A bill to establish the position of Assistant Secretary of Commerce for Manufacturing in the Department of Commerce.

Mr. President, today I am pleased to introduce the United States-Mexico Transboundary Aquifer Assessment Act.

This bill is the result of a field hearing I conducted in Las Cruces, NM two years ago during my tenure as the Chairman of the Energy and Natural Resources Committee. The focus of the hearing was water resource issues that were developing along the U.S.-Mexico border-- particularly the area encompassing Las Cruces, El Paso, Texas, and Juarez, Mexico.

There had long existed an ongoing effort to address water quality issues and waste-water infrastructure needs in the border region, but I was concerned that issues regarding the availability of future water supplies were growing. The testimony at that hearing made clear that there exists little consensus on how growing communities in the border region will address their future water needs. In particular, I was struck by the lack of agreement on the long-term viability of future groundwater sources, many of which involve aquifers underlying communities in both the United States and Mexico. Given the rapid population growth along the U.S.-Mexico border and the increasing demand for water, there is a strong need to gain a common understanding of the limits of our shared groundwater resources. A thorough understanding of the resource is the first step to avoiding conflicts similar to those that have arisen between the United States and Mexico over shared surface waters--e.g. the Rio Grande.

The United States-Mexico Transboundary Assessment Act is intended to address the lack of binational consensus regarding the source and availability of future water supplies along the border. It will do this by establishing a scientific program, involving entities on both sides of the border, to comprehensively assess priority transboundary aquifers. The information and scientific tools developed by this program will be extremely valuable to State and local water resource managers in the border region. This effort is to be led by the United States Geological Survey (USGS) working closely with the border states and local entities. Over the last several years the USGS has been working with key stakeholders in the border region to design this technical program.

I understand that establishing this scientific program and accurately assessing our shared water resources is just a step towards developing the long-term plans and solutions that will help avoid future international disputes concerning scarce water supplies. This small step, however, is an important one, and is recognized by a number of organizations familiar with the need for cooperative efforts between the United States and Mexico on shared water resources. In its 6th Report on the U.S.-Mexico Border Environment, the Good Neighbor Environmental Board, an independent federal advisory committee managed by the U.S. Environmental Protection Agency, recommended the initiation of a ``border-wide groundwater assessment program to systematically analyze priority trans-boundary aquifers.'' Also, the Center for Strategic and International Studies, in a January 2003 report of its U.S.-Mexico Binational Council, included as one of its recommendations that Mexico and the United States ``improve data collection, information gathering, and transparency as the first step to developing a long-term strategy for water management.''

Ultimately, the necessary long-term strategy will have to be developed by the communities and other water users who reside along the border. Working with each other and their state water resource agencies, I believe successful strategies can be developed so long as the information that is the basis for the plans is the most accurate possible. In that respect, the USGS has a strong and important role to play. This bill will ensure that the USGS will be able to fulfill this role which, in turn, will enhance the prospects for our border communities to plan for their future and manage their growth in a manner that ensures their long-term viability and prosperity.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I want to speak for just a few minutes today on an issue on which I have introduced a bill. The bill is S. 1966. It is a bill to require a report on the detainees being held at Guantanamo Bay, Cuba.

The purpose of this legislation is to shed some light on the process that is being used by this administration to determine the status of so-called enemy combatants who are held by our Government at Guantanamo Bay Naval Base. It has now been nearly 2 years since the first detainees arrived at Guantanamo as prisoners of the United States. Yet these individuals are still being held in what most would refer to as legal limbo.

My colleagues will recall that on July 16, I urged the Senate to adopt an amendment to the Defense appropriations bill. That amendment was tabled 52 to 42. It is essentially the same provision--it contained the same provisions I have now put into S. 1966, this freestanding legislation I have introduced.

The day after that amendment was defeated I sent a letter to Secretary Rumsfeld expressing my concern over the apparent lack of any kind of legal process being extended to the detainees being held at Guantanamo. Only recently I received a reply from the Department of Defense. In that letter, the Department of Defense maintains that it:

. . . reviews on a regular basis the continued detention of

each enemy combatant and assesses the appropriate disposition

of each individual case.

According to the Defense Department, at the time they wrote back to me, they said that the review had resulted in the release of 64 detainees who were determined to no longer pose a threat to the United States, and more releases were expected.

However, the letter fails to address the more important question, which is whether the Department's review of these detainees is being done in accordance with any recognized civilian or military legal process.

I ask unanimous consent to have the letter printed in the Record at the conclusion of my remarks.

What prompted me to come to the floor of the Senate today was an article I saw in the morning paper. This appeared in various papers around the country, but the one I have here in front of me is from the Boston Globe. It says:

The U.S. military sent home 20 ``enemy combatants'' last

weekend who were being held without trial at Guantanamo Bay

Naval Base in Cuba, only to replace them with the same number

of new prisoners.

It has a quotation from a spokesperson for the military saying:

We cannot talk about any of the individuals that may have

departed the island due to security concerns.

According to this article, all those transferred last week have been returned, many of them to Pakistan, and all of those transferred last weekend, according to representatives from the countries they are citizens of, said they will be released once they have arrived in those countries.

The figure now, as I understand it, is there are 88 suspects who have been transferred out of Guantanamo Bay. Four were released, 4 were handed over to Saudi Arabia, and the remaining 650 or 700 are still there. As this article indicated, we continue to add additional people to this prison we are operating there at Guantanamo.

There are various complaints described in the article by foreign diplomats about the process we are following. There is a statement by the attorney for one of the human rights organizations that has complained bitterly about the improvisational policy decisions and the arbitrary power over prisoners at the base.

My motives for offering this legislation are very simple. While I obviously have concerns about judicial treatment and the failure of any kind of legal process being followed in the treatment of these detainees in Guantanamo, I am even more concerned about the implications of this treatment we are affording these individuals for our own fighting forces as well as our international reputation.

The bill I filed here in the Senate today requires the Secretary of Defense to report on the status of these detainees, including the process that was utilized to determine that status for those who have already been released from Guantanamo. The bill requires the Secretary to provide information related to this release, how long they were detained, the conditions of their release, if any, the explanations of why the Department of Defense has now determined these individuals could be released after what has in many cases been a very long detention.

For the remaining detainees--those who are still at Guantanamo--the administration has still refused to provide ``access to an impartial tribunal to review whether any basis exists for [detainees] continued detention.'' The detainees have not been allowed to speak with their families or their counsel, nor have they been informed of any charges against them, as far as I am informed.

The bill I filed requires that within 90 days of its enactment the Secretary of Defense provide the Senate with information related to the process used to categorize and hold these detainees. It does not call for release of the detainees. It does not in any way, shape, or form require the release of any classified information other than to the chairman and vice chairman of the Senate and House committees. The amendment merely seeks to clarify for the Senate and for the Congress the process by which the detainees' status is determined.

Like most Americans, I have always thought that what distinguished our country in the history of the world was our commitment to individual freedom and to the rule of law; that the bedrock of a free society is the obligation taken by the Government to afford individuals with certain legal protections, and as a Nation committed to these principles we have been instrumental in the formulation and enforcement of international law, particularly when it came to the treatment of prisoners of war. For over 75 years, the United States has adhered to the Geneva Convention. Even during conflicts with insurgents and irregular forces, we have adhered to the Geneva Convention. Whenever our Nation has gone to war, we have taken pride in going above and beyond the requirements of international law as set out in the third Geneva Convention of 1929. In fact, the Department of Defense has adopted its own detailed regulations and doctrine and field manuals built on the provisions of the Geneva Convention which have guided our military through many conflicts regardless of size and scope and duration.

These regulations we have in our own military, like international law, do not contemplate the legal limbo we are holding these detainees in at Guantanamo. Neither the Geneva Convention nor the established military regulations define or use the term the President is using here. This term, unlawful combatant, is a new term which has come up in order to sidestep the requirements both of the Geneva Convention and of our own military regulations. Army Regulation 190-8 provides an effective and efficient process to

categorize the detainees on the battlefield. According to that provision, detainees must be classified either as an enemy prisoner of war, a recommended retained person entitled to enemy prisoner-of-war protections, an innocent civilian who should be immediately returned to his or her home or released, or a civilian internee who, for reasons of operational security, or probable cause incident to criminal investigation, should be retained. Such internees have the right to appeal the order directing their internment by challenging the existence of imperative security reasons that led to their detention.

The President's unilateral determination of the detainee's status at Guantanamo Bay signals a significant departure from the spirit of the Geneva Convention and a significant departure from the letter of established military regulations. In stark contrast to our Government's previous commitment to adherence to the rule of law and human rights, this administration has adopted a position that once the President designates that a person is a so-called enemy combatant or unlawful combatant, a term created by the administration, that person can be locked up and held incommunicado as long as the President desires, with absolutely no legal rights; no right to review of that decision. This means even if the administration makes a mistake or is given faulty information, it is virtually impossible for the person involved to prove his or her innocence because not only can they not talk to a lawyer or to family members, but they do not have the right even to know what they are being charged with.

The U.S. Supreme Court has agreed to consider the narrow question of whether the Federal courts have the power to hear challenges to the detainees' imprisonment. This is a significant move towards restoring the system of checks and balances, which needs to be restored--the system of checks and balances our Founders felt was essential to preserving liberty in the country. Similarly, the bill I have filed begins to fulfill Congress's constitutional responsibility to oversee what the executive branch does. It calls on the administration to tell us whether its actions are in accordance with military regulations and doctrine.

Our goal is to bring transparency to the issue and to fulfill Congress's constitutional role of oversight of the executive. We should know what process the administration is using to determine the status of these detainees.

My concern is much broader than what happens to these particular detainees. I am concerned about the impact of our treatment of these detainees on the treatment of our own military personnel who are captured in future conflicts. Former U.S. diplomats and judge advocate generals and even former U.S. prisoners of war filed ``friend of the court'' briefs in the Supreme Court questioning the legality and wisdom of the administration's policy of open-ended detentions at Guantanamo. Some of those briefs were extremely thoughtful, in my view. One former diplomat wrote:

It has been the experience of each of us that our most

important diplomatic asset has been this Nation's values. . .

. The hint that America is not all that it claims, that it .

. . can accept that the Executive Branch may imprison whom it

will and do so beyond the reach of due process of law demeans

and weakens this Nation's voice abroad.

In their brief, former judge advocate generals, the military's legal prosecutors and those most familiar with the law as it applies to enemy prisoners of war, strongly argue:

To be sure, this is a perilous time, as the President has

stated. But that does not justify indefinite confinement

without any type of hearing or judicial review. The United

States played a major role in the development and adoption of

the Geneva Conventions. The requirements of those

Conventions. The requirements of those Conventions are

incorporated directly into American Military Regulations.

American failure to provide foreign prisoners with the

protections of the Geneva Conventions may well provide

foreign authorities, in current or future conflicts, with an

excuse not to comply with the Geneva Conventions with respect

to captured American military forces.

Just as compelling are the stories told in the ``friends of the court'' brief filed by former prisoners of war. They argue that as a result of their own experience as prisoners of war, the United States has an interest ``in fostering the development, acceptance and enforcement of international norms pursuant to which prisoners of war and others captured during armed conflicts will be treated humanely and in accordance with the rule of law.'' They emphasize, that in particular, they ``wish to ensure that the treatment by the Untied States of foreign detainees . . . is such that the United States and former American POWs retain the moral authority to demand fair and humane treatment for any future Americans detained by foreign governments.''

However, nothing more clearly demonstrates this point than the actual stories themselves. Leslie H. Jackson, Edward Jackfert, and Neal Harrington are former prisoners of war. Mr. Jackson was captured by the Germans, who adhered to the Geneva Conventions. Mr. Jackfert and Mr. Harrington were held by Japan, which had not ratified and did not purport to follow international law.

If you will allow me to read them their brief:

Mr. Jackson was captured by the German Army on April 24,

1944, when his B-17 bomber crashed. Jailed and interrogated

for approximately one week, he was then transported to Stalag

17, a converted concentration camp. In his 13 months of

captivity, Mr. Jackson was granted the bare necessities:

shelter, minimal food, and the ability to socialize with

other American POWs. While the experience was harsh and

unpleasant, Mr. Jackson was never tortured or otherwise hurt

by the German guards. To follow the terms of the Geneva

Conventions of 1929, to which Germany was a party, Mr.

Jackson's German captors placed the appropriate Geneva

Convention signage in the barracks, permitted the

international Red Cross to ship basic necessities to POWs,

and allowed a Geneva inspector to survey the premises. Mr.

Jackson believes that his survival and relatively good health

while in captivity are the result of the German Army's

adherence to the 1929 Geneva Conventions.

The experiences of Mr. Jackfert and Mr. Harrington in the

custody of Japan, which had not ratified and did not purport

to follow the 1929 Geneva Conventions, offer a sharp

contrast. Both men were serving with the U.S. Army in the

Philippines when it surrendered to the Japanese in 1942, and

both subsequently served several years of hard captivity

beyond the reach of any Geneva Convention protections. Both

were part of the Bataan Death March and its well-documented

horrors. Mr. Harrington was forced into slave labor in a

Japanese coalmine, and saw his compatriots starved, beaten

and killed. Mr. Jackfert was also forced into slave labor

and suffered the extreme effects of heavy labor, cruelty

and inadequate nourishment, going from 125 pounds to 90

pounds in a matter of months. There was no Geneva signage,

no recognition of prisoner rights, and virtually no Red

Cross access.

Nor were the experiences of Mr. Harrington and Mr. Jackfert

atypical. Studies have determined that the death rate of U.S.

Military personnel interned by Japan was as high as 40

percent while the death rate of personnel captured and

interned by Germany was little more than 1 percent. . . .

Moreover, while it was rare for American POWs detained in

Germany to be tortured, the opposite was true for American

POWs in Japan. No one can adequately impart the suffering

most allied prisoners endured [in Japan]. . . . They were

beaten, kicked, robbed . . . and were buried alive. . . .

[T]he overwhelming majority endured ``hell on earth.''

Again, let me say, I am in no way suggesting that the detainees are not being treated humanely. In fact, from all information I have received, they are being treated humanely. But what I and these briefs that were filed in the Supreme Court are suggesting is that our failure to adhere to some recognized legal process in determining the status of these detainees opens the door for other countries to refuse to adhere to any legal process as well. It may very well result in arbitrary confinement and harsh treatment or other inhumane practices applied to our own citizens.

This bill will help Congress fulfill its duties and obligations as outlined in the Constitution and in U.S. law and regulation.

I hope we can quickly pass this legislation when we return for the second session of the Congress in January.

I yield the floor.

Exhibit 1

[From the Boston Globe, Nov. 25, 2003]

US Releases 20 Detainees, Transfers 20 More to Cuba

(By Charlie Savage)

Washington.--The U.S. military sent home 20 ``enemy

combatants'' last weekend who were being held without trial

at Guantanamo Bay naval base in Cuba--only to replace them

with the same number of new prisoners.

The prisoner transfer, the first such movement since mid-

July, followed a determination by senior military and

intelligence officials that the outgoing group ``either no

longer posed a threat to U.S. security or no longer required

detention by the United States,'' according to a statement

the Department of Defense released yesterday.

``We can't talk about any of the individuals that may have

departed the island due to security concerns,'' said

Lieutenant Colonel Pamela Hart, a spokeswoman for the

isolated facility at which the United States detains and

interrogates suspected terrorists.

But a high-ranking Pakistani official, who said yesterday

that at least five of the outgoing transferees were Pakistani

citizens, offered a chilly reaction to the Pentagon's news.

``The government is happy, but this is too damn late,''

said Imran Ali, second secretary of the Pakistan Embassy,

adding that 21 Pakistanis have been released from Guantanamo,

but another 37 are still there.

``Their lives have been destroyed. Their families have gone

through psychological trauma, since they were not terrorists;

they were just low-level Taliban fighters.''

The Pakistani official's reaction illustrated the pressure

on the United States to resolve the situation--especially

from allies in the war on terrorism who have expressed

concern for their citizens who are among the 660 prisoners

from 42 countries being held at the base.

Although the State Department has been negotiating with a

number of countries to continue the detention of some, all

those transferred last weekend will be released by their

countries, U.S. officials said.

The Pentagon statement said that ``at the time of their

detention, these enemy combatants posed a threat to U.S.

security.'' It offered little information about the new

arrivals, except that they were transferred from U.S. Central

Command in the Middle East.

Navy Lieutenant Commander Barbara Burfeind, a Pentagon

spokeswoman, said none of the new detainees were captured in

Iraq.

The weekend transfers of the detainees bring to 88 the

number of Al Qaeda or Taliban suspects who have been

transferred out. Of those, 84 were released and four were

handed over to Saudi Arabia.

Ruth Wedgwood, an international law professor at Johns

Hopkins University, said the arrival of the 20 new detainees

follows a flare-up of fighting by Taliban insurgents in

Afghanistan.

Wedgwood has defended the Bush administration's position

that the rules of the Geneva Conventions do not apply to the

detainees because they were not soldiers of a regular Afghan

army.

``Dismayingly, the Taliban have become very active again in

the southern area, so really . . . the war isn't over in that

area,'' she said.

Not among those who were transferred for release, according

to a senior Pentagon official, were the three ``juvenile

enemy combatants''--Afghans ages 13 to 15 who were captured

fighting alongside the Taliban and whose detention at the

prison has attracted particularly intense international

criticism. The commander of Guantanamo operations, Major

General Geoffrey Miller, had recommended that they be sent

home in August.

U.S. officials say they have been coordinating with UNICEF

in the event that the young fighters are released. UNICEF, a

United Nations agency that has offered to handle the juvenile

combatants, runs a program to ease the reintegration of

former child soldiers back into their home societies.

``The State Department and UNICEF will make sure that if

they're returned to Afghanistan, they won't just be plopped

down,'' a Pentagon official told The Boston Globe last week.

Ken Hurwitz of the Lawyers Committee for Human Rights, a

New York-based organization, said that the surprise release

reflected the military's ``improvisational'' policy decisions

and its arbitrary power over the prisoners at the base.

``It's the rule of law that's the point,'' he said.

``They're saying, `Trust us, and we'll do the right thing.'

But there is no right thing unless it's pursuant to some kind

of ordered, lawful proceeding.''

Challenges to the detentions that have been filed in

federal court have so far been dismissed because the base is

located on Cuban soil--it has been leased and controlled by

the United States for a century--and outside the jurisdiction

of U.S. sovereignty. Two weeks ago, the Supreme Court said it

would review the question of whether federal court

jurisdiction may extend there.

In a related development, the lawyer for Army Captain James

``Yousef'' Yee, the former Muslim chaplain at Guantanamo who

was arrested in September in the alleged mishandling of

classified material, sent a letter to President Bush

yesterday asking that his client be released from pretrial

detention for Thanksgiving and his daughter's birthday.

``These charges do not warrant pretrial confinement of any

kind,'' Eugene Fidell wrote in the letter. ``While military

sources initially reported a wild laundry list of suspected

offenses, such as spying or aiding the enemy, these have now

been reduced to two relatively minor [charges]. . . .

Nonetheless, he is being treated as if the original laundry

list of charges was the legal basis for his confinement. This

is totally wrong and unfair.''

Sean McCormack, a spokesman for the National Security

Council, said he would look into the letter, but had no

comment on the president's behalf.

Mr. President, I rise today to introduce legislation with Senators Domenici, Murray, Jeffords, Cantwell, Akaka, Reed, Chafee, and Inouye entitled the ``Children's Health Equity Technical Amendments Act of 2003.''

Since the passage of the Children's Health Insurance Program, or CHIP, in 1997, a group of States that expanded coverage to children in Medicaid prior to the enactment of CHIP have been unfairly penalized for that expansion. States are not allowed to use the enhanced matching rate available to other States for children at similar levels of poverty under the act. As a result, a child in the States of New York, Florida, and Pennsylvania, because they were grandfathered in the original act or in Iowa, Montana, or a number of other States at 134 percent of poverty is eligible for an enhanced matching rate in CHIP but that has not been the case for States such as New Mexico, Vermont, Washington, Rhode Island, Hawaii, and a number of others, including Connecticut, Tennessee, Minnesota, New Hampshire, Wisconsin, and Maryland.

As the health policy statement by the National Governors' Association reads, ``The Governors believe that it is critical that innovative states not be penalized for having expanded coverage to children before the enactment of S-CHIP, which provides enhanced funding to meet these goals. To this end, the Governors support providing additional funding flexibility to states that had already significantly expanded coverage of the majority of uninsured children in their states.

For six years, our group of States have sought to have this inequity addressed. Early this year, I introduced the ``Children's Health Equity of 2003'' with Senators Jeffords, Murray, Leahy, and Ms. Cantwell and we worked successfully to get a compromise worked out for inclusion in S. 312 by Senators Rockefeller, and Chafee. This compromise extended expiring CHIP allotments only for fiscal years 1998 through 2001 in order to meet budgetary caps.

The compromise allowed States to be able to use up to 20 percent of our State's CHIP allotments to pay for Medicaid eligible children about 150 percent of poverty that were part of our State's expansions prior to the enactment of CHIP. That language was maintained in conference and included in H.R. 2854 that was signed by the President as Public Law 108-74. Unfortunately, a slight change was made in the conference language that excluded New Mexico and Hawaii, Maryland, and Rhode Island needed specific changes so an additional bill was passed, H.R. 3288, and signed into law as Public Law 108-107, on November 17, 2003. This second bill included language from legislation that I introduced with Senator Domenici, S. 1547, to address the problem caused to New Mexico by the conference committee's change.

Unfortunately, one major problem with the compromise was that it would allow the 10 States flexibility with its CHIP funds for allotments between 1998 and 2001 and not in the future. Therefore, the inequity continues with CHIP allotments last year, this year, and into the future. This legislation would address that problem and ensure that all future allotments give these 11 States the flexibility to use up to 20 percent of our CHIP allotments to pay for health care services of children above 150 percent of poverty in our respective state Medicaid programs.

This rather technical issue has real and negative consequences in States such as New Mexico. In fact, due to the CHIP inequity, New Mexico has been allocated $266 million from CHIP between fiscal years 1998 and 2002, and yet, has only been able to spend slightly over $26 million as of the end of last fiscal year. In other words, New Mexico has been allowed to spend less than 10 percent of its federal CHIP allocations.

With the passage of H.R. 2854 and H.R. 3288, that situations will improve somewhat. Unfortunately, the change was not made permanent and does not apply to future CHIP allotments. This legislation would correct this problem.

It is important to note that this initiative includes strong maintenance of effort language as well as incentives for our State to conduct outreach and

enrollment efforts and program simplification to find and enroll uninsured kids because we feel strongly that they must receive the health coverage for which they are eligible.

The bill does not take money from other States's CHIP allotments. It simple allows our States to spend our States' specific CHIP allotments from the Federal government on our uninsured children--just as other States across the country are doing.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise today to introduce the ``Small Manufacturers Assistance, and Trade (SMART) Act,'' which responds to the needs of America's small manufacturers. This bill offers a new emphasis on programs and services within the Federal Government that will provide small companies a better opportunity to survive in these challenging times and compete in our global economy. The SMART Act introduces new resources, improves existing programs, and expands those programs that work to serve a larger constituency. It is critical that we revitalize our country's manufacturing base and establish an environment for economic growth and job creation.

Small manufacturers constitute over 98 percent of our Nation's manufacturing enterprises, employ 12 million people, and supply more than 50 percent of the value-added U.S. production. It is a sector we cannot afford to ignore. In addition, no industry has witnessed a more profound erosion of jobs.

The damage manufacturing has sustained is nothing short of alarming. Since July 2000, almost 2.8 million U.S. manufacturing jobs have been eliminated. New England alone lost more than 214,000 jobs between June 1993 through June 2003, with 78 percent of those losses, 166,000 jobs, occurring since January of 2001.

In my home State of Maine, we've been shedding jobs at a startling rate over the past decade--and even more so in the past 2 years. Between July 2000 and June 2003 an astounding 17,300 manufacturing jobs were lost.

The bottom line is that we must bolster our manufacturing industry, especially with the current 6.0 percent unemployment rate in the United States. To ensure that the road to recovery is robust, we have a special obligation to provide the investment to allow small companies to grow. In fact, it has been reported that for every dollar of final manufacturing output, an additional $1.26 is created in other industry sectors such as suppliers of raw materials, marketing, and retail industries.

Looking even more broadly, a healthy manufacturing base is essential to the preservation of our Nation's security and its status as a world power. We must end the trend of becoming increasingly dependent upon other countries for the products we use and rely upon. Now is the crucial time for everyone--industry representatives, Congress, the President, Republicans and Democrats alike--to work together toward the common goal of revitalizing this industry.

As the Chair of the Committee on Small Business, I have been focusing considerable attention on the concerns of small business manufacturers and efforts to aid in their recovery. Last month, I held a field hearing on this critical subject in Lewiston, ME. I invited Grant Aldonas, Under Secretary for International Trade of the Commerce Department, and Pamela Olson, Assistant Secretary for Tax Policy of the Treasury Department, to participate and explored with them ways to strengthen and expand this vital industry. Their testimony and comments confirmed that we cannot delay and must act quickly to support our small manufacturing base.

Additionally, I heard from a number of small businesses in the manufacturing industry. Their testimony confirmed the damage sustained by our country's manufacturing sector, and the sense of urgency that we need to act immediately to assist them. The SMART Act is a vital first step toward helping them do what they do best--create jobs.

The bill I introduce today starts by establishing a strong and influential voice for manufacturers within the Federal Government through the creation of an Assistant Secretary for Manufacturing within the U.S. Department of Commerce. The new Assistant Secretary will be responsible for identifying and addressing the concerns of small manufacturers at the highest level of our Federal Government. Senator Voinovich has introduced S. 1326, which similarly creates an Assistant Secretary for Manufacturing. I support that bill and Senator Voinovich's efforts to assisting our country's manufacturers.

To ensure that the government acts on the needs of manufacturers, the SMART Act creates an Interagency Manufacturing Task Force (IMTF). The mission of the IMTF will be to encourage the Federal departments and agencies to coordinate their efforts by identifying and addressing manufacturing concerns collectively. The IMTF will

be chaired by the Commerce Department's new Assistant Secretary for Manufacturing and will be comprised of representatives from the Federal departments and agencies that directly affect this sector of our economy. In addition, the IMTF will be tasked with the duty of submitting an annual report on their findings and recommendations to the President and the Senate and House Small Business Committees.

In conjunction with this government-wide task force, the SMART Act also continues to improve the Federal infrastructure supporting the industry by establishing a Small Business Manufacturing Task Force (SBMTF) within the Small Business Administration (SBA). The SBA has a wide spectrum of programs and services available to small manufacturers. The mission of the new SBMTF will be to refocus the agency's programs and services to ensure that they respond to the particular needs of small manufacturers while still serving all aspects of the small business community.

Adding to the information gained from the Committee's hearing, we have reviewed the SBA's programs and services that are geared specifically toward manufacturing and international trade. I was alarmed to learn, during this hearing, that small manufacturers were unfamiliar with the SBA programs that can assist them. These findings revealed that the SBA needs to realign its efforts specifically to include manufacturers in the delivery of the agency's program and services.

In order to improve existing SBA small business development programs, the agency needs to take its services beyond the traditional small business enterprise. The SMART Act improves the SBA's entrepreneurial development programs and services so that small manufacturers can grow their business operation, expand their facilities, and purchase new equipment--all of which will result in creating jobs throughout the industry and its supply chain.

Partnerships developed between SBA related organizations and non-SBA related entities will be an additional asset for these producers. The SMART Act directs the SBA to develop partnerships with the Manufacturing Extension Partnership (MEP), community economic development organizations, and the agency's resource partners--such as Small Business Development Centers and SCORE--to create new outreach and training programs for small manufacturers and small businesses in the manufacturing supply chain.

The SMART Act requires SCORE, with its long established expertise in counseling, to extend its reach to small manufacturers and exporters through its online counseling services and its community based offices. The Act also directs SCORE to recruit more counselors with manufacturing and international trade expertise and increase its partnerships with manufacturing and exporting related organizations, which will help increase the marketing capabilities of these small producers and exporters.

I have also learned that small and medium sized companies are often hesitant to engage in the export of their product as a way to grow their small business, because they are often fearful of the many unfamiliar intricacies involved in doing business in a foreign market. Small businesses currently account for almost $300 billion of yearly export sales--nearly one-third of total U.S. exports. However, according to an Administration survey through the SBA's Export Trade Assistance Partnership, approximately 30 percent of non-exporting small businesses are interested in exporting their products and services. These businesses hold the potential to be a major source for even more economic activity and job growth.

The SBA is a pivotal resource in delivering financial and business development tools to businesses seeking to export. The SMART Act improves the SBA's international trade and exporting programs to assist small businesses and manufacturers expand into the export market and play an even greater role in the balance of U.S. trade.

The SMART Act also requires the SBA to establish annual goals that are linked to its trade promotion activities, and to develop programs that will help small businesses compete against imports. This objective will be more easily obtained by incrementally increasing the number of SBA representatives at the U.S. Export Assistance Centers (USEACs) over the next 3 years. To ensure that all States have the same services available, the SBA Office of International Trade will have at least one financial specialist dedicated to the international loan programs and providing oversight of trade financing issues.

The SBA's financing programs have helped American small businesses create and retain jobs, even as other sources of financing have become more scarce. This bill provides improvements to the SBA's 7(a), 504, and Surety Bond programs.

From Fiscal Year 1999 through Fiscal Year 2002, the 7(a) loan program helped small businesses create more than 1.3 million new jobs by making $37.7 billion in financing available to more than 182,000 small businesses. This bill increases the maximum size of 7(a) loans for small exporters from $2 million to $2.6 million by increasing the maximum amount guaranteed by the SBA from $1 million to $1.3 million.

During that same period, the 504 loan program provided more than 20,000 new loans to small businesses, allowing those businesses to create or retain almost 450,000 jobs. The SMART Act increases 504 loan sizes in two ways. First, the bill increases the maximum loan size for manufacturing projects by increasing the SBA's maximum guarantee, which is 40 percent of the total loan size, from $1 million to $4 million. Second, for loans to exporters, the bill increases the maximum loan size from $3.25 million to $5 million by increasing the SBA's maximum guarantee from $1.3 million to $2 million.

Finally, the bill clarifies that under the SBA's Surety Bond Guarantee Program, the SBA may guarantee bonds for specific contracts of $2 million or less, even if the total range of affiliated contracts may exceed $2 million.

These SBA financing programs have helped to create millions of jobs in America, and manufacturers and exporters have been an important part of that success. This bill will increase small companies' and exporters' ability to obtain vital capital that will help them compete in a very difficult international environment and enable them to create more jobs for American workers.

I am drawing these provisions from another bill I have authored, the Small Business Administration 50th Anniversary Reauthorization Act of 203 (S. 1375), which the Committee and the Senate unanimously approved earlier this year. While we are waiting for the House of Representatives to pass an SBA reauthorization bill, I believe that given the importance of these financing provisions, they must be included in this bill as well to increase their chance of being signed into law.

Because Federal assistance for small manufacturers should extend beyond the SBA, the SMART Act will also establish a new Assistant United States Trade Representatives for Small Business within the Office of the United States Trade Representatives (USTR). This office will be tasked with focusing on small businesses', including small manufacturers, concerns in trade negotiations and promoting their exports.

There are currently 21 Assistant USTRs covering issues from services to telecommunications to labor. While small businesses face many of the same issues that serve as barriers to trade as many of the largest multinational corporations, they do not have the same resources to overcome these barriers, thus blocking them from reaping the benefits of international trade. In particular, small businesses do not have the resources necessary to settle private trade disputes in a timely and cost effective fashion, meet physical presence requirements in other countries, conform to complex customs procedures, or meet off-set exclusions in government procurement. By establishing a new Assistant U.S. Trade Representative, we will ensure that the views and concerns of small businesses will have an appropriate seat at the negotiating table and help secure the competitiveness of our small exporters abroad.

The Small Manufacturers Assistance, Recovery, and Trade Act answers the call for help that I have heard too often of late from small manufacturers in this country. These improvements to existing resources within the Federal

government will give these companies a better opportunity to survive in these challenging times and compete in the global economy.

This bill is a critical starting point to revitalize our country's manufacturing base and create an environment that allows them to grow and create jobs again. We must help these businesses access the global marketplace through expanded exporting opportunities and assistance. I intend to work with all groups and interested parties that are committed to improving and passing this bill. There are still many needs that face our Nation's manufacturers--and this is just the beginning.

I look forward to working with my colleagues in the Senate to ensure that the provisions of this bill are enacted so that these companies can continue to grow and reach their full potential.

Mr. President, I ask unanimous consent that the text of the bill and a section-by-section analysis be printed in the Record.

Mr. President, as the world's largest economy, I believe the United States must have the fairest, most transparent and efficient financial markets in the world. Our financial services companies must live up to the highest standards of accountability. This is critical to ensure that the United States remains strong, competitive and safe in the global economy. Unfortunately, recent reports of late trading and market timing have brought into question whether mutual fund companies have lived up to the highest standards of accountability. They have also shown that the Bush Administration failed to provide effective oversight and examination of mutual fund companies, while poorly enforcing our securities laws. The inaction of the Bush Administration has dangerously eroded the trust and confidence of the American people in mutual funds and may have allowed mutual fund companies and big investors to engage in fraudulent behavior against individuals and pension funds.

New York and Massachusetts regulators have uncovered a scheme in which some of America's top mutual fund companies let big investors profit illegally at the expense of small investors with so-called ``late trades'' and ``market timing.'' The scam appears to be widespread. Today, roughly half of all American households own mutual funds either directly or through a retirement account or pension fund. It's been reported that as much as one quarter of mutual fund companies may be involved in late trading and market timing and that such schemes may cost investors as much as $5 billion annually.

In a late trade, big investors purchase mutual fund shares after the close of the market but at the closing price, allowing them to take advantage of late-breaking financial news. A mutual fund manager might allow a big investor to buy shares in a technology fund at the 4 p.m. close price after learning at 5 p.m. that a major technology company has reported unexpectedly strong earnings. The investor is almost guaranteed a profit when the market opens the following day and share prices climb. In return for this illegal access, the big investor might pledge to continue to invest in the fund.

Market timing exploits the unique way that mutual funds set their prices. While it is not illegal, most mutual fund companies assure investors that they discourage such practices and that they are working to prevent fund timing. Under a market timing trade, big investors trade in and out of certain mutual funds in order to exploit the inefficient way mutual funds price their shares and ensure a profit.

In 2002, individuals who invested in mutual funds paid approximately $70 billion in advisory and management

fees, an average of more than $700 per investor. There is a significant disparity between the rate of advisory fees charged to mutual fund investors and the rate paid by institutional investors, even though they provide the similar services. Currently, mutual fund managers are under no obligation to negotiate advisory and management fees that are in the best interest of their shareholders. In some instances, mutual fund managers has a financial relationship with the contractor which receives a no-bid contract from the same mutual fund.

In a September 2003 complaint, New York Attorney General Spitzer alleged that Canary Capital Partners, a New Jersey hedge fund, engaged in illegal and unethical trading in mutual funds, such as late trading and market timing. After the New York State complaint, the SEC ordered a preliminary investigation, which found that half of the 88 mutual fund companies and brokerage firms had arrangements to make market- timing trades. These arrangements occurred even though about half of the fund companies have policies specifically barring market timing. Other investigations of mutual fund companies have begun, and it appears as though many mutual fund companies have been involved directly or indirectly in late trading and market-timing schemes.

I am very concerned that the actions of the SEC in response to the State investigations of late trading and market timing have been inadequate and show a bias in favor of mutual fund companies at the expense of small investors.

For example, earlier this year the SEC conducted a four-month investigation of Putnam Investments' record keeping, internal controls, and ability to comply with Federal securities laws. During that review, a Putnam employee informed the SEC that the company had failed to stop improper market-timing trades. Despite the tip, SEC examiners did not identify any problems with market timing in its report on Putnam. The Putnam employee, after being rejected by the SEC, brought the same information to the Massachusetts Secretary of State's office, which began an investigation. Only after the Commonwealth of Massachusetts began an investigation did the SEC begin its own investigation of market timing at Putnam. In October, both the Commonwealth of Massachusetts and the SEC charged Putnam with securities fraud, only months after the SEC gave Putnam a clean bill of health. Only a few weeks later, Putnam reached a partial settlement of the securities fraud charges with the SEC which did not include the Commonwealth of Massachusetts. Under the settlement, Putnam agrees to make restitution only for losses to investors attributable to excessive short-term and market-timing trading by its employees and to make structural reforms. Under the agreement, Putnam neither admitted nor denied wrongdoing and the SEC still has not investigated whether outside investors were engaged in market-timing activities. New York Attorney General Eliot Spitzer said that Putnam's agreement with the SEC does not address crucial issues involving restitution to fund holders, fees and penalties. William Galvin, the Massachusetts Secretary of State said that the agreement clearly demonstrates that the SEC is more interested in protecting the mutual fund industry than the average investor.

These actions by the SEC highlight a fundamental problem in the Bush Administration's hands-off approach to regulating financial markets and the danger it poses to small investors and the national economy.

Compounding this danger and lack of responsible leadership, President Bush has repeatedly nominated individuals to important economic positions notable for their corporate sympathies. The President selected a lobbyist for financial deregulation as the chief regulator of the federal mortgage lender Freddie Mac. His first SEC chairman was an accounting industry who was forced to resign in a storm of public outrage over his lenient treatment of his former business.

Even after the accounting scandals that felled Enron and WorldCom, it was last year's Democratic Senate that pushed to enact an historic corporate reform law and the President who joined the effort only once its passage was all but ensured. It was state attorneys general who exposed dubious conflicts of interest at brokerage houses. And when energy companies gauged ratepayers in the West through questionable trades, the Administration sat on its hands for months.

The message from the White House to the regulatory agencies, in actions if not words, is don't ask and don't tell when it comes to protecting investors and consumers.

Justice demands that we fully prosecute Wall Street insiders that steal from Americans saving for retirement, education or simply a brighter future. And we can only hope to revive our economy if we restore investor confidence in the markets so that capital flows to business growth and job creation.

To stop the erosion of trust in our financial markets and to help restore the American investor's faith in the mutual fund industry, I am introducing the Mutual Fund Investor Protection Act to update federal securities laws to curb late-trading and market-timing abuses and institute new limits on mutual fund fees paid by investors.

The actions by the SEC show that it is incapable of protecting investors from securities fraud by mutual fund companies and will not prosecute this type of fraud to the full extent of the law. Therefore, we must take the day-to-day oversight of mutual funds away from the SEC and develop a new Mutual Fund Oversight Board to provide oversight, examination and enforcement of mutual funds. This new board will be similar to the Public Company Accounting Oversight Board developed in the Sarbanes-Oxley Act. It will be charged with identifying potential problems in the mutual fund industry and ensuring that fund boards are actively addressing these problems--before they spread. It would promulgate guidance regarding current regulatory issues and best practices regarding how to deal with them, and it would examine mutual funds to ensure that they are taking necessary steps to protect shareholders. The Board itself would determine how to provide an adequate and reliable source of funding for its investigations.

I believe that every investor has the right to know how much their mutual fund takes away from their investment to pay for advisory, management, and investment service fees. Under this legislation, each investor will receive in their statement a regular accounting as to what types of fees they are paying to invest in their mutual fund. This will help investors shop around and find the mutual funds that have the lowest fees. Mutual funds will have to respond to the changing marketplace and only charge fees that are absolutely necessary to the management of the fund. Also, this legislation requires mutual fund managers to negotiate fee contracts that are reasonable and in their investors' best interest and to report on any significant or material business or professional relationship with companies that the mutual fund provides contracts. Finally, the bill requires each mutual fund to hire a compliance officer to ensure that the mutual fund complies with all relevant laws and makes sure that they provide any information on scams to the independent mutual fund directors to stop abuse. Taken together, these provisions will help investors by making it much more difficult for mutual funds to charge unreasonable and unnecessary fees.

Today, mutual funds are valued once a day, called the Net Asset Value or NAV, usually at 4 p.m. EST, when the New York market closes. The bill will require that all mutual fund companies receive an order prior to the time the fund sets a share price or NAV for an investor to receive that day's price. This will make it much more difficult for big investors to use brokers to send in trades after the 4 p.m. deadline.

We should include late-trading laws as an offense under the Racketeer Influenced and Corrupt Organization (RICO) provisions of the criminal code. First used to prosecute the Mob, RICO should now be used to stop and punish organized crime on Wall Street. This will help limit mutual fund employees and big investors from attempting to defraud small investors. It will also help investors who lose money due to late- trading schemes to recover treble damages, costs and attorneys' fees.

The SEC recently found that many mutual fund companies and brokerage

firms had arrangements with big investors allowing them to make market- timing trades even though these fund companies have policies specifically barring market timing. My legislation bars mutual fund employees from engaging in market timing trades. It requires each mutual fund prospectus to explicitly disclose market-timing policies and procedures to stop abuse. Then, it increases penalties for mutual funds which do not follow their own policies and procedures to limit abuse.

In order to help stop mutual fund abuse, this legislation increases the penalties and jail time for current securities laws including: defrauding the offer or sale of securities, failing to keep current and appropriate records of brokerage transactions, and not selling or redeeming fund shares at a price based on current Net Asset Value (NAV). These changes will make criminals think twice before committing violations of securities laws. The proceeds of the additional fines collected by this legislation will be put into a fund to assist the victims of their crimes.

Today, individual mutual funds are effectively dominated by their advisers. My legislation strengthens the influence of independent directors on fund boards by requiring that independent directors comprise at least three-quarters of the board. It will also require mutual funds to have an independent chairman with the authority and ability to demand and receive all information from the fund advisory and management companies. This will increase the voice investors have in fund management and limit mutual fund abuses.

By developing a new structure to provide appropriate oversight and enforcement mechanisms to fight abuse in the mutual fund industry, this legislation restores the confidence of investors in mutual funds. Ultimately, investor confidence will increase investment and enhance economic growth. I ask all my colleagues to support this legislation.

Mr. President, I rise today to join Senators Hollings, Collins, Specter, Jeffords and Lautenberg in introducing ``ARRIVE 21,'' the American Railroad Revitalization, Investment, and Enhancement Act of the 21st Century. ARRIVE 21 is a comprehensive proposal that creates a new public/private partnership to fund rail infrastructure development, reauthorizes and improves Amtrak, and enhances Federal and State rail policy and planning efforts.

As our Nation faces a mobility crisis of staggering proportions, with freight movements expected to double and our highways and airways already overburdened with congestion, ARRIVE 21 will give our States a new and powerful tool to unlock the potential of intercity passenger rail, bringing high-speed rail to viable corridors across the country while providing capital funding for freight rail projects that deliver public benefits. Today's passenger and freight railroads are already essential components of our surface transportation system and I believe that greater use of rail offers one of the best opportunities to augment the capacity of our existing transportation network, while benefiting the environment and reducing our dependency on foreign oil.

Historically, railroads have been built, maintained and operated outside of the publicly funded programs that finance our other transportation modes, relying almost exclusively on the private sector to fund their infrastructure. However, today's railroads face restricted access to capital and capacity constraints that limit service quality and expansion, all the while facing ever-growing modal competition financed by federally funded trust funds. If rail is to remain viable or increase its share of the intercity passenger and freight markets--necessary developments if we are to reach other transportation and public policy goals including highway infrastructure preservation, highway and air congestion relief, energy efficiency, environmental stewardship and smart growth development--then the pubic sector, through arm's length voluntary partnerships with private railroads, must play a more active role in financing the development of freight and passenger rail infrastructure, as it has with all other modes.

Today, America's freight railroads carry 16 percent of the nation's freight by tonnage and intercity passenger rail carriers roughly 23 million passenger annually. But, the ability of our passenger and freight rail systems to generate the sufficient investment capital needed to maintain this market share, or expand it to handle the expected increases in passenger and freight traffic over the next 20 years, is limited or in jeopardy. According to the America Association of State Highway and Transportation Officials' (ASSHTO) ``Freight Rail Bottom Line Report,'' the nation's freight railroads will need an additional $2.65 billion of public sector annual capital investment over the next 20 years above and beyond what they can finance themselves just to maintain their current share of the freight tonnage.

Without this additional investment, freight traffic is likely to shift from rail to our highways, resulting in an additional 450 million tons of freight and 15 billion truck VMT (Vehicle Miles Traveled) on our roads and $162 billion in increased shipper costs, $238 billion in increased highway user costs, and approximately $20 billion in direct additional highway infrastructure costs. Alternatively, ASSHTO has concluded that with a public investment of $4 billion annually in freight rail infrastructure over the next 20 years, freight rail's tonnage share would increase 1 percentage point to 17 percent. This shift would thereby relieve our highways of an estimated 600 million tons of freight traffic and 25 billion VMT, while saving shippers $239 billion and highways users $397 billion, and reducing direct highway infrastructure costs by $17 billion.

For intercity passenger rail, ASSHTO similarly concludes that roughly $3 billion in annual public sector investment over the next 20 years is needed to expand intercity passenger rail services and advance the many viable high speed rail corridors that could reduce highway and aviation congestion. The Texas Transportation Institute's ``2003 Urban Mobility Report,'' which looks at transportation mobility in 75 cities of varying sizes, concludes that the average annual transportation delay time per person climbed from ``16 hours in 1982 to 60 hours in 2001'' due to the congestion of our surface system.

High-quality and high-speed intercity passenger service, especially in intercity corridors of 500 miles or less where rail can offer competitive trip times, offers a tremendous opportunity to relieve such congestion by shifting travelers who current drive and fly onto trains. Today, roughly 80 percent off all trips of more than 100 miles are less than 500 miles in length. Successful rail corridors in California, the Pacific Northwest, and in the Northeast have shown that rail can be viable option for travelers in such markets, capturing significant market share and in same cases becoming the dominate mode when frequent and high-quality service

is offered. Where intercity passenger rail is successful, congestion in our airports and on our highways is reduced, smart development is induced, jobs are created and citizens' safety and quality of life are improved.

Theses facts lead to the obvious conclusion that leveraging modest public investment in our rail system will reap benefits to our entire surface transportation system and to our Nation as a whole. In my State of Delaware, we have clearly seen the value that high-quality passenger and freight rail service brings and we have made significant investments to upgrade both Amtrak facilities and infrastructure and enhance freight capacity for the railroads that serve Delaware industries. But despite of all the good reasons to invest in our railroad infrastructure, Delaware and other States are limited in what they can do on there own without the benefit of the financing partnership that our Federal Government provides the State for all other transportation investments. ARRIVE 21 is designed to change that.

ARRIVE 21 will empower our States to make rational investments in our rail system when such investments provide significant pubic benefits. Through the creation of the Rail Infrastructure Finance Corporation (RIFCO) a non-profit, non-Federal, congressionally-chartered corporation that can issue $30 billion in tax-credit bonds over 6 years, States will have a new partner to assist them in undertaking rail capital projects. RIFCO will award, using a portion of the proceeds from the bond issuance, discretionary capital matching grants to States and Amtrak for high-speed rail and intercity passenger rail projects and State formula matching grants for freight capital projects. Prior to issuing grants, a portion of the bond proceeds will be deposited in a secure and continually monitored repayment fund managed by the RIFCO investment trust to retire the debt over the life of the bonds.

Passenger and freight rail projects eligible for funding through RIFCO include planning and environmental review, rail line rehabilitation, upgrades and development, safety and security projects, passenger equipment acquisition, station improvements, and intermodal facilities development. In order to receive grants, States must prepare a State rail plan and provide a 20 percent non-Federal match to RIFCO, thereby replicating the cost sharing relationship our States currently have for investments in other modes.

ARRIVE 21 will promote jobs and economic growth through the rehabilitation and expansion of rail infrastructure, the manufacture and procurement of new rail equipment and the enhancement of mobility and development in and around or cities and towns. Our bill provides a total $42 billion investment in U.S. rail infrastructure and service to expand high-speed passenger rail in congested corridors, strengthen Amtrak, and improve freight mobility. Such investment will revitalize the U.S. rail supply industry and create thousands of jobs. According to U.S. Transportation Secretary Mineta, every $1 billion invested in transportation infrastructure creates roughly 47,500 jobs. That means ARRIVE 21 stands to create roughly 2 million jobs, if enacted.

ARRIVE 21 reauthorizes and reforms Amtrak. Designed to improve upon Amtrak's current congressional and State funding processes, our bill authorizes approximately $1.5 billion annually for 6 years to Amtrak for the basic capital and operating needs required to run and maintain the current system. In addition to these funds, the States and Amtrak can pursue major capital improvements and equipment acquisition through RIFCO, with reductions in Amtrak's capital authorizations for projects funded through RIFCO capital grants. Through this process, the amount needed for annual Amtrak appropriation for capital will be reduced over the life of the reauthorization, as RIFCO begins to finance a growing share of Amtrak's capital needs. As is the case today, operating costs on long distance trains will be covered by Amtrak's annual appropriation, while States will share the costs with Amtrak for operations of short distance corridors.

For such shot distance corridors, ARRIVE 21 infuse fairness into the current system by requiring parity between Amtrak and all States for cost sharing, putting an end to disparate treatment among the States that contract with Amtrak to provide corridor service. Furthermore, it authorizes a study of new methodologies to determine Amtrak routes and services while defining the national passenger rail system based on existing service and high-speed rail corridors. ARRIVE 21 also requires a whole host of new reforms including accounting transparency measures, the establishment of a quarterly grant process for Amtrak through the U.S. Department of Transportation to ensure accountability, and the creation of new service metrics that will improve the monitoring and quantification of Amtrak service performance and quality.

ARRIVE 21 helps to coordinate rail-planning efforts across the U.S. at the national and State level and increases the Federal Railroad Administration's advocacy role in promoting a safe, secure, efficient, environmentally sound rail transportation system nationwide. The bill directs the Federal Government to develop a national rail plan in coordination with State rail plans and creates a rail cooperative research program through the National Academies of Sciences. It also authorizes additional funds for planning of high-speed rail projects through the U.S. Secretary of Transportation and addresses rail safety needs by authorizing funding for emergency passenger safety improvement projects. In light of the security risks facing our railroads, ARRIVE 21 authorizes $515 million in 2004 for rail security threat assessments and grants through the Department of Homeland Security.

In total, ARRIVE 21 provides the needed funding for the more than $5 billion annual shortfall in U.S. rail infrastructure investment cited by AASHTO Bottom Line Report without involving the Highway Trust Fund or sapping funds away from other important transportation priorities. This bill will provide our States and the Nation with a fiscally responsible and innovative opportunity to enhance our entire transportation system. We owe it to the American people to support this bill and move towards the type of high-quality, high-speed intercity passenger rail service that Americans desire and deserve, while meeting the ever-growing demands that trade and our economy are placing on our freight system. I ask my colleagues to join me in supporting ARRIVE 21.

Mr. President, I rise today to address an issue of importance to all Americans, the quality and safety of health care in the United States.

Numerous studies have identified serious shortcomings in the quality and safety of health care. However, addressing these shortcomings and improving health care outcomes in a complex health care system requires long-range strategies and specific goals.

The Medicare program, as one of the largest purchasers of health care, is ideally situated to take a leadership role in encouraging quality improvement. Currently, however, Medicare's payment methods and regulations provide few incentives to pursue innovative quality improvement strategies and to reward those who achieve exemplary performance.

Traditional Medicare pays most physicians according to a fee schedule and pays hospitals according to a DRG-based payment system. Medicare+Choice plans are paid a capitated rate and, in turn, pay physicians using a range of approaches, from salary to capitation to fee-for-service, none of which directly reward enhanced quality.

Attempts to adjust Medicare payments to reward performance improvements in safety and quality have been hampered, in part, by the lack of measures and data for assessing performance. Although the Centers for Medicare and Medicaid Services recently began an initiative to develop voluntary consensus performance measures for 10 clinical conditions for hospitals, standardized measures of quality for hospitals and providers do not otherwise exist.

As the Senate considers a new Medicare prescription drug benefit and additional measures to reform the Medicare program, it is more important than ever that we consider also measures to ensure that these new benefits are provided as safely and effectively as possible.

That is why I am today introducing a bill charging the Institute of Medicine with performing a study to evaluate leading health care performance measures and options to implement policies that align performance with payment in Medicare.

We have learned much about health care quality in the last several years. The Institute of Medicine, in its studies entitled ``To Err Is Human,'' and ``Crossing the Quality Chasm,'' has identified the health care safety and quality shortcomings that exist and the need for improvement. In a recent study performed at the request of Congress, ``Leadership by Example,'' the Institute of Medicine identified the leadership role that Government can take in improving health care quality in government sponsored health care programs and those in the private sector.

The bill that I am introducing today, and the study that will result, represents the next step toward improving health care quality and safety in the United States. It is an important step and one that we must take in order to ensure that Medicare beneficiaries receive the highest quality health care services available. I urge my colleagues to join me in supporting this legislation.

Mr. President, there is no question that our need to improve the Medicare program by adding prescription drug coverage for beneficiaries is extremely important, as this debate indicates.

But, our discussions would not be complete if we neglected another major Medicare improvement which is also long overdue, and that is the need to improve the climate in which providers strive to provide high quality services to patients.

Medicare's anticipated regulations--three times longer than the U.S. tax code--prevent providers from delivering health care efficiently and beneficiaries from receiving the care they need.

Complex Federal regulations and reams of paperwork require physicians to spend hours each day filling out government forms rather than caring for their patients. The array of Federal Medicare rules with which physicians must comply is overwhelming. Doctors are required to complete claims forms, advance beneficiary notices, certify medical necessity, file enrollment forms, and comply with code documentation guidelines. Indeed, these rules and mandates are not only extensive, they are constantly changing and they may be interpreted differently in different regions of the country.

The complexity of the rules and the variation in their interpretation has prompted outcries from all centers of our country. In fact, I have heard loud and clear from the physicians in my home State of Utah about the severity of the problem.

Leon Sorensen, Executive Vice President of the Utah Medical Association, recently wrote to me and said:

``The Utah Medical Association has long been concerned

about the unnecessary burdens placed upon physicians by the

voluminous regulations of Medicare. Not only does compliance

with these regulations take physicians' time away from

patients, but also the regulations contribute to the high

cost of medical care while contributing little of value. They

discourage physicians from participating fully in Medicare.

They are often punitive in nature rather than an educational.

They use tactics that would not be tolerated by businesses or

government if applied to them.

An example is the practice of extrapolating a small sample

of billing errors over the physician's entire practice,

making the physician liable for payback of thousands of

dollars of ``overpaid'' claims when demonstrated over

billings may amount only to a few dollars. If this process

were used by the IRS in a tax audit, the public outcry would

be deafening.

Medicare also requires that alleged ``overpayments'' to

physicians by repaid within 60 days, even if a physician

chooses to appeal Medicare's allegations. When assessed a

Medicare overpayment, the only way physicians can appeal is

to subject their practices to another audit, using a

``statistically valid random sample.'' Statistical sample

audits can shut down a physician's practice for days,

preventing physicians from treating patients. Physicians are

forced to settle with Medicare rather than be subjected to

such unfair scrutiny.

Any defense against this kind of administrative abuse is

extremely costly, time consuming and often ineffective.

Indeed, failure to follow Medicare's complex rules--or just the perception of such failure--can result in an audit of a physician's billing records, withholding of payments and crippling of a physician's practice.

And, physicians are not the only individuals affected by these rules. Medicare beneficiaries are affected--both directly and indirectly--by Medicare's onerous rules and burdensome paperwork. Both patients and providers are confused by obscure paperwork and apparently conflicting rules. Physicians have difficulty understanding how to bill for their services and beneficiaries find it difficult to understand the forms and billing information that they receive. Indeed, the administrative costs associated with managing this paperwork and the fear of harsh consequences in response to clerical errors has led some providers to consider whether they should continue to participate in the Medicare program.

The problem has not escaped the attention of the administration and addressing it is a priority for President Bush and it should be for Congress also. Secretary Thompson has said, ``Patients and providers alike are fed up with voluminous and complex paperwork. Rules are constantly changing. Complexity is overloading the system, criminalizing honest mistakes and driving doctors, nurses, and other health care professionals out of the program.''

Congress has considered legislation over the past few years to provide relief from this regulatory burden. Former Senator Frank Murkowski should be given great credit for drafting S. 452, the ``Medicare Education and Regulatory Fairness Act of 2001''--legislation that he introduced in the Senate on March 5, 2001 but which never came to a vote.

The legislation that I am introducing today, the ``Medicare Education Regulatory Reform and Contracting Improvement Act of 2003,'' MERCI, builds on that initiative. It will improve the Medicare program for beneficiaries and providers alike by clarifying regulations, rewarding quality and by enhancing services. I am introducing this legislation today because the need for Medicare regulatory reform remains. In fact, the need for Medicare regulatory reform has never been greater. In addition, the regulatory reform that I am proposing in MERCI fits hand in glove with the reforms that we have

proposed in S. 1, the ``Prescription Drug and Medicare Improvement Act of 2003.'' The reformed Medicare program must include reformed regulations if it is to provide efficient service to beneficiaries.

Let me take a moment to review a few of the important provisions in this bill. The educational provisions of the MERCI Act are designed to decrease Medicare billing and claims payment errors by improving education and training programs for Medicare providers. It includes also provisions that will improve communication between the Department of Health and Human Services and Medicare providers. Furthermore, the bill will improve communication with Medicare beneficiaries by providing for central toll-free telephone services to require free, appropriate referrals to individuals seeking information or assistance with Medicare.

The MERCI Act includes regulatory reform provisions that are designed to reduce waste, fraud and abuse in Medicare; provisions that are just and fair for beneficiaries, contractors, and providers. Among other things, the bill eliminates retroactive application of regulatory changes and expedites the appeals processes for beneficiaries, providers, and suppliers of Medicare services.

Finally, the MERCI Act will improve Medicare contracting; increasing competition, improving service and reducing costs by providing for a competitive bidding process for Medicare contractors that takes into account performance quality, price and other factors that are important to beneficiaries.

Medicare beneficiaries and Medicare providers have been suffering from burdensome and confusing regulations for too long. It is time that they received some mercy. The time for Medicare regulatory reform has come and the bill that I am introducing today provides that mercy. MERCI, the ``Medicare Education, Regulatory Reform and Contracting Improvement Act of 2003'' takes a common sense approach to providing relief for the Medicare beneficiaries and providers who have been suffering this burden for so long.

I believe that MERCI will improve the delivery of health care services to Medicare beneficiaries by enhancing the efficiency of the Medicare program for all concerned.

Finally, I would be remiss if I did not thank Chairman Grassley and Senator Baucus for working with me to include the MERCI legislative language in S. 1, the ``Prescription Drug and Medicare Improvement Act of 2003.'' Senators Grassley and Baucus have worked for many years to reform Medicare's complex regulations, as have I, and their agreement to include this language is appreciated greatly.

And so, it is with a great appreciation for my colleagues who have worked with me on this legislation and for those who have worked on similar legislation in the past, that I urge my colleagues in the Senate today to join me in addressing the needs of Medicare beneficiaries and providers by supporting this legislation.