Small Business Tax Extenders Act of 2012

Mr. President, I come to the floor today to discuss the importance of small businesses in the United States. It cannot be stated enough that small businesses are the economic engines of our country. Small businesses also represent the essence of the American Dream. They are creators of new jobs and innovative technologies. In fact, over the last 15 years, businesses employing less than 500 people have created 93 percent of all new jobs and employed 58.6 million workers. Businesses employing less than 20 people alone employed 21.3 million workers. In my home state of Louisiana, small businesses make up about 98 percent of businesses. As Chair of the Senate Committee on Small Business and Entrepreneurship, I remain focused on the needs of these small businesses. That is why I am here today to introduce a bill that I believe will help spur job creation among small businesses.

As you know, right now our country is still mired in an historic economic downturn. This economic downturn is disproportionately affecting small businesses and, in turn, stifling opportunities for them to generate economic growth for the country. Sadly, since November 2008 80 percent of the job losses have come from small businesses. 2.16 million jobs were lost in the private sector from July to February 2008--nearly half from businesses with less than 50 employees. While corporate layoffs get the headlines, small business layoffs increase the breadlines. Ten jobs lost here and five jobs there add up. These are the job losses that hurt our economy, our communities and our families.

With this in mind, I was proud to lead Congressional efforts to enact the Small Business Jobs Act of 2010, Public Law 111-240. President Obama signed this legislation into law on September 27, 2010. This legislation focused on the three ``C's'' important to small businesses: Capital, Contracting, and Counseling. 332 community banks in 47 states have received $4.01 billion in funding from the Small Business Lending Fund in the bill, which is $9.3 billion in leverage potential for small businesses. Furthermore, a total of 54 states/territories applied for funding through the Small Business State Credit Initiative Program to support State-run small business lending programs. Approximately, $1.3 billion for 47 states and territories has been approved. Lastly, $30 million of Round 1 of State Trade and Export, STEP, export grant funding was awarded in the Fall 2011 to 52 states and territories to promote small business exports. To date, the Small Business Jobs Act has provided an important boost to small businesses looking to get credit or open new markets overseas.

Given the importance of small businesses to our economy, I believe that there is no better time than now for Congress to build off the success of the Small Business Jobs Act. But the key question is how to best assist our country's 28 million small businesses? This is complicated because Federal law defines a small business as ``those having 500 employees or less.'' They may all fit under the same broad category of small business, but they are not all the same. So it makes no sense for the Federal government or Congress to have a ``one size fits all'' policy for helping them grow. We must put a special focus on maximizing strategies to help those small firms that have the capacity to grow in the near term.

The approach I have taken is to focus on the entrepreneurial ecosystems in our communities. This is because an ecosystem is defined as ``a system formed by the interaction of a community of organisms with their environment.'' I am particularly interested in the relationship between entrepreneurs, the current environment for entrepreneurship, and how we can make them more robust. In my view strengthening these ecosystems is an avenue to spur small business growth, create jobs, and grow our economy.

Babson College, one of the country's top colleges for undergraduate/ graduate entrepreneurship programs, has looked into what makes up an entrepreneurial ecosystem. Babson has identified the ``six domains'' of any entrepreneurial ecosystem: a conducive culture that rewards innovation, creativity and experimentation; enabling policies and leadership that provide regulatory and capital support; availability of appropriate finance, including micro-loans, private equity and public capital; quality human capital that include both skilled and unskilled workers from at home and abroad; venture-friendly markets for products by creating distribution channels and entrepreneurship networks; and a range of institutional and infrastructural supports, including incubation centers and legal and accounting advisers.

Building off this research and with feedback from other stakeholders, late last year my committee began preparations to conduct a series of roundtables on strengthening the entrepreneurial ecosystem for small businesses. The goal of these roundtables, which were conducted between February and April 2012, was to take the ideas that come out of these discussions and use them as the foundation for a major piece of legislation to support the entrepreneurial ecosystem. The first roundtable on February 1, 2012, was entitled ``Developing and Strengthening High-Growth Entrepreneurship.'' This roundtable set the stage for our discussions by exploring the recent success of high- growth firms in job creation and why it is so important that we replicate that success. The second roundtable was on March 22, 2012, and was entitled ``A Spotlight on Small Business Investment Companies and Their Role in the Entrepreneurship Ecosystem.'' That roundtable looked at how we could enhance an already successful program that gets capital into the hands of America's job creators. The last roundtable was on April 18, 2012, and was entitled ``Perspectives from the Entrepreneurial Ecosystem: Creating Jobs and Growing Businesses through Entrepreneurship.'' That roundtable discussed how different stakeholders in the entrepreneurial ecosystem are creating new entrepreneurs and growing businesses. It brought together key stakeholders from different levels of an entrepreneurial ecosystem: universities and entrepreneurship programs, Federal and local officials, investors, private sector accelerators, mentors, and successful entrepreneurs.

As a result of these three roundtables, my committee received almost 60 specific policy recommendations from the 41 participants. Some of these recommendations fell under the

jurisdictions of other Senate committees, while other proposals had a significant cost associated with them or lacked the strong bipartisan support necessary to move them forward in the Senate. After further consulting with my colleagues on the committee, I was able to identify our own six ``domains'' of proposals to focus our efforts on: Tax and Finance; Access to Capital; Access to Global Markets; Access to Mentoring, Education and Strategic Partnerships; Access to Government Contracting; and Transparency, Accountability, and Effectiveness. These domains form the six titles of the Success Ultimately Comes from Capital, Contracting, Education, Strategic Partnerships, and Smart Regulations, SUCCESS, Act of 2012.

First, Title I of the SUCCESS Act provides almost $12 billion in tax incentives to assist small businesses. All five tax provisions within the SUCCESS Act were based on parts of legislation, S. 2050, that was introduced in January by Senator Snowe and myself. S. 2050, the Small Business Tax Extenders Act, reflects the work of many of my Senate colleagues, including Senators Snowe, Kerry, Merkley, Cardin, Isakson, and Shaheen.

Section 102 of the SUCCESS Act extends the 100 percent exclusion from tax the gain on the sale of qualified small businesses, QSB, stock that non-corporate taxpayers purchase in 2012 and 2013 and hold for 5 years. Qualifying small business stock is stock of C-corporation whose gross assets do not exceed $50 million, including the proceeds received from the issuance of the stock, and who meets a specific active business requirement. The amount of gain eligible for the exclusion is limited to the greater of ten times the taxpayer's basis in the stock or $10 million of gain from stock in that corporation. Until 2009, non- corporate taxpayers were allowed to exclude 50 percent of the gain from the sale of stock of QSB if the taxpayers held the stock for 5 years. The Recovery Act of 2009 increased the 50 percent exclusion to 75 percent and the Small Business Jobs Act and subsequent legislation increased and extended the exclusion to 100 percent through 2011. However, as of January 1, 2012, the 100 percent exclusion has reverted to 50 percent and startup investments are no longer entitled to preferential capital gains treatment.

Senator Kerry, a senior member of my committee as well as the Finance Committee, has been a leader in the Senate in getting this provision extended in previous Congresses. I also note that this proposal has bipartisan and White House support. President Obama has repeatedly called on Congress to make permanent the 100 percent capital gains exclusion and included this proposal in his Startup America Legislative Agenda. Senators Moran, Warner, Coons and Rubio have all called for making this provision permanent and included a version of this provision in S. 3217, the Startup Act 2.0 that was introduced in May. According to a Kauffman Foundation paper published earlier this year, the 100 percent exclusion ``boosts the after-tax returns on such investments in startups and should induce substantial levels of new investments in startup firms.'' They further estimate that making this provision permanent would increase risky investments by conservatively 50 percent more than overall cost of the provision.

Section 103 of the bill extends the increased deduction for business start-up expenditures in 2012 and 2013 from $5,000 to $10,000, subject to a $60,000 threshold. Under current law, taxpayers can elect to deduct up to $5,000 of ``start-up expenditures'' in the taxable year in which they start a trade or business. The $5,000 is reduced--but not below zero--by the amount by which start-up costs exceed $50,000. Examples of startup costs include studies of potential markets, products, labor markets, or transportation systems; advertisements for the opening of a new business; compensation for consultants and employees undergoing training and their instructors; and travel for the purpose of securing suppliers, distributors, and customers.

The Small Business Jobs Act temporarily increased the amount of start-up expenditures entrepreneurs could deduct from their taxes in 2010 from $5,000 to $10,000, with a phase-out threshold of $60,000. We need to bring this provision back to aid our small businesses.

I note that there is also support within this chamber and from the White House for this proposal. As part of his Startup America Legislative Agenda, President Obama has called for making permanent the increased deduction for start-up expenditures. Senator Merkley successfully fought for the initial increase in deduction to be included in the Small Business Jobs Act. Over the past several years, this proposal has been repeatedly endorsed by the National Association for the Self-Employed and the National Federation of Independent Businesses, NFIB. Furthermore, according to a Kauffman Foundation survey, on average, new firms inject about $80,000 into their business during the first year of operation. The vast majority of small business owners--between 80 percent and 90 percent--also invest significant amounts of their own money into their businesses. These budding enterprises are also more dependent on personal capital at startup than after they become established businesses. Doubling the deduction for start-up costs puts cash in the hands of small businesses owners who need it most--those who are just getting started. According to estimates from Third Way, a non-partisan group, this proposal would help the more than 600,000 Americans who start their own business every year.

Under current law, when a corporation becomes an S-Corporation, it is required to hold its business assets for 10 years or pay punitive taxes. This 10- year holding period is too long and ties up assets that could be sold to raise capital. In 2010, Congress reduced this holding period to 5 years to better match business planning cycles. Section 104 of my bill will extend the 5-year holding period for 2012 and 2013, costing $251 million over 10 years. As with other provisions in the SUCCESS Act, this provision has bipartisan support. Senator Cardin has fought to make this proposal permanent. Senators Snowe, Vitter, and Roberts have also been long-time supporters and are co-sponsors of legislation introduced by Senator Cardin to make this provision permanent. By granting this extension, we will give the more than 4 million S-Corporations in the U.S. the flexibility they need to raise capital.

Section 105 would allow sole proprietorships, partnerships and non- publicly traded corporations with less than $50M in average gross annual receipts for the prior 3 years, to carryback unused general business credits earned in 2012 and 2013 for 5 previous years. Under current law, if a business has no tax liability in its current tax year, it may carry the general business tax credit back to the previous tax year to offset taxes paid in the previous year and obtain a refund. If the current credit exceeds taxes paid in the previous year, the remaining credit may be carried forward for 20 years, without interest, and used to offset tax liability in future years. The general business credit is limited to the difference between the regular tax liability of a business and the greater of its tentative minimum tax or 25 percent of regular tax liability in excess of $25,000. The general business tax credit is comprised of several different tax credits including the R&D tax credit, energy credits, the Low-Income Housing Tax Credit and the Work Opportunity Tax Credit.

This extension would provide tax refunds to businesses that were previously healthy but are currently running losses. It would improve the effectiveness of business credits that are intended to expand investment and employment, in the case of the Work Opportunity Tax Credit. It would also allow businesses greater immediate benefit from credits designed to encourage specific types of economic activity, such as hiring disadvantaged workers or investments in renewable energy. By providing businesses with greater opportunity to claim business credits, the provisions would also give an infusion of cash to businesses, which might promote investment. This could be particularly important if businesses have trouble borrowing because of financial market problems.

Section 106 of the SUCCESS Act extends a generous Section 179 provision that allows small businesses to immediately write-off up to $500,000, up from $250,000, for tangible personal property

and up to $250,000 for improvements to leasehold property and retail property.

Under the Small Business Jobs Act and other subsequent legislation, for taxable years beginning in 2010 and 2011, small businesses could write-off for capital expenditures for ``qualifying Sec. 179 property'' up to $500,000 and the phase-out threshold has been increased to $2,000,000. These thresholds were up from prior law thresholds of $25,000/$200,000. In addition, for the first time, the Small Business Jobs Act allowed taxpayers to expense $250,000 of the cost of improvements to real property including qualified restaurant property and qualified retail property. To qualify for the section 179 deduction, property must have been acquired for use in the trade or business. Examples of qualifying property include machinery and equipment; property contained in or attached to a building, other than structural components, such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs.; gasoline storage tanks and pumps at retail service stations.; livestock, including horses, cattle, hogs, sheep, goats, and mink and other furbearing animals.

Extending the enhanced Section 179 deduction has bipartisan Senate support, White House support, and industry support. The President supports extending Section 179. My colleague Senator Snowe is a strong supporter of the enhanced Section 179 provision that allows businesses to expense improvements to restaurant and retail property. She developed this particular proposal in connection with her work on the Small Business Jobs Act. Finally, 26 National business groups such as the NFIB, the U.S. Chamber of Commerce, the National Association of Homebuilders, and the National Association of the Self-Employed endorsed extending Section 179 and including expensing for real property improvements in a May 21, 2012 letter to Congress.

The next title of the SUCCESS Act focuses on improving access to capital for small businesses. In particular, Subtitle A under Title II was previously introduced as S. 3253, the Expanding Access to Capital for Entrepreneurial Leaders, EXCEL, Act. It provides necessary and timely enhancements to the Small Business Investment Company, SBIC, program. SBICs are government backed and regulated private equity funds which invest in U.S. small businesses. The SBIC program was created in 1958 by then Senator Lyndon Johnson and Senator William Fulbright, and signed into law by President Eisenhower. During a Senate hearing on the creation of the program, Senator Joseph Clark said the legislation is ``necessary to increase the availability of long-term credit and equity capital for small businesses.''

Since 1958, SBICs have invested $56 billion in over 100,000 small businesses. The core debenture program operates at no cost to taxpayers. SBIC success stories include: Apple Computer, Callaway Golf, Costco, Outback Steakhouse, Jenny Craig, Annie's food company, and Center Rock of Berlin, PA, the manufacturers of the drill bit that saved the Chilean miners in October 2010.

The SBIC program has seen strong growth in the past few years. For example, the program grew 50 percent in fiscal year 2011 alone. However, the authorization level has not been permanently raised since 2003. To continue fulfilling the intent of the original legislation, it is time to make some improvements. The Landrieu-Snowe EXCEL Act has two main components. First, it raises the statutory cap for the SBIC Program from $3 billion to $4 billion. Second, it increases the amount of leverage by SBIC licensees under common control from $225 million to $350 million ``Family of Funds''. The components of this provision were also included in the President's Startup America legislative package.

Subtitle B of Title II was originally introduced as S. 2364 by Senators Snowe, Landrieu, Isakson and Shaheen. The 504 loan program is a long-term financing tool for economic development that provides small businesses with long-term, fixed-rate loans to help them acquire major fixed assets and real estate for expansion or modernization. The Small Business Jobs Act allowed small businesses to use the 504 loan program to refinance certain qualifying existing debt for two years, but the SBA did not promulgate regulations to implement the refinancing provision until February 17, 2012.

This subtitle would extend for a year and a half a provision allowing small business owners to use Small Business Administration, SBA, 504 loans to refinance existing commercial mortgages. Extending the 504 refinancing program is a common-sense way to help small businesses and create jobs. By allowing small businesses to refinance qualified commercial real estate debt, this program lowers their monthly mortgage payments at no cost to taxpayers. That's right, this provision has zero subsidy cost. At a time when we are still facing high unemployment, this extension is one of many things that we should be doing to put more capital in the hands of America's job creators.

Subtitle C of Title II is a new proposal introduced for the first time as part of the SUCCESS Act. SBA currently releases some information publicly about SBA lending activity, but it is almost impossible to find and comprehend if you are not an SBA lending professional. If a small business, mayor, or governor wants to determine SBA lending activity in their area, they lack the ability to do so easily.

This subtitle would require the SBA to post a user friendly Lender Activity Index on the SBA website. Users will immediately be able to access the following data for any given bank: name of bank, number of SBA loans each bank made, total dollar amount of SBA loans of each bank, zip code of bank activity, not where every single loan was made, but a list of every zip code where the bank has made an SBA loan, industries lent to, hospitality, manufacturing, service, software, etc., stage of business cycle, new, or existing business, and business specific information, i.e. Women Owned Businesses, Minority Owned Businesses, or Veteran Owned Businesses. Data will be available for the year to date and users will be able to compare to 3 previous fiscal years. Both quarterly and annual data will be included.

Title III of the SUCCESS Act focuses on promoting exports from small businesses. The Small Business Jobs Act made major changes to the international trade work done by the SBA. Now that those provisions have been in place for several years, there are additional refinements and direction needed. I would like to specifically thank Senators Shaheen and Ayotte for their bipartisan export contributions to this effort. The export provisions of Tile III are taken from S. 3218, their Small Business Growth Act of 2012, as well as S. 3277, the Go Global Act of 2012 that Senator Shaheen and I authored this year.

95 percent of the world's customers are located outside of the borders of the United States, and in the last twelve months we have exported more than $2 trillion of goods and services to these consumers. Yet only 1 percent of our approximately 28 million small businesses export. Our agencies need to be working together to ensure our small businesses have the resources they need to expand their customer base and be part of the more than $180 billion in exports that the United States sends around the world each month.

This title aids our small business exporters by addressing federal government coordination, resources for rural businesses, and export control education. It establishes, in Section 306, an interagency task force of SBA, the Department of Agriculture (USDA), the Export-Import Bank, and the Overseas Private Investment Corporation on export financing to review, improve, and increase collaboration on current finance programs. Then, to further coordination, Section 307(a) begins a cross training program with SBA and USDA to inform their respective export finance specialists more about each other's programs. Our small businesses face enough challenges--we should be bringing our resources to them. In Section 304, this bill requires SBA, in coordination with other agencies, to do at least one export outreach event per year in each state. Section 307(b) also aids our rural small businesses by posting a list of rural lenders who participate in SBA and USDA loan programs and a list of rural small businesses counseling and technical assistance resources. Jobs created by exports pay, on average, 15 to 20 percent more than jobs created by goods and services sold

in the United States. This bill will continue to support entrepreneurs who want to create and grow these employment opportunities for all Americans.

Title IV of the bill focuses on promoting small business access to mentoring, education and strategic partnerships. Subtitle A of this title was originally introduced by Senator Snowe and I as S. 3198, the Strengthening Resources for America's Entrepreneurs Act of 2012. The SBA Office of Entrepreneurial Development, OED, oversees a network of programs and services that support the training and counseling needs of small business. According to the SBA, OED helps hundreds of thousands of small business clients start, grow and compete in global markets by providing quality training, counseling and access to resources. SBA delivers these services through non-profit, college and university, and community-based organization resource partners. Through its network of over 1,000 resource partners across the country, OED programs include Small Business Development Centers, SBDCs, Women's Business Centers, SCORE, and Entrepreneurship Education. However, it is currently difficult to track effectiveness and ensure our resources are being used in the best ways possible. To solve this challenge, this subtitle has four primary components. First, it requires the SBA to coordinate and make consistent data collection and outcome metrics for Entrepreneurial Development programs. Second, it increases planning for utilizing Entrepreneurial Development programs to create jobs. Third, it increases coordination between Entrepreneurial Development programs and Resource Partners at the national level. Finally, it increases accountability measures and reports to Congress regarding the effectiveness of Entrepreneurial Development programs.

Subtitle B of the bill comes from S. 3197, the Women's Small Business Ownership Act which was sponsored by Senator Snowe and myself. This subtitle is focused on the SBA Women's Business Center (WBC) program. The WBC program was established in 1988 and implemented through the SBA's Office of Women's Business Ownership. It provides quality counseling and training services to all entrepreneurs, primarily women, especially those who are socially and economically disadvantaged. Through a network of over 100 non-profit organizations, WBCs help more than 150,000 clients annually to start and grow small firms in the local area in which they serve and to stimulate economic growth. Subtitle B reauthorizes the WBC program through Fiscal Year 2015 and makes improvements to the program, including a Government Accountability Office review of Women's Business Center program performance as compared with other SBA Entrepreneurial Development programs.

Subtitle C of the SUCCESS Act is Senator Snowe's Strengthening America's Small Business Development Centers Act. Small Business Development Centers (SBDCs) are considered to be the backbone of the SBA's Office of Entrepreneurial Development efforts, and are the largest of the agency's OED programs. SBDCs are the university based resource partners that provide counseling and training needs for more than 600,000 business clients annually. From 2007 to 2008, the counseling and technical assistance services they offered lead to the creation of 58,501 new jobs, at a cost of $3,462 per job. Additionally, they estimate that their counseling services helped to save 88,889 jobs. This subtitle would reauthorize SBDC program at the current $135 million authorization level through fiscal year 15. Beyond reauthorizing the SBDC program, this provision also encourages SBDCs to improve outreach and communications to universities, community colleges, and junior colleges and allows the SBA Administrator to authorize out-of-state SBDCs to provide assistance in declared disaster areas.

Subtitle D of Title IV was originally introduced as S. 3281 by Senators Snowe, Kerry, and Coburn. This subtitle repeals Federal authorization of the National Veterans Business Development Corporation, TVC, eliminating an ineffective government program. The National Veterans Business Development Corporation, also known as The Veterans Corporation or simply TVC, has been ineffective and controversial since its inception as part of the Veterans Entrepreneurship and Small Business Development Act, P.L. 106-50, in 1999. In December of 2008, former Small Business Committee Chairman Kerry and Ranking Member Snowe investigated TVC, and issued a report detailing the organization's blatant mismanagement and wasting of taxpayers' dollars. Since the issuing of the Small Business Committee's report, Congress has appropriated no further funding for TVC, and the Small Business Administration has incorporated the Veteran Business Resource Centers, VBRCs, that TVC previously funded into its existing network of Veteran Business Outreach Centers, VBOCs. At present, TVC still exists as an organization, and it is still technically federally chartered. At the same time, it receives no Federal funds, has no Department or Agency oversight. It is time for it to be eliminated.

Title V of the SUCCESS Act focuses on promoting Federal government contracting opportunities for small businesses. Section 511 under Subtitle A of Title V was originally introduced by Senators Cardin, Landrieu and Snowe as S. 2187, the Small Business Administration Surety Bond Increase Act. The SBA administers a surety bond guarantee program, designed to encourage sureties to issue bonds when they would otherwise determine that a small business presents an unacceptable degree of risk. Under the program, SBA may guarantee bid, performance, and payment bonds for individual contracts of $2 million or less for small businesses that cannot obtain surety bonds through regular commercial channels. In the American Recovery & Reinvestment Act of 2009, Senator Cardin was able to temporarily increase the size of SBA surety bond guarantee from $2 million to $5 million. Section 511 would make that permanent. It would ensure that small businesses have the means to the secure the necessary surety bonding to compete for contracts during the economic downturn.

Subtitle B of Title V was originally introduced by Senators Snowe, Landrieu, Enzi, Brown, Merkley, Cantwell and eight other senators as S. 633, the Small Business Contracting Fraud Prevention Act. Fraud in small business contracting programs has starkly increased over the years. Recently we have all read about instances where large businesses misrepresent their size and status to receive the benefits of SBA programs designed for small businesses. Firms that engage in this activity have long been subject to civil and/or criminal penalties under various laws and government-wide policies.

The provisions in Subtitle B provide the SBA Inspector General with enhanced tools to eliminate fraud in small business contracting programs by: imposing greater penalties for fraud; requiring that firms be debarred for five years if they misrepresent their status as veteran-owned for purposes of programs under the act; and requiring the SBA to submit annual reports to Congress on the number of persons debarred or suspended from government contracting, or considered for debarment or suspension from government contracting, for violations of the bill. This will deter fraud in government small business contracting and will keep Congress in the loop on small business fraud issues.

Subtitle C under Title V was originally introduced by Senators Snowe, Landrieu, Gillibrand and seven other senators as S. 2172, the Fairness in Women-Owned Small Business Contracting Act. Currently, the Women- Owned Small Business, WOSB, contracting program caps contract awards to woman-owned businesses at $4 million for goods/services and $6.5 million for manufacturing. In addition, sole-source contract awards under the program are prohibited. In other words, this program has limits that no other contracting program has.

The provisions in Subtitle C would remove the contract award price limits for women-owned small businesses, create a provision allowing sole-source contract awards to WOSBs, direct the SBA to periodically conduct a study to identify any U.S. industry in which women are underrepresented, and every five years report the study results to Congress. From these improvements, more contracting opportunities will emerge for women-owned businesses in the Federal marketplace.

Subtitle D of the Title V of the SUCCESS originated with our colleagues in the House of Representatives as H.R. 3851, the Small Business Champion Act. The Small Business Act established an Office of Small and Disadvantaged Business, OSDBU, within all major Federal Executive Agencies. The OSDBU is the primary advocate within each Agency responsible for promoting the maximum use of all small business programs within the Federal contracting process. The OSDBU is tasked with ensuring that each Federal agency and their large prime vendors comply with federal laws, regulations, and policies to include small businesses as sources for goods and services, both as prime contractors and subcontractors. Approximately 35 Federal Agencies have fully functioning OSDBU offices.

In an effort to assist agencies with meeting contracting goals, Subtitle D makes three major modifications to OSDBU offices. First, it elevates the OSDBU Director at each agency to the Senior Executive Service, SES, rank. Second, it prohibits combining the duties of the OSDBU Director with unrelated duties. Finally, it requires that agencies consult with the OSDBU office on decisions to insource work performed by small businesses. I would note that the House of Representatives Committee on Small Business approved H.R. 3851 by voice vote on March 7, 2012.

The final title of the SUCCESS Act is focused on improving Federal Government transparency, accountability, and effectiveness. A key component of this title is a result of the work of my colleague Senator Hagan from North Carolina. In particular, Subtitle A of Title VI is based upon Senator Hagan's legislation, S. 3194, the Small Business Common Application Act of 2012.

Whether it is applying for a grant, seeking technical assistance, or bidding on a contract, small businesses face a dizzying array of paperwork when interacting with the Federal government. As a result, many small businesses avoid Federal programs altogether, missing out on potentially lucrative business opportunities. Senator Hagan's bill aims to streamline assistance for small businesses facing layers of paperwork when they apply for a grant, seek technical assistance or bid on a contract from the Federal government.

Furthermore, according to a 2010 study from the SBA Office of Advocacy, it costs small businesses with 20 employees or less more than $10,500 per employee to comply with Federal regulations. When compared to their larger counterparts, it costs small firms over $2,800--or approximately 36 percent more--for each employee.

Subtitle A builds off provisions in S. 3194 by establishing an Executive Committee of 12 Federal agency representatives, headed by the SBA Administrator, to review the feasibility of establishing a Small Business Common Application. This Executive Committee would then provide recommendations to the Executive Branch and Congress within 270 days on establishing a common application and web portal for small businesses.

The small business ``common app'' would function much like the one that students complete to apply to multiple colleges and universities simultaneously. It would ensure that small businesses across the country can concentrate on growing and creating jobs--not wasting time, filling out mountains of repetitive paperwork.

Lastly, I recognize that it is important to provide sufficient oversight of the programs and assistance authorized in this bill. Subtitle B of Title VI would authorize a GAO review of the bill-- including whether programs receive necessary funding, have been successfully implemented, and are promoting job creation among small businesses. This report would go to the House and Senate Small Business Committees not later than 2 years after the date of enactment.

In closing, I would like to reiterate that the SUCCESS Act is a combination of numerous bipartisan bills that have been introduced this Congress. So these proposals are neither new nor untested--they are ready for prime time. On July 12, 2012 the Senate voted on the SUCCESS Act as part of Senate Amendment 2521 to S. 2237, the Small Business Jobs and Tax Relief Act of 2012. Although the amendment came up short of the 60 votes needed to end debate, Senate Amendment 2521 did receive a strong 57 bipartisan votes. My Republican colleagues Senators Snowe, Collins, Vitter, Scott Brown, and Heller all voted in support of the amendment. I thank them for joining with us to try to move this legislation forward in the Senate. It is my understanding that some of my Republican colleagues may have voted for the amendment if it did not contain the underlying provisions from S. 2237. Procedurally, it was necessary to include these provisions to ensure a vote on the SUCCESS Act. However, recognizing these concerns, our bill that is being introduced today only includes Subtitle B of Senate Amendment 2521--the bipartisan SUCCESS Act provisions. I hope that additional colleagues from both sides of the aisle will now support the SUCCESS Act, especially as we are only a few votes short of being able to move it forward here in the Senate.

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

Mr. President, I rise today to talk about a bill I have just introduced, the Arbitration Fairness for Students Act, and to talk about why it is so important to protect our Nation's students.

Access to higher education is becoming increasingly important in our Nation. In 2018, 70 percent of the jobs in

our State, Minnesota, will require some postsecondary education. We must also make sure access to higher education remains and stays a positive experience and not a damaging one. Colleges and universities need to deliver on the promises they make to students. If they don't, students need to be able to hold them accountable.

That is why I have introduced this bill today along with Senator Harkin and six cosponsors, including Senator Sanders. It would prohibit any school participating in the title IV Federal student aid system from forcing its students to forego access to the courts when they have a valid dispute and instead forcing them into private arbitration proceedings. This bill is simply about accountability. It is about the basic American right to seek justice in our court system--a right that is, unfortunately, being denied now to thousands of students after the landmark Supreme Court decision in the AT&T Mobility v. Concepcion case.

A recent report from Public Citizen and the National Association of Consumer Advocates highlights how that decision is harming students. Before that decision, thousands of students who had attended a chain of culinary schools formed a class action lawsuit alleging that the school had exaggerated the salaries of its graduates, and they won. The students received payments of up to $20,000 each, which they desperately needed since, according to the lawsuits, these students typically had more than $40,000 in student loan debt.

But that was before the Concepcion decision, which now allows corporations to block class action lawsuits through the use of mandatory arbitration clauses in their contracts. Now, a group of students who can prove they were lied to by their college can be barred from accessing our court system. I think that is wrong, and my bill would change that.

But don't just take it from me. Take it from judges who are ruling in the post-Concepcion world and who believe that students are being hurt. In one recent case students alleged that a school misrepresented basic facts, such as the cost of education and the school's accreditation status. The students even showed they had to sign the enrollment contract, which contained the mandatory arbitration clause, before they were allowed to speak to financial aid counselors.

The court ruled against the students, citing the Concepcion decision. According to the court:

The argument had considerable validity and the court would

likely have found the Arbitration Agreements at issue here

unconscionable . . . if it were issuing this decision pre-

Concepcion.

The court also said that Concepcion ``likely foreclosed the possibility of any recovery for many wronged individuals.''

As I said, this bill is about accountability. It is also about college affordability. Our higher education system often requires students to take on tens of thousands of dollars in debt. In exchange for this debt, students believe they are receiving an education that will allow them to pay that money back, often because that is exactly what the school is telling them. But what if the school is lying? Students need to be able to hold those schools accountable for their actions. Otherwise, what is going to stop other schools from charging whatever they want and convincing their students they can afford it by lying? We can stop these anticonsumer, antistudent contracts, and my bill would do just that.

Congress has acted several times to protect individual industries from abuse of mandatory arbitration clauses. In 2001, Congress heard from William Shack, a long-time automobile dealer from Nevada. He told his story to Congress about how he and a partner had been working together to open a Saturn dealership, investing a lot of money, when Saturn suddenly pulled the deal.

As a result of the arbitration clause in their contract, Mr. Shack and his partner were required to arbitrate the dispute. In his testimony, he said Federal legislation was the only remedy available to protect auto dealers from the imposition of these unfair contract provisions and to preserve State procedural and substantive protections. He explained:

We reject categorically the idea that we ``voluntarily''

agreed to submit to mandatory binding arbitration.

The most compelling portion of Mr. Shack's testimony was this:

[T]he dispute drove home to us in a drastic fashion just

how one-sided the mandatory binding arbitration process can

be for dealers. We were surprised to learn that, despite the

great system of justice that we have in this country, we

could be deprived of the basic right to an impartial decision

on the merits of our case. That is a grave injustice.

In response to stories like Mr. Shack's, Senator Orrin Hatch introduced the Motor Vehicle Franchise Contract Arbitration Fairness Act. The bill had 66 cosponsors--an equal number of Democrats and Republicans. Unsurprisingly, there was opposition to this legislation-- the Chamber of Commerce testified against it. But Congress decided to prioritize the rights of auto dealers to seek justice in our courts, and in November of 2002, Congress passed this bill and made it law.

Today automobile dealers cannot be bound by mandatory arbitration provisions in their contracts with their manufacturers. This change didn't result in a flood of litigation. It simply provided some equal footing for small auto dealerships to bargain with the large manufacturers. Once Congress determined that this particular industry was subject to the abuse, it took action to protect the vulnerable party.

Congress again acted in 2007 to protect members of our Armed Services. Congress heard from military leaders that predatory lending targeted at our Nation's servicemembers was impairing our country's military readiness. In response, Republican Senator Jim Talent from Missouri, along with his colleague Senator Bill Nelson of Florida, a Democrat, introduced an amendment to the 2006 national defense authorization bill. Their provision prohibited predatory lending practices, including a prohibition on enforcing mandatory arbitration clauses in financial agreements with servicemembers. This amendment passed the Senate unanimously, and it went into effect in 2007.

Despite strong opposition from the Wall Street lobby, Congress came together in a bipartisan manner to target abuses against our servicemembers.

In addition to auto dealers and servicemembers, Congress has also taken up the plight of poultry growers. In a 2007 hearing in the Senate Agriculture Committee, one witness shared this terrible story. Gertrude Overstreet was a 67-year-old contract poultry farmer. She operated two chicken houses, so her total monthly income, including food stamps, was less than $1,000 a month for her and her husband. Mrs. Overstreet had a 10th grade education.

When the poultry producer for whom she worked violated the terms of their agreement, that company required Mrs. Overstreet to bring her claim into arbitration, where she was required to pay $27,000 in upfront costs before she could even get a hearing. Mrs. Overstreet didn't know what arbitration was or that her legal remedies had been stripped from her. This is an elderly couple who could not afford the cost of their medication, much less $20,000 in upfront arbitration fees.

This might be the most compelling example of disparate bargaining power, a giant poultry processor versus Mrs. Overstreet. But Senator Grassley took up this cause and introduced the Fair Contracts for Growers Act. Thanks to his efforts, when the farm bill passed the following year, it included provisions that enabled poultry farmers to opt out of mandatory arbitration clauses imposed by the big processors.

Most recently, Congress took up an amendment that I introduced in the national defense authorization bill in the fall of 2009. Some of the most offensive uses of mandatory arbitration clauses that I have seen are by overseas military contractors against women who have been victimized on the job. Too many women working for military contractors have had to endure unimaginable workplace harassment and environments. Those women deserve their right to a day in court just like the auto dealers, the servicemembers, and the poultry farmers. Once again, the amendment passed with broad bipartisan support. Once again, Congress took steps to tackle the most egregious abuses of mandatory arbitration.

When confronted with a group that has been victimized by mandatory arbitration clauses, Congress has repeatedly taken steps to protect the little guy and their right to a day in court, and we have done so on a bipartisan basis. I believe Minnesota's students--and students across the country--deserve the same protection we have afforded to auto dealers, to servicemembers, poultry farmers, and employees of military contractors. The Arbitration Fairness for Students Act would provide that protection, and I urge my colleagues to support it.

Mr. President, I would like to associate myself with the remarks of the Senator from Vermont. I am one of the cosponsors of the reauthorization of the Older Americans Act, and before I talk about a bill I have just introduced, I would like to underscore the fact that the Older Americans Act was introduced in 1965, and it allows seniors to stay in their homes and also saves money. It costs $6 a day to do Meals on Wheels per senior. This allows a senior to stay in their home and not go to a nursing home. We know what a nursing home costs every day. So this is an example of common sense. Seniors want to stay in their homes if they can.

I have been with the Presiding Officer, my colleague from the State of

Minnesota, doing roundtables on the Older Americans Act. It is a great program that we need to reauthorize in order to do really a commonsense thing, which is allow seniors to stay where they want to stay--in their homes--and at the same time not have them spending the kind of money they would be spending in a nursing home or in that kind of facility. So I commend the Senator from Vermont.

Mr. President, I am very pleased to join today with the senior Senator from Oklahoma, Senator Inhofe, in introducing legislation that has already attracted broad support--from across the social and political spectrum.

This bill, titled the Foreign Prison Conditions Improvement Act of 2012, seeks to address a much neglected, global human rights and humanitarian problem--the inhumane treatment of people in foreign prisons and other detention facilities.

On any given day, millions of people are languishing in foreign prisons, many in pretrial detention having never been brought before a judge or formally charged or proven guilty of anything, deprived of their freedom in abysmal conditions, often for years longer than they could have been sentenced to prison if convicted.

Others are imprisoned after being convicted of offenses, often after woefully unfair trials, including for nothing more than peacefully expressing political or religious beliefs or defending human rights. Regardless of their status they have one thing in common. They are deprived of the most basic rights and necessities--safe water, adequate food, essential medical care, personal safety, and dignity.

Anyone who has been inside one of these facilities, or seen photographs or press reports of what they are like, understands that this is about the mistreatment of human beings in ways that are reminiscent of the Dark Ages.

A few examples illustrate the point. In Haiti's National Penitentiary before the 2010 earthquake, more than 4,000 prisoners were confined in a space built for less than 900. Many did not have room to lie down and had to sleep standing up. Sanitation was practically non-existent. Deadly contagious diseases were rampant. The overwhelming majority of inmates had never been formally charged, never seen a lawyer or a judge. The earthquake damaged the prison and the prison guards fled, leaving the inmates to fend for themselves without food or water. They managed to get out, but the squalid facility filled up again.

I recall a newspaper article about how in Benin, in West Africa, the skin of prisoners was ragged from the extraction of fly larvae, an affliction that is symptomatic of the deplorable conditions. Many inmates suffer from tuberculosis, scabies, parasites, lung infections or other illnesses. The prison in Abomey, located in southern Benin, was built in 1904 to house a maximum of 150 prisoners. More than 1,000 have reportedly been confined there.

In February of this year, a fire at the Comayagua Prison in Honduras killed 360 inmates. In one overcrowded cell block only 4 of 105 prisoners survived. More than half of those who died were waiting to be charged or tried.

It is common in prisons from Latin America to the Middle East, Africa, and Asia for inmates to be severely malnourished and to go for months without being able to wash. Many prisoners depend for survival on food brought to them by relatives. In many countries individuals awaiting trial, young and old, are housed together with convicted, violent criminals.

Prisoners and other detainees in many countries are also routinely victimized by poorly trained, abusive guards who are virtually unsupervised and unaccountable to any higher authority. Sexual abuse of men, women and children is common.

A government commission in Cameroon reported that an average of five prisoners die per month in a prison there, simply from lack of proper medical care. Inmates in many countries suffer from HIV/AIDS and other illnesses in prisons with no medical records, where doctors do not enter. Prisoners intentionally cut or otherwise harm themselves in the hope of receiving medical attention for life-threatening illnesses. If and when they are released they infect the local population.

A New York Times article described how prisoners in Zambia were punished by being stripped naked and held in solitary confinement in small, windowless cells, sometimes for days on end, in ankle-to-calf- high water contaminated with their own excrement. It is like something out of The Count of Monte Cristo, only worse because it is happening in the 21st Century. But the article went on to describe how Zambia's Prison Service conducted its own internal audit, appointed a new medical director, and allowed human rights workers access to its facilities. The legislation Senator Inhofe and I are introducing seeks to provide incentives for those kinds of improvements. Our bill would do the following:

First, it calls attention to this long ignored problem. Most people know little if anything about what goes on inside foreign prisons, and many would prefer not to know.

Second, it sets forth primary indicators for the elimination of inhumane conditions in foreign prisons and other detention facilities, such as human waste facilities that are sanitary and accessible, and adequate ventilation, food and safe drinking water.

Third, it requires the Secretary of State to report annually on the conditions in prisons and other detention facilities in at least 30 countries receiving United States assistance or under sanction by the United States, selected by the Secretary's determination that such conditions raise the most serious human rights or humanitarian concerns.

Fourth, it encourages the Secretary and the Administrator of the U.S. Agency for International Development to furnish assistance for the purpose of eliminating inhumane conditions where such assistance would be appropriate and beneficial.

For countries that are not making significant efforts to eliminate such

conditions, the Secretary is to enter into consultations with their government to achieve the purposes of the Act.

The legislation also provides for training of Foreign Service Officers, and directs the Secretary to designate, within the Department of State's Bureau for Democracy, Human Rights, and Labor, an official with responsibility for implementing the provisions of the Act.

Finally, it authorizes the expenditure of funds to implement the Act.

Once enacted, the Foreign Prison Conditions Improvement Act of 2012 will help foreign governments ensure that prisoners in their countries are treated as any people deprived of their freedom should be--as human beings, with dignity, in safety, and provided the basic necessities of life.

In countries around the world, the United States is helping to reform justice systems and strengthen the rule of law. No justice system can claim to deliver justice if prisoners and other detainees are treated like animals, or worse. By helping to change attitudes, and showing how with relatively little money prison conditions can be significantly improved, we can help advance the cause of justice more broadly.

Millions of people around the world look to the United States as a defender of justice. This legislation will further that goal and it reflects the best instincts of the American people. It has already been endorsed by a wide range of groups, including Amnesty International, USA; Baptist World Alliance, Division of Freedom and Justice; Ethics and Religious Liberty Commission of the Southern Baptist Convention; Human Rights First; Human Rights Watch; International CURE; International Justice Mission; International Prison Chaplains' Association; Jewish Council for Public Affairs; Just Detention International; Justice Fellowship/Prison Fellowship Ministries; National Association of Evangelicals; National Religious Campaign Against Torture; New Evangelical Partnership for the Common Good; Open Society Policy Center; Penal Reform International; Religious Action Center of Reform Judaism; United Methodist Church, General Board of Church and Society; and the United States Conference of Catholic Bishops. I want to thank these groups for their support and their efforts to focus attention on this urgent problem.

Identical legislation is being introduced today in the House by Representatives Chris Smith and Russ Carnahan, both of whom care deeply about this issue, so this is a bipartisan, bicameral effort.

Finally, I want to thank Senator Inhofe, who has visited many African countries and has witnessed the problems this legislation seeks to address, as well as his staff, who have been very helpful in this process. At a time when some people seem to get satisfaction from calling Washington broken, this is another example of how two Senators and two Representatives, of different parties, whose political views often differ, can work together in furtherance of a just cause.

Mr. President, I rise today, along with Senator Warner, to reintroduce the Radio Spectrum Inventory Act. Simply put, in order to make more spectrum available to meet the growing demand for wireless broadband and other radio-based services, decision makers at the FCC, NTIA, and Congress must have a clear, detailed, up-to-date understanding of how spectrum is currently being used and by whom--data essential to sound policy decisions.

Specifically, the Radio Spectrum Inventory Act directs the National Telecommunications and Information Administration, NTIA, the Federal Communications Commission, FCC, with assistance from the Office of Science and Technology, to create a comprehensive and accurate inventory of each spectrum band, at a minimum, between 300 Megahertz to 6.5 Gigahertz. The information collected would include the licenses assigned in that band, number and type of end-user devices deployed, amount of deployed infrastructure, type of missions and activities supported in the band, as well as any relevant unlicensed end user devices operating in the band. This information is fundamental to constructing a comprehensive framework for spectrum policy.

The Radio Spectrum Inventory Act also provides more transparency related to spectrum use by creating a centralized website or portal that would include relevant spectrum and license information accessible by the public. Given that radio spectrum is a public good, we are obligated to provide the public more clarity and accountability on how it is being utilized by both Federal and non-Federal licensees. But let me be clear, given the sensitive nature of some spectrum assignments and allocations, this bill makes the appropriate disclosure exceptions for spectrum utilized or reserved for national security and public safety activities.

A comprehensive inventory is a critical step in reforming our spectrum policy and management. The FCC manages over 2 million active licenses and NTIA administers more than 450,000 frequency assignments. And while I appreciate the FCC's effort in conducting a ``baseline'' inventory and NTIA's evaluation--both the fast track and ten year plan--I do not believe they are sufficient substitutes to conducting a full inventory since those efforts were limited in scope and seemingly didn't capture or make available more detailed data on spectrum use.

In addition, there has been a growing call for a comprehensive spectrum inventory from Members of Congress, former FCC officials, and industry--even the House Energy & Commerce Committee bipartisan Federal Spectrum Working Group requested what amounts to a complete inventory of Federal frequency assignments between 300 MHz and 3 GHz. But if we are to examine Federal use, we must also look at non-Federal use in order to gain a truly comprehensive picture and understanding of the heterogeneous spectrum ecosystem.

The ultimate goals this legislation sets the path towards achieving are to implement more efficient use of spectrum and to locate additional spectrum to meet the future demands of all spectrum users-- commercial, Federal, and military. A comprehensive inventory would yield a significant amount more of data that would be extremely useful for conducting measurements, implementing more robust management, and developing greater strategic planning of spectrum resources.

With the enactment of P.L. 112-96 earlier this year, Congress took a notable but incremental step in an effort to free up additional spectrum to meet the growing demand of wireless broadband. As I have stated before, I believe more can and must be done to meet the future needs of all spectrum users and properly address existing spectrum challenges. This includes a comprehensive spectrum inventory, more strategic and longterm planning of spectrum resources, and greater collaboration between the FCC and NTIA. In addition, we must also continually promote more investment in infrastructure and foster greater technical innovation. That is why I sincerely hope that my colleagues join Senator Warner and me in supporting this critical legislation and continuing our focus on implementing spectrum reform.

Mr. President, I rise today, along with Senator Warner, to reintroduce pro-consumer wireless legislation, which will improve wireless coverage indoors. Specifically, the Federal Wi-Net Act would require the installation of small wireless base stations, such as femtocells or similar technologies, and Wi-Fi hot-spots in all publicly accessible Federal buildings to improve wireless coverage and network capacity.

Over the past several years, there has been growing concern about a looming spectrum crisis given the significant growth in the wireless industry. Currently, there are more than 331 million wireless subscribers in the U.S., and American consumers used more than 2.3 trillion minutes in 2010--that is more than 6.4 billion minutes per day. And while the foundation for wireless services has been voice communication, more subscribers are utilizing it for broadband. According to Cisco, global mobile data traffic grew 159 percent in 2010, nearly tripling for the third year in a row. That growth is only expected to continue--there is expected to be over seven billion mobile devices globally by 2015 producing more than six exabytes per month. To put it in context, all the words ever spoken by human beings would equate to five exabytes worth of data.

To meet this growing demand, a multi-faceted solution is required that includes fostering technological advancement and more robust spectrum management. Technologies, such as femtocells, distributed antenna system, DAS, and Wi-Fi hotspots, will help alleviate growing wireless demand by offloading that traffic onto wireline broadband networks. The Chairman of the Federal Communications Commission recently announced plans to open a proceeding on utilizing small cells in the 3.5 GHz band. And a recent spectrum report by the President's Council of Advisors on Science and Technology, PCAST, highlighted how reducing cell sizes of wireless networks to femtocell or Wi-Fi ranges could provide 400 times as much aggregate network capacity than current macro cells network topologies.

To that point, the need is there--approximately 40 percent of cell phone

calls are made indoors and more than 26 percent of U.S. households have ``cut-the-cord,'' relying solely on cell phones to make voice calls. On the data side, Cisco's Virtual Network Index reports approximately 60 percent of mobile Internet use is done inside--either at home or at work. Consumers are also utilizing Wi-Fi more frequently--more than 80 percent of smartphone users prefer Wi-Fi connections over cellular for mobile data usage, and approximately 75 percent of tablet users use Wi- Fi connections only. In addition, several new tablets, such as the Microsoft Surface, Google Nexus 7, and Samsung Galaxy Tab, were introduced as Wi-Fi only versions.

As the FCC's National Broadband Plan highlights, most smartphones sold today have Wi-Fi capabilities to take advantage of the growing ubiquity of Wi-Fi routers and devices. According to a May 2011 report from comScore, approximately 48 percent of all iPhone traffic was transported over Wi-Fi/LAN networks. So installing more mini-base stations, such as femtocells, DAS, and Wi-Fi hotspots will improve indoor coverage and wireless network capacity. It will also increase battery life of phones and tablets since the indoor signal will be stronger so devices will use less power.

The increasing importance of wireless communications and broadband has a direct correlation to our nation's competitiveness, economy, and national security and therefore demands we make the appropriate changes to current spectrum policy and management to avert a spectrum crisis and continue to realize the boundless benefits of spectrum-based services. Congress has taken some steps but more must be done. That is why I sincerely hope that my colleagues join Senator Warner and me in supporting this important legislation.

Mr. President, I rise today to introduce legislation aimed at ensuring that the health of American travelers is not placed at possible risk as our airport security technology evolves. I am very pleased to be joined by Senators Akaka, Coburn, Scott Brown, and Levin, who are cosponsoring this bill.

Our bill has two major components. First, it would require the Department of Homeland Security's Science and Technology Directorate, in consultation with the National Science Foundation, to commission an independent study on the possible health effects of the x-ray radiation emitted by some of the scanning machines we see and pass through in our airports. Second, it would give airline passengers, especially those passengers in sensitive groups such as pregnant women, clear notice of their ability to choose another screening option in lieu of exposure to ionizing radiation.

Some advanced-imaging technology--or AIT--machines rely on x-ray backscatter technology. Time and time again, I have expressed my concern over their use, particularly since there is an alternative screening technology available. While the TSA has repeatedly told the public that the amount of radiation emitted from these machines is extremely small, passengers and some scientific experts have raised legitimate questions about the impact of repeated exposure to this radiation.

Last November, during a hearing on aviation security before our Homeland Security Committee, the TSA Administrator, John Pistole, agreed to my

call for an independent study to address the lingering health concerns and questions about this additional and repeated exposure to radiation. Shortly thereafter, however, he appeared to back away from this commitment, suggesting that a forthcoming report by the Department of Homeland Security's inspector general might be a sufficient substitute for a new, completely independent, thorough study.

Chairman Joe Lieberman and I wrote to the Administrator to press for more details about TSA's plans for an independent study. Two weeks later, having received no reply, I sent another letter to Administrator Pistole asking why he believed the IG report on TSA's use of backscatter machines was a sufficient substitute for an independent study of the health impacts. TSA's response lacked any detail as to why the agency no longer believes an independent study on the health effects of x-ray backscatter machines is warranted, nor did it explain how the IG's review would be a sufficient substitute for an independent study. That is why I have introduced this bill today.

Late last year, the European Commission announced that ``in order not to risk jeopardizing citizens' health and safety,'' it would only authorize the use of passenger scanners in the European Union that do not use x-ray technology. This prohibition gives even more need and justification for an independent study of the safety of the AIT machines.

Some respected experts have warned Congress and the administration of the potential negative public health risks posed by the x-ray backscatter machines. They note that while the risk that someone might develop cancer because of his or her exposure to radiation during one screening by such an AIT machine is very small, we simply do not truly know the risk of this radiation exposure over multiple screenings for frequent flyers, those in vulnerable groups, or TSA employees themselves who are operating these machines.

When a person is scanned by these machines, they receive a dose of radiation--what experts in the field call a direct dose. During the scan, some of the radiation is not absorbed but is scattered in random directions from the person being scanned. Experts call this the scatter dose. Some experts point to anomalies between the scatter dose reportedly associated with these scanners and the scatter dose associated with comparable medical technology. Specifically, the scatter doses for these AIT machines are higher in relative terms than scatter doses for comparable medical devices. What is troubling is that the experts are not sure why the AIT scatter doses are higher. They point to possible deficiencies with the testing equipment or the poor placement of the testing equipment as possible explanations. Overall, they say this anomaly could point to higher direct dose rates and should be yet another impetus for an independent study.

Additionally, some experts note that the safety mechanisms in these machines that would prevent them from malfunctioning have never been independently tested. This means that if a machine malfunctions and the safety features designed to shut the machine down in such an instance do not work, a traveler could receive a higher dose of radiation. Pregnant women, children, the elderly, and as much as 5 percent of the adult population are more sensitive to radiation exposure. At a minimum, this suggests the need for further independent study.

Mr. President, I wish to share with my colleagues a tragic episode involving the daughter of two of my constituents. She underwent screening at the airport with a backscatter x-ray AIT. She was pregnant and directed by TSA to a line for a backscatter x-ray AIT machine. She was completely unaware that she was entering into an x-ray emitting machine before she stepped into it. She thought it was the more traditional magnetometer. Afterward, she was distressed to know she had exposed her unborn child to x-ray radiation. Had she realized ahead of time, she clearly would have opted for the alternative screening methods. Only 2 weeks later, she suffered a miscarriage which she attributes to the radiation she received from this scan. We will never know for certain the cause of this family's loss, but they believe in their hearts that the backscatter radiation is to blame.

Clearly, at a minimum, this young woman should have been informed by a prominent sign that an alternative means of screening was available. That is why my bill also requires TSA to have larger, understandable signs at the beginning of the screening process, not later when it is only noticed, if at all, after a lengthy wait in line. Signs should alert passengers that pregnant women, children, and the elderly can be more sensitive to radiation exposure. These signs should also make clear that passengers can opt out of this type of scanning.

I have urged TSA to move forward using only radiation screening technology, but in the meantime, an independent study is needed to protect the public and to determine which technology is worthy of taxpayer dollars. Surely passengers should be well informed of their screening options.

We Americans have demonstrated our willingness to endure enhanced security measures at our airports if those measures appear to be reasonable and related to real risks. But travelers become frustrated when security measures inconvenience them without cause, cause privacy or health concerns, or when they appear to be focused on those who pose little or no threat.

On this particular issue, Senators Akaka, Coburn, Scott Brown, Levin, and I agree that we are past the time when an independent review of the scanning technology that emits radiation must be undertaken. I urge my colleagues to join us in quickly passing this legislation.