitive in global 
markets.
    S. 2045 addresses both aspects of this problem. In order to 
meet immediate needs, the bill raises the current ceiling on 
temporary visas to 195,000 for fiscal year 2000, fiscal year 
2001, and fiscal year 2002. In addition, it provides for 
exemptions from the ceiling for graduate degree recipients from 
American universities and personnel at universities and 
research facilities to allow these educators and top graduates 
to remain in the country.
    S. 2045 also addresses the long-term problem that too few 
U.S. students are entering and excelling in mathematics, 
computer science, engineering and related fields. It contains 
measures to encourage more young people to study mathematics, 
engineering and computer science and to train more Americans in 
these areas. Specifically, the bill extends the $500 per visa 
fee originally authorized in the 1998 bill. This fee is 
assessed on each initial petition for H-1B status for an 
individual, on each initial application for extension of that 
individual's status, and on each petition required on account 
of a change of employer or concurrent employment. It funds 
scholarships for U.S. students and training for U.S. workers. 
Using the same assumptions on the rate of renewals, changes of 
employer and the like that the Committee and the administration 
relied on in estimating the impact of the 1998 legislation, the 
increase in visas should result in total funding for training, 
scholarships and administration of H-1B visas of approximately 
$450 million over fiscal year 2000, fiscal year 2001, and 
fiscal year 2002. The Committee anticipates that this funding 
will allow for 40,000 scholarships to U.S. students, thereby 
helping them to choose these important fields.

                        II. Legislative History

    This legislation was introduced by Senator Hatch and is 
cosponsored by Senators Abraham, Gramm, Graham, Lieberman, 
Feinstein, Lott, Nickles, Mack, Specter, DeWine, Ashcroft, 
McConnell, Gorton, Hagel, Bennett, Grams, Brownback, Smith 
(OR), Warner, Helms, and Kohl.
    Before the American Competitiveness Act was enacted in 
1998, the Senate Judiciary Committee held a hearing on February 
25, 1998, that demonstrated the need for that legislation. The 
Subcommittee on Immigration held a hearing on October 21, 1999, 
to update the information the Committee obtained in 1998. That 
hearing made clear that further legislation is necessary now.
    At the October 21, 1999, hearing, national trade groups and 
leaders of small businesses alike made clear that additional 
highly skilled workers are urgently needed, will remain needed 
for the foreseeable future, and are not currently available 
within the United States. ``As investment capital flows into 
start-ups and puts them on a fast growth track, the demand for 
workers will continue to far exceed the supply,'' testified 
Susan DeFife, CEO, womenCONNECT.com, a woman-owned company that 
is a leading internet site for women in business. Unless the 
visa cap is raised, she explained ``the options for tech 
companies [seeking to fill these positions] are not 
particularly attractive: we can limit our growth, but then we 
lose the ability to compete; we can `steal' employees from 
other companies, which makes none of us stronger and forces us 
to constantly look over our shoulders; or, in the case of 
larger companies I know, move operations off-shore.''
    The witnesses' testimony also made clear that greater 
access to H-1B workers does not detract from but rather 
multiplies opportunities for American workers. Julie Holdren, 
president and CEO of the Virginia-based Olympus Group, which 
specializes in internet-based business intelligence solutions, 
testified that ``For every H-1B worker I employ, I am able to 
hire ten more American workers. That's the ironic part of this 
debate. The H-1B visa holders who are employed by me actually 
create many new job opportunities for domestic workers.'' Her 
company employs over 70 people but has 30 jobs openings. In 
short, as Roberta Katz, CEO of the high-tech trade group 
TechNet, testified: ``If the United States is to remain the 
world's technology leader, it isessential that American 
companies continue to have access to the most highly skilled 
employees.''
    All of the witnesses at the 1999 hearing, including Rob 
Atkinson of the Progressive Policy Institute, which is 
affiliated with the Democratic Leadership Council, agreed that 
while education and training are an important part of the 
solution, meeting the demand for skilled professionals through 
H-1B visas is also essential. S. 2045 embodies both approaches.
    The bill was not referred to subcommittee but was 
considered directly by the full Committee on the Judiciary. It 
was marked up on March 9, 2000, and reported out of Committee 
with a favorable recommendation by a 16-to-2 vote.

                            III. Discussion


                             A. Background


                             1. current law

a. General provisions governing H-1B visas

    Current law allows employers seeking people with special 
skills on a temporary basis to hire them on H-1B visas. These 
visas are valid for 3 years, after which they can be renewed 
for an additional 3 years, thus allowing a maximum stay of 6 
years. Persons admitted under these visas cannot stay 
permanently unless they are sponsored by an employer for a 
separate, permanent employment-based immigrant visa, for which 
there is a separate and lengthy approval process.
    In order to qualify for an H-1B visa, an individual must be 
in a ``specialty occupation.'' According to the law:

        The term ``specialty occupation'' means an occupation 
        that requires--(A) theoretical and practical 
        application of a body of highly specialized knowledge, 
        and (B) attainment of a bachelor's or higher degree in 
        the specific specialty (or its equivalent) as a minimum 
        for entry into the occupation in the United States.

Immigration and Nationality Act (``INA'') Sec. 214(i)(1).

    To qualify for an H-1B visa a nonimmigrant must have ``full 
state licensure to practice in the occupation, if such 
licensure is required to practice in the occupation'' or must 
possess ``experience in the specialty equivalent to the 
completion of [a bachelor's or higher degree], and recognition 
of expertise in the specialty through progressively responsible 
positions relating to the specialty.'' INA Sec. 214(i)(2).\1\
---------------------------------------------------------------------------
    \1\ It should be noted that the language establishing the 
qualifications individuals must have to be eligible for H-1B visas is 
contained not only in the U.S. code but is also part of a commitment 
the United States made in the General Agreement on Trade in Services 
(GATS). The commitments set out in that agreement can be modified or 
withdrawn only after negotiations with other nations. Any unilateral 
change in that definition (education, licensing, etc.) that is more 
restrictive would accordingly be in violation of the United States' 
international obligations. Unilaterally limiting or eliminating 
occupational categories from eligibility for H-1B visas would also 
violate GATS. A numerical limitation in Senate and House bill in 1998 
on the maximum number of physical and occupational therapists who could 
be hired on H-1B visas was removed during negotiations with the 
Administration after the U.S. Trade Representative's Office noted that 
such a provision would violate GATS. By the same token, unilaterally 
placing new restrictions on which employers could hire individuals on 
H-1B visas would also be in violation of America's international 
obligations.
---------------------------------------------------------------------------
    Until the 1990 Immigration Act, employers were allowed to 
hire individuals on what were then known as ``H-1'' visas 
without numerical limitations. In 1990, however, as part of a 
comprehensive package of immigration law reforms, the 
Immigration Act of 1990 capped these visas at 65,000, a number 
that the legislative history suggests was chosen arbitrarily in 
order to reassure critics of these visas that an unlimited 
supply of visas would not be available. ``The [65,000] number 
was set without public hearings, is arbitrary, and was in no 
way arrived at by analyzing demand, labor shortages, business 
conditions, or skilled labor needed by firms to remain globally 
competitive,'' according to Prof. Charles B. Keely of 
Georgetown University.
    Even in 1990, there were contemporaneous expressions of 
concern that the 65,000 ceiling would eventually have an 
adverse impact on American companies' and universities' access 
to skilled personnel and hence on their potential growth. That 
prediction was not realized until 1997, however, when for the 
first time companies bumped up against the ceiling a month 
before the end of the fiscal year. The situation worsened in 
1998, when the cap was reached in May. As a result, Congress 
acted in 1998 to raise the ceiling to a level that it thought, 
on the basis of then-current use and the rate at which use of 
the visas had been growing, should be adequate to accommodate 
demand for the next 3 years. Under current law, the United 
States may issue up to 115,000 H-1B visas annually for fiscal 
year 2000 and 107,500 for fiscal year 2001. In fiscal year 
2002, the ceiling is scheduled to revert to 65,000, the level 
set in the 1990 act.

b. Labor condition application attestations and related enforcement 
        provisions

            (1) The prevailing/actual wage attestation
    In order to obtain an H-1B visa, an employer must execute a 
Labor Condition Application (LCA) in which it attests that it 
will be paying individuals on H-1Bs the higher of the 
prevailing wage or actual wage paid to Americans in the same 
job with similar experience. This provision was included in the 
1990 Immigration Act in order to assure that the hiring of H-1B 
workers would not have an adverse wage impact on Americans. 
Specifically, it requires that in order to obtain approval for 
employing an individual on an H-1B visa, an employer must file 
an application with the Secretary of Labor stating:
          (A) The employer--
                  (i) is offering and will offer during the 
                period of authorized employment to aliens 
                admitted or provided status as a nonimmigrant 
                described in section 101(a)(15)(H)(i)(b) wages 
                that are at least--
                          (I) the actual wage level paid by the 
                        employer to all other individuals with 
                        similar experience and qualifications 
                        for the specific employment in 
                        question, or
                          (II) the prevailing wage level for 
                        the occupational classification in the 
                        area of employment, whichever is 
                        greater, based on the best information 
                        available at the time of filing the 
                        application, and
                  (ii) will provide working conditions for such 
                a nonimmigrant that will not adversely affect 
                the working conditions of workers similarly 
                employed.

INA Sec. 212(n)(1).

    To assist in enforcing this requirement, an employer hiring 
a worker on an H-1B visa must provide notice of the hiring and 
salary level to employees' collective bargaining representative 
for the relevant occupational classification. If no such 
representative exists, notice is to be given to employees 
directly by posting the information in conspicuous locations at 
the place of employment. The law also establishes a complaint 
mechanism for individuals with information that these 
requirements are not being complied with. The Department of 
Labor is authorized to investigate these complaints and, if it 
finds them meritorious, to take appropriate action against 
violators, ranging from back pay to the H-1B to fines to 
debarment from use of employment visas. INA Sec. 212(n)(1)-(2).
            (2) Additional enforcement provisions in the 1998 act
    In addition to raising the ceiling on H-1B visas for fiscal 
years 1999, 2000, and 2001, the 1998 American Competitiveness 
and Workforce Improvement Act addressed many concerns raised 
about perceived needs to increase enforcement of the terms and 
conditions attached to H-1B visas. These issues were addressed 
both in the original Senate bill, S. 1723, the American 
Competitiveness Act, which passed the Senate by a vote of 78 to 
20 in May 1998, and in the final version of that legislation, 
arrived at through extensive negotiations between the House and 
Senate and between Congress and the administration.\2\ At the 
conclusion of those negotiations, the American Competitiveness 
and Workforce Improvement Act passed by an overwhelming margin 
in the House and became law as part of the 1998 Omnibus 
Appropriations bill.
---------------------------------------------------------------------------
    \2\ These measures were adopted despite a very thin record that 
there were actually a significant number of employers misusing the 
visas. There have been 7 documented willful violations by employers 
using H-1B visas since 1990. In 1998, the Department of Labor refused 
to answer questions submitted to it by the Judiciary Committee 
following the Feb. 25, 1997, hearing that sought additional details on 
DOL's findings of H-1B violations.
---------------------------------------------------------------------------
    Detailed below are key enforcement provisions of the 1998 
legislation related to H-1B visas:
    Layoff protection for American workers. The bill provided 
three types of layoff protection for American workers; (1) Any 
employer who replaces a U.S. worker with an individual on an H-
1B visa and wilfully underpays the H-1B visa holder is subject 
to debarment from all employment immigration programs for 3 
years and a $35,000 fine per violation. (2) A company that is 
H-1B dependent (see below) must attest that it will not lay off 
an American employee in the same job classification during the 
90 days before or after the filing of a petitionfor an H-1B 
professional. (3) An H-1B dependent company acting as a contractor must 
attest that it similarly will not place an H-1B professional in another 
company to fill the same job held by a laid off American 90 days before 
or after the date of placement.
    Recruitment Requirements on Dependent Employers. H-1B 
dependent companies must attest that they recruit according to 
industry-wide standards. Moreover, they must attest that the H-
1B hiree was as qualified as, or more qualified than, any 
American job applicant. A U.S. citizen not hired can file a 
complaint with an arbitration panel, which can fine employers 
found to have violated this provision.
    H-1B Dependent Companies. The legislation established new 
distinctions between types of employers. The legislation 
defined an employer as H-1B dependent and subject to the new 
recruitment and layoff attestations if its workforce consists 
of 15 percent or more H-1B visa holders. Smaller employers and 
start-ups are ``non-dependent'' if they have 25 employees and 
no more than 7 H-1B's, or 26 to 50 employees with no more than 
12 H-1B's. Non H-1B dependent employers who are found to have 
committed willful violations in the prior 5 years are also 
subject to these new attestations.
    Increased Enforcement and Penalties. The bill increased by 
five-fold--to $5,000--fines for willful violators of the H-1B 
program and doubled the debarment period for such violations 
from 1 to 2 years. The bill gives the Department of Labor (DOL) 
authority to initiate ``spot'' investigations, without a 
complaint filed, of employers found to have committed prior 
willful violations. Upon the certification of the Secretary of 
Labor that DOL has received specific and credible evidence of 
willful and serious violations of the terms and conditions 
attached to H-1B visas, DOL also has the authority to 
investigate an employer without the filing of a specific 
complaint.
    Whistle-blower Protection. The legislation made it a 
violation of the terms and conditions of obtaining an H-1B visa 
for an employer to retaliate against an employee for filing a 
complaint against an employer. This codified previous 
regulatory provisions.
    Benching Explicitly Prohibited. The legislation clarified 
that it is a violation of the attestation set out in INA 
Sec. 212(n)(1)(A) for an employer to engage in the practice 
colloquially known as ``benching,'' under which an employer 
brings over an H-1B worker on the promise that the worker will 
be paid a certain wage, but then pays the worker only a 
fraction of that wage because the employer does not have work 
for the H-1B worker to do.
    Benefits and Eligibility for benefits. The new law 
clarified that it is a violation of the attestation set out in 
INA Sec. 212(n)(1)(A) for an employer to fail to offer benefits 
and eligibility for benefits to workers on the same basis, and 
in accordance with the same criteria, as the employer offers 
benefits and eligibility to benefits to U.S. workers.
    Penalties prohibited. The legislation prohibited employers 
from requiring H-1B workers to pay a penalty for leaving an 
employer's employ before a date agreed to between the employer 
and the worker.
    For a more detailed explanation of the congressional intent 
of the provisions in the 1998 legislation, see Senator 
Abraham's floor statement of October 21, 1998.
            (3) Education and training provisions for American workers 
                    in the 1998 act
    The 1998 legislation also provided a mechanism whereby the 
hiring of individuals on H-1B visas would help address the 
long-term workforce needs of the United States. It assessed a 
$500 fee per visa petition, a $500 fee for the petition for the 
initial renewal of such a visa, and a $500 fee for a petition 
on behalf of an individual being hired by a new or concurrent 
employer. This was estimated to raise approximately $75 million 
a year to fund scholarships and training set out in the bill. 
The bill then split the proceeds from the fee between different 
mechanisms for educating Americans and training American 
workers. It provided 8,000 to 10,000 scholarships a year for 
low-income students in math, engineering, and computer science 
through the National Science Foundation, assistance to certain 
NSF programs targeted to K-12 education, and training for many 
thousands of Americans through the Job Training Partnership 
Act. The money was split as follows: 56.3 percent for training 
through the DOL under the Job Training Partnership Act; 28.2 
percent for scholarships administered through the National 
Science Foundation (NSF); 4 percent for NSF grants for year-
round K-12 academic enrichment; 4 percent for NSF grants for 
systemic reform activities in K-12; 1.5 percent for INS 
processing related to the fee; 3 percent for DOL visa 
processing and 3 percent for DOL enforcement.\3\
---------------------------------------------------------------------------
    \3\ Enforcement funding is contingent on a certification by the DOL 
that it has met its statutory obligations for timely processing.
---------------------------------------------------------------------------
    In sum, the 1998 legislation significantly enhanced 
enforcement by dramatically increasing penalties, increasing 
the authority of the Department of Labor to investigate 
potential violations, and establishing other new provisions 
aimed at protecting U.S. workers and H-1B visa holders. 
Moreover, today every time an individual is hired on an H-1B 
visa a $500 fee goes to training U.S. workers and providing 
scholarships for U.S. students in science and technology. The 
new legislation extends the $500 fee and the additional labor 
provisions through fiscal year 2002. The H-1B increase in the 
proposed legislation will add considerably to training and 
scholarships over a 3-year period.

                        B. The Current Situation

    Despite the increase in the H-1B ceiling to 115,000, in 
1999, the visa supply was once again exhausted in June, well 
before the end of the fiscal year. This was partly due to the 
protracted negotiations over the 1998 legislation, resulting in 
the buildup of a large backlog, as well as to the 
administration's unwillingness to include provisions 
specifically designed to alleviate that backlog. It was also, 
however, due to an extraordinary growth in demand for these 
visas that surpassed the projections of even the strongest 
proponents of raising the ceiling on the visas, who had based 
their assessment of what was needed in large measure on prior 
experience. In 2000, INS announced on March 17 that no new 
applications will be accepted for H-1B visas as it believes it 
already has received a sufficient number to reach the 115,000 
ceiling.
    In a February 28, 2000 report, Manpower president and chief 
executive officer Jeffrey Joerres stated, ``The personnel 
shortage continues to plague companies in all industries and 
geographic regions.'' Cato Institute economist Daniel Griswold 
wrote recently that ``Americans are not earning specialized 
degrees fast enough to fill the 1.3 million high tech jobs the 
Labor Department estimates will be created during the next 
decade.'' (Mar. 16, 2000, Intellectualcapital.com)
    In discussing the Midwest, Federal Reserve economist 
Richard E. Kraglic stated in 1998, ``The region is not just 
running out of workers; it is running out of potential 
workers.'' This is having a negative impact on economic growth, 
says economist Diane Swonk at First Chicago NBD. The Hudson 
Institute estimates that the unaddressed shortage of skilled 
workers throughout the U.S. economy will result in a 5-percent 
drop in the growth rate of GDP. That translates into 
approximately $200 billion in lost output, nearly $1,000 for 
every American.
    It is worth noting that critics who predicted in 1998 that 
widespread unemployment and extreme economic times would result 
if the proposed H-1B increase became law have been proved 
completely wrong. Instead, more studies and more individuals 
have reached the same conclusion that was embodied in the 1998 
legislation:

  --A 1999 study by Joint Venture: Silicon Valley found that a 
        lack of skilled workers is costing Silicon Valley 
        companies $3 to $4 billion a year.
  --A 1999 study by the Computer Technology Industry 
        Association concluded that a shortage of information 
        technology professionals is costing the U.S. economy as 
        a whole $105 billion a year.
  --A 1999 study for the Public Policy Institute of California 
        contained findings by U.C.-Berkeley Prof. Annalee 
        Saxenian that immigrants are a major source of job 
        creation. Her research showed that Chinese and Indian 
        immigrant entrepreneurs in northern California alone 
        were responsible for employing 58,000 people, with 
        annual sales of nearly $17 billion.
  --Laura D'Andrea Tyson, former chief economic adviser to 
        President Clinton, wrote in Business Week: ``Conditions 
        in the information technology sector indicate that it's 
        time to raise the cap on H-1B visas yet again and to 
        provide room for further increases as warranted. 
        Silicon Valley's experience reveals that the results 
        will be more jobs and higher incomes for both Americans 
        and immigrant workers.''
  --Finally, in testimony before the Senate Banking Committee, 
        Federal Reserve Chairman Alan Greenspan this year 
        endorsed S. 2045 in response to a question from Senator 
        Phil Gramm, and stated that ``The benefits of bringing 
        in people to do the work here, rather than doing the 
        work elsewhere, to me, should be pretty self-evident.''

        C. The American Competitiveness in the 21st Century Act

    The American Competitiveness in the 21st Century Act seeks 
to help the American economy in both the short and long run by 
a combination of temporary visa increases and training and 
education initiatives. A more detailed section-by-section 
description of the bill appears elsewhere in the committee 
report. However, below is a brief summary of the bill's 
contents:
    Temporary Increase in Visa Allotment for Skilled 
Professionals. The bill increases the number of H-1B visas that 
may be issued by 80,000 for fiscal year 2000, 87,500 for fiscal 
year 2001, and 130,000 for fiscal year 2002, for a level of 
195,000 a year.
    Education and Training. Additional visas in the bill will 
generate more money for training and scholarships for U.S. 
workers and students through the $500 per visa fee that 
originated in the 1998 legislation. Funding from this fee 
should raise approximately $450 million total over 3 years, 
creating 40,000 scholarships, training thousands of 
individuals, and funding promising K-12 programs. The bill also 
authorizes funds for after-school technology programs in Boys 
and Girls Clubs.
    Universities and Research Facilities. The bill exempts from 
the cap visas obtained by universities, research facilities, 
and those obtained on behalf of graduate degree recipients to 
help keep top graduates and educators in the country.
    Enforcement. The bill maintains the increased fines, 
attestations, increased DOL investigative authority and other 
enforcement measures passed into law in 1998 and extends the 
provisions through fiscal year 2002. It mandates that 
fraudulently issued visas be returned to the pool of visas for 
that fiscal year.
    Per Country Limit. The bill modifies the per country limit 
on employment-based immigrant visas to eliminate the 
discriminatory impact of the limit under current law.
    Increased Portability of H-1B Status. The bill allows an H-
1B visa holder to change employers at the time a new employer 
files the initial paperwork, rather than requiring the visa 
holder to wait for the new H-1B application to be approved.
    Relief from Lengthy Adjudications. The bill addresses 
inordinate delays in labor certification and INS visa 
processing by allowing an individual on an H-1B visa on whose 
behalf an employer has taken steps to seek an immigrant visa to 
obtain an extension on that visa so the individual can stay in 
the United States until a decision is made on his or her case--
rather than forcing the person to leave the country--if more 
than 1 year has elapsed from the date the employer filed the 
labor certification application or petition for adjustment of 
status. If labor certification is required, an individual is 
only eligible for this extension if the DOL has already 
approved the labor certification application.

   D. Responses to Concerns Raised and the Likely Consequences of a 
                             Failure to Act


                     1. the impact on american jobs

    Critics of H-1B visas claim that they result in taking away 
jobs from Americans and giving them to foreigners. In fact, 
however, failure to raise the H-1B ceiling is what will deprive 
Americans of jobs. This is because artificially limiting 
companies' ability to hire skilled foreign professionals will 
stymie our country's economic growth and thereby partially 
atrophy its creation of new jobs. It will also result in 
sending some of those jobs abroad. Thus, contrary to the claims 
of some critics of the H-1B program, American workers' 
interests are advanced, rather than impeded, by raising the H-
1B cap.
    A letter signed in 1998 by the CEO's of 14 of America's 
leading companies, including Microsoft's Bill Gates, Netscape's 
James Barksdale, and Texas Instruments' Thomas Engibous, 
expressed this point well:

          Failure to increase the H-1B cap and the limits that 
        will place on the ability of American companies to grow 
        and innovate will also limit the growth of jobs 
        available to American workers. * * * Failure to raise 
        the H-1B cap will aid our foreign competitors by 
        limiting the growth and innovation potential of U.S. 
        companies while pushing talented people away from our 
        shores. * * * [this] could mean a loss of America's 
        high technology leadership in the world.

    At both the Immigration Subcommittee hearing of October 21, 
1999, and the Full Committee hearing 2 years ago, the testimony 
given strongly indicated that individuals on H-1B visas create 
many jobs in America. As noted above, at the October 1999 
hearing, Julie Holdren, president and CEO of the Virginia-based 
Olympus Group, testified that for every H-1B worker she 
employs, she is able to hire 10 more American workers. Thus 
``[t]he H-1B visa holders [her company hires] actually create 
many new job opportunities for domestic workers.'' T.J. 
Rodgers, president and CEO of Cypress Semiconductor, testified 
to similar effect in February 1998: for every foreign-born 
engineer he can hire, he employs five more Americans in 
marketing, manufacturing, or related endeavors. At that same 
hearing, Kenneth M. Alvares, Human Resources CEO at Sun 
Microsystems, provided a particularly striking example of how 
this works. He testified that Anant Agrawal, born in India, 
entered the country on an H-1B visa. When he started working at 
Sun Microsystems the company employed fewer than 300 people. 
Combining his talents with those of another engineer, he 
developed SPARC, a powerful microprocessor that proved to be a 
dramatic innovation in chip design, according to Sun 
Microsystems. Today, Sun employs more than 23,000 people, the 
majority of whom do work related to Agrawal's innovation.
    Moreover, failure to raise the cap on H-1B visas will 
almost certainly cause some U.S. companies to move some of 
their operations offshore. The Committee continues to believe 
that it is essential to avoid this danger by removing the 
artificial limits on companies' access to skilled personnel 
created if too few H-1B visas are available and resisting the 
call to impose excessive regulations on their use that would 
have the same effect.
    Many of the concerns about H-1B visas revolve around the 
fear that individuals entering on H-1B visas will ``take'' a 
job from an American worker. This fear arises from the premise 
that there is a fixed number of jobs for which competition is a 
zero-sum game. But this premise is plainly flawed: Following 
passage of the 1990 act, the number of U.S. jobs has increased 
by more than 17 million, and the Internet, which was used by a 
few thousand specialists back in 1990, is now used by tens of 
millions and is a major source of jobs and innovation in 
America. Since 1960, the number of U.S. jobs has more than 
doubled from 65 million to over 135 million today. These 
figures simply demonstrate the general principle that labor 
markets have demonstrated time and time again: additional 
people entering the labor force, whether native-born students 
out of school, immigrants, or nonimmigrants, expand job 
opportunities and create other jobs through innovation, 
entrepreneurship, and money spent on consumer items like food, 
clothing, and housing, as pointed out in the 1986 Economic 
Report of the President.
    Moreover, looking at the particular case of individuals on 
H-1B visas, there is no evidence that they are harming the job 
prospects of native-born Americans. According to National 
Science Foundation data, there is no correlation between the 
percentage of foreign-born employees in a field and the 
unemployment rate in that field. The data show that fields with 
a high percentage of foreign-born workers, such as computer 
science and engineering, have lower unemployment rates than 
fields with relatively few foreign-born workers, such as the 
geosciences and social sciences. And there is abundant evidence 
that the U.S. economy, its industries, and its universities, 
which are recognized as the best in the world, have all 
prospered as skilled foreign nationals and immigrants have 
worked side by side with native-born Americans.

                     2. impact on american salaries

    Critics have also suggested that raising the cap on H-1B 
visas will have a negative impact on salaries for Americans in 
the same occupations, and that, in fact, one reason employers 
may want to bring in H-1B workers is to economize on costs. But 
there are no data to support these concerns. In fact, National 
Science Foundation data show that the typical foreign-born 
scientist and engineer earns more, not less, than his or her 
native-born counterpart, according to the Wall Street Journal. 
The 1996 worldwide salary survey conducted by EE Times, a 
publication that covers the electrical engineering field, 
provides further evidence of this assertion. The survey 
included findings that:

          American-born engineers earned a mean salary of 
        $66,000, fully $1,400 below the total mean. Immigrants 
        from India ($74,400) and Hong Kong ($76,800) pulled up 
        the averages for foreign-born engineers. Newcomers from 
        China at $65,800 only $200 below the mean] lagged 
        behind them. This illustrates a point made in earlier 
        surveys * * * no evidence exists of immigrants dragging 
        down overall salaries.

    The EE Times survey stated that it found no evidence of 
exploitation. ``Not a single one of the 137 non-U.S.-born 
engineers or managers earned under $35,000. By contrast 28 
American readers did.''
    Thus, what evidence we have suggests that American wages 
are not being undercut by H-1B workers, particularly in light 
of market forces and the role innovation plays in propelling 
the fields in question forward. There is also no evidence that 
companies maintain disparate wage scales for native-born and H-
1B employees working side by side one another in the same 
occupations. In fact, provisions in current law governing the 
hiring of H-1B workers, which require employers to pay H-1B 
workers the higher of prevailing or actual wages and to provide 
them working conditions that do not adversely affect the 
working conditions of others similarly situated, forbid any 
such a practice. In addition to these requirements employers 
typically pay legal fees of $3,000 or more to secure H-1B visas 
for needed employees. Moreover, the market would not tolerate 
exploitation, especially given the fierce competition for 
skilled workers. An H-1B employee who is not being treated 
fairly can easily be petitioned by another employer and switch 
to work for that employer. The Committee further facilitated 
this flexibility in S. 2045 by allowing an H-1B employee to 
change employers at the time a new employer files the initial 
paperwork, rather than requiring the employee to wait for the 
new H-1B application to be approved. Indeed, the Committee 
understands that such job changes are fairly common among H-1B 
workers, an assumption shared by the administration in 1998 in 
developing estimates of the funds the $500 fee would produce. 
Finally, many H-1B's are foreign students recruited on U.S. 
college campuses in the same process through which companies 
hire native-born students. For example, Kenneth Alvares, vice 
president for Human Resources at Sun Microsystems,testified at 
the Committee's 1998 hearing that ``of all the H-1B workers that Sun 
has hired, only a very small handful are actually recruited outside the 
United States and then brought into the country. The majority of H-1Bs 
that Sun hires are already in the U.S. having graduated from United 
States schools frequently at the top of their class.'' Hence it is 
unlikely, to say the least, that employers are creating different wage 
scales for these two groups of classmates.
    As to the competition for graduates among companies and the 
pay scales themselves: Steven Levin of Texas Instruments 
testified in 1998 that the employment situation is so 
competitive that there are more companies recruiting at M.I.T. 
than there are graduates in high-tech fields annually. In his 
testimony, Levin also provided data on starting salaries for 
various fields that cast real doubt on the proposition that 
salaries in these areas are suffering from any kind of 
deflationary pressure. Although he noted that ``starting salary 
* * * is heavily dependent on the education and work experience 
of each person offered employment'' and that ``the schools 
attended and the grade point average of a person also 
influences the starting salary,'' Levin testified that the 
average starting salary for engineers with a bachelor's degree 
and summer work experience at Texas Instruments is $46,800. 
Average starting salary is $54,000 for a master's degree with 
summer work experience and $76,200 for a Ph.D. with summer work 
experience. Kenneth Alvares stated that the starting salaries 
Sun Microsystems offers for recent college graduates is $45,000 
to $55,000, though those with more experience could start at 
more than $55,000. Microsoft testified to similar numbers. 
These levels, of course, do not take into account noncash 
benefits such as stock options, which, according to a February 
28, 2000, article in InfoWorld, have become practically a 
standard component of any software engineer's employment 
package. Indeed, according to the same article, companies are 
even increasingly offering recruits stock portfolios with 
options in companies with which the employer conducts business, 
perks such as on-site drycleaning and corporate concierges, and 
even BMW's.

                       3. training and education

    There is widespread agreement among Committee Members that 
efforts are necessary to educate more American young people for 
the jobs of tomorrow. Indeed, the Committee specifically 
addressed this issue by adopting two amendments. The Feinstein-
Abraham amendment builds on the 1998 legislation to address 
that need (1) through a scholarship program included in the 
bill to help students major in engineering, mathematics, and 
computer science, (2) through funding for NSF educational 
programs directed at K-12 education, and (3) through provisions 
for training the unemployed and other workers. The Biden 
Amendment authorizes funds for grants to Boys and Girls clubs 
to fund computers and related expenses.
    It is also important to understand, however, that American 
companies are doing a great deal to address these issues on 
their own. It was suggested during the 1998 debate that raising 
the cap on H-1B visas would have a negative effect on American 
companies' commitment to education and training; however, this 
has not proven true. In fact, the Committee has seen 
extraordinary initiatives from industry that indicate that 
concern was completely unfounded. Below is a sampling of the 
materials that have been brought to the Committee's attention. 
The sample is meant to be illustrative rather than an 
exhaustive description of employers' efforts.
    In 1998, Intel's contributions to K-12 education totaled 
$28,541,751. Contributions to higher education totaled 
$62,632,634 and contributions to community organizations 
totaled $8,848,742. Intel's science talent search results in 
$1.25 million in scholarships and donations to schools to help 
support science and math programs. Intel will invest $100 
million in cash, equipment, curriculum development and program 
management to train teachers in the use of technology through 
the Intel Teach to the Future program. In this program, 
Microsoft will contribute $344 million in software and program 
support. Also, leading manufacturers including Hewlett Packard 
and Premio have donated equipment.
    In 1999, the Bill and Melinda Gates Foundation has given 
$350 million to help student achievement and $25 million to the 
Alliance for Education and Seattle public schools. In the past 
three years, Microsoft has also given more than $173 million to 
help organizations provide technology access to underserved 
communities. In cooperation with Bill and Melinda Gates 
Foundation, Microsoft is also contributing $200 million in 
software, matched by the Foundation's $200 million to provide 
technology access to libraries. Microsoft has supported the 
training of more than 1 million teachers in the use of 
technology.
    Hewlett Packard's Hands-On Science Program provides funding 
to elementary school districts working with Hewlett Packard 
sites to reform elementary science education. As of 1998, the 
Hands-On Science Program was supporting 60 schools. HP Science 
Partners are employee volunteers who help to implement the 
reforms by working with teachers, in classrooms and as advisors 
to the schools. Through an e-mail mentor program, these 
employees help 5th through 12th grade students relate their 
science and math curriculum to personal interests. In a recent 
initiative that received significant attention this year, Ford 
Motor Co. announced it will supply a computer, printer and 
internet access to its employees for a nominal fee. Thirty-
seven percent of Ford's contributions went to various 
educational activities in 1998. Ford contributes to 
universities and colleges with a plan to increase contributions 
to 26 colleges and universities over the next 5 years. Ford has 
maintained a longterm commitment to contribute to historically 
African-American colleges and universities.
    Texas Instruments states that education is its highest 
priority for corporate philanthropy and volunteerism. It has 
established a series of grants for universities totaling $27 
million. Texas Instruments supports preschool programs, 
mentoring for K-12 students, teacher training, scholarships for 
community college students, internships, support for 
university-based research and tuition reimbursement for 
employees. Texas Instruments has donated $5 million to Southern 
Methodist University for an electrical engineering building. 
The corporation's continuing education program represents a 
$100 million investment annually.
    Netscape through AOL Foundation participates in the 
Interactive Education Initiative which makes 55 grants to 
institutions looking for ways to improve technology in 
education. They support the Rural Telecom Leadership Awards as 
well as the Digital Divide Initiative. Netscape regularly 
donates computers as well as sponsoring paid internships in 
their headquarters. Additionally, Jim Barksdale, the former 
president of Netscape, recently donated $100 million to promote 
literacy in his home State of Mississippi.
    In 1998, Kodak contributed $11.2 million to not-for-profit 
organizations and programs devoted to education, health and 
human services and civic and community causes. Kodak is also a 
corporate sponsor of the JASON project, a year round scientific 
expedition designed to engage students in grades 4 to 9 in 
science and technology.
    IBM has developed a variety of programs to help the 
community. Through their KidSmart Program, IBM donated over 
1,000 ``young explorers'' computers to more than 400 nonprofit 
day care centers and preschools. Through Project First 
(Fostering Instructional Reform throughService and Technology), 
IBM and Americorp have combined to train and supply technology 
coordinators to public schools. IBM also matches employees' gifts to 
universities, and employees can donate equipment to K-12 schools by 
paying only 20 percent of the retail value of the equipment.
    The Corning Incorporated Foundation develops and 
administers projects in support of educational, cultural, 
community and selected national organizations. Corning has 
entered into a collaborative effort called Futures '97 with 
Local 1000 of the American Flint Glass Workers' Union. Futures 
'97 is designed to assist Corning's active and laid off hourly 
employees with career management training and education. 
Corning also runs a summer intern program to provide real life 
experience to students in technical programs.
    Motorola established Motorola University as a way to help 
transform learning and teaching. The university establishes 
alliances with school systems, the private sector and not-for-
profit organizations to improve the skill level of graduates 
entering the workforce.
    Haliburton Co. sponsors the Haliburton Energy Institute 
which offers courses, seminars and workshops designed to keep 
students up to date with technology. Haliburton, through 
Kellogg Discover Engineering Committee, also sponsors National 
Engineers Week in which high school students participate in 
activities at their offices.

                             F. Amendments


                        1. The kennedy amendment

    Senator Kennedy offered an amendment at the markup that 
raised the H-1B visa cap to 145,000 a year for fiscal year 
2000, fiscal year 2001, and fiscal year 2002. The amendment 
exempted from the cap those above a master's degree. It also 
guaranteed 50,000 visas within the 145,000 ceiling for master's 
degree recipients.
    The Kennedy amendment also proposed to raise substantially 
fees paid by employers of H-1B visa holders. The amendment 
would have increased the current $500 fee as follows: $1,000 
for employers with 150 or fewer employees; $2,000 for those 
with 151 to 500 employees; and $3,000 for those with 501 or 
more employees.
    The amendment would have changed the current mix of 
training and education programs, including adding a new Digital 
Divide Program within the National Science Foundation.
    The amendment would have instituted new labor requirements. 
H-1B-dependent employers would have to attest that they did 
not/will not displace U.S. workers 6 months before or after the 
filing of a labor condition application. In addition, H-1B-
dependent employers would have to attest they are making 
efforts to continually train and update existing skills of 
their workers and to promote them where possible. The amendment 
also authorized the Department of Labor to conduct a ``random 
sample'' and investigate compliance of employers for a report 
to Congress. It would also allow DOL to penalize noncomplying 
employers, thereby making it possible for the ``report'' to 
turn into a mechanism that supersedes the carefully negotiated 
current law prerequisites for investigations and processes for 
enforcement designed to ensure fairness for all concerned.
    While finding much to appreciate in the Kennedy amendment's 
recognition of the essential need to increase the H-1B visa 
cap, the Committee ultimately was compelled to reject the 
amendment for a number of reasons.
    First, the visa increase in the amendment was inadequate. 
Senator Kennedy's amendment increases H-1B visas by only 30,000 
this year and 37,500 next year, which simply is far less than 
current demand. Since the cap has been reached this year, 
employers must be using more than 15,000 visas a month. In 
other words, Senator Kennedy's amendment would have added fewer 
than 2 months worth of visas. This would have guaranteed that 
the Committee would have had to return to this issue again next 
year and raise the ceiling yet again.
    Second, the proposed fee increases in the amendment were 
excessive. Prior to 1998, there were no additional fees for 
training or education associated with H-1B visas. In 1998, 
Senator Abraham and Senator Kennedy agreed in principle that 
the final version of the legislation would contain a fee of 
this type. The fee was set at $250 per visa in a House-Senate 
agreement. Negotiations with the White House led to agreement 
on a $500 fee to be assessed not only on initial visa petitions 
but on petitions for first extensions of visas and petitions 
for changes of employer or concurrent employment. Doubling that 
fee to $1,000 for small businesses and raising it six-fold for 
others is excessive. The Committee recognizes the advantage of 
providing additional training and scholarships, and has 
accomplished this through the visa increase, which will more 
than double funds for these purposes over 3 years. However, it 
is worth noting that the Federal Government already spends $7.1 
billion on training programs, while companies spend tens of 
billions more on their own training of employees. In addition, 
increases in funding for these programs of the order of 
magnitude contemplated by Sen. Kennedy's amendment should be 
preceded by some experience to provide a gauge for how 
effectively they are working.
    Third, the amendment sought to add labor provisions that 
are unnecessary and unwarranted given the extensive array of 
new enforcement provisions added through negotiations with the 
administration in 1998. The 1998 bill, as noted above, provided 
three types of layoff protection for American workers. One of 
these bars H-1B-dependent employers (those with more than 15 
percent H-1B's in their workforce) from hiring an H-1B worker 
to replace a U.S. worker in the same job who was laid off 90 
days before or after the filing of a visa petition. Senator 
Kennedy would have expanded that to 6 months before and after. 
This works a significant change in the provision. In its 
current form, the provision is designed to prevent a 
purposeful, planned layoff by a company laying off U.S. workers 
and bringing in foreign workers as replacements. But it strains 
credulity to believe an employer will lay off an American in 
the hope that 364 days later he is going to be able to replace 
the American with a foreign worker. Thus the effect of this 
proposed change would have been to turn the attestation from a 
mechanism designed to prevent deliberate replacement of a U.S. 
worker with an H-1B worker into a trap for the unwary employer 
who makes changes to his workforce that are in no way connected 
to the hiring of an H-1B worker.
    The Kennedy amendment also contained an attestation that H-
1B-dependent employers train workers in a way satisfactory to 
the Federal Government. Again this appears excessive and the 
Committee believes puts us on a slippery slope where all 
employers are required to subject themselves to DOL auditors to 
determine whether they satisfy Government training standards. 
By definition extremely subjective standards will be involved 
in such a process and thereby will make it difficult for any 
employer to know if his or her company is in compliance.
    The Kennedy amendment also would have authorized the 
Department of Labor to ``conduct an ongoing survey on the level 
of compliance by employers with the provision and requirements 
of the H-1B visa program'' and stated the Secretary of Labor 
could pursue``appropriate penalties'' based on this ``survey.'' 
Whatever its limited intentions may have been, this provision would 
have authorized rolling, invasive ongoing investigations--without the 
need to show any cause--of potentially all employers that use H-1B 
visas, thereby overriding the carefully crafted compromises on these 
issues worked out in the 1998 legislation.
    There have been few violations of H-1B visas, with only 
``seven'' willful violations documented by DOL since 1990. 
Despite this low level of documented violations, Congress gave 
the DOL substantial new investigative authority that allows the 
DOL to investigate an employer outside the complaint process if 
it receives credible information of a possible violation and 
receives the approval of the Labor Secretary to investigate. No 
case has been made that that authority was inadequate, or that 
it has uncovered any heretofore undiscovered serious 
violations. To grant the DOL sweeping new authority far beyond 
that, regardless of the stated purpose of that authority, is 
not justified on the current record. The Committee also notes 
that recent complaints of outrageous behavior in connection 
with a San Antonio enforcement action conducted by INS with DOL 
cooperation outside the procedures set out in INA Sec. 212(n), 
in which it is claimed that INS, with DOL cooperation, arrested 
and mistreated 40 Indian professionals, arrested their spouses, 
and mocked their religious beliefs, provide a reminder why we 
do not give carte blanche to Federal agencies.

                   2. the feinstein-abraham amendment

    This amendment modified the existing allocation of H-1B fee 
revenue so that 36.2 percent of the total H-1B fee revenue goes 
to workforce training and 30.7 percent of the total H-1B fee 
revenue goes to math, science, engineering and technology post-
secondary scholarships for low-income and disadvantaged 
students. It allowed the National Science Foundation to renew 
the annual scholarship for up to 4 years and increased the 
minimum scholarship amount to $3,125 (the Pell Grant amount). 
It dedicated an additional 25.8 percent of the total H-1B fee 
revenue to improving K-12 math and science education by 
directing it to the National Science Foundation for matching or 
direct grants to support private-public partnerships to help 
schools build, improve or expand math, science and information 
technology curricula. It folded the funds for the Systemic 
Reform Grant Program under the 1998 legislation into the 
broader NSF direct and matching grant program. To ensure 
accountability and progress among the various H-1B grant 
recipients, it requires the National Science Foundation and 
Department of Labor to develop a tracking system to monitor the 
performance of programs receiving H-1B grant funding.

                         3. the biden amendment

    This amendment authorized $20,000,000 for grants to Boys 
and Girls Clubs across America to fund after-school technology 
programs for fiscal year 2001 through fiscal year 2006.

                          4. the kyl amendment

    This amendment would have transferred training programs 
under S. 2045 from the DOL to the Department of Commerce.

                         5. the hatch amendment

    This technical amendment corrected a drafting error that 
limited the exemptions for universities, research institutes, 
and advanced degree recipients to fiscal year 2000.

                             F. Conclusion

    We should continue to be concerned about the impact on 
America if the H-1B cap is not addressed. In 1998, Thomas 
Friedman of the New York Times wrote, ``If U.S. companies are 
told to put up `No Vacancy' signs, they are inevitably going to 
move more knowledge operations overseas, and that will spur 
more innovation, wealth creation, and jobs over there.'' He 
points out that many of those hired on H-1B visas are actually 
educated at American universities, noting that ``the idea that 
we would educate all these foreign computer engineers in U.S. 
universities and then send them home to compete with us is 
nuts.''
    Demetrios G. Papademetriou, co-director of the 
International Migration Policy Program at the Carnegie 
Endowment for International Peace, wrote this year, ``While we 
are again showing how not to have the right conversation about 
foreign-born high-tech workers, people who come into this 
country on H-1B visas, the rest of the developed world is 
waking up to the fact that America's cherry-picking of 
international tech talent amounts to an enormous competitive 
advantage, one that, if left unchallenged, could extend U.S. 
dominance in information technology indefinitely. Our 
competitors are doing something about it. Germany, Canada, the 
United Kingdom, and Australia, among others, have already 
entered the sweepstakes for hightech workers.'' A global 
competition for talented individuals is indeed taking place. 
The question is simple: Will America choose to remain a global 
leader in crucial academic, science and technology fields?
    Since 1990, the American economy has prospered and American 
companies have become world leaders in numerous fields. 
Foreign-born talent has played an important role in that 
success. The Committee believes that the American system of 
openness works and that, in effect, barring talented 
individuals from working in the United States simply because 
those individuals were not born in this country is not in 
keeping with the American tradition of welcoming to our shores 
people who can make a contribution to our economy and society.

                       IV. Vote of the Committee

    On March 9, 2000, with a quorum present, the Committee on 
the Judiciary considered S. 2045, the American Competitiveness 
in the 21st Century Act. Senator Kennedy offered an amendment 
in the nature of a substitute which was defeated by a 10-to-8 
vote. An amendment offered by Senators Feinstein and Abraham to 
modify and expand the use of visa fees for education was 
approved by a 12-to-6 vote. A Kyl second degree amendment to 
the Feinstein/Abraham amendment that would provide training 
within the Department of Commerce was defeated by a voice vote. 
A Biden amendment to authorize grants to the Boys and Girls 
Clubs was approved by a voice vote with Senator Kyl noting his 
dissent. A Hatch technical amendment to correct a drafting 
error which limited the exemptions in the bill to 1 year was 
approved unanimously. A Feingold amendment dealing with the 
naturalization of Hmong veterans was withdrawn. A Leahy 
amendment to grant the Attorney General authority to cancel 
removal ofveterans was withdrawn. A Torricelli amendment to 
adjust the status of certain persons who fled Syria was withdrawn.

                             recorded votes

Vote on Kennedy substitute amendment

        YEAS (8)                      NAYS (10)
Leahy (by proxy)                    Hatch
Kennedy                             Thurmond
Biden                               Specter (by proxy)
Kohl (by proxy)                     Kyl
Feingold                            DeWine (by proxy)
Torricelli                          Ashcroft (by proxy)
Schumer                             Abraham
Grassley                            Sessions (by proxy)
                                    Smith (by proxy)
                                    Feinstein

Vote on Feinstein-Abraham amendment to modify and expand the use of 
        VISA fees for education

        YEAS (12)                     NAYS (6)
Hatch                               Leahy (by proxy)
Thurmond                            Kennedy
Specter (by proxy)                  Feingold
Kyl                                 Torricelli
DeWine (by proxy)                   Schumer (by proxy)
Ashcroft (by proxy)
Abraham
Sessions (by proxy)
Smith (by proxy)
Biden
Kohl (by proxy)
Feinstein

Kyl second degree amendment to provide training within the department 
        of commerce

    Defeated by voice vote.

Biden amendment for authorization of the boys and girls clubs

    Approved by voice vote with Senator Kyl noting his dissent.

Hatch technical amendment to correct a drafting error which limited the 
        exemptions in the bill to 1 year

    Approved unanimously.

          motion to report s. 2045 favorably, with amendments

        YEAS (16)                     NAYS (2)
Hatch                               Kennedy
Thurmond                            Feingold
Specter
Kyl
DeWine
Ashcroft
Abraham
Sessions
Smith
Biden
Kohl
Feinstein
Leahy
Torricelli
Schumer

                     V. Section-by-Section Analysis

    Section 1.--Short title: American Competitiveness in the 
21st Century Act of 2000.

Section 2.--Temporary increase in visa allotments

    In addition to the number of H-1B visas issued or 
individuals authorized H-1B status under current law, this 
section authorizes:
          (A) 80,000 for fiscal year 2000.
          (B) 87,500 for fiscal year 2001.
          (C) 130,000 for fiscal year 2002.
    This section has the effect of raising the cap to 195,000 
for fiscal year 2000, 2001, and 2002.

Section 3.--Special rule for universities, research facilities, and 
        graduate degree recipients

    This section exempts from the numerical limitation (1) 
individuals who are employed or receive offers of employment 
from an institution of higher education, affiliated entity, 
nonprofit research organization or governmental research 
organization and (2) individuals who have a petition filed 
between 90 days before and 180 days after receiving a master's 
degree or higher from a U.S. institution of higher education. 
The principal reason for the first exemption is that by virtue 
of what they are doing, people working in universities are 
necessarily immediately contributing to educating Americans. 
The more highly qualified educators in specialty occupation 
fields we have in this country, the more Americans we will have 
ready to take positions in these fields upon completion of 
their education. Additionally, U.S. universities are on a 
different hiring cycle from other employers. The H-1B cap has 
hit them hard because they often do not hire until the numbers 
have been used up; and because of the academic calendar, they 
cannot wait until October 1, the new fiscal year, to start a 
class.

Section 4.--Limitation on per-country ceiling with respect to 
        employment-based immigrants

    This section modifies per-country limits on employment-
based visas to eliminate the discriminatory effects of those 
limits on nationals from certain Asian Pacific nations. 
Currently, in a given year, the annual limit of 140,000 
employment visas is not being used, yet U.S. law prevents 
individuals born in particular countries from being able to 
join employers who want to sponsor them as permanent employees 
because those countries have reached their per-country limit. 
This amounts to preventing an employer from hiring or 
sponsoring someone permanently simply because he or she is 
Chinese or Indian, even though the individual meets all other 
legal criteria. This is inconsistent with the legitimate 
function of the per-country limit, which is to attempt to 
allocate visas among residents of different countries if there 
are not enough visas available for all qualified applicants. 
The bill would end this prohibition unless demand for visas 
indicates that the 140,000 limit will be hit, in which case the 
per-country principle would remain in place as an allocation 
mechanism. This would work as follows: if there are still 
unused employment-based immigrant visas available after the 
employment-based visas issuable during any calendar quarter 
have been issued according to the per-country limitations, 
those visas may then be issued without regard to the country of 
origin of the recipient. They may be issued, however, only to 
the limit of the total number of employment-based visas 
available for each category. This provision will have no 
adverse impact on family immigration levels in the foreseeable 
future, because the employment visa ``spill-down'' is triggered 
only if immediate relative numbers fall below a threshold that 
they are not expected to reach.
    This section also affords transitional protection for 
individuals on H-1B visas with approved petitions for permanent 
employment visas but whom the per-country limit is preventing 
from obtaining a permanent resident visa to stay until such a 
visa becomes available. These immigrants would otherwise be 
forced to return home at the conclusion of their allotted time 
in H-1B status, disrupting projects and American workers. The 
provision enables these individuals to remain in H-1B status 
until they are able to receive an immigrant visa and adjust 
their status within theUnited States, thus limiting the 
disruption to American businesses.

Section 5.--Increased portability of H-1B status

    This section allows an H-1B visa holder to change employers 
at the time a new employer files the initial paperwork, rather 
than having to wait for the new H-1B application to be 
approved. This responds to concerns raised about the potential 
for exploitation of H-1B visa holders as a result of a specific 
employer's control over the employee's legal status.

Section 6.--Extension of authorized stay in cases of lengthy 
        adjudications

    This section addresses the inordinate delays in labor 
certification and INS visa processing by allowing an individual 
on an H-1B visa whose adjustment to permanent resident on the 
basis of employment has progressed far enough to stay in the 
United States until a final decision is made on his or her 
case. Individuals in these circumstances are currently being 
forced to leave the country and disrupt the projects they are 
working on simply on account of entirely unreasonable 
administrative delays. This section allows the Attorney General 
to extend in 1-year increments the H-1B visa of an individual 
in this category beyond the 6-year limitation period if the 
employer has filed on the individual's behalf either a petition 
for a permanent resident visa or an application for adjustment 
of status and more than 1 year has elapsed from the date the 
employer filed the labor certification application or petition 
for adjustment of status. If labor certification is required, 
an individual is only eligible for this extension if the DOL 
has already approved the labor certification application.

Section 7.--Extension of certain requirements and authorities through 
        fiscal year 2002

    Education and Training: This section extends the $500 per 
visa fee, set to expire in fiscal year 2001, through fiscal 
year 2002.
    Enforcement and DOL Investigative Authority: This section 
extends the authority for the nonpermanent additional labor 
requirements added by the 1998 law and set to expire in fiscal 
year 2001 through fiscal year 2002. It also extends the new 
authority of the Department of Labor to investigate possible H-
1B violations without first having received a complaint through 
fiscal year 2002.

Section 8.--Recovery of visas used fraudulently

    This section requires fraudulently issued H-1B visas to be 
put back into the pool of available visas so legitimate 
employers and visa holders can use them.

Section 9.--Study by national science foundation on ``digital divide''

    This section requires the National Science Foundation to 
conduct a study on the ``digital divide'' with a report to 
Congress no later than 18 months after enactment of the bill.

Section 10.--Modification of nonimmigrant petitioner account provisions

    This section modifies the existing allocation of H-1B fee 
revenue so that 36.2 percent of the total H-1B fee revenue goes 
to workforce training and 30.7 percent of the total H-1B fee 
revenue goes to math, science, engineering and technology post-
secondary scholarships for low-income and disadvantaged 
students. It allows the National Science Foundation to renew 
the annual scholarship for up to 4 years and increases the 
minimum scholarship amount to $3,125 (the Pell Grant amount). 
It dedicates an additional 25.8 percent of the total H-1B fee 
revenue to improving K-12 math and science education by 
directing it to the National Science Foundation for matching or 
direct Grants to support private-public partnerships to help 
schools build, improve or expand math, science and information 
technology curricula. It folds the funds for the Systemic 
Reform grant program under the 1998 legislation into the 
broader NSF direct and matching grant program. To ensure 
accountability and progress among the various H-1B grant 
recipients, it requires the National Science Foundation and 
Department of Labor to develop a tracking system to monitor the 
performance of programs receiving H-1B grant funding.

Section 11.--Kids 2000 crime prevention and computer education 
        initiative

    This section authorizes $20,000,000 for grants to Boys and 
Girls Clubs across America to fund after-school technology 
programs for fiscal year 2001 through fiscal year 2006.

                           VI. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 10, 2000.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2045, the American 
Competitiveness in that Twenty-First Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark 
Grabowicz (for federal costs), Theresa Gullo (for the state and 
local impact), and John Harris (for the private-sector impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 2045--American Competitiveness in the Twenty-First Century Act of 
        2000

    Summary: S. 2045 would increase the number of nonimmigrant 
(temporary) visas, known as H-1B visas, available for certain 
skilled foreign workers and make several other changes to 
current laws relating to the employment of skilled foreign 
workers. The bill also would change the formulas governing the 
allocation of H-1B visa fees collected by the Immigration and 
Naturalization Service (INS), which are spent under current law 
without further, appropriation for job training, scholarship, 
and administrative programs. It would direct the National 
Science Foundation (NSF) to conduct a study on access to 
advanced technology. Finally, S. 2045 would authorize the 
appropriation of $20 million for each of fiscal years 2001 
through 2006 for the Attorney General to make grants to the 
Boys and Girls Clubs of America to fund after-school technology 
programs.
    Assuming appropriation of the necessary funds, CBO 
estimates that implementing S. 2045 would result in additional 
discretionary spending, over the 2000-2005 period, of $101 
million ($20 million a year for the grants to Boys and Girls 
Clubs, and about $1 million for the NSF study). In addition, we 
estimate that the bill would increase both offsetting receipts 
and direct spending of those receipts by about $220 million 
over the 2000-2005 period. Because S. 2045 would affect direct 
spending, pay-as-you-go procedures would apply.
    S. 2045 would impose an intergovernmental mandate as 
defined in the Unfunded Mandates Reform Act (UMRA), but CBO 
estimates that the costs of complying with this mandate would 
be very small and would not exceed the threshold established in 
that act ($55 million in 2000, adjusted annually for 
inflation).
    S. 2045 would impose private-sector mandates as defined by 
UMRA by extending, for one year, two requirements of certain 
employers of persons with H-1B visas. However, CBO estimates 
that the direct costs of those mandates would not exceed the 
annual threshold established in UMRA for private-sector 
mandates ($109 million in 2000 dollars, adjusted annually for 
inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 2045 is shown in Table 1. The costs of 
this legislation fall within budget functions 150 
(international affairs), 250 (general science, space, and 
technology), 500 (education, employment, training, and social 
services) and 750 (administration of justice).

 TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF S. 2045, THE AMERICAN COMPETITIVENESS IN THE TWENTY-FIRST CENTURY ACT
                                                     OF 2000
----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year, in millions of dollars--
                                                                ------------------------------------------------
                                                                  2000    2001     2002    2003    2004    2005
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated authorization level..................................       0      21       20      20      20      20
Estimated outlays..............................................       0      21       20      20      20      20
Net spending or visa fees under current law:
    Estimated budget authority.................................       0       0        0       0       0       0
    Estimated outlays..........................................     -39     -10       72      36       9       0
    Proposed changes:
        INS administrative fees:
            Estimated budget authority.........................     -11     -10      -14       0       0       0
            Estimated outlays..................................     -11     -10      -14       0       0       0
        H-1B petitioner fees:
            Estimated budget authority.........................     -45     -39      -86       0       0       0
            Estimated outlays..................................     -45     -39      -86       0       0       0
        Department of State fees:
            Estimated budget authority.........................      -5      -4       -6       0       0       0
            Estimated outlays..................................      -5      -4       -6       0       0       0
        Total change in visa fee collections:
            Estimated budget authority.........................     -61     -53     -106       0       0       0
            Estimated outlays..................................     -61     -53     -106       0       0       0
        Additional spending from visa fees:
            Estimated budget authority.........................      61      53      106       0       0       0
            Estimated outlays..................................      16      24       49      57      54      18
        Net change in direct spending:
            Estimated budget authority.........................       0       0        0       0       0       0
            Estimated outlays..................................     -45     -28      -57      57      54      18
Net direct spending under S. 2045:
    Estimated budget authority.................................       0       0        0       0       0       0
    Estimated outlays..........................................     -84     -38       15      93      63      18
----------------------------------------------------------------------------------------------------------------

            Basis of estimate
    CBO estimates that implementing S. 2045 would cost about 
$21 million in 2001 and about $20 million a year for 2002 
through 2005, assuming appropriation of the necessary funds. In 
addition, we estimate that enacting the bill would decrease 
direct spending for 2000, 2001, and 2002, and increase spending 
for 2003, 2004, and 2005. Over the 2000-2005 period, CBO 
estimates that net direct spending would decrease by $1 
million. For the purpose of this estimate, CBO assumes that S. 
2045 will be enacted by June 1, 2000.
    Spending Subject to Appropriation.--For the purposes of 
this estimate, CBO assumes that $20 million authorized to be 
appropriated for the technology grants to the Boys and Girls 
Clubs will be appropriated at the start of each fiscal year 
over the 2001-2005 period, with spending expected to occur in 
the same year. (The bill would authorize an additional $20 
million for such grants in 2006.) CBO estimates that the NSF 
study would cost about $1 million in fiscal year 2001, subject 
to the availability of approprited funds.
    Direct Spending.--S. 2045 would increase the number of 
nonimmigrant visas available to certain skilled workers by 
about 100,000 in fiscal year 2000, by 87,500 in fiscal year 
2001, and by 130,000 in fiscal year 2002. Table 2 shows the 
number of visas authorized by current law and the levels 
proposed under S. 2045. For 2000, the increase consists of a 
specified additional 80,000 visas plus an estimated addition of 
about 20,000 visas because section 3 of the bill would allow 
for certain exemptions from the cap on H-1B visas in that year.

         TABLE 2.--NUMBER OF H-1B VISAS AUTHORIZED UNDER S. 2045
------------------------------------------------------------------------
                                            2000       2001       2002
------------------------------------------------------------------------
H-1B visas authorized under current law    115,000    107,000     65,000
Additional H-1B visas authorized under     100,000     87,000    130,000
 S. 2045...............................
                                        --------------------------------
      Total H-1B visas authorized under    215,000    195,000    195,000
       S. 2045.........................
------------------------------------------------------------------------

    The administrative fee for these visas is $110 each, and 
CBO estimates that all of the additional authorized visas would 
be issued. Thus, enacting the bill would increase fees 
collected by the INS by about $11 million in fiscal year 2000, 
by $10 million in 2001, and by $14 million in 2002. We expect 
that the INS would spend the fees (without appropriation 
action), mostly in the year in which they are collected. Thus, 
enacting this portion of S. 2045 would result in a negligible 
net budgetary impact in each year.
    In addition to the administrative fees collected under this 
bill, most employers of the affected workers must pay a 
petitioner fee of $500 per worker hired by October 1, 2001. The 
bill would extend the petitioner fee until October 1, 2002. 
Consequently, CBO estimates that the INS would collect 
additional petitioner fees of about $45 million in fiscal year 
2000, $39 million in 2001, and $86 million in 2002 (or a total 
of $170 million over the three-year period). As under current 
law, these additional petitioner fees would be spent without 
further appropriation by the Department of Labor (DOL) to help 
train domestic workers for jobs in the technology sector, by 
NSF for certain scholarship and science education initiatives, 
and by DOL and INS for administrative expenses.
    S. 2045 would change the formulas governing the allocation 
of petitioner fees among DOL, NSF, and INS. For purposes of 
this estimate, CBO assumes that the new formulas would take 
effect upon enactment, thereby changing the distribution of 
both the estimated $170 million in new collections under the 
bill and the $174 million expected to be collected under 
current law in 2000 and 2001. The formulas in S. 2045 would 
allocate 42.2 percent of the amounts collected to DOL for job 
training and administrative expenses, compared to 62.3 percent 
under current law. NSF would receive 59 percent of the fees for 
scholarships and other grants, versus 36.2 percent under 
current law. Finally, 1.5 percent of the funds would go to INS 
to help offset administrative costs. These new allocations 
total 102.7 percent of the fees, compared to 100 percent under 
current law. However, CBO assumes that spending would be 
limited by the amounts actually collected. Therefore, CBO 
estimates that new spending from petitioner fees authorized 
under S. 2045 would equal the $170 million collected. (If 
spending were not limited by the amounts collected, CBO 
estimates that enacting the allocation formula authorized by S. 
2045 would result in spending of $10 million more than would be 
collected over the 2000-2005 period.)
    This bill also would increase collections by the Department 
of State for H-1B visas; the fee for those visas is currently 
set at $45 per person. CBO estimates that, on average, the 
State Department would collect and spend an additional $5 
million a year over the 2000-2002 period, and the net budgetary 
impact would be around $1 million or less each year.
    Individuals classified as nonimmigrants are ineligible for 
most federal public benefits, with a few exceptions that 
include emergency Medicaid services. Given that H-1B visa 
recipients are skilled workers admitted for employment, CBO 
expects that any increase in costs for these services would not 
be significant.
    In addition to provisions concerning the H-1B nonimmigrant 
visas, S. 2045 also would affect immigrant (permanent) visas. 
Current law provides for a cap on the number of employment-
related immigrant visas that can be granted to natives of any 
one country in a given year. The bill would remove this cap, 
which could result in a small increase in the number of visas 
granted, and thus could increase fees collected by the INS. We 
expect that additional fees would not exceed $500,000 annually, 
most of which would be spent in the same year, resulting in a 
negligible net budgetary impact.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays that are subject to pay-as-you-go procedures 
are shown in Table 3. For the purposes of enforcing pay-as-you-
go procedures, only the effects in the current year, the budget 
year, and the succeeding four years are counted.

                       TABLE 3.--ESTIMATED IMPACT OF S. 2045 ON DIRECT SPENDING AND RECEIPTS
----------------------------------------------------------------------------------------------------------------
                                                     By fiscal year, in millions of dollars--
                                 -------------------------------------------------------------------------------
                                   2000    2001    2002    2003   2004   2005   2006   2007   2008   2009   2010
----------------------------------------------------------------------------------------------------------------
Changes in outlays..............     -45     -28     -57     57     54     18      0      0      0      0      0
Changes in receipts.............                                   Not applicable
----------------------------------------------------------------------------------------------------------------

    Estimated Impact on State, Local, and Tribal Governments: 
S. 2045 would extend for one year the requirement that 
employers, including state and local governments, pay the $500 
petitioner fee when they hire an H-1B visa holder. This 
requirement would be an intergovernmental mandate as defined in 
UMRA. While CBO is uncertain how to calculate the costs of such 
a mandate (as discussed below in the private-sector section), 
we estimate that costs to state and local governments would be 
very small and would not exceed the threshold established in 
UMRA ($55 million in 2000, adjusted annually for inflation).
    Estimated impact on the private sector: S. 2045 would 
impose private-sector mandates on employers that hire H-1B visa 
holders by extending for one year two existing mandates that 
would otherwise expire on October 1, 2001. The American 
Competitiveness and Workforce Improvement Act of 1998 prohibits 
any ``H-1B-dependent'' employer from hiring any H-1B visa 
holder within 90 days of firing another employee from a similar 
position. (An H-1B-dependent employer is a business where at 
least 15 percent of the employees are foreigners with H-1B 
visas.) The same act also requires that all employers that hire 
H-1B visa holders pay a $500 fee to the government for each H-
1B holder they hire.
    CBO cannot determine whether these mandates would impose 
any costs on the private sector as defined in UMRA because the 
law is unclear about how to measure costs associated with 
extending an existing mandate that has not yet expired. The 
costs of the extension would be equal to the current cost of 
compliance if measured against the costs that would be incurred 
if current law remains in place and the mandate expires. 
Because there are very few H-1B-dependent employers, CBO 
expects that the cost of extending the prohibition on firing 
current employees would be low. The fee extension, which would 
affect all employers that hire H-1B holders, would be more 
costly. CBO estimates that the government would collect over 
$50 million by extending the fee provision.
    In contrast, UMRA may also be interpreted to mean that the 
costs would be measured against the current costs of complying 
with the mandate. In that case, the mandate would impose no 
additional costs on the private sector because the extension 
would not force employers to change their current behavior. In 
either case, CBO estimates that the total costs to the private 
sector would fall below the threshold established in UMRA ($109 
million in 2000, adjusted annually for inflation).
    The employers affected by the extensions are among those 
most likely to benefit from the bill's other provisions, 
particularly the increase in the number of available H-1B 
visas.
    Estimate prepared by: Federal costs: DOL: Christina Hawley 
Sadoti, State Department: Sunita D'Monte, INS: Mark Grabowicz, 
NSF: Kathy Gramp; impact on State, local, and tribal 
governments: Theresa Gullo; Impact on the Private Sector: John 
Harris.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                    VII. Regulatory Impact Statement

    Pursuant to paragraph 11(b), rule XXVI of the Standing 
Rules of the Senate, the Committee, after due consideration, 
concludes that Senate bill 2045 will not have direct regulatory 
impact.

  VIII. ADDITIONAL VIEWS OF SENATORS LEAHY, KENNEDY, BIDEN, FEINGOLD, 
                        TORRICELLI, AND SCHUMER

                              Introduction

    The views contained here are considered ``additional 
views'' because they reflect the serious reservations held by 
many Members of the Judiciary Committee despite the fact that 
most minority Members voted in favor of S. 2045 as amended. 
Some Members voted for that bill to demonstrate a good-faith 
effort to address the immediate matters at hand while not 
completely agreeing with the Majority's long-term approach to 
resolving the high skill shortage in our workforce, as 
presented in the views below.
    Our Nation's economy is experiencing a time of 
unprecedented growth and transition. This strong economic 
growth can, in large measure, be traced to the vibrant, 
competitive and fast-growing high-technology industry. 
Information technology, biotechnology and its associated 
manufacturers have created more new jobs than any other part of 
the economy. In fact, today the software industry's 
contribution to the economy is greater than the contribution of 
any other manufacturing industry in America--an extraordinary 
achievement for an industry that is less than 30 years old.
    The rapid growth of high technology has made it the 
Nation's third largest employer, with over 4.8 million workers 
in high-tech related fields, working in jobs that pay 70 
percent above average incomes. The Bureau of Labor Statistics 
projects that the number of core IT workers will grow to a 
staggering 2.6 million by 2006--an increase of 1.1 million from 
1996.
    With such rapid change, we find ourselves stretched thin to 
support these new businesses and the growth opportunities they 
present. The most cited constraint on future growth of the 
high-tech industry is clearly the shortage of people with the 
skills and technical background to take on jobs in the 
industry. A survey conducted by the Information Technology 
Association of America identified more than 346,000 unfilled IT 
positions. Several factors are contributing to this shortage, 
including an inaccurate, negative image of IT occupations as 
dry and overly demanding, the under-representation of women and 
other minorities in the IT workforce, and outdated academic 
curricula that often does not keep pace with industry needs.
    All of us want to be responsive to our Nation's need for 
high-tech workers. We know that unless we take steps now to 
address this growing workforce gap, America's technological and 
economic leadership will be jeopardized.
    We also agree with the majority's view that we need to find 
both short- and long-term solutions to resolve this critical 
labor shortage. We disagree, however, that S. 2045 addresses 
both sides of this problem. S. 2045 places too much emphasis on 
increasing the H-1B cap as the immediate and best solution to 
this workforce gap. Barely any importance is placed on finding 
long lasting solutions that will provide our workforce with the 
skills needed to benefit from this growth economy and help our 
companies continue to grow.
    The H-1B visa cap should be increased, but in a way that 
better addresses the fundamental needs of the American economy. 
Simply raising the cap, without meaningfully addressing our 
long-term labor needs misses the point. We must place greater 
emphasis on education and training to satisfy the rapidly 
growing demand for skilled IT workers. The Kennedy amendment 
ensures that the H-1B program will contribute to solving the 
long-term IT skill shortage by strengthening training 
opportunities for U.S. workers and educational opportunities 
for U.S. students.

 A Modest Increase in the H-1B High-Tech Visa Cap Is Justified, But it 
    Must Be Temporary, Reasonable and Sufficiently Tailored To Meet 
                       Existing Short-Term Needs

    A modest increase in the H-1B high-tech visa cap is 
justified. But this increase must be temporary, reasonable and 
sufficiently tailored to meet existing short-term needs. The 
Kennedy amendment meets these requirements. Raising the annual 
cap to 145,000, an increase of 30,000 additional visas, plus an 
exemption for individuals with degrees higher than a masters--
approximately 10,000 to 14,000 additional visas--provides the 
IT industry with a sufficient number of H-1B visas to meet the 
immediate, short-term labor shortages.
    In contrast, S. 2045 proposes increasing the H-1B visa cap 
to 195,000. This number is not inherently unacceptable, but the 
bill would also exempt from the cap graduate degree recipients 
from American universities and persons employed by institutions 
of higher education, affiliated entities and nonprofit and 
government research institutions. Based on recent statistics 
provided by the Immigration and Naturalization Service, we 
estimate that these exemptions could result in as many as 
40,000 additional H-1B visas being issued per year, raising the 
overall numbers of H-1B visas to 235,000 per year. This figure 
is well above the number of visas even the most ardent IT 
industrylobbyists claim are needed.
    No one would disagree that the persons contemplated by 
these exemptions are clearly the types of professionals our 
universities and our industries need. However, exempting all of 
them from the H-1B visa cap results in a significant increase 
in the admission of persons with relatively less specialized 
skills.
    While many Members of the Committee would have preferred to 
have more reliable evidence before supporting such a large 
increase in the cap, many voted to proceed with the Majority's 
195,000 cap since the potential needs of our economy are of 
such importance and such evidence is in progress. For example, 
the bill that we passed in 1998 directed the National Academy 
of Sciences (NAS) to study the issue of worker shortages in the 
information technology industry and allegations of age 
discrimination in the industry. NAS has not yet completed this 
report. The 1998 legislation also directed the INS to report 
information on H-1B workers, their employers and occupations by 
October 2000. The INS has not yet completed its report. The 
results of these reports should soon demonstrate more precisely 
the particular needs of the IT industry and U.S. workforce for 
future legislation.
    In the meantime, we believe that the H-1B debate should not 
focus solely on the number of visas available for foreign 
skilled workers, but should also emphasize employers' need for 
as many workers with the highest professional credentials as 
possible. Strong arguments can be made for expanding the number 
of H-1B visas needed to fill an unmet shortage for masters and 
doctoral level professionals who possess specialized skills 
that cannot be easily and quickly produced domestically. Any 
increase in the visa cap should therefore be done with an 
increased proportion of foreign workers entering with a 
master's degree or higher. The Kennedy amendment promotes this 
goal by reserving within the cap an increasing number of H-1B 
visas for petitioners with at least a master's degree. In 
fiscal year 2000, 45,000 H-1B visas are reserved; the number 
increases to 50,000 in fiscal year 2001, and 55,000 in fiscal 
year 2002.
    The exemption for individuals with doctoral degrees 
addresses the special concerns of the universities and research 
institutions as well as high-tech companies. In the last few 
years, as a result of their unique hiring cycle, these 
institutions have been unable to secure the foreign nationals 
they need as qualified professors and researchers. Our 
universities, and our country as a whole, benefit from the 
admission of these exceptionally talented individuals. They 
represent the best the world has to offer. We welcome these 
accomplished individuals and the unique skills they will bring 
to strengthen and diversify our economy.
    The vast majority of the foreign nationals hired by these 
institutions have Ph.D.'s, earned either in the U.S. or at one 
of the premier universities abroad. S. 2045 provides a limited 
exemption for Ph.D.'s. The Kennedy amendment proposes an 
unencumbered exemption for these exceptionally gifted foreign 
nationals and ensures their admission.

  We Must Ensure That U.S. Workers Are Not Harmed by Our Immigration 
                                Policies

    In considering a new high-tech immigration bill, we must 
ensure that U.S. workers are not harmed by our immigration 
policies. We should not bring in temporary foreign workers to 
do jobs that U.S. workers could fill. We should also not bring 
in so many temporary foreign workers that the wages and 
benefits of U.S. workers become artificially depressed. We know 
that the IT industry has a current need for additional workers, 
but we also know that many U.S. workers want good paying high-
technology jobs. We understand that not every American worker 
can step in and perform these tasks--some of them need skills 
training so they can move from low-paying service sector jobs 
into better paying information technology jobs. But others are 
laid off IT workers or recent college graduates who can assume 
those positions immediately.
    We are experiencing the longest period of economic growth 
and prosperity in our Nation's history and an unemployment rate 
just over 4 percent, the lowest level in 30 years. The 
information technology industry, like many other industries 
today, must contend with a tight job market during these times 
of low unemployment. We are concerned that data from the Bureau 
of Labor Statistics show that real median weekly high-
technology wages were actually less in 1998 than in 1995, while 
wages for other managers and professionals rose during that 
same time. We must ensure that the ready supply of H-1B workers 
in the information technology industry is not keeping wages and 
benefits artificially low.
    Although many new jobs are created in the IT industry each 
year, we also know that thousands of IT workers were laid off 
in 1999. For example 5,180 workers lost their jobs at 
Electronic Data Systems, 2,150 at Compaq, and 3,000 at NEC-
Packard Bell. We also know that some IT companies classify 
their workers as independent contractors or temporary workers 
rather than as employees in part to avoid paying them benefits. 
According to a February 8, 1999, article in ``Computerworld'' 
magazine, U.S. Census Bureau data show that the unemployment 
rate for IT workers over age 40 is more than five times that of 
other unemployed workers. An IEEE-USA survey of its membership, 
completed in December 1998, found that each year of age above 
45 adds 3 weeks to the duration of unemployment experienced by 
electrical engineers.
    As we address the needs of the IT industry, we must strive 
to first place those laid off workers in new jobs and to 
enforce our labor and employment laws so that the current IT 
workforce gets the pay, benefits, and working conditions to 
which they are entitled.
    We must also do more to increase the number of women and 
minorities in the IT workforce. The number of women entering 
the IT field has dramatically decreased since the mid 1980's. 
The number of persons from most minority groups is also very 
low.

  Expanding Job Training for U.S. Workers Is Critical and Provides Us 
        With the Only Long-Term Solution to This Labor Shortage

    A temporary influx of foreign workers and students may be 
needed in the short-term to help meet the demands by U.S. firms 
for high skilled workers. But we cannot count on foreign 
sources of labor as a long-term solution since the supply of 
foreign workers is limited. In their 1999 book, ``The Supply of 
Information Technology Workers in the United States,'' Peter 
Freeman and William Aspray report that other countries are 
experiencing their own IT labor shortages and ``placing 
pressures on or providing incentives to their indigenous IT 
workforce to stay at home or return home.'' They warn that 
countries like Canada, The Netherlands, the United Kingdom, 
Israel, and Belgium will be competing with the United States 
for IT workers from countries like India that have an IT worker 
surplus. This warning is echoed in the March 7, 2000, New York 
Times article ``High-Tech Firms Warn EU Leaders of IT Skills 
Gap,'' which quotes large IT companies like Microsoft as saying 
that the ``IT skills gap in the EU is large and growing,'' and 
the ``demand for IT professionals will outstrip supply by 13 
percent by 2003.'' Faced with this crisis, the article reports 
that these IT companies have asked EU leaders to take urgent 
steps, such as promoting education and training in the new 
information technologies.
    These recent articles support our contention that any 
legislation increasing these visas should substantially invest 
in improved job training for U.S. workers and better education 
for U.S. students. We must give the U.S. workers the skills 
they need to qualify for these jobs. And as a nation, we have 
an obligation to invest in our students, the workers of 
tomorrow. Expanding the number of H-1B visas is no substitute 
for fully developing the potential of our domestic workforce. 
An educated workforce has become the most valuable resource in 
the modern economy. Expanding job training for U.S. workers and 
educational opportunities for U.S. students is critical and 
provide us with the only long-term solution to this labor 
shortage.
    Many high-tech companies are investing significant 
resources in education, and to a limited extent, in training 
programs. The majority lists many commendable examples of high-
tech companies that have contributed considerable resources to 
improve our communities around the country. In carefully 
reviewing these examples, however, we notice that the focus of 
their contributions are in education, not worker training. And 
as would be expected, the companies devoting funds for these 
initiatives are the largest and richest IT companies--
Microsoft, Intel, Texas Instruments, Hewlett Packard, and 
Netscape.
    According to the ``2000 ASTD (American Society for Training 
and Development) State of the Industry Report,'' total employer 
training costs equaled 2 percent of total payroll costs in 
1998. But, according to the National Association of 
Manufacturers, many companies spend less than 1 percent of 
their payroll on training, and many others have no retraining 
programs to provide incumbent workers with new or updated 
skills. Small firms often do not have the resources to provide 
their workers with the training they need to keep pace with the 
rapid changes in industry.
    Only when businesses address the shortage of highly skilled 
workers as a national problem with a national solution--rather 
than a company-by-company approach to worker training--will our 
workforce be able to meet the growing demand for high skills, 
and will our economy be able to continue to prosper.
    As such, any credible legislative proposal to increase the 
number of high-tech workers available to American businesses 
must begin with the expansion of career training opportunities 
for American workers. Our Nation's long-term economic vitality 
depends on the creation of effective, accessible, and 
accountable job training initiatives that are open to all our 
citizens. The importance of highly developed employment skills 
has never been greater--for the continued growth of our economy 
and for individual workers seeking secure, well paying jobs.
    There are very few investments we can make that would 
produce a better return for our Nation's economy than investing 
in workforce training. Despite the overwhelming evidence, we 
have been slow to increase the level of funding for training 
programs. The only portion of the workforce system that has 
received a substantial increase is the dislocated worker 
program. However, participation in that program is limited to 
workers who have been discharged by an employer and are 
currently unemployed. That is only one small segment of the 
workforce, of which only 9 percent are served by public job 
training programs. We need to create high-tech training 
opportunities on a large scale for those who currently hold 
relatively low paying jobs and wish to obtain new skills to 
enhance their employability and their earning potential.
    Because many more jobs require advanced skills, the gap in 
earnings between skilled and unskilled workers has steadily 
widened over the last decade. The impact of increased education 
on earnings is very pronounced among workers with less than a 
college degree. In the 1990's, the rate of real growth in the 
average income of a worker with an associate's degree from a 
community college increased 2\1/2\ times the rate of income 
growth for a high school dropout. Even relatively brief periods 
of training in high-tech workforce skills can make a very real 
difference for both the worker and his or her employer.
    When we expanded the number of H-1B visas in 1998, we 
created a modest training initiative funded by visa fees. The 
Kennedy amendment proposes to substantially expand and 
strengthen that program to provide state-of-the-art high-tech 
training for large numbers of workers. It is one of the best 
ways to keep the economic expansion going and to extend the 
current prosperity well into the new century. The information 
technology industry has been a major catalyst for the recent 
growth in the U.S. economy, and well trained workers are 
essential to keep the trend going.
    To help meet this need, the Information Technology Training 
Initiative will provide a significant level of new financial 
support for regional workforce boards in areas with substantial 
high-tech skill shortages. It would be awarded by competitive 
grants based on innovative high-tech training proposals 
developed by workforce boards in partnership with one or more 
area employers, and one or more unions, community 
organizations, or higher educational institutions. The 
financial resources for this initiative would come from higher 
H-1B visa petition fees on an increased number of visas, and 
matching partnership resources. This will allow us to expand 
the funding provided through the H-1B program for training, 
resulting in over $250 million each year. This program will 
serve 50,000 workers each year--both those who are currently 
employed and are seeking to enhance their skills, as well as 
those who are currently unemployed.
    At least 80 percent of the funds generated by this program 
will be reserved for training in the high-tech skills required 
by the information technology and biotechnology industries, 
including software and communications services, 
telecommunications, systems installation and integration, 
computers and communications hardware, health care technology, 
biotechnology, biomedical research and manufacturing and 
innovative services. These are the skills most in demand by 
those companies which are fueling our economic growth. We need 
to concentrate our limited resources on preparing workers for 
these positions.
    Training grants will be targeted at those areas which can 
demonstrate a substantial unmet need for workers with these 
skills. This program is designed to encourage broad community 
participation in the training initiatives with the regional 
Workforce Investment Boards. We are looking for active 
participation by high-tech companies and trade associations 
representing small, high-tech-oriented businesses, labor unions 
representing high-tech workers, and community organizations and 
educational institutions involved in developing and overseeing 
these training programs. In order to maximize the number of 
workers receiving training, workforce boards and other 
participants are being asked to contribute a 50 percent local 
match of the Federal grant in either dollars or services.
    These programs will be expected to demonstrate concrete 
results--trainees placed in high-tech jobs, wage increases and 
promotions for incumbent workers who have upgraded their 
skills, and attainment of performance levels required by 
occupational skill standards.
    S. 2045 will shut the door to training for thousands of 
American workers. Instead of expanding existing H-1B training 
opportunities for American adults, the Feinstein-Abraham 
amendment to S. 2045 cuts the percentage of H-1B fee revenues 
that goes to worker training from 56.3 percent to 36.2 percent. 
As a result of this cut, the dollar amount spent on training 
remains the same--a mere $54 million that would train 
approximately 16,000 workers.
    In contrast, the Kennedy amendment would provide $167 
million to train more than 50,000 workers. The majority states 
in this report that we must increase our training efforts ``so 
that more Americans can be prepared to keep this country at the 
cutting edge and competitive in global markets.'' But how can 
anyone believe that S. 2045 would accomplish this goal when it 
dramatically expands the H-1B program while doing nothing to 
increase the amount of money going to train U.S. workers?

     Educational Opportunities for U.S. Students Must Be Increased

    As we enter the 21st century, careers increasingly require 
advanced degrees, especially in math, sciences, engineering, 
and computer sciences. According to ``21st Century Skills for 
21st Century Jobs,'' a report published last January by the 
U.S. Department of Commerce, U.S. Department of Education, U.S. 
Department of Labor, and the National Institute for Literacy 
and Small Business Administration, 8 of the 10 fastest growing 
jobs of the next decade will require college education or 
moderate- to long-term training. The three fastest growing jobs 
are in the IT industry--database administrators, computer 
engineers, and systems analysts.
    We must encourage students, including minority students, to 
consider degrees in math, sciences, computers, and engineering. 
Today, the number of students graduating from American 
universities with engineering degrees is at a 17-year low. We 
need to change this disturbing trend. Scholarship opportunities 
must be meaningfully expanded for talented minority and low-
income students whose families cannot afford today's high 
college tuition costs. With increased opportunities for 
scholarships, students completing 2-year degrees will be 
provided with incentives to continue their education and obtain 
4-year degrees.
    Building on the foundation established by the 1998 high-
tech bill, the Kennedy amendment would substantially increase 
the funds available through the National Science Foundation 
(NSF) to provide scholarships to low-income students pursuing 
degrees in math, science, and engineering. This year, the NSF 
received approximately $20 million toward low-income 
scholarships. With the proposed increase in the H-1B petition 
fees, the Kennedy amendment would generate over $100 million in 
scholarships--increasing the current total fivefold and 
resulting in more than 25,000 scholarships.
    In contrast, S. 2045, as modified by the Feinstein-Abraham 
amendment, would only provide $46 million for low-income 
scholarships. With funding at this level, less than 15,000 
scholarships would be awarded. If we are truly committed to 
finding long term and long lasting solutions to the IT 
workforce shortages, we must be prepared to make a more 
substantial investment in education.
    A recent report on undergraduate education, issued by the 
NSF, stated that financial concerns can intrude upon, and 
significantly hamper, a student's learning experience. Low-
income students are often compelled to finance their college 
education by working long hours in jobs that leave them little 
time for laboratories and other demands of a strenuous 
curriculum in math, science, engineering, or computer science. 
The availability of scholarships for low-income students 
significantly enhances their academic performance and 
graduation rates.
    The Feinstein-Abraham amendment raises the level of 
scholarship awards available to individual students from $2,500 
per year to $3,125 (the Pell Grant amount). This increased 
amount is still significantly below the average tuition and fee 
levels of most baccalaureate and graduate programs. Both NSF 
and CRS have indicated that higher scholarship amounts are 
needed to effectively assist low-income students. The Kennedy 
amendment deletes the cap on individual scholarship awards, 
enabling the NSF, based on their unique expertise and proven 
track record, to set the amount of the individual awards.
    The fact that American students lack the degrees to compete 
for good jobs in the IT industry is a distressing aspect of our 
educational system. Our schools must keep pace with these 
demands. We must do all we can to improve K-12 education, and 
from an early age, instill the skills needed in the new 
millennium. But this must be done on a much larger scale than 
the well-intentioned but modest K-12 systemic reform programs 
proposed by the Feinstein-Abraham amendment. Reforms of this 
magnitude would require billions of dollars, and are presently 
being discussed in the reauthorization for the Elementary and 
Secondary Education Act. Although the Feinstein-Abraham 
amendment includes some interesting ideas, for example, the 
``technology fellows,'' Congress should hesitate to create new 
programs--however credible they may inherently be--through the 
H-1B legislation. Instead of taking away $38 million from high-
skill adult training, we should boost what the H-1B user fees 
already support: worker training, scholarships, and after-
school programs to bridge the digital divide.
    The information age presents an era of new possibilities 
for the entire Nation. It is one of the greatest periods of 
innovation and change in history. But millions of Americans, 
particularly those at lower income levels, risk being left 
behind because of lack of access to technology. Closing the 
digital divide must therefore be an important part of our long-
term approach to meeting the growing demand for highly skilled, 
technology trained workers. If we commit now to providing low-
income students with greater access to technology, and expose 
them to the challenges and excitement of math, science, and 
engineering, we can build a technologically fluent workforce 
prepared to maintain America's competitive edge in the global 
marketplace.
    Unfortunately, S. 2045 misses the mark on the digital 
divide by calling for an NSF study on the issue. Considering 
that the Department of Commerce is scheduled to release its 
third report on the digital divide this fall, the last thing we 
need is another study.
    The bill fails to offer any concrete proposals to address 
existing disparities. In fact, with the Feinstein-Abraham 
amendment, S. 2045 would reduce the funding allocated to the 
NSF school enrichment program from 4 percent to 2.5 percent, 
resulting in only $3 million in fee revenues.
    By contrast, the Kennedy amendment includes a digital 
divide component designed to help strengthen the pipeline of 
young people prepared to enter college and the workforce with 
the skills necessary to compete for technology-related jobs. 
The proposal is a substantive out-of-school math, science, and 
engineering enrichment program targeted toward low income, 
middle and high school students. Through merit-based, 
competitive grants, the NSF will fund public/private 
partnership programs that provide these young people with 
meaningful training and exposure to careers in math, science, 
and engineering.The Kennedy amendment allocates 9 percent of 
the H-1B user fees to fund this program, resulting in $30 million in 
revenues.
    The NSF grants offer technology companies the flexibility 
to start new partnerships with schools, local community groups, 
or professional societies or expand upon existing programs that 
have proven successful. An out-of-school enrichment program 
that focuses on math, science, and engineering is an ideal 
complement to the college scholarship program. We should all 
support this important and effective approach to closing the 
digital divide by opening the door to careers in math, science, 
and engineering.

At a Time When the IT Industry Is Experiencing so Much Economic Growth 
  and Record Profits, the Industry Can Afford To Pay a Higher Fee in 
       Order To Invest in Technology Skill Upgrades and Education

    The current H-1B visa petition fee stands at $500, and S. 
2045 provides no increase in that fee. As a result the increase 
in the visa cap would only raise $150 million. This is 
insufficient to provide the necessary education and training to 
support our Nation's economic expansion and future prosperity. 
This goal can only be accomplished when we put additional funds 
on the table for training and education.
    The Kennedy amendment offers a three-tiered fee structure, 
depending on the total number of employees in each company. 
Employers with 150 or fewer employees would pay a $1,000 fee, 
those with 151 to 500 employees would pay $2,000, and employers 
with over 500 employees would pay $3,000. ``Job shops,'' which 
are defined as H-1B dependent companies, would also pay $3,000. 
We estimate that the Kennedy amendment would raise $333 million 
for U.S. workers and students.
    The majority calls this fee increase ``excessive.'' They 
express concern that doubling the fee for some small businesses 
and raising it to $3,000 for others will cause these companies 
to suffer financial hardship. At a time when the IT industry is 
experiencing rapid economic growth and record profits, there is 
no reason why even the smallest of businesses should not pay a 
slightly higher fee in order to invest in technology skill 
upgrades and education. The majority points out that H-1B 
employers typically pay legal fees of $3,000 or more to secure 
needed employees. There is anecdotal evidence that both small 
and large IT companies offer sizable signing bonuses and even 
new automobiles to recruit new employees. Weekly news articles 
describe how record profits by IT companies are producing 
hundreds of new millionaires. Given these circumstances, 
requiring these companies to pay higher fees to help fund long-
term and long-lasting solutions to their own labor shortages is 
surely not excessive and will not result in any credible 
financial hardship.
    Furthermore, the majority should remember that immigrant 
families with very modest incomes must pay a $1,000 fee to 
obtain green cards here in the United States. Certainly, multi-
million dollar companies can afford to pay at least as much for 
these visas.

We Should Expand the Workforce Training Program Established by the 1998 
                     Legislation, Not Dismantle It

    The majority did not discuss the Kyl amendment, which if 
successful, would have transferred from the Department of Labor 
to the Department of Commerce responsibility for the employment 
training program established by the 1998 legislation. We are 
concerned that this type of initiative was prompted by 
inaccurate assumptions and misperceptions and therefore believe 
that this issue merits further discussion.
    In 1998, Congress overwhelmingly passed the Workforce 
Investment Act establishing a new, innovative framework for 
employment training programs. It was the product of several 
years of effort with extensive input from all of the key 
constituencies involved in job training. It provides an 
effective and modern program structure for workforce training 
which will go into effect in most States this summer. We are 
concerned that initiatives like the Kyl amendment would 
circumvent the new workforce system before it even goes into 
effect. To do so would be a serious mistake.
    What is needed now are additional resources. Congress has 
not provided resources sufficient to meet the dramatically 
expanding demand for worker training and retraining, especially 
the need of those who are already employed to upgrade their 
skills. The revenue collected from the H-1B visa user fees can 
be the source of significant new resources allowing us to train 
thousands of additional workers each year in high-tech skills 
through the workforce investment boards. We should not be 
designing a new training structure that bypasses everything we 
have so recently put in place. We should not be reinventing the 
training wheel when all that is needed is additional fuel to 
turn it.
    Others urging that responsibility for workforce training be 
shifted to the Department of Commerce contend that the 
Department of Labor was slow in implementing the training grant 
program established by the 1998 act and the money has not been 
put to good use. We believe that these criticisms are 
unwarranted.
    Any new competitive grants program requires a significant 
amount of time to consult with interested groups, draft and 
redraft rules and parameters for competition and clear all 
language with OMB. This would require several months for any 
agency. Havingsome or all of the future training funds 
delivered through the Department of Commerce would take at least as 
long to set up, and perhaps longer since the Department has no history 
of competing-out grants of this nature.
    The Department of Labor announced the first round of 
training grant awards on February 10, 2000, awarding nine 
grants for a total of $12.4 million, eight of which went to 
high-tech initiatives. Below is a description of the recent 
grant recipients:

Hamden County, MA ($1.5 million)

    The Information Telecommunication Technologies Workforce 
Development Project will upgrade the technical skills of 210 
employed and unemployed workers for highly skilled jobs in the 
IT industry. Partners include Coghlin Electrical Contractors, 
Systems Software Support, Inc., RCN Javanet, Telitcom 
Development Corp., and two area community colleges.

NOVA PIC, Sunnyvale, CA ($1.3 million)

    Participants will be provided with the appropriate training 
for occupational skills training. Partners include Silicon 
Valley Network, Sun Microsystems, and Cisco.

Pima County, Tuscon, AZ ($1.5 million)

    The grant will build on a high-tech/high-wage project that 
has been underway since 1998. Participants will be trained in 
health, IT, electronics, accounting, and management. Partners 
include the University of Arizona and employers from the 
targeted occupations.

Chicago, IL ($1.5 million)

    The purpose of the project is to prepare incumbent workers 
for more skilled positions within their companies. Partners 
include DePaul University, City College of Chicago, Xpedior, 
Integration, uBID, Inc., and Catalyst Consulting Group.

Seattle-King County, WA ($1.5 million)

    The project will prepare workers to design, implement and 
manage the computer-based enterprises that will drive commerce 
and education into the new century. Partners include the 
University of Washington, the Washington Software Alliance 
(1,400 members) and three area community colleges.

Bridgeport, CT ($1.5 million)

    This project will create new career paths to high-skill 
jobs by creating Certified Skills Centers where the trainees 
will receive on-the-job training in those areas. Partners 
include Pepperidge Farm, Pitney Bowes, SACIA, and the Norwalk 
Community-Technical College.

Philadelphia, PA ($563,057)

    This project will address the needs of area employers for 
nurses at all levels and especially for RN's and LPN's. 
Partners include Temple University Healthcare Systems, Medical 
College of Pennsylvania, AFSCME, and 60 area hospitals.

New Hampshire ($1.5 million)

    The project will implement job training that will enable 
companies to obtain and retain skilled workers in the State. It 
will develop a technical skills feeder pattern for high-tech 
firms. Partners include the New Hampshire Technical College 
System, the Manufacturing Extension Partnership, the University 
of New Hampshire, and the Software Association of New 
Hampshire.

Prince George's County, MD ($1.5 million)

    The project will provide a multi-regional program to 
recruit, assess, train, and place participants in the IT 
fields. Partners include CWA, Cisco Systems, Lucent 
Technologies, AT&T;, Bell Atlantic, US West, and Pac Bell.
    Now that the first round of grant awards is completed, and 
a system is in place, future rounds will move more rapidly. In 
fact, the Department of Labor announced on March 29, 2000, that 
it is making $40 million available for a second round of 
awards. Proposals for this round will be due in June 2000 and 
awards made in August 2000. The third round of competition is 
scheduled for September 2000, with awards being announced in 
November 2000.
    The majority's criticism of the Department of Labor survey 
proposed in the Kennedy amendment is also unwarranted. The 
Kennedy provision simply proposes that the Department of Labor 
conduct an ongoing survey of the level of compliance by 
employers with the provisions and requirements of the H-1B 
program. The results of this survey would be reported to 
Congress in biennial reports. Using statistically reliable 
random sampling, only a small number of employers would be 
surveyed. There is nothing invasive about this survey, nor does 
it override the provisions contained in the 1998 legislation. 
In fact, the use of a compliance survey would facilitate the 
ability of the Department of Labor to effectively assess 
whether employers were adhering to the provisions included in 
the 1998 legislation to protect both U.S. and foreign workers 
were being adhered to. The need to assess wage compliance 
provisions in particular is emphasized in the Office of 
Inspector General's 1996 report on the Department of Labor's 
Foreign Certification Programs, which found in their sampling 
that wage abuse was a common problem.
    National compliance surveys are frequently relied upon by 
the Department of Labor. Traditional enforcement data, such as 
what would result from the Department of Labor's current 
investigative authority, can provide an unrepresentative view 
of overall compliance because the data is primarily based on 
complaint information. Statistically sound investigation-based 
compliance surveys, on the other hand, provide a more realistic 
measure of compliance in the targeted industry.

 We Reject the View That the Only Pro-Immigrant Agenda This Session is 
                             an H-1B Agenda

    We express our deep regret that this Committee and this 
Congress have failed to consider the many other immigration 
bills and issues of utmost importance to immigrants living and 
working in this country. As the National Council of La Raza and 
other groups point out in letters that Judiciary Committee 
Members received recently, ``these are issues that have reached 
a crisis level and need immediate legislative attention.'' 
Unfortunately, unlike the H-1B issue, these other equally 
important issues have been ignored by most Members of Congress.
    Last year, a broad coalition of immigrant and faith-based 
groups launched the ``Fix '96'' campaign to repeal the harsh 
and excessive provisions in the 1996 immigration and welfare 
laws and restore balance and fairness. All of the issues raised 
in this campaign remain outstanding. A number of bills have 
been introduced proposing solutions to these problems; other 
bills are near introduction. However, the GOP has neither taken 
action on nor, for the most part, supported any of these bills 
which are as critical to U.S. immigrants in our workforce as H-
1B visas are to the information technology industry. These 
issues include parity legislation for Central Americans and 
Haitians, restoring protections to asylum seekers, restoring 
due process in detention and deportation policy, and restoring 
public benefits to legal immigrants and protections to battered 
immigrant women and children.
    We echo the sentiments of the immigrant groups--that other 
equally important immigration bills must be considered this 
session. We urge our colleagues to give equal attention to 
these other immigration issues that affect so many immigrant 
families in our workforce.

                               Conclusion

    We are committed to meeting the needs of our high-tech 
industry. But this cannot be accomplished without a long-term 
commitment to expand job training for U.S. workers and 
educational opportunities to U.S. students. We believe the 
Kennedy amendment substitute comes far closer to achieving both 
of these goals than the Committee bill.

                                   Patrick J. Leahy.
                                   Edward M. Kennedy.
                                   Joseph R. Biden, Jr.
                                   Russell D. Feingold.
                                   Robert G. Torricelli.
                                   Charles E. Schumer.

                      IX. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 2045, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matters is printed in italic, and existing law in which no 
change is proposed is shown in roman):

UNITED STATES CODE

           *       *       *       *       *       *       *


                    TITLE 8--ALIENS AND NATIONALITY

Chapter                                                          Section
1General Provisions [Repealed or Omitted].......................

           *       *       *       *       *       *       *


                CHAPTER 12--IMMIGRATION AND NATIONALITY


                   SUBCHAPTER 1--GENERAL PROVISIONS

           *       *       *       *       *       *       *



                       SUBCHAPTER II--IMMIGRATION


                        Part I--Selection System

1151. Worldwide level of immigration.

           *       *       *       *       *       *       *


Sec. 1152. Numerical limitations on individual foreign states

    (a) Per country Level.--
          (1) Nondiscrimination.--
                  (A) Except * * *

           *       *       *       *       *       *       *

          (2) Per country levels for family-sponsored and 
        employment-based immigrants.--Subject to [paragraphs 
        (3) and (4)], paragraphs (3), (4), and (5), the total 
        number of immigrants visas made available to natives of 
        any single foreign state or dependent area under 
        subsections (a) and (b) of section 1153 of this title 
        in any fiscal year may not exceed 7 percent (in the 
        case of a single foreign state) or 2 percent (in the 
        case of dependent area) of the total number of such 
        visas made available under such subsections in that 
        fiscal year.

           *       *       *       *       *       *       *

          (4) Special rules for spouses and children of lawful 
        permanent resident aliens.--
                  (A) 75 percent of 2nd preference set-aside 
                for spouses and children not subject to per 
                country limitation.--
                          (i) In general.--Of the * * *

           *       *       *       *       *       *       *

                  (D) Limiting pass down for certain countries 
                subject to subsection (e).--In the case * * *
          (5) Rules for employment-based immigrants.--
                          (A) Employment-based immigrants not 
                        subject to per country limitation if 
                        additional visas available.--If the 
                        total number of visas available under 
                        paragraph (1), (2), (3), (4), or (5) of 
                        section 203(b) for a calendar quarter 
                        exceeds the number of qualified 
                        immigrants who may otherwise be issued 
                        such visas, the visas made available 
                        under that paragraph shall be issued 
                        without regard to the numerical 
                        limitation under paragraph (2) of this 
                        subsection during the remainder of the 
                        calendar quarter.
                          (B) Limiting fall across for certain 
                        countries subject to subsection (e).--
                        In the case of a foreign state or 
                        dependent area to which subsection (e) 
                        applies, if the total number of visas 
                        issued under section 203(b) exceeds the 
                        maximum number of visas that may be 
                        made available to immigrants of the 
                        state or area under section 203(b) 
                        consistent with subsection (e) 
                        (determined without regard to this 
                        paragraph), in applying subsection (e) 
                        all visas shall be deemed to have been 
                        required for the classes of aliens 
                        specified in section 203(b).

           *       *       *       *       *       *       *

    (e) Special Rules for Countries at Ceiling.--If it is * * *
          (1) the ratio of the visa numbers made available 
        under section 1153(a) of this title to the visa numbers 
        made available under section 1153(b) of this title is 
        equal to the ratio of the worldwide level of 
        immigration under section 1151(c) of this title to such 
        level under section 1151(d) of this title;

           *       *       *       *       *       *       *

          (3) [the proportion of the visa numbers] except as 
        provided in subsection (a)(5), the proportion of the 
        visa numbers made available under each of paragraphs 
        (1) through (5) of section 1153(b) of this title is 
        equal to the ratio of the total number of visas made 
        available under the respective paragraph to the total 
        number of visas made available under section 1153(b) of 
        this title.

           *       *       *       *       *       *       *


    Part II--Admission Qualifications for Aliens; Travel Control of 
                          Citizens and Aliens

1181. Admission to immigration into the United States.

           *       *       *       *       *       *       *


Sec. 1181. Inadmissible aliens

    (a) Classes of Aliens Ineligible for Visas or Admission.--
Except. * * *

           *       *       *       *       *       *       *

    (n) Labor Condition Application.--
          (1) No alien may be admitted or provided status as an 
        H-1B nonimmigrant in an occupational classification 
        unless the employer has filed with the Secretary of 
        Labor an application stating the following:
                  (A) The employer--

           *       *       *       *       *       *       *

                  (E)(i) In the case of an application 
                described in clause (ii), the employer did not 
                displace and will not displace a United States 
                worker (as defined in paragraph (4)) employed 
                by the employer within the period beginning 90 
                days before and ending 90 days after the date 
                of filing of any visa petition supported by the 
                application.
                  (ii) An application described in this clause 
                is an application filed on or after the date 
                final regulations are first promulgated to 
                carry out this subparagraph, and before 
                [October 1, 2001] October 1, 2002, by an H-1B-
                dependent employer (as defined in paragraph 
                (3)) or by an employer that has been found, on 
                or after October 21, 1998, under paragraph 
                (2)(C), or (5) to have committed a willful 
                failure or misrepresetation during the 5-year 
                period preceding the filing of the application. 
                An application is not described in this clause 
                if the only H-1B nonimmigrants sought in the 
                application are exempt H-1B nonimmigrants.

           *       *       *       *       *       *       *


Sec. 1184. Admission of nonimmigrants

    (a) Regulations.--
          (1) The admission * * *

           *       *       *       *       *       *       *

    (c) Petition of Importing Employer; Involvement of 
Departments of Labor and Agriculture.--
          (1) The question of * * *

           *       *       *       *       *       *       *

          (9)(A) The attorney general shall impose a fee on an 
        employer (excluding an employer described in 
        subparagraph (A) or (B) of section 1182(p)(1) of this 
        title) filing (on or after December 1, 1998, and before 
        [October 1, 2001] October 1, 2002) a petition under 
        paragraph (1).

           *       *       *       *       *       *       *

    (g) Temporary Workers and Trainees; Limitation on 
Numbers.--
          (1) The total number of aliens who may be issued 
        visas or otherwise provided nonimmigrant status during 
        any fiscal year (beginning with fiscal year 1992)--

           *       *       *       *       *       *       *

          [(3) Aliens who are subject to the numerical 
        limitations of paragraph (1) shall be issued visas (or 
        otherwise provided nonimmigrant status) in the order in 
        which petitions are filed for such visas or status.]
          (3) Aliens who are subject to the numerical 
        limitations of paragraph (1) shall be issued visas (or 
        otherwise provided nonimmigrant status) in the order in 
        which petitions are filed for such visas or status. If 
        an alien who was issued a visa or otherwise provided 
        nonimmigrant status and counted against the numerical 
        limitations of paragraph (1) is found to have been 
        issued such visa or otherwise provided such status by 
        fraud or willfully misrepresenting a material fact and 
        such visa or nonimmigrant status is revoked, then one 
        number shall be restored to the total number of aliens 
        who may be issued visas or otherwise provided such 
        status under the numerical limitations of paragraph (1) 
        in the fiscal year in which the petition is revoked, 
        regardless of the fiscal year in which the petition was 
        approved.
          (4) In the case of a nonimmigrant described in 
        section 1101(a)(15)(H)(i)(b) of this title, the period 
        of authorized admission as such a nonimmigrant may not 
        exceed 6 years.
          (5) The numerical limitations contained in paragraph 
        (1)(A) shall not apply to any nonimmigrant alien issued 
        a visa or otherwise provided status under section 
        101(a)(15)(H)(i)(b)--
                  (A) who is employed (or has received an offer 
                of employment) at--
                          (i) an institution of higher 
                        education (as defined in section 101(a) 
                        of the Higher Education Act of 1965 (20 
                        U.S.C. 1001(a))), or a related or 
                        affiliated nonprofit entity; or
                          (ii) a nonprofit research 
                        organization or a governmental research 
                        organization; or
                  (B) for whom a petition is filed not more 
                than 90 days before or not more than 180 days 
                after the nonimmigrant has attained a master's 
                degree or higher degree from an institution of 
                higher education (as defined in section 101(a) 
                of the Higher Education Act of 1965 (20 U.S.C. 
                1001(a))).
          (6) Any alien who ceases to be employed by an 
        employer described in paragraph (5)(A) shall, if 
        employed a nonimmigrant alien described in section 
        101(a)(15)(H)(i)(b), be counted toward the numerical 
        limitations contained in paragraph (1)(A) the first 
        time the alien is employed by an employer other than 
        one described in paragraph (5)(A).

           *       *       *       *       *       *       *

    (l)\1\ Nonimmigrant Elementary and Secondary School 
Students.--
---------------------------------------------------------------------------
    \1\ So in original. Two subsecs. (l) have been enacted.
---------------------------------------------------------------------------
          (1) an alien may not be accorded status as a 
        nonimmigrant under section 1101(a)(15)(F)(i) of this 
        title in order to pursue a course of study--

           *       *       *       *       *       *       *

          (2) An alien who obtains the status of a nonimmigrant 
        under section 1101(a)(15)(F)(i) of this title in order 
        to pursue a course of study at a private elementary or 
        secondary school or in a language training program that 
        is not publicly funded shall be considered to have 
        violated such status, and the alien' visa under section 
        1101(a)(15)(F) of this title shall be void, if the 
        alien terminates or abandons such course of study at 
        such a school and undertakes a course of study at a 
        public elementary school, in a publicly funded adult 
        education program, in a publicly funded adult education 
        language training program, or at a public secondary 
        school (unless the requirements of paragraph (1)(B) are 
        met).
    (m)(1) A nonimmigrant alien described in paragraph (2) who 
was previously issued a visa or otherwise provided nonimmigrant 
status under section 101(a)(15)(H)(i)(b) is authorized to 
accept new employment upon the filing by the prospective 
employer of a new petition on behalf of such nonimmigrant as 
provided under subsection (a). Employment authorization shall 
continue for such alien until the new petition is adjudicated. 
If the new petition is denied, employment authorization shall 
cease.
    (2) A nonimmigrant alien described in this paragraph is a 
nonimmigrant alien--
          (A) who has been lawfully admitted into the United 
        States;
          (B) on whose behalf an employer has filed a 
        nonfrivolous application for new employment or 
        extension of status before the date of expiration of 
        the period of stay authorized by the Attorney General; 
        and
          (C) who has not been employed without authorization 
        in the United States before or during the pendency of 
        such petition for new employment.

           *       *       *       *       *       *       *


                         Part IX--Miscellaneous

1351. Nonimmigrant visa fees.

           *       *       *       *       *       *       *


Sec. 1356. Disposition of monies collected under the provisions of this 
                    subchapter

    (a) Detention, Transportation, Hospitalization, and All 
Other Expenses of Detained Aliens; Expenses of Landing 
Stations.--All moneys * * *

           *       *       *       *       *       *       *

    (s) H-1B Nonimmigrant Petitioner Account.--
          (1) In general.--There is established in the general 
        fund of the Treasury a separate account, which shall be 
        known as the ``H-1B Nonimmigrant Petitioner Account''. 
        Notwithstanding any other section of this title, there 
        shall be deposited as offsetting receipts into the 
        account all fees collected under section 1184(c)(9) of 
        this title.
          (2) Use of fees for job training.--[56.3 percent] 
        36.2 percent of amounts deposited into the H-1B 
        Nonimmigrant Petitioner Account shall remain available 
        to the Secretary of Labor until expended for 
        demonstration programs and projects described in 
        section 414(c) of the American Competitiveness and 
        Workforce Improvement Act of 1998.
          (3) Use of fees for low-income scholarship program.--
        [28.2 percent] 30.7 percent of the amounts deposited 
        into the H-1B Nonimmigrant Petitioner Account shall 
        remain available to the Director of the National 
        Science Foundation until expended for scholarships 
        described in section 414(d) of the American 
        Competitiveness and Workforce Improvement Act of 1998 
        for low-income students enrolled in a program of study 
        leading to a degree in mathematics, engineering, or 
        computer science.
          (4) Additional nsf uses.--
                  (A) Grants for mathematics, engineering, or 
                science enrichment courses.--[4 percent] 2.5 
                percent of the amounts deposited into the H-1B 
                Nonimmigrant Petitioner Account shall remain 
                available to the Director of the National 
                Science Foundation until expended to make 
                merit-reviewed grants, under section 3(a)(1) of 
                the National Science Foundation Act of 1950 (42 
                U.S.C. 1862(a)(1)), for programs that provide 
                opportunities for enrollment in year-round 
                academic enrichment courses in mathematics, 
                engineering, or science.
                  [(B) Systemic reform activities.--4 percent 
                of the amounts deposited into the H-1B 
                Nonimmigrant Petitioner Account shall remain 
                available to the Director of the National 
                Science Foundation until expended to carry out 
                systemic reform activities administered by the 
                National Science Foundation under section 
                3(a)(1) of the National Science Foundation Act 
                of 1950 (42 U.S.C. 1862(a)(1)).]
                  (B) National science foundation competitive 
                grant program for k-12 math, science and 
                technology education.--(i) 25.8 percent of the 
                amounts deposited into the H-1B Nonimmigrant 
                Petitioner Account shall remain available to 
                the Director of the National Science Foundation 
                until expended to carry out a direct and/or 
                matching grant program to support private-
                public partnerships in K-12 education.
                  (ii) Types of programs covered.--The Director 
                shall award grants to such programs, including, 
                those which support the development and 
                implementation of standards-based instructional 
                materials models and related student 
                assessments that enable K-12 students to 
                acquire an understanding of science, 
                mathematics, and technology, as well as to 
                develop critical thinking skills; provide 
                systemic improvement in training K-12 teachers 
                and education for students in science, 
                mathematics, and technology; stimulate system-
                wide K-12 reform of science, mathematics, and 
                technology in rural, economically disadvantaged 
                regions of the United States; provide 
                externships and other opportunities for 
                students to increase their appreciation and 
                understanding of science, mathematics, 
                engineering, and technology; involve 
                partnerships of industry, educational 
                institutions, and community organizations to 
                address the educational needs of disadvantaged 
                communities; and college preparatory support to 
                expose and prepare students for careers in 
                science, mathematics, engineering, and 
                technology.

           *       *       *       *       *       *       *

                              ----------                              


                         PUBLIC LAW 105-277

           *       *       *       *       *       *       *


                      DIVISION C--OTHER MATTERS

           *       *       *       *       *       *       *


    TITLE IV--AMERICAN COMPETITIVENESS AND WORKFORCE IMPROVEMENT ACT

SEC. 401. SHORT TITLE; TABLE OF CONTENTS; AMENDMENTS TO IMMIGRATION AND 
                    NATIONALITY ACT.

           *       *       *       *       *       *       *


SEC. 413. CHANGES IN ENFORCEMENT AND PENALTIES.

    (a) Increased Enforcement and Penalties.--Section 
212(n)(2)(C) (8 U.S.C. 1182(n)(2)(C)) is amended to read as 
follows:

           *       *       *       *       *       *       *

    (e) Additional Investigative Authority.--
          (1) In general.--Section 212(n)(2) (8 U.S.C. 
        1182(n)(2)), as amended by subsection (d), is further 
        amended by adding at the end the following:

           *       *       *       *       *       *       *

          (2) Sunset.--The amendment made by paragraph (1) 
        shall cease to be effective on [September 30, 2001] 
        September 30, 2002.

           *       *       *       *       *       *       *


SEC. 414. COLLECTION AND USE OF H-1B NONIMMIGRANT FEES FOR SCHOLARSHIPS 
                    FOR LOW-INCOME MATH, ENGINEERING, AND COMPUTER 
                    SCIENCE STUDENTS AND JOB TRAINING OF UNITED STATES 
                    WORKERS.

    (a) Imposition of Fee.--Section 214(c) (8 U.S.C. 1184(c)) 
is amended by adding at the end the following:

           *       *       *       *       *       *       *

    (d) Low-Income Scholarship Program.--
          (1) Establishment.--The Director of the National 
        Science Foundation (referred to in this subsection as 
        the ``Director'') shall award scholarships to low-
        income individuals to enable such individuals to pursue 
        associate, undergraduate, or graduate level degrees in 
        mathematics, engineering, or computer science.

           *       *       *       *       *       *       *

          (3) Limitation.--The amount of a scholarship awarded 
        under this subsection shall be determined by the 
        Director, except that the Director shall not award a 
        scholarship in an amount exceeding [$2,500 per year.] 
        $3,125 per year. The Director may renew scholarships 
        for up to 4 years.

           *       *       *       *       *       *       *

    (e) The Secretary of the Department of Labor and the 
Director of the National Science Foundation shall--
          (1) track and monitor the performance of programs 
        receiving H-1B Nonimmigrant Fee grant money; and
          (2) not later than one year after the date of 
        enactment of this subsection, submit a report to the 
        Committees on the Judiciary of the House of 
        Representatives and the Senate--
                  (A) the tracking system to monitor the 
                performance of programs receiving H-1B grant 
                funding; and
                  (B) the number of individuals who have 
                completed training and have entered the high-
                skill workforce through these programs.

           *       *       *       *       *       *       *