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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
(Senate - June 05, 1997)

Text of this article available as: TXT PDF [Pages S5342-S5368] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. JEFFORDS: S. 830. A bill to amend the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act to improve the regulation of food, drugs, devices, and biological products, and for other purposes; to the Committee on Labor and Human Resources. the food and drug administration modernization and accountability act of 1997 Mr. JEFFORDS. Mr. President, today I am introducing legislation to modernize the Food and Drug Administration [FDA] and reauthorize the Prescription Drug User Fee Act for 5 years. This legislation comes as result of over 3 years of consideration by the Congress on steps that could be taken by the agency that would contribute to its mandate to protect the American public while ensuring that life-saving products could be made more readily available. FDA acknowledges that its mandate also requires it to regulate over one-third of our Nation's products. Within its purview the FDA regulates virtually all of the food and all of the cosmetics, medical devices, and drugs made available to our citizens. I believe, and several members of the Labor Committee share my belief, that in an organization the size of FDA there is always room for improvement and modernization. Our objective, which this legislation achieves, was identify areas where improvements could be made that will strengthen the agency's ability to approve safe and effective products more expeditiously. Last year, both the House and the Senate held numerous and extensive hearings on countless proposals for modernizing and reforming the FDA. The Senate Labor and Human Resources Committee successfully reported a bipartisan bill that sought to accomplish many of those reforms. But last year, acrimonious issues remained, time ran out and the bill did not receive floor consideration. This year I have resolved to move forward. I have been committed to addressing last year's most controversial issues. I believe that the legislation I am introducing today addresses virtually all of objections raised last year both in process and in content. This is a better bill and I believe that upon examination, my colleagues will agree that it accomplishes its goal. I want to comment a moment on the open, consensus-building process we followed in developing this legislation. The Labor Committee held two hearings. During the first the committee received testimony from the principal FDA Deputy Commissioner, Dr. Michael Friedman, and all of the FDA Center Directors. The second hearing included representatives from patient and consumer coalitions and from the food, drug, and medical device sectors regulated by the FDA. Committee members learned from the agency of the administrative reforms and the progress it has already undertaken, areas that remain a challenge, and those areas that require legislative authority to change. The committee listened to consumers' concerns with provisions that were considered last year that they felt would weaken the FDA's ability to protect the public health. Finally, the committee learned of the ongoing and needless delays and frustrations facing health care and consumer product sectors of our economy in working with the FDA. The committee learned of the frustrated attempts to work through the bureaucratic labyrinth of needless regulatory delays. Delays that prohibited people from getting access to vitally needed, life saving medical treatments, drugs, and devices. Since the finish of the committee's hearings we have engaged in an open, collaborative process that has given voice to each party wishing to be heard. For many of these meetings it is worth noting that the agency was a full, cooperating participant and we would not have been able to make the progress made without FDA's collaboration. Several meetings, essentially roundtable discussions, have occurred with bipartisan committee staff, the FDA, and each of the several sectors regulated by the agency. These meetings have given all the participants an opportunity to discuss problems and potential solutions and have been the basis for the consensus bill I am introducing today. Finally, committee staff have had numerous meetings to discuss key provisions in the bill with a wide range of consumer groups including, among others, the Patient Coalition, Public Citizen, the Centers for Science in the Public Interest, the Pediatric AIDS Foundation, and the National Organization for Rare Diseases. It should be clear that no person or group was excluded from this deliberative process. Let me turn to the content of this measure and the steps we have taken to respond to the controversies raised last year. Five key objections were raised against the FDA reform bill that had been reported on a strong bipartisan vote from the Labor and Human Resources Committee during the last Congress. In that vein, we have sought to and have accomplished addressing each of the substantive concerns raised by the minority. Last year's measure was criticized by some for the number of mandatory, but shortened, product review time frames that critics said would overburden the FDA and for the hammers that would have required FDA to contract out some product reviews or to give priority to products approved abroad. Today's legislation eliminates most of the mandatory time frames and retains only those necessary to ensure collaborative, more efficient reviews or to facilitate quick reviews of low risk products. The contracting out and European review hammers that would have forced FDA actions have been eliminated. Last year's provision allowing for third party, outside expert review were criticized for turning central regulatory authority decisions over to private industry, creating conflicts of interest, and depriving FDA of resources and expertise. Today's legislation adopts FDA's current system for accrediting and selecting third-party review organizations. The bill expands FDA's current pilot third-party review program beyond just the lowest risk devices and FDA retains final approval for all devices. Devices that are life- [[Page S5343]] supporting, life-sustaining, or implantable are excluded from third- party review. FDA may allow third-party review for higher risk devices at its sole discretion. This approval will allow FDA to retain, augment, and focus its expertise, at its discretion, on critical areas of its expanding workload. Last year's bill would have required FDA to contract out review of food additive petitions, medical devices, and drugs. Critics argued these changes would weaken consumer protections. We have modified these provisions to give FDA express authority to contract out when deemed by FDA to be more efficient or to add needed expertise. Thsi year the collaborative effort has continued. During our meetings FDA identified a number of enforcement powers that the agency believes will enhance its ability to protect the public health. We have included a number of FDA's specific requests. Many patient and consumer groups raised concerns about insufficient safeguards related to the fast-track drug approval process and the provision improving accelerated access to investigational products and we have adopted several of their key concerns. I would close by saying that this measure embodies a reasonable, moderate approach to balancing the agency's mandate to regulate over one-third of our Nation's economy and provide for the public health and safety with the compelling need to provide new, improved, safe, and effective products to the American public. It is a good bill and I look forward to working with my colleagues to improve it even further. ______ By Mr. SHELBY (for himself, Mr. Bond, Mr. Hagel, Mr. Hutchinson, and Mr. Coverdell): S. 831. A bill to amend chapter 8 of title 5, United States Code, to provide for congressional review of any rule promulgated by the Internal Revenue Service that increases Federal revenue, and for other purposes; to the Committee on Governmental Affairs. the stealth tax prevention act Mr. SHELBY. Mr. President, I rise today to introduce the Stealth Tax Prevention Act. Perhaps the most important power given to the Congress in the Constitution of the United States is bestowed in article I, section 8--the power to tax. This authority is vested in Congress because, as elected representatives, Congress remains accountable to the public when they lay and collect taxes. Last year, Mr. President, Congress passed the Congressional Review Act of 1996, which provides that when a major agency rule takes effect, Congress has 60 days to review it. During this time period, Congress has the option to pass a disapproval resolution. If no such resolution is passed, the rule then goes into effect. The Internal Revenue Service, as the President here knows, has enormous power to affect the lives and the livelihoods of American taxpayers through their authority to interpret the Tax Code. The Stealth Tax Prevention Act that I am introducing today, along with Senator Bond and Senator Hagel, will expand the definition of a major rule to include, Mr. President, any IRS regulation which increases Federal revenue. Why? Because we desperately need this today. For example, if the Office of Management and Budget finds that the implementation and enforcement of a rule has resulted in an increase of Federal revenues over current practices or revenues anticipated from the rule on the date of the enactment of the statute under which the rule is promulgated. Therefore, the Stealth Tax Prevention Act will allow Congress to review the regulation and take appropriate measures to avoid raising taxes on hard-working Americans, in most cases, small businesses. Mr. President, the Founding Fathers' intent, as you know, was to put the power to lay and collect taxes in the hands of elected Members of Congress, not in the hands of bureaucrats who are shielded from public accountability. It is appropriate, I believe, that the IRS's breach of authority is addressed, in light of the fact that we are celebrating this week Small Business Week. The discretionary authority of the Internal Revenue Service exposes small businesses, farmers, and others to the arbitrary whims of bureaucrats, thus creating an uncertain and, under certain cases, hostile environment in which to conduct day-to-day activities. Most of these people do not have lobbyists that work for them, other than their elected Representatives, the way it should be. The Stealth Tax Prevention Act will be particularly helpful in lowering the tax burden on small business which suffers disproportionately, Mr. President, from IRS regulations. This burden discourages the startup of new firms and ultimately the creation of new jobs in the economy, which has really made America great today. Americans pay Federal income taxes. They, Mr. President, as you well know, pay State income taxes. They pay property taxes. On the way to work in the morning they pay a gasoline tax when they fill up their car, and a sales tax when they buy a cup of coffee. Mr. President, average Americans in small businesses are saddled with the highest tax burden in our country's history. Allowing bureaucrats to increase taxes even further, at their own discretion through interpretation of the Tax Code is intolerable. The Stealth Tax Prevention Act will leave tax policy where it belongs, to elected Members of the Congress, not unelected and unaccountable IRS bureaucrats. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 831 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. CONGRESSIONAL REVIEW OF INTERNAL REVENUE SERVICE RULES THAT INCREASE REVENUE. (a) Short Title.--This Act may be cited as the ``Stealth Tax Prevention Act''. (b) In General.--Section 804(2) of title 5, United States Code, is amended to read as follows: ``(2) The term `major rule'-- ``(A) means any rule that-- ``(i) the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget finds has resulted in or is likely to result in-- ``(I) an annual effect on the economy of $100,000,000 or more; ``(II) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or ``(III) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets; or ``(ii)(I) is promulgated by the Internal Revenue Service; and ``(II) the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget finds that the implementation and enforcement of the rule has resulted in or is likely to result in any net increase in Federal revenues over current practices in tax collection or revenues anticipated from the rule on the date of the enactment of the statute under which the rule is promulgated; and ``(B) does not include any rule promulgated under the Telecommunications Act of 1996 and the amendments made by that Act.''. Mr. BOND. Mr. President, I rise today to join my distinguished colleague from Alabama, Senator Shelby, in introducing legislation to ensure that the Treasury Department's Internal Revenue Service does not usurp the power to tax--a power solely vested in Congress by the U.S. Constitution. The Stealth Tax Prevention Act will ensure that the duly elected representatives of the people, who are accountable to the electorate for our actions, will have discretion to exercise the power to tax. This legislation is intended to curb the ability of the Treasury Department to bypass Congress by proposing a tax increase without the authorization or consent of Congress. The Stealth Tax Prevention Act builds on legislation passed unanimously by the Senate just over 1 year ago. As chairman of the Committee on Small Business, I authored the Small Business Regulatory Enforcement Fairness Act--better known as the Red Tape Reduction Act-- to ensure that small businesses are treated fairly in agency rulemaking and enforcement activities. Subtitle E of the Red Tape Reduction Act provides that a final rule issued by a Federal agency and deemed a major rule by the Office of Information and Regulatory Affairs of the Office of Management and Budget [[Page S5344]] cannot go into effect for at least 60 days. This delay is to provide Congress with a window during which it can review the rule and its impact, allowing time for Congress to consider whether a resolution of disapproval should be enacted to strike down the regulation. To become effective, the resolution must pass both the House and Senate and be signed into law by the President or enacted as the result of a veto override. The bill Senator Shelby and I introduce today amends this law to provide that any rule issued by the Treasury Department's Internal Revenue Service that will result in a tax increase--any increase--will be deemed a major rule by OIRA and, consequently, not go into effect for at least 60 days. This procedural safeguard will ensure that the Department of the Treasury and its Internal Revenue Service cannot make an end-run around Congress, as it is currently attempting with the stealth tax it proposed on January 13. As my colleagues are aware, the IRS has issued a proposal that is tantamount to a tax increase on businesses structured as limited liability companies. The IRS proposal disqualifies a taxpayer from being considered as a limited partner if he or she ``participates in the partnership's trade or business for more than 500 hours during a taxable year'' or is involved in a ``service'' partnership, such as lawyers, accountants, engineers, architects, and health-care providers. The IRS alleges that its proposal merely interprets section 1402(a)(13) of the Tax Code, providing clarification, when in actuality it is a tax increase by regulatory fiat. Under the IRS proposal, disqualification as a limited partner will result in a tax increase on income from both capital investments as well as earnings of the partnership. The effect will be to add the self-employment tax--12.4 percent for social security and 2.9 percent for Medicare--to income from investments as well as earnings for limited partners that under current rules can exclude such income from the self-employment tax. Under the bill introduced today, the tax increase proposed by the Internal Revenue Service of the Treasury Department, if later issued as a final rule, could not go into effect for at least 60 days following its publication in the Federal Register. This window, which coincides with issuance of a report by the Comptroller General, would allow Congress the opportunity to review the rule and vote on a resolution to disapprove the tax increase before it is applied to a single taxpayer. The Stealth Tax Prevention Act strengthens the Red Tape Reduction Act and the vital procedural safeguards it provides to ensure that small businesses are not burdened unnecessarily by new Federal regulations. Congress enacted the 1966 provisions to strengthen the effectiveness of the Regulatory Flexibility Act, a law which had been ignored too often by Government agencies, especially the Internal Revenue Service. Three of the top recommendations of the 1995 White House Conference on Small Business sought reforms to the way Government regulations are developed and enforced, and the Red Tape Reduction Act passed the Senate without a single dissenting vote on its way to being signed into law last year. Despite the inclusion of language in the 1996 amendments that expressly addresses coverage of IRS interpretative rules, we find ourselves faced again with an IRS proposal that was not issued in compliance with the Regulatory Flexibility Act. As 18 of my Senate colleagues and I advised Secretary Rubin in an April letter, the proposed IRS regulation on limited partner taxation is precisely the type of rule for which a regulatory flexibility analysis should be done. Although, on its face, the rulemaking seeks merely to define a limited partner or to eliminate uncertainty in determining net earnings from self-employment, the real effect of the rule would be to raise taxes by executive fiat and expand substantially the spirit and letter of the underlying statute. The rule also seeks to impose on small businesses a burdensome new recordkeeping and collection of information requirement that would affect millions of limited partners and members of limited liability companies. The Treasury's IRS proposes this stealth tax increase with the knowledge that Congress declined to adopt a similar tax increase in the Health Security Act proposed in 1994--a provision that the Congressional Joint Committee on Taxation estimated in 1994 would have resulted in a tax increase of approximately $500 million per year. The Stealth Tax Prevention Act would remove any incentive for the Treasury Department to underestimate the cost imposed by an IRS proposed or final rule in an effort to skirt the administration's regulatory review process or its obligations under the Regulatory Flexibility Act. By amending the definition of major rule under the Congressional Review Act, which is subtitle E of the Red Tape Reduction Act, we ensure that an IRS rule that imposes a tax increase will be a major rule, whether or not it has an estimated annual effect on the economy of $100,000,000. Our amendment does not change the trigger for a regulatory flexibility analysis, which still will be required if a proposed rule would have a significant economic impact on a substantial number of small entities. We believe the heightened scrutiny of IRS regulations called for by this legislation will provide an additional incentive for the Treasury Department's Internal Revenue Service to meet all of its procedural obligations under the Regulatory Flexibility Act and the Red Tape Reduction Act. I urge my colleagues to join Senator Shelby and me in supporting this important legislation to ensure that the IRS not usurp the proper role of Congress--nor skirt its obligations to identify the impact of its proposed and final rules. Rules such as that currently proposed by the IRS should be carefully scrutinized by Congress. When the Department of the Treasury issues a final IRS rule that increases taxes, Congress should have the ability to exercise its discretion to enact a resolution of disapproval before the rule is applicable to a single taxpayer. The Stealth Tax Prevention Act Senator Shelby and I introduce today provides that opportunity. ______ By Mr. KOHL (for himself, Mr. Kerrey, Mr. Harkin, Mr. Hatch, Mr. Hagel, and Mr. Grassley): S. 832. A bill to amend the Internal Revenue Code of 1986 to increase the deductibility of business meal expenses for individuals who are subject to Federal limitations on hours of service; to the Committee on Finance. The Business Meal Deduction Fairness Act of 1997 Mr. KOHL. Mr. President, as my colleagues know, I am one of this body's strongest advocates for deficit reduction. I attribute much of my deep commitment to this goal to my days in business. As a businessman, I learned that you must balance your books and live within your means. I also learned that you must treat people fairly and admit when you have made a mistake. I have come to the floor to acknowledge that a mistake has been made, and must be corrected. In August 1993 we passed the omnibus budget reconciliation bill. I am proud to say that this legislation has helped to produce falling deficits and sustained economic growth. However, in our efforts to get our fiscal house in order we unfairly penalized a group of hard working, middle-class Americans: transportation workers. It is for this reason that I rise today, to reintroduce the business meal deduction fairness bill. This measure would increase the deductibility of business meals, from 50 to 80 percent, for individuals who are required to eat away from home due to the nature of their work. In the 1993 reconciliation bill was a provision which lowered the deductible portion of business meals and entertainment expenses from 80 to 50 percent. The change was aimed at the so-called three martini lunches and extravagant entertainment expenses of Wall Street financiers and Hollywood movie moguls. Unfortunately, the change also hit the average truck driver who eats chicken fried steak, hot roast beef sandwiches, and meatloaf in truck stops. And while those who entertain for business purposes can change their practices based on the tax law change, long-haul transportation workers often have no choice but to eat on the road. For these workers, the 1993 decrease in the meal deduction has translated into an undeserved decrease in take home pay. For example, when the allowable deduction was dropped in 1993, [[Page S5345]] it increased taxes on an average truck driver $700 to $2,000 per year. This is a huge increase for a truck driver who normally earns $27,000 to $35,000 per year. Our legislation would increase the take-home pay of hard working, middle-class Americans who were inadvertently hurt by changes in the tax law in 1993. Workers who, due to regulations limiting travel hours, must eat out. They have no control over the length of their trips, the amount of time they must rest during a delivery, or, in many cases, the places they can stop and eat. This legislation is straight forward. It would simply restore the business meal expense deduction to 80 per cent for individuals subject to the Department of Transportation's hours-of- service limitations. I will be the first to admit that the budget deficit is the No. 1 economic problem facing this country. Since being elected to the Senate, I have fought to eliminate this destructive drain on our ability to grow and compete in the world economy, but I have fought to do so in a fair manner. The 1993 reconciliation bill closed a loophole and unintentionally trapped some very hard working Americans. We need to acknowledge that a mistake was made and take the opportunity of a tax bill moving this year to fix that mistake. Therefore my colleagues, Senators Kerrey, Harkin, Hatch, Hagel, Grassley and I are requesting the support and assistance of this entire body to ensure that the business meal deduction fairness bill becomes law. Mr. President, I ask unanimous consent that a copy of my legislation be printed in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 832 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF SERVICE. (a) In General.--Section 274(n) of the Internal Revenue Code of 1986 (relating to only 50 percent of meal and entertainment expenses allowed as deduction) is amended by adding at the end the following new paragraph: ``(3) Special rule for individuals subject to federal limitations on hours of service.--In the case of any expenses for food or beverages consumed by an individual during, or incident to, any period of duty which is subject to the hours of service limitations of the Department of Transportation, paragraph (1) shall be applied by substituting `80 percent' for `50 percent'.'' (b) Effective Date.--The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1997. ______ By Mr. LAUTENBERG (for himself, Mr. DeWine, Mr. Glenn, and Mr. Hatch): S. 833. A bill to designate the Federal building courthouse at Public Square and Superior Avenue in Cleveland, Ohio, as the ``Howard M. Metzenbaum United States Courthouse''; to the Committee on Environment and Public Works. the howard m. metzenbaum united states courthouse designation act of 1997 Mr. LAUTENBERG. Mr. President, I rise today to congratulate my dear friend and former colleague, Howard Metzenbaum, on the occasion of his 80th birthday. In his honor, I am introducing a bill that would designate the Federal Building Courthouse in Cleveland, OH, as the ``Howard M. Metzenbaum United States Courthouse.'' I am joined by Ohio's two Senators, Senator Glenn and Senator DeWine. Mr. President, I propose naming a courthouse after Howard because a courthouse is a symbol of justice where all people can come and be treated equally under the law. Howard Metzenbaum deserves this honor because he was a dedicated public servant, who served his home State of Ohio for 18 years in the U.S. Senate. Howard's sense of fairness and equality for all Americans led one of his former colleagues to suggest that Howard would have made an exceptional U.S. Supreme Court Justice when he retired from the Senate in 1994. Mr. President, naming a courthouse after Howard is only a small gesture in attempting to remember a man so committed to justice and fairness. Howard's contributions to the Senate are extraordinary, so we should commemorate his unique contribution by celebrating his 80th year, his 18 years in the United States Senate, and also the special character he brought to our body. I pay tribute today to a man who always stood up for what he believed was right, fighting hard to preserve opportunity for those yet to come. As a Senator, Howard had a broad range of interests and he pursued them with dogged perseverance, sincerity, and clarity. Howard and I worked on many issues together during our time in the Senate. Individual rights and environmental preservation were major concerns. He poured his energy into clean air protection, nuclear regulation, cleaning up superfund sites, and recycling. Howard provided strong leadership on antitrust issues as Chairman of the Subcommittee on Antitrust, Monopolies and Business Rights on the Judiciary Committee. He was a persistent gun control advocate, taking the lead on many antigun initiatives in the Senate. He was one of the lead sponsors of the Brady bill handgun purchase waiting period, as well as the bans on assault weapons and plastic explosives. But Howard's true passions lay with America's underprivileged and needy communities, which never had a bolder champion. His work on behalf of the poor, the disabled, and the elderly reflect his remarkable compassion for those members of society who face challenges that many of us cannot fully appreciate. He tirelessly defended their interests and fought for their protection. He was dedicated to eradicating discrimination, ensuring adequate health care to those in need, and boosting public education. It has been said many times, but for good reason, that Howard brought not only his conscience to the Senate, but also the courage to act on his convictions. Howard remains a good friend to me, but he was also a mentor and a teacher during his years in the Senate. He gave me good advice and plenty of it. And, I might add, he continues to do so today, which I welcome. But more than that, his dedication to the office of United States Senator is an example by which to live. He stood tall for the little people. Some will affectionately remember Howard as determined, argumentative, and even ``irascible.'' I cannot deny that those words come to my mind every now and then, when describing Howard. He was always at his best then, and for good reason. I heard it said by one Senator, and not a good friend: ``If there wasn't a Metzenbaum here, we'd have to invent one to keep us alert.'' I have missed working with Howard Metzenbaum in this great institution, a place that has been truly enhanced by his presence. I salute him on celebrating his 80th year. I ask unanimous consent that the text of the bill appear at the appropriate place in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 833 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. DESIGNATION OF HOWARD M. METZENBAUM UNITED STATES COURTHOUSE. The Federal building courthouse at Public Square and Superior Avenue in Cleveland, Ohio, shall be known and designated as the ``Howard M. Metzenbaum United States Courthouse''. SEC. 2. REFERENCES. Any reference in a law, map, regulation, document, paper, or other record of the United States to the Federal building courthouse referred to in section 1 shall be deemed to be a reference to the ``Howard M. Metzenbaum United States Courthouse''. ______ By Mr. HARKIN (for himself and Mr. Reed): S. 834. A bill to amend the Public Health Service Act to ensure adequate research and education regarding the drug DES; to the Committee on Labor and Human Resources. the DES Research and Education Amendments of 1997 Mr. HARKIN. Mr. President, today I am pleased to be joined by my distinguished colleague from Rhode Island, Senator Reed, in introducing an important women's health initiative. The DES Research and Education Amendments of 1997 would extend and expand our effort to assist the over 5 million Americans who have been exposed to [[Page S5346]] the drug, DES. Representative Louise Slaughter, a long-time leader on this issue, is introducing companion legislation today in the other body. Between 1938 and 1971, some 5 million American women were given the synthetic drug, diethylstilbestrol, commonly known as DES. Women were given the drug during pregnancy in the mistaken belief it would help prevent miscarriage. The drug was pulled from the market based on studies that found that it was ineffective and might result in damage to children born to the women who had been given it. Since the 1970's, studies have shown that DES does damage the reproductive systems of those exposed in utero and increases these individuals' risk for cancer, infertility, and a wide range of other serious reproductive tract disorders. The women exposed in utero to DES are five times more likely to have an ectopic pregnancy and three times more likely to miscarry when they in turn try to have children. Studies also show that one of every thousand women exposed to DES in utero will develop clear cell cancer. Women who took DES have also been found to face a higher risk for breast cancer. In 1992, while there had been a number of research studies on DES exposure and its effects, much more research was necessary. That year, President Bush signed legislation introduced by myself and Representative Slaughter, that mandated a significant increase in DES research supported by the National Institutes of Health [NIH]. Our legislation also required NIH to support long-term studies of Americans impacted by this drug. Those studies are now underway and must be continued. The legislation we are introducing today will ensure that this critical medical research continues. In addition, there is now preliminary evidence that the grandkids of women who took DES may also be at higher risk for certain health problems, and this legislation would help ensure that further research into this is supported. Another major problem in this area is that millions of Americans don't know the risks they face because of their exposure to DES. Many health professionals who see these people also lack sufficient information about DES exposure and the appropriate steps that should be taken to identify and assist their patients. As a result, many people do not seek or get the appropriate preventive care or take appropriate preventive measures to reduce their risks of adverse affects. For example, women exposed to DES in utero and therefore at higher risk of miscarriage may be able to reduce their risks with appropriate precautionary steps. In an initial attempt to address this need for better information, our 1992 legislation required NIH to test ways to educate the public and health professionals about how to deal with DES exposure. The legislation we are introducing today would give people across the Nation access to the information developed through these pilot programs by requiring a national consumer and health professional education effort. Mr. President, we took a very important step in 1992 to begin to address the significant problem presented by DES exposure. And we did it with strong bipartisan cooperation between a Democratic Congress and a Republican President. That legislation expires this year. We need to make sure that the progress we've made is continued. The 5 million Americans whose health is at risk are depending on us to work together to make sure that happens. I urge my colleagues to join me in support of that effort. I ask unanimous consent that a copy of the legislation be included in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 834 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``DES Research and Education Amendments of 1997''. SEC. 2. FINDINGS. With respect to diethylstilbestrol (a drug commonly known as DES), the Congress finds as follows: (1) DES was widely prescribed to American women from 1938 to 1971 in the mistaken belief it would prevent miscarriage. Approximately 5,000,000 pregnant women took the drug, resulting in DES exposure for approximately 5,000,000 daughters and sons. (2) Studies conducted since the 1970s have shown that DES damages the reproductive systems of those exposed in utero and increases the risk for cancer, infertility, and a wide range of other serious reproductive tract disorders. These disorders include a five-fold increased risk for ectopic pregnancy for DES daughters and a three-fold increase in risk for miscarriage and preterm labor. Studies have indicated that exposure to DES may increase the risk for autoimmune disorders and diseases. (3) An estimated 1 in 1,000 women exposed to DES in utero will develop clear cell cancer of the vagina or cervix. While survival rates for clear cell cancer are over 80 percent when it is detected early, there is still no effective treatment for recurrences of this cancer. (4) Studies also indicate a higher incidence of breast cancer among mothers who took DES during pregnancy. (5) While research on DES and its effects has produced important advances to date, much more remains to be learned. (6) Preliminary research results indicate that DES exposure may have a genetic impact on the third generation--the children of parents exposed to DES in utero--and that estrogen replacement therapy may not be advisable for DES- exposed women. (7) All DES-exposed individuals have special screening and health care needs, especially during gynecological exams and pregnancy for DES daughters, who should receive high risk care. (8) Many Americans remain unaware of their DES exposure or ignorant about proper health care and screening. There remains a great need for a national education effort to inform both the public and health care providers about the health effects and proper health care practices for DES- exposed individuals. SEC. 3. REVISION AND EXTENSION OF PROGRAM FOR RESEARCH AND AUTHORIZATION OF NEW NATIONAL PROGRAM OF EDUCATION REGARDING DRUG DES. (a) Permanent Extension of General Program.--Section 403A(e) of the Public Health Service Act (42 U.S.C. 283a(e)) is amended by striking ``for each of the fiscal years 1993 through 1996'' and inserting ``for fiscal year 1997 and each subsequent fiscal year''. (b) National Program for Education of Health Professionals and Public.--From amounts appropriated for carrying out section 403A of the Public Health Service Act (42 U.S.C. 283a), the Secretary of Health and Human Services, acting through the heads of the appropriate agencies of the Public Health Service, shall carry out a national program for the education of health professionals and the public with respect to the drug diethylstilbestrol (commonly known as DES). To the extent appropriate, such national program shall use methodologies developed through the education demonstration program carried out under such section 403A. In developing and carrying out the national program, the Secretary shall consult closely with representatives of nonprofit private entities that represent individuals who have been exposed to DES and that have expertise in community-based information campaigns for the public and for health care providers. The implementation of the national program shall begin during fiscal year 1998. ______ By Mr. ABRAHAM (for himself, Mr. McConnell, Mr. Coverdell, Mr. Santorum, Mr. McCain and Mr. Ashcroft): S. 836. A bill to offer small businesses certain protections from litigation excesses; to the Committee on the Judiciary. The Small Business Lawsuit Abuse Protection Act of 1997 Mr. ABRAHAM. Mr. President, I rise today to introduce the Small Business Lawsuit Abuse Protection Act of 1997. This bill will provide targeted relief from litigation excesses to small businesses. Small businesses in Michigan and across the Nation have faced increasingly burdensome litigation and desperately need relief from unwarranted and costly lawsuits. While other sectors of our society and our economy also need relief from litigation excesses, small businesses by their very nature are particularly vulnerable to lawsuit abuses and especially unable to bear the high costs of unjustified and unfair litigation against them. As this week is Small Business Week, it provides a fine opportunity for us to focus on relieving the burdens faced by small businesses. Small businesses represent the engine of our growing economy and provide countless benefits to communities across America. The Research Institute for Small and Emerging Business, for example, has estimated that there are over 20 million small businesses in America and that small businesses generate 50 percent of the country's private sector output. When I was in Michigan last week over the Memorial Day recess, I heard story after story from small businesses about the constraints, limitations, and [[Page S5347]] fear imposed on them by the threat of abusive and unwarranted litigation. I also heard about the high costs that they must pay for liability insurance. Those represent costs that could be going to expand small businesses, to provide more jobs, or to offer more benefits. According to a recent Gallup survey, one out of every five small businesses decides not to hire more employees, expand its business, introduce a new product, or improve an existing one out of fear of lawsuits. Before the Memorial Day recess, Congress passed the Volunteer Protection Act, which--if signed by the President--will provide specific protections from abusive litigation to volunteers. The Senate passed that legislation by an overwhelming margin of 99 to 1. That legislation provides a model for further targeted reforms for sectors that are particularly hard hit and in need of immediate relief. Small businesses have carried an often unbearable load from unwarranted and unjustified lawsuits. Data from San Diego's superior court published by the Washington Legal Foundation revealed that punitive damages were requested in 41 percent of suits against small businesses. It is unfathomable that such a large proportion of our small businesses are engaging in the sort of egregious misconduct that would warrant a claim of punitive damages. Unfortunately, those sort of findings are not unusual. The National Federation of Independent Business has reported that 34 percent of Texas small business owners have been sued or threatened with court action seeking punitive damages. Those figures are outrageously high and simply cannot have anything to do with actual wrongdoing. We know of far too many examples of expensive and ridiculous legal threats faced by our small businesses that they must defend every day. In a case reported by the American Consulting Engineers Council, a drunk driver had an accident after speeding and bypassing detour signs. Eight hours after the crash, the driver had a blood alcohol level of 0.09. The driver sued the engineering firm that designed the road, the contractor, the subcontractor, and the State highway department. Five years later, and after expending exorbitant amounts on legal fees, the defendants settled the case for $35,000. The engineering firm--a small 15 person firm--was swamped with over $200,000 in legal costs. That represents an intolerable amount for a small business to have to pay in defending a questionable and unwarranted lawsuit. There are more examples. In an Ann Landers column from October 1995, a case was reported that involved a minister and his wife who sued a guide dog school for $160,000 after a blind man who was learning to use a seeing-eye dog stepped on the woman's toes in a shopping mall. The guide dog school, Southeastern Guide Dogs, Inc., which provided the instructor supervising the man, was the only school of its kind in the Southeast. It trains seeing-eye dogs at no cost to the visually impaired. The couple filed their lawsuit 13 months after the so-called accident, in which witnesses reported that the woman did not move out of the blind man's way because she wanted to see if the dog would walk around her. The experiences of a small business in Michigan, the Michigan Furnace Co., is likewise alarming. The plawsuit in the history of her company has been a nuisance lawsuit. She indicates that if the money the company spends on liability insurance and legal fees was distributed among the employees, it would amount to a $10,000 annual raise per employee. These costs are stifling our small businesses and the people who work there. The straightforward provisions of the Small Business Lawsuit Abuse Protection Act will provide small businesses with relief by discouraging abusive litigation. The bill contains essentially two principal reforms. First, the bill limits punitive damages that may be awarded against a small business. In most civil lawsuits against small businesses, punitive damages would be available against the small business only if the claimant proves by clear and convincing evidence that the harm was caused by the small business through at least a conscious, flagrant indifference to the rights and safety of the claimant. Punitive damages would also be limited in amount. Punitive damages would be limited to the lesser of $250,000 or two times the compensatory damages awarded for the harm. That formulation is exactly the same formulation that appears in the small business protection provision that was included in the product liability conference report that passed in the 104th Congress. Second, joint and several liability reforms for small businesses are included under the exact same formulation that was used both in the Volunteer Protection Act passed this Congress and in the product liability conference report passed last Congress. Joint and several liability would be limited so that a small business would be liable for noneconomic damages only in proportion to the small business's responsibility for causing the harm. If a small business is responsible for 100% of an accident, then it will be liable for 100% of noneconomic damages. But if it is only 70%, 25%, 10%, or any other amount responsible, then the small business will be liable only for that same percent of noneconomic damages. Of course, small businesses would still be jointly and severally liable for economic damages, and any other defendants in the action that were not small businesses could be held jointly and severally liable for all damages. This should provide some protection to small businesses so that they will not be sought out as ``deep pocket'' defendants by trial lawyers who would otherwise try to get them on the hook for harms that they have not caused. The fact is that many small businesses simply do not have deep pockets, and they frequently need all of their resources just to stay in business, take care of their employees, and make ends meet. The other provisions in the bill specify the situations in which those reforms apply. The bill defines small business as any business having fewer than 25 employees. That is the same definition of small business that was included in the Product Liability Conference Report. Like the Volunteer Protection Act, this bill covers all civil lawsuits with the exception of suits involving certain types of egregious conduct. The limitations on liability included in the bill would not apply to any misconduct that constitutes a crime of violence, act of international terrorism, hate crime, sexual offense, or civil rights law violation, or which occurred while the defendant was under the influence of intoxicating alcohol or any drug. Also like the Volunteer Protection Act, the bill includes a State opt-out. A State would be able to opt out of the provisions of the bill provided the State enacts a law indicating its election to do so and containing no other provisions. I do not expect that any State will opt-out of these provisions, but I feel it is important to include one out of respect for principles of federalism. I am pleased to have Senators McConnell, Coverdell, Santorum and McCain as original cosponsors of the legislation and very much appreciate their support for our small businesses and for meaningful litigation reforms. The bill is also supported by the National Federation of Independent Business and by the National Restaurant Association. I ask unanimous consent that letters from those two organizations be inserted in the Record. Finally, I ask unanimous consent that a section-by-section analysis of the bill be printed in the Record, as well as the full text of the bill, and I encourage my colleagues to support this simple and much- needed legislation. There being no objection, the material was ordered to be printed in the Record, as follows: S. 836 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Small Business Lawsuit Abuse Protection Act of 1997''. SEC. 2. FINDINGS. Congress finds that-- (1) the United States civil justice system is inefficient, unpredictable, unfair, costly, and impedes competitiveness in the marketplace for goods, services, business, and employees; (2) the defects in the civil justice system have a direct and undesirable effect on interstate commerce by decreasing the availability of goods and services in commerce; (3) there is a need to restore rationality, certainty, and fairness to the legal system; (4) the spiralling costs of litigation and the magnitude and unpredictability of punitive [[Page S5348]] damage awards and noneconomic damage awards have continued unabated for at least the past 30 years; (5) the Supreme Court of the United States has recognized that a punitive damage award can be unconstitutional if the award is grossly excessive in relation to the legitimate interest of the government in the punishment and deterrence of unlawful conduct; (6) just as punitive damage awards can be grossly excessive, so can it be grossly excessive in some circumstances for a party to be held responsible under the doctrine of joint and several liability for damages that party did not cause; (7) as a result of joint and several liability, entities including small businesses are often brought into litigation despite the fact that their conduct may have little or nothing to do with the accident or transaction giving rise to the lawsuit, and may therefore face increased and unjust costs due to the possibility or result of unfair and disproportionate damage awards; (8) the costs imposed by the civil justice system on small businesses are particularly acute, since small businesses often lack the resources to bear those costs and to challenge unwarranted lawsuits; (9) due to high liability costs and unwarranted litigation costs, small businesses face higher costs in purchasing insurance through interstate insurance markets to cover their activities; (10) liability reform for small businesses will promote the free flow of goods and services, lessen burdens on interstate commerce, and decrease litigiousness; and (11) legislation to address these concerns is an appropriate exercise of Congress powers under Article I, section 8, clauses 3, 9, and 18 of the Constitution, and the fourteenth amendment to the Constitution. SEC. 3. DEFINITIONS. In this Act: (1) Act of international terrorism.--The term ``act of international terrorism'' has the same meaning as in section 2331 of title 18, United States Code). (2) Crime of violence.--The term ``crime of violence'' has the same meaning as in section 16 of title 18, United States Code. (3) Drug.--The term ``drug'' means any controlled substance (as that term is defined in section 102 of the Controlled Substances Act (21 U.S.C. 802(b)) that was not legally prescribed for use by the defendant or that was taken by the defendant other than in accordance with the terms of a lawfully issued prescription. (4) Economic loss.--The term ``economic loss'' means any pecuniary loss resulting from harm (including the loss of earnings or other benefits related to employment, medical expense loss, replacement services loss, loss due to death, burial costs, and loss of business or employment opportunities) to the extent recovery for such loss is allowed under applicable State law. (5) Harm.--The term ``harm'' includes physical, nonphysical, economic, and noneconomic losses. (6) Hate crime.--The term ``hate crime'' means a crime described in section 1(b) of the Hate Crime Statistics Act (28 U.S.C. 534 note)). (7) Noneconomic losses.--The term ``noneconomic losses'' means losses for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), injury to reputation, and all other nonpecuniary losses of any kind or nature. (8) Small business.-- (A) In general.--The term ``small business'' means any unincorporated business, or any partnership, corporation, association, unit of local government, or organization that has less than 25 full-time employees. (B) Calculation of number of employees.--For purposes of subparagraph (A), the number of employees of a subsidiary of a wholly-owned corporation includes the employees of-- (i) a parent corporation; and (ii) any other subsidiary corporation of that parent corporation. (10) State.--The term ``State'' means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, any other territory or possession of the United States, or any political subdivision of any such State, territory, or possession. SEC. 4. LIMITATION ON PUNITIVE DAMAGES FOR SMALL BUSINESSES. (a) General Rule.--Except as provided in section 6, in any civil action against a small business, punitive damages may, to the extent permitted by applicable State law, be awarded against the small business only if the claimant establishes by clear and convincing evidence that conduct carried out by that defendant through willful misconduct or with a conscious, flagrant indifference to the rights or safety of others was the proximate cause of the harm that is the subject of the action. (b) Limitation on Amount.--In any civil action against a small business, punitive damages shall not exceed the lesser of-- (1) two times the total amount awarded to the claimant for economic and noneconomic losses; or (2) $250,000. (c) Application by Court.--This section shall be applied by the court and shall not be disclosed to the jury. SEC. 5. LIMITATION ON SEVERAL LIABILITY FOR NONECONOMIC LOSS FOR SMALL BUSINESSES. (a) General Rule.--Except as provided in section 6, in any civil action against a small business, the liability of each defendant that is a small business, or the agent of a small business, for noneconomic loss shall be determined in accordance with subsection (b). (b) Amount of Liability.-- (1) In General.--In any civil action described in subsection (a)-- (A) each defendant described in that subsection shall be liable only for the amount of noneconomic loss allocated to that defendant in direct proportion to the percentage of responsibility of that defendant (determined in accordance with paragraph (2)) for the harm to the claimant with respect to which the defendant is liable; and (B) the court shall render a separate judgment against each defendant described in that subsection in an amount determined pursuant to subparagraph (A). (2) Percentage of responsibility.--For purposes of determining the amount of noneconomic loss allocated to a defendant under this section, the trier of fact shall determine the percentage of responsibility of each person responsible for the harm to the claimant, regardless of whether or not the person is a party to the action. SEC. 6. EXCEPTIONS TO LIMITATIONS ON LIABILITY. The limitations on liability under sections 4 and 5 do not apply to any misconduct of a defendant-- (1) that constitutes-- (A) a crime of violence; (B) an act of international terrorism; or (C) a hate crime; (2) that involves-- (A) a sexual offense, as defined by applicable State law; or (B) a violation of a Federal or State civil rights law; or (3) if the defendant was under the influence (as determined pursuant to applicable State law) of intoxicating alcohol or a drug at the time of the misconduct, and the fact that the defendant was under the influence was the cause of any harm alleged by the plaintiff in the subject action. SEC. 7. PREEMPTION AND ELECTION OF STATE NONAPPLICABILITY. (a) Preemption.--Subject to subsection (b), this Act preempts the laws of any State to the extent that State laws are inconsistent with this Act, except that this Act shall not preempt any State law that provides additional protections from liability for small businesses. (b) Election of State Regarding Nonapplicability.--This Act does not apply to any action in a State court against a small business in which all parties are citizens of the State, if the State enacts a statute-- (1) citing the authority of this subsection; (2) declaring the election of such State that this Act does not apply as of a date certain to such actions in the State; and (3) containing no other provision. SEC. 8. EFFECTIVE DATE. (a) In General.--This Act shall take effect 90 days after the date of enactment of this Act. (b) Application.--This Act applies to any claim for harm caused by an act or omission of a small business, if the claim is filed on or after the effective date of this Act, without regard to whether the harm that is the subject of the claim or the conduct that caused the harm occurred before such effective date. ____ Section-by-Section Analysis--The Small Business Lawsuit Abuse Protection Act of 1997 section 1. short title This section provides that the act may be cited as the ``Small Business Lawsuit Abuse Protection Act of 1997.'' section 2. findings This section sets out congressional findings concerning the litigation excesses facing small businesses, and the need for litigation reforms to provide certain protections to small businesses from abusive litigation. section 3. definitions Various terms used in the bill are defined in the section. Significantly, for purposes of the legislation, a small business is defined as any business or organization with fewer than 25 full time employees. section 4. limitation on punitive damages for small businesses The bill provides that punitive damages may, to the extent permitted by applicable State law, be awarded against a defendant that is a small business only if the claimant establishes by clear and convincing evidence that conduct carried out by that defendant with a conscious, flagrant indifference to the rights or safety of others was the proximate cause of the harm that is the subject of the action. The bill also limits the amount of punitive damages that may be awarded against a small business. In any civil action against a small business, punitive damages may not exceed the lesser of two times the amount awarded to the claimant for economic and noneconomic losses, or $250,000. section 5. limitation on several liability for noneconomic loss for small businesses This section provides that, in any civil action against a small business, for each defendant that is a small business, the liability of that defendant for noneconomic loss will be in proportion to that defendant's responsibility for causing the harm. Those defendants would continue, however, to be held [[Page S5349]] jointly and severally liable for

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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
(Senate - June 05, 1997)

Text of this article available as: TXT PDF [Pages S5342-S5368] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. JEFFORDS: S. 830. A bill to amend the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act to improve the regulation of food, drugs, devices, and biological products, and for other purposes; to the Committee on Labor and Human Resources. the food and drug administration modernization and accountability act of 1997 Mr. JEFFORDS. Mr. President, today I am introducing legislation to modernize the Food and Drug Administration [FDA] and reauthorize the Prescription Drug User Fee Act for 5 years. This legislation comes as result of over 3 years of consideration by the Congress on steps that could be taken by the agency that would contribute to its mandate to protect the American public while ensuring that life-saving products could be made more readily available. FDA acknowledges that its mandate also requires it to regulate over one-third of our Nation's products. Within its purview the FDA regulates virtually all of the food and all of the cosmetics, medical devices, and drugs made available to our citizens. I believe, and several members of the Labor Committee share my belief, that in an organization the size of FDA there is always room for improvement and modernization. Our objective, which this legislation achieves, was identify areas where improvements could be made that will strengthen the agency's ability to approve safe and effective products more expeditiously. Last year, both the House and the Senate held numerous and extensive hearings on countless proposals for modernizing and reforming the FDA. The Senate Labor and Human Resources Committee successfully reported a bipartisan bill that sought to accomplish many of those reforms. But last year, acrimonious issues remained, time ran out and the bill did not receive floor consideration. This year I have resolved to move forward. I have been committed to addressing last year's most controversial issues. I believe that the legislation I am introducing today addresses virtually all of objections raised last year both in process and in content. This is a better bill and I believe that upon examination, my colleagues will agree that it accomplishes its goal. I want to comment a moment on the open, consensus-building process we followed in developing this legislation. The Labor Committee held two hearings. During the first the committee received testimony from the principal FDA Deputy Commissioner, Dr. Michael Friedman, and all of the FDA Center Directors. The second hearing included representatives from patient and consumer coalitions and from the food, drug, and medical device sectors regulated by the FDA. Committee members learned from the agency of the administrative reforms and the progress it has already undertaken, areas that remain a challenge, and those areas that require legislative authority to change. The committee listened to consumers' concerns with provisions that were considered last year that they felt would weaken the FDA's ability to protect the public health. Finally, the committee learned of the ongoing and needless delays and frustrations facing health care and consumer product sectors of our economy in working with the FDA. The committee learned of the frustrated attempts to work through the bureaucratic labyrinth of needless regulatory delays. Delays that prohibited people from getting access to vitally needed, life saving medical treatments, drugs, and devices. Since the finish of the committee's hearings we have engaged in an open, collaborative process that has given voice to each party wishing to be heard. For many of these meetings it is worth noting that the agency was a full, cooperating participant and we would not have been able to make the progress made without FDA's collaboration. Several meetings, essentially roundtable discussions, have occurred with bipartisan committee staff, the FDA, and each of the several sectors regulated by the agency. These meetings have given all the participants an opportunity to discuss problems and potential solutions and have been the basis for the consensus bill I am introducing today. Finally, committee staff have had numerous meetings to discuss key provisions in the bill with a wide range of consumer groups including, among others, the Patient Coalition, Public Citizen, the Centers for Science in the Public Interest, the Pediatric AIDS Foundation, and the National Organization for Rare Diseases. It should be clear that no person or group was excluded from this deliberative process. Let me turn to the content of this measure and the steps we have taken to respond to the controversies raised last year. Five key objections were raised against the FDA reform bill that had been reported on a strong bipartisan vote from the Labor and Human Resources Committee during the last Congress. In that vein, we have sought to and have accomplished addressing each of the substantive concerns raised by the minority. Last year's measure was criticized by some for the number of mandatory, but shortened, product review time frames that critics said would overburden the FDA and for the hammers that would have required FDA to contract out some product reviews or to give priority to products approved abroad. Today's legislation eliminates most of the mandatory time frames and retains only those necessary to ensure collaborative, more efficient reviews or to facilitate quick reviews of low risk products. The contracting out and European review hammers that would have forced FDA actions have been eliminated. Last year's provision allowing for third party, outside expert review were criticized for turning central regulatory authority decisions over to private industry, creating conflicts of interest, and depriving FDA of resources and expertise. Today's legislation adopts FDA's current system for accrediting and selecting third-party review organizations. The bill expands FDA's current pilot third-party review program beyond just the lowest risk devices and FDA retains final approval for all devices. Devices that are life- [[Page S5343]] supporting, life-sustaining, or implantable are excluded from third- party review. FDA may allow third-party review for higher risk devices at its sole discretion. This approval will allow FDA to retain, augment, and focus its expertise, at its discretion, on critical areas of its expanding workload. Last year's bill would have required FDA to contract out review of food additive petitions, medical devices, and drugs. Critics argued these changes would weaken consumer protections. We have modified these provisions to give FDA express authority to contract out when deemed by FDA to be more efficient or to add needed expertise. Thsi year the collaborative effort has continued. During our meetings FDA identified a number of enforcement powers that the agency believes will enhance its ability to protect the public health. We have included a number of FDA's specific requests. Many patient and consumer groups raised concerns about insufficient safeguards related to the fast-track drug approval process and the provision improving accelerated access to investigational products and we have adopted several of their key concerns. I would close by saying that this measure embodies a reasonable, moderate approach to balancing the agency's mandate to regulate over one-third of our Nation's economy and provide for the public health and safety with the compelling need to provide new, improved, safe, and effective products to the American public. It is a good bill and I look forward to working with my colleagues to improve it even further. ______ By Mr. SHELBY (for himself, Mr. Bond, Mr. Hagel, Mr. Hutchinson, and Mr. Coverdell): S. 831. A bill to amend chapter 8 of title 5, United States Code, to provide for congressional review of any rule promulgated by the Internal Revenue Service that increases Federal revenue, and for other purposes; to the Committee on Governmental Affairs. the stealth tax prevention act Mr. SHELBY. Mr. President, I rise today to introduce the Stealth Tax Prevention Act. Perhaps the most important power given to the Congress in the Constitution of the United States is bestowed in article I, section 8--the power to tax. This authority is vested in Congress because, as elected representatives, Congress remains accountable to the public when they lay and collect taxes. Last year, Mr. President, Congress passed the Congressional Review Act of 1996, which provides that when a major agency rule takes effect, Congress has 60 days to review it. During this time period, Congress has the option to pass a disapproval resolution. If no such resolution is passed, the rule then goes into effect. The Internal Revenue Service, as the President here knows, has enormous power to affect the lives and the livelihoods of American taxpayers through their authority to interpret the Tax Code. The Stealth Tax Prevention Act that I am introducing today, along with Senator Bond and Senator Hagel, will expand the definition of a major rule to include, Mr. President, any IRS regulation which increases Federal revenue. Why? Because we desperately need this today. For example, if the Office of Management and Budget finds that the implementation and enforcement of a rule has resulted in an increase of Federal revenues over current practices or revenues anticipated from the rule on the date of the enactment of the statute under which the rule is promulgated. Therefore, the Stealth Tax Prevention Act will allow Congress to review the regulation and take appropriate measures to avoid raising taxes on hard-working Americans, in most cases, small businesses. Mr. President, the Founding Fathers' intent, as you know, was to put the power to lay and collect taxes in the hands of elected Members of Congress, not in the hands of bureaucrats who are shielded from public accountability. It is appropriate, I believe, that the IRS's breach of authority is addressed, in light of the fact that we are celebrating this week Small Business Week. The discretionary authority of the Internal Revenue Service exposes small businesses, farmers, and others to the arbitrary whims of bureaucrats, thus creating an uncertain and, under certain cases, hostile environment in which to conduct day-to-day activities. Most of these people do not have lobbyists that work for them, other than their elected Representatives, the way it should be. The Stealth Tax Prevention Act will be particularly helpful in lowering the tax burden on small business which suffers disproportionately, Mr. President, from IRS regulations. This burden discourages the startup of new firms and ultimately the creation of new jobs in the economy, which has really made America great today. Americans pay Federal income taxes. They, Mr. President, as you well know, pay State income taxes. They pay property taxes. On the way to work in the morning they pay a gasoline tax when they fill up their car, and a sales tax when they buy a cup of coffee. Mr. President, average Americans in small businesses are saddled with the highest tax burden in our country's history. Allowing bureaucrats to increase taxes even further, at their own discretion through interpretation of the Tax Code is intolerable. The Stealth Tax Prevention Act will leave tax policy where it belongs, to elected Members of the Congress, not unelected and unaccountable IRS bureaucrats. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 831 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. CONGRESSIONAL REVIEW OF INTERNAL REVENUE SERVICE RULES THAT INCREASE REVENUE. (a) Short Title.--This Act may be cited as the ``Stealth Tax Prevention Act''. (b) In General.--Section 804(2) of title 5, United States Code, is amended to read as follows: ``(2) The term `major rule'-- ``(A) means any rule that-- ``(i) the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget finds has resulted in or is likely to result in-- ``(I) an annual effect on the economy of $100,000,000 or more; ``(II) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or ``(III) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets; or ``(ii)(I) is promulgated by the Internal Revenue Service; and ``(II) the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget finds that the implementation and enforcement of the rule has resulted in or is likely to result in any net increase in Federal revenues over current practices in tax collection or revenues anticipated from the rule on the date of the enactment of the statute under which the rule is promulgated; and ``(B) does not include any rule promulgated under the Telecommunications Act of 1996 and the amendments made by that Act.''. Mr. BOND. Mr. President, I rise today to join my distinguished colleague from Alabama, Senator Shelby, in introducing legislation to ensure that the Treasury Department's Internal Revenue Service does not usurp the power to tax--a power solely vested in Congress by the U.S. Constitution. The Stealth Tax Prevention Act will ensure that the duly elected representatives of the people, who are accountable to the electorate for our actions, will have discretion to exercise the power to tax. This legislation is intended to curb the ability of the Treasury Department to bypass Congress by proposing a tax increase without the authorization or consent of Congress. The Stealth Tax Prevention Act builds on legislation passed unanimously by the Senate just over 1 year ago. As chairman of the Committee on Small Business, I authored the Small Business Regulatory Enforcement Fairness Act--better known as the Red Tape Reduction Act-- to ensure that small businesses are treated fairly in agency rulemaking and enforcement activities. Subtitle E of the Red Tape Reduction Act provides that a final rule issued by a Federal agency and deemed a major rule by the Office of Information and Regulatory Affairs of the Office of Management and Budget [[Page S5344]] cannot go into effect for at least 60 days. This delay is to provide Congress with a window during which it can review the rule and its impact, allowing time for Congress to consider whether a resolution of disapproval should be enacted to strike down the regulation. To become effective, the resolution must pass both the House and Senate and be signed into law by the President or enacted as the result of a veto override. The bill Senator Shelby and I introduce today amends this law to provide that any rule issued by the Treasury Department's Internal Revenue Service that will result in a tax increase--any increase--will be deemed a major rule by OIRA and, consequently, not go into effect for at least 60 days. This procedural safeguard will ensure that the Department of the Treasury and its Internal Revenue Service cannot make an end-run around Congress, as it is currently attempting with the stealth tax it proposed on January 13. As my colleagues are aware, the IRS has issued a proposal that is tantamount to a tax increase on businesses structured as limited liability companies. The IRS proposal disqualifies a taxpayer from being considered as a limited partner if he or she ``participates in the partnership's trade or business for more than 500 hours during a taxable year'' or is involved in a ``service'' partnership, such as lawyers, accountants, engineers, architects, and health-care providers. The IRS alleges that its proposal merely interprets section 1402(a)(13) of the Tax Code, providing clarification, when in actuality it is a tax increase by regulatory fiat. Under the IRS proposal, disqualification as a limited partner will result in a tax increase on income from both capital investments as well as earnings of the partnership. The effect will be to add the self-employment tax--12.4 percent for social security and 2.9 percent for Medicare--to income from investments as well as earnings for limited partners that under current rules can exclude such income from the self-employment tax. Under the bill introduced today, the tax increase proposed by the Internal Revenue Service of the Treasury Department, if later issued as a final rule, could not go into effect for at least 60 days following its publication in the Federal Register. This window, which coincides with issuance of a report by the Comptroller General, would allow Congress the opportunity to review the rule and vote on a resolution to disapprove the tax increase before it is applied to a single taxpayer. The Stealth Tax Prevention Act strengthens the Red Tape Reduction Act and the vital procedural safeguards it provides to ensure that small businesses are not burdened unnecessarily by new Federal regulations. Congress enacted the 1966 provisions to strengthen the effectiveness of the Regulatory Flexibility Act, a law which had been ignored too often by Government agencies, especially the Internal Revenue Service. Three of the top recommendations of the 1995 White House Conference on Small Business sought reforms to the way Government regulations are developed and enforced, and the Red Tape Reduction Act passed the Senate without a single dissenting vote on its way to being signed into law last year. Despite the inclusion of language in the 1996 amendments that expressly addresses coverage of IRS interpretative rules, we find ourselves faced again with an IRS proposal that was not issued in compliance with the Regulatory Flexibility Act. As 18 of my Senate colleagues and I advised Secretary Rubin in an April letter, the proposed IRS regulation on limited partner taxation is precisely the type of rule for which a regulatory flexibility analysis should be done. Although, on its face, the rulemaking seeks merely to define a limited partner or to eliminate uncertainty in determining net earnings from self-employment, the real effect of the rule would be to raise taxes by executive fiat and expand substantially the spirit and letter of the underlying statute. The rule also seeks to impose on small businesses a burdensome new recordkeeping and collection of information requirement that would affect millions of limited partners and members of limited liability companies. The Treasury's IRS proposes this stealth tax increase with the knowledge that Congress declined to adopt a similar tax increase in the Health Security Act proposed in 1994--a provision that the Congressional Joint Committee on Taxation estimated in 1994 would have resulted in a tax increase of approximately $500 million per year. The Stealth Tax Prevention Act would remove any incentive for the Treasury Department to underestimate the cost imposed by an IRS proposed or final rule in an effort to skirt the administration's regulatory review process or its obligations under the Regulatory Flexibility Act. By amending the definition of major rule under the Congressional Review Act, which is subtitle E of the Red Tape Reduction Act, we ensure that an IRS rule that imposes a tax increase will be a major rule, whether or not it has an estimated annual effect on the economy of $100,000,000. Our amendment does not change the trigger for a regulatory flexibility analysis, which still will be required if a proposed rule would have a significant economic impact on a substantial number of small entities. We believe the heightened scrutiny of IRS regulations called for by this legislation will provide an additional incentive for the Treasury Department's Internal Revenue Service to meet all of its procedural obligations under the Regulatory Flexibility Act and the Red Tape Reduction Act. I urge my colleagues to join Senator Shelby and me in supporting this important legislation to ensure that the IRS not usurp the proper role of Congress--nor skirt its obligations to identify the impact of its proposed and final rules. Rules such as that currently proposed by the IRS should be carefully scrutinized by Congress. When the Department of the Treasury issues a final IRS rule that increases taxes, Congress should have the ability to exercise its discretion to enact a resolution of disapproval before the rule is applicable to a single taxpayer. The Stealth Tax Prevention Act Senator Shelby and I introduce today provides that opportunity. ______ By Mr. KOHL (for himself, Mr. Kerrey, Mr. Harkin, Mr. Hatch, Mr. Hagel, and Mr. Grassley): S. 832. A bill to amend the Internal Revenue Code of 1986 to increase the deductibility of business meal expenses for individuals who are subject to Federal limitations on hours of service; to the Committee on Finance. The Business Meal Deduction Fairness Act of 1997 Mr. KOHL. Mr. President, as my colleagues know, I am one of this body's strongest advocates for deficit reduction. I attribute much of my deep commitment to this goal to my days in business. As a businessman, I learned that you must balance your books and live within your means. I also learned that you must treat people fairly and admit when you have made a mistake. I have come to the floor to acknowledge that a mistake has been made, and must be corrected. In August 1993 we passed the omnibus budget reconciliation bill. I am proud to say that this legislation has helped to produce falling deficits and sustained economic growth. However, in our efforts to get our fiscal house in order we unfairly penalized a group of hard working, middle-class Americans: transportation workers. It is for this reason that I rise today, to reintroduce the business meal deduction fairness bill. This measure would increase the deductibility of business meals, from 50 to 80 percent, for individuals who are required to eat away from home due to the nature of their work. In the 1993 reconciliation bill was a provision which lowered the deductible portion of business meals and entertainment expenses from 80 to 50 percent. The change was aimed at the so-called three martini lunches and extravagant entertainment expenses of Wall Street financiers and Hollywood movie moguls. Unfortunately, the change also hit the average truck driver who eats chicken fried steak, hot roast beef sandwiches, and meatloaf in truck stops. And while those who entertain for business purposes can change their practices based on the tax law change, long-haul transportation workers often have no choice but to eat on the road. For these workers, the 1993 decrease in the meal deduction has translated into an undeserved decrease in take home pay. For example, when the allowable deduction was dropped in 1993, [[Page S5345]] it increased taxes on an average truck driver $700 to $2,000 per year. This is a huge increase for a truck driver who normally earns $27,000 to $35,000 per year. Our legislation would increase the take-home pay of hard working, middle-class Americans who were inadvertently hurt by changes in the tax law in 1993. Workers who, due to regulations limiting travel hours, must eat out. They have no control over the length of their trips, the amount of time they must rest during a delivery, or, in many cases, the places they can stop and eat. This legislation is straight forward. It would simply restore the business meal expense deduction to 80 per cent for individuals subject to the Department of Transportation's hours-of- service limitations. I will be the first to admit that the budget deficit is the No. 1 economic problem facing this country. Since being elected to the Senate, I have fought to eliminate this destructive drain on our ability to grow and compete in the world economy, but I have fought to do so in a fair manner. The 1993 reconciliation bill closed a loophole and unintentionally trapped some very hard working Americans. We need to acknowledge that a mistake was made and take the opportunity of a tax bill moving this year to fix that mistake. Therefore my colleagues, Senators Kerrey, Harkin, Hatch, Hagel, Grassley and I are requesting the support and assistance of this entire body to ensure that the business meal deduction fairness bill becomes law. Mr. President, I ask unanimous consent that a copy of my legislation be printed in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 832 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF SERVICE. (a) In General.--Section 274(n) of the Internal Revenue Code of 1986 (relating to only 50 percent of meal and entertainment expenses allowed as deduction) is amended by adding at the end the following new paragraph: ``(3) Special rule for individuals subject to federal limitations on hours of service.--In the case of any expenses for food or beverages consumed by an individual during, or incident to, any period of duty which is subject to the hours of service limitations of the Department of Transportation, paragraph (1) shall be applied by substituting `80 percent' for `50 percent'.'' (b) Effective Date.--The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1997. ______ By Mr. LAUTENBERG (for himself, Mr. DeWine, Mr. Glenn, and Mr. Hatch): S. 833. A bill to designate the Federal building courthouse at Public Square and Superior Avenue in Cleveland, Ohio, as the ``Howard M. Metzenbaum United States Courthouse''; to the Committee on Environment and Public Works. the howard m. metzenbaum united states courthouse designation act of 1997 Mr. LAUTENBERG. Mr. President, I rise today to congratulate my dear friend and former colleague, Howard Metzenbaum, on the occasion of his 80th birthday. In his honor, I am introducing a bill that would designate the Federal Building Courthouse in Cleveland, OH, as the ``Howard M. Metzenbaum United States Courthouse.'' I am joined by Ohio's two Senators, Senator Glenn and Senator DeWine. Mr. President, I propose naming a courthouse after Howard because a courthouse is a symbol of justice where all people can come and be treated equally under the law. Howard Metzenbaum deserves this honor because he was a dedicated public servant, who served his home State of Ohio for 18 years in the U.S. Senate. Howard's sense of fairness and equality for all Americans led one of his former colleagues to suggest that Howard would have made an exceptional U.S. Supreme Court Justice when he retired from the Senate in 1994. Mr. President, naming a courthouse after Howard is only a small gesture in attempting to remember a man so committed to justice and fairness. Howard's contributions to the Senate are extraordinary, so we should commemorate his unique contribution by celebrating his 80th year, his 18 years in the United States Senate, and also the special character he brought to our body. I pay tribute today to a man who always stood up for what he believed was right, fighting hard to preserve opportunity for those yet to come. As a Senator, Howard had a broad range of interests and he pursued them with dogged perseverance, sincerity, and clarity. Howard and I worked on many issues together during our time in the Senate. Individual rights and environmental preservation were major concerns. He poured his energy into clean air protection, nuclear regulation, cleaning up superfund sites, and recycling. Howard provided strong leadership on antitrust issues as Chairman of the Subcommittee on Antitrust, Monopolies and Business Rights on the Judiciary Committee. He was a persistent gun control advocate, taking the lead on many antigun initiatives in the Senate. He was one of the lead sponsors of the Brady bill handgun purchase waiting period, as well as the bans on assault weapons and plastic explosives. But Howard's true passions lay with America's underprivileged and needy communities, which never had a bolder champion. His work on behalf of the poor, the disabled, and the elderly reflect his remarkable compassion for those members of society who face challenges that many of us cannot fully appreciate. He tirelessly defended their interests and fought for their protection. He was dedicated to eradicating discrimination, ensuring adequate health care to those in need, and boosting public education. It has been said many times, but for good reason, that Howard brought not only his conscience to the Senate, but also the courage to act on his convictions. Howard remains a good friend to me, but he was also a mentor and a teacher during his years in the Senate. He gave me good advice and plenty of it. And, I might add, he continues to do so today, which I welcome. But more than that, his dedication to the office of United States Senator is an example by which to live. He stood tall for the little people. Some will affectionately remember Howard as determined, argumentative, and even ``irascible.'' I cannot deny that those words come to my mind every now and then, when describing Howard. He was always at his best then, and for good reason. I heard it said by one Senator, and not a good friend: ``If there wasn't a Metzenbaum here, we'd have to invent one to keep us alert.'' I have missed working with Howard Metzenbaum in this great institution, a place that has been truly enhanced by his presence. I salute him on celebrating his 80th year. I ask unanimous consent that the text of the bill appear at the appropriate place in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 833 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. DESIGNATION OF HOWARD M. METZENBAUM UNITED STATES COURTHOUSE. The Federal building courthouse at Public Square and Superior Avenue in Cleveland, Ohio, shall be known and designated as the ``Howard M. Metzenbaum United States Courthouse''. SEC. 2. REFERENCES. Any reference in a law, map, regulation, document, paper, or other record of the United States to the Federal building courthouse referred to in section 1 shall be deemed to be a reference to the ``Howard M. Metzenbaum United States Courthouse''. ______ By Mr. HARKIN (for himself and Mr. Reed): S. 834. A bill to amend the Public Health Service Act to ensure adequate research and education regarding the drug DES; to the Committee on Labor and Human Resources. the DES Research and Education Amendments of 1997 Mr. HARKIN. Mr. President, today I am pleased to be joined by my distinguished colleague from Rhode Island, Senator Reed, in introducing an important women's health initiative. The DES Research and Education Amendments of 1997 would extend and expand our effort to assist the over 5 million Americans who have been exposed to [[Page S5346]] the drug, DES. Representative Louise Slaughter, a long-time leader on this issue, is introducing companion legislation today in the other body. Between 1938 and 1971, some 5 million American women were given the synthetic drug, diethylstilbestrol, commonly known as DES. Women were given the drug during pregnancy in the mistaken belief it would help prevent miscarriage. The drug was pulled from the market based on studies that found that it was ineffective and might result in damage to children born to the women who had been given it. Since the 1970's, studies have shown that DES does damage the reproductive systems of those exposed in utero and increases these individuals' risk for cancer, infertility, and a wide range of other serious reproductive tract disorders. The women exposed in utero to DES are five times more likely to have an ectopic pregnancy and three times more likely to miscarry when they in turn try to have children. Studies also show that one of every thousand women exposed to DES in utero will develop clear cell cancer. Women who took DES have also been found to face a higher risk for breast cancer. In 1992, while there had been a number of research studies on DES exposure and its effects, much more research was necessary. That year, President Bush signed legislation introduced by myself and Representative Slaughter, that mandated a significant increase in DES research supported by the National Institutes of Health [NIH]. Our legislation also required NIH to support long-term studies of Americans impacted by this drug. Those studies are now underway and must be continued. The legislation we are introducing today will ensure that this critical medical research continues. In addition, there is now preliminary evidence that the grandkids of women who took DES may also be at higher risk for certain health problems, and this legislation would help ensure that further research into this is supported. Another major problem in this area is that millions of Americans don't know the risks they face because of their exposure to DES. Many health professionals who see these people also lack sufficient information about DES exposure and the appropriate steps that should be taken to identify and assist their patients. As a result, many people do not seek or get the appropriate preventive care or take appropriate preventive measures to reduce their risks of adverse affects. For example, women exposed to DES in utero and therefore at higher risk of miscarriage may be able to reduce their risks with appropriate precautionary steps. In an initial attempt to address this need for better information, our 1992 legislation required NIH to test ways to educate the public and health professionals about how to deal with DES exposure. The legislation we are introducing today would give people across the Nation access to the information developed through these pilot programs by requiring a national consumer and health professional education effort. Mr. President, we took a very important step in 1992 to begin to address the significant problem presented by DES exposure. And we did it with strong bipartisan cooperation between a Democratic Congress and a Republican President. That legislation expires this year. We need to make sure that the progress we've made is continued. The 5 million Americans whose health is at risk are depending on us to work together to make sure that happens. I urge my colleagues to join me in support of that effort. I ask unanimous consent that a copy of the legislation be included in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 834 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``DES Research and Education Amendments of 1997''. SEC. 2. FINDINGS. With respect to diethylstilbestrol (a drug commonly known as DES), the Congress finds as follows: (1) DES was widely prescribed to American women from 1938 to 1971 in the mistaken belief it would prevent miscarriage. Approximately 5,000,000 pregnant women took the drug, resulting in DES exposure for approximately 5,000,000 daughters and sons. (2) Studies conducted since the 1970s have shown that DES damages the reproductive systems of those exposed in utero and increases the risk for cancer, infertility, and a wide range of other serious reproductive tract disorders. These disorders include a five-fold increased risk for ectopic pregnancy for DES daughters and a three-fold increase in risk for miscarriage and preterm labor. Studies have indicated that exposure to DES may increase the risk for autoimmune disorders and diseases. (3) An estimated 1 in 1,000 women exposed to DES in utero will develop clear cell cancer of the vagina or cervix. While survival rates for clear cell cancer are over 80 percent when it is detected early, there is still no effective treatment for recurrences of this cancer. (4) Studies also indicate a higher incidence of breast cancer among mothers who took DES during pregnancy. (5) While research on DES and its effects has produced important advances to date, much more remains to be learned. (6) Preliminary research results indicate that DES exposure may have a genetic impact on the third generation--the children of parents exposed to DES in utero--and that estrogen replacement therapy may not be advisable for DES- exposed women. (7) All DES-exposed individuals have special screening and health care needs, especially during gynecological exams and pregnancy for DES daughters, who should receive high risk care. (8) Many Americans remain unaware of their DES exposure or ignorant about proper health care and screening. There remains a great need for a national education effort to inform both the public and health care providers about the health effects and proper health care practices for DES- exposed individuals. SEC. 3. REVISION AND EXTENSION OF PROGRAM FOR RESEARCH AND AUTHORIZATION OF NEW NATIONAL PROGRAM OF EDUCATION REGARDING DRUG DES. (a) Permanent Extension of General Program.--Section 403A(e) of the Public Health Service Act (42 U.S.C. 283a(e)) is amended by striking ``for each of the fiscal years 1993 through 1996'' and inserting ``for fiscal year 1997 and each subsequent fiscal year''. (b) National Program for Education of Health Professionals and Public.--From amounts appropriated for carrying out section 403A of the Public Health Service Act (42 U.S.C. 283a), the Secretary of Health and Human Services, acting through the heads of the appropriate agencies of the Public Health Service, shall carry out a national program for the education of health professionals and the public with respect to the drug diethylstilbestrol (commonly known as DES). To the extent appropriate, such national program shall use methodologies developed through the education demonstration program carried out under such section 403A. In developing and carrying out the national program, the Secretary shall consult closely with representatives of nonprofit private entities that represent individuals who have been exposed to DES and that have expertise in community-based information campaigns for the public and for health care providers. The implementation of the national program shall begin during fiscal year 1998. ______ By Mr. ABRAHAM (for himself, Mr. McConnell, Mr. Coverdell, Mr. Santorum, Mr. McCain and Mr. Ashcroft): S. 836. A bill to offer small businesses certain protections from litigation excesses; to the Committee on the Judiciary. The Small Business Lawsuit Abuse Protection Act of 1997 Mr. ABRAHAM. Mr. President, I rise today to introduce the Small Business Lawsuit Abuse Protection Act of 1997. This bill will provide targeted relief from litigation excesses to small businesses. Small businesses in Michigan and across the Nation have faced increasingly burdensome litigation and desperately need relief from unwarranted and costly lawsuits. While other sectors of our society and our economy also need relief from litigation excesses, small businesses by their very nature are particularly vulnerable to lawsuit abuses and especially unable to bear the high costs of unjustified and unfair litigation against them. As this week is Small Business Week, it provides a fine opportunity for us to focus on relieving the burdens faced by small businesses. Small businesses represent the engine of our growing economy and provide countless benefits to communities across America. The Research Institute for Small and Emerging Business, for example, has estimated that there are over 20 million small businesses in America and that small businesses generate 50 percent of the country's private sector output. When I was in Michigan last week over the Memorial Day recess, I heard story after story from small businesses about the constraints, limitations, and [[Page S5347]] fear imposed on them by the threat of abusive and unwarranted litigation. I also heard about the high costs that they must pay for liability insurance. Those represent costs that could be going to expand small businesses, to provide more jobs, or to offer more benefits. According to a recent Gallup survey, one out of every five small businesses decides not to hire more employees, expand its business, introduce a new product, or improve an existing one out of fear of lawsuits. Before the Memorial Day recess, Congress passed the Volunteer Protection Act, which--if signed by the President--will provide specific protections from abusive litigation to volunteers. The Senate passed that legislation by an overwhelming margin of 99 to 1. That legislation provides a model for further targeted reforms for sectors that are particularly hard hit and in need of immediate relief. Small businesses have carried an often unbearable load from unwarranted and unjustified lawsuits. Data from San Diego's superior court published by the Washington Legal Foundation revealed that punitive damages were requested in 41 percent of suits against small businesses. It is unfathomable that such a large proportion of our small businesses are engaging in the sort of egregious misconduct that would warrant a claim of punitive damages. Unfortunately, those sort of findings are not unusual. The National Federation of Independent Business has reported that 34 percent of Texas small business owners have been sued or threatened with court action seeking punitive damages. Those figures are outrageously high and simply cannot have anything to do with actual wrongdoing. We know of far too many examples of expensive and ridiculous legal threats faced by our small businesses that they must defend every day. In a case reported by the American Consulting Engineers Council, a drunk driver had an accident after speeding and bypassing detour signs. Eight hours after the crash, the driver had a blood alcohol level of 0.09. The driver sued the engineering firm that designed the road, the contractor, the subcontractor, and the State highway department. Five years later, and after expending exorbitant amounts on legal fees, the defendants settled the case for $35,000. The engineering firm--a small 15 person firm--was swamped with over $200,000 in legal costs. That represents an intolerable amount for a small business to have to pay in defending a questionable and unwarranted lawsuit. There are more examples. In an Ann Landers column from October 1995, a case was reported that involved a minister and his wife who sued a guide dog school for $160,000 after a blind man who was learning to use a seeing-eye dog stepped on the woman's toes in a shopping mall. The guide dog school, Southeastern Guide Dogs, Inc., which provided the instructor supervising the man, was the only school of its kind in the Southeast. It trains seeing-eye dogs at no cost to the visually impaired. The couple filed their lawsuit 13 months after the so-called accident, in which witnesses reported that the woman did not move out of the blind man's way because she wanted to see if the dog would walk around her. The experiences of a small business in Michigan, the Michigan Furnace Co., is likewise alarming. The plawsuit in the history of her company has been a nuisance lawsuit. She indicates that if the money the company spends on liability insurance and legal fees was distributed among the employees, it would amount to a $10,000 annual raise per employee. These costs are stifling our small businesses and the people who work there. The straightforward provisions of the Small Business Lawsuit Abuse Protection Act will provide small businesses with relief by discouraging abusive litigation. The bill contains essentially two principal reforms. First, the bill limits punitive damages that may be awarded against a small business. In most civil lawsuits against small businesses, punitive damages would be available against the small business only if the claimant proves by clear and convincing evidence that the harm was caused by the small business through at least a conscious, flagrant indifference to the rights and safety of the claimant. Punitive damages would also be limited in amount. Punitive damages would be limited to the lesser of $250,000 or two times the compensatory damages awarded for the harm. That formulation is exactly the same formulation that appears in the small business protection provision that was included in the product liability conference report that passed in the 104th Congress. Second, joint and several liability reforms for small businesses are included under the exact same formulation that was used both in the Volunteer Protection Act passed this Congress and in the product liability conference report passed last Congress. Joint and several liability would be limited so that a small business would be liable for noneconomic damages only in proportion to the small business's responsibility for causing the harm. If a small business is responsible for 100% of an accident, then it will be liable for 100% of noneconomic damages. But if it is only 70%, 25%, 10%, or any other amount responsible, then the small business will be liable only for that same percent of noneconomic damages. Of course, small businesses would still be jointly and severally liable for economic damages, and any other defendants in the action that were not small businesses could be held jointly and severally liable for all damages. This should provide some protection to small businesses so that they will not be sought out as ``deep pocket'' defendants by trial lawyers who would otherwise try to get them on the hook for harms that they have not caused. The fact is that many small businesses simply do not have deep pockets, and they frequently need all of their resources just to stay in business, take care of their employees, and make ends meet. The other provisions in the bill specify the situations in which those reforms apply. The bill defines small business as any business having fewer than 25 employees. That is the same definition of small business that was included in the Product Liability Conference Report. Like the Volunteer Protection Act, this bill covers all civil lawsuits with the exception of suits involving certain types of egregious conduct. The limitations on liability included in the bill would not apply to any misconduct that constitutes a crime of violence, act of international terrorism, hate crime, sexual offense, or civil rights law violation, or which occurred while the defendant was under the influence of intoxicating alcohol or any drug. Also like the Volunteer Protection Act, the bill includes a State opt-out. A State would be able to opt out of the provisions of the bill provided the State enacts a law indicating its election to do so and containing no other provisions. I do not expect that any State will opt-out of these provisions, but I feel it is important to include one out of respect for principles of federalism. I am pleased to have Senators McConnell, Coverdell, Santorum and McCain as original cosponsors of the legislation and very much appreciate their support for our small businesses and for meaningful litigation reforms. The bill is also supported by the National Federation of Independent Business and by the National Restaurant Association. I ask unanimous consent that letters from those two organizations be inserted in the Record. Finally, I ask unanimous consent that a section-by-section analysis of the bill be printed in the Record, as well as the full text of the bill, and I encourage my colleagues to support this simple and much- needed legislation. There being no objection, the material was ordered to be printed in the Record, as follows: S. 836 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Small Business Lawsuit Abuse Protection Act of 1997''. SEC. 2. FINDINGS. Congress finds that-- (1) the United States civil justice system is inefficient, unpredictable, unfair, costly, and impedes competitiveness in the marketplace for goods, services, business, and employees; (2) the defects in the civil justice system have a direct and undesirable effect on interstate commerce by decreasing the availability of goods and services in commerce; (3) there is a need to restore rationality, certainty, and fairness to the legal system; (4) the spiralling costs of litigation and the magnitude and unpredictability of punitive [[Page S5348]] damage awards and noneconomic damage awards have continued unabated for at least the past 30 years; (5) the Supreme Court of the United States has recognized that a punitive damage award can be unconstitutional if the award is grossly excessive in relation to the legitimate interest of the government in the punishment and deterrence of unlawful conduct; (6) just as punitive damage awards can be grossly excessive, so can it be grossly excessive in some circumstances for a party to be held responsible under the doctrine of joint and several liability for damages that party did not cause; (7) as a result of joint and several liability, entities including small businesses are often brought into litigation despite the fact that their conduct may have little or nothing to do with the accident or transaction giving rise to the lawsuit, and may therefore face increased and unjust costs due to the possibility or result of unfair and disproportionate damage awards; (8) the costs imposed by the civil justice system on small businesses are particularly acute, since small businesses often lack the resources to bear those costs and to challenge unwarranted lawsuits; (9) due to high liability costs and unwarranted litigation costs, small businesses face higher costs in purchasing insurance through interstate insurance markets to cover their activities; (10) liability reform for small businesses will promote the free flow of goods and services, lessen burdens on interstate commerce, and decrease litigiousness; and (11) legislation to address these concerns is an appropriate exercise of Congress powers under Article I, section 8, clauses 3, 9, and 18 of the Constitution, and the fourteenth amendment to the Constitution. SEC. 3. DEFINITIONS. In this Act: (1) Act of international terrorism.--The term ``act of international terrorism'' has the same meaning as in section 2331 of title 18, United States Code). (2) Crime of violence.--The term ``crime of violence'' has the same meaning as in section 16 of title 18, United States Code. (3) Drug.--The term ``drug'' means any controlled substance (as that term is defined in section 102 of the Controlled Substances Act (21 U.S.C. 802(b)) that was not legally prescribed for use by the defendant or that was taken by the defendant other than in accordance with the terms of a lawfully issued prescription. (4) Economic loss.--The term ``economic loss'' means any pecuniary loss resulting from harm (including the loss of earnings or other benefits related to employment, medical expense loss, replacement services loss, loss due to death, burial costs, and loss of business or employment opportunities) to the extent recovery for such loss is allowed under applicable State law. (5) Harm.--The term ``harm'' includes physical, nonphysical, economic, and noneconomic losses. (6) Hate crime.--The term ``hate crime'' means a crime described in section 1(b) of the Hate Crime Statistics Act (28 U.S.C. 534 note)). (7) Noneconomic losses.--The term ``noneconomic losses'' means losses for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), injury to reputation, and all other nonpecuniary losses of any kind or nature. (8) Small business.-- (A) In general.--The term ``small business'' means any unincorporated business, or any partnership, corporation, association, unit of local government, or organization that has less than 25 full-time employees. (B) Calculation of number of employees.--For purposes of subparagraph (A), the number of employees of a subsidiary of a wholly-owned corporation includes the employees of-- (i) a parent corporation; and (ii) any other subsidiary corporation of that parent corporation. (10) State.--The term ``State'' means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, any other territory or possession of the United States, or any political subdivision of any such State, territory, or possession. SEC. 4. LIMITATION ON PUNITIVE DAMAGES FOR SMALL BUSINESSES. (a) General Rule.--Except as provided in section 6, in any civil action against a small business, punitive damages may, to the extent permitted by applicable State law, be awarded against the small business only if the claimant establishes by clear and convincing evidence that conduct carried out by that defendant through willful misconduct or with a conscious, flagrant indifference to the rights or safety of others was the proximate cause of the harm that is the subject of the action. (b) Limitation on Amount.--In any civil action against a small business, punitive damages shall not exceed the lesser of-- (1) two times the total amount awarded to the claimant for economic and noneconomic losses; or (2) $250,000. (c) Application by Court.--This section shall be applied by the court and shall not be disclosed to the jury. SEC. 5. LIMITATION ON SEVERAL LIABILITY FOR NONECONOMIC LOSS FOR SMALL BUSINESSES. (a) General Rule.--Except as provided in section 6, in any civil action against a small business, the liability of each defendant that is a small business, or the agent of a small business, for noneconomic loss shall be determined in accordance with subsection (b). (b) Amount of Liability.-- (1) In General.--In any civil action described in subsection (a)-- (A) each defendant described in that subsection shall be liable only for the amount of noneconomic loss allocated to that defendant in direct proportion to the percentage of responsibility of that defendant (determined in accordance with paragraph (2)) for the harm to the claimant with respect to which the defendant is liable; and (B) the court shall render a separate judgment against each defendant described in that subsection in an amount determined pursuant to subparagraph (A). (2) Percentage of responsibility.--For purposes of determining the amount of noneconomic loss allocated to a defendant under this section, the trier of fact shall determine the percentage of responsibility of each person responsible for the harm to the claimant, regardless of whether or not the person is a party to the action. SEC. 6. EXCEPTIONS TO LIMITATIONS ON LIABILITY. The limitations on liability under sections 4 and 5 do not apply to any misconduct of a defendant-- (1) that constitutes-- (A) a crime of violence; (B) an act of international terrorism; or (C) a hate crime; (2) that involves-- (A) a sexual offense, as defined by applicable State law; or (B) a violation of a Federal or State civil rights law; or (3) if the defendant was under the influence (as determined pursuant to applicable State law) of intoxicating alcohol or a drug at the time of the misconduct, and the fact that the defendant was under the influence was the cause of any harm alleged by the plaintiff in the subject action. SEC. 7. PREEMPTION AND ELECTION OF STATE NONAPPLICABILITY. (a) Preemption.--Subject to subsection (b), this Act preempts the laws of any State to the extent that State laws are inconsistent with this Act, except that this Act shall not preempt any State law that provides additional protections from liability for small businesses. (b) Election of State Regarding Nonapplicability.--This Act does not apply to any action in a State court against a small business in which all parties are citizens of the State, if the State enacts a statute-- (1) citing the authority of this subsection; (2) declaring the election of such State that this Act does not apply as of a date certain to such actions in the State; and (3) containing no other provision. SEC. 8. EFFECTIVE DATE. (a) In General.--This Act shall take effect 90 days after the date of enactment of this Act. (b) Application.--This Act applies to any claim for harm caused by an act or omission of a small business, if the claim is filed on or after the effective date of this Act, without regard to whether the harm that is the subject of the claim or the conduct that caused the harm occurred before such effective date. ____ Section-by-Section Analysis--The Small Business Lawsuit Abuse Protection Act of 1997 section 1. short title This section provides that the act may be cited as the ``Small Business Lawsuit Abuse Protection Act of 1997.'' section 2. findings This section sets out congressional findings concerning the litigation excesses facing small businesses, and the need for litigation reforms to provide certain protections to small businesses from abusive litigation. section 3. definitions Various terms used in the bill are defined in the section. Significantly, for purposes of the legislation, a small business is defined as any business or organization with fewer than 25 full time employees. section 4. limitation on punitive damages for small businesses The bill provides that punitive damages may, to the extent permitted by applicable State law, be awarded against a defendant that is a small business only if the claimant establishes by clear and convincing evidence that conduct carried out by that defendant with a conscious, flagrant indifference to the rights or safety of others was the proximate cause of the harm that is the subject of the action. The bill also limits the amount of punitive damages that may be awarded against a small business. In any civil action against a small business, punitive damages may not exceed the lesser of two times the amount awarded to the claimant for economic and noneconomic losses, or $250,000. section 5. limitation on several liability for noneconomic loss for small businesses This section provides that, in any civil action against a small business, for each defendant that is a small business, the liability of that defendant for noneconomic loss will be in proportion to that defendant's responsibility for causing the harm. Those defendants would continue, however, to be held [[Page S5349]] jointly and severally l

Summary:

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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
(Senate - June 05, 1997)

Text of this article available as: TXT PDF [Pages S5342-S5368] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. JEFFORDS: S. 830. A bill to amend the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act to improve the regulation of food, drugs, devices, and biological products, and for other purposes; to the Committee on Labor and Human Resources. the food and drug administration modernization and accountability act of 1997 Mr. JEFFORDS. Mr. President, today I am introducing legislation to modernize the Food and Drug Administration [FDA] and reauthorize the Prescription Drug User Fee Act for 5 years. This legislation comes as result of over 3 years of consideration by the Congress on steps that could be taken by the agency that would contribute to its mandate to protect the American public while ensuring that life-saving products could be made more readily available. FDA acknowledges that its mandate also requires it to regulate over one-third of our Nation's products. Within its purview the FDA regulates virtually all of the food and all of the cosmetics, medical devices, and drugs made available to our citizens. I believe, and several members of the Labor Committee share my belief, that in an organization the size of FDA there is always room for improvement and modernization. Our objective, which this legislation achieves, was identify areas where improvements could be made that will strengthen the agency's ability to approve safe and effective products more expeditiously. Last year, both the House and the Senate held numerous and extensive hearings on countless proposals for modernizing and reforming the FDA. The Senate Labor and Human Resources Committee successfully reported a bipartisan bill that sought to accomplish many of those reforms. But last year, acrimonious issues remained, time ran out and the bill did not receive floor consideration. This year I have resolved to move forward. I have been committed to addressing last year's most controversial issues. I believe that the legislation I am introducing today addresses virtually all of objections raised last year both in process and in content. This is a better bill and I believe that upon examination, my colleagues will agree that it accomplishes its goal. I want to comment a moment on the open, consensus-building process we followed in developing this legislation. The Labor Committee held two hearings. During the first the committee received testimony from the principal FDA Deputy Commissioner, Dr. Michael Friedman, and all of the FDA Center Directors. The second hearing included representatives from patient and consumer coalitions and from the food, drug, and medical device sectors regulated by the FDA. Committee members learned from the agency of the administrative reforms and the progress it has already undertaken, areas that remain a challenge, and those areas that require legislative authority to change. The committee listened to consumers' concerns with provisions that were considered last year that they felt would weaken the FDA's ability to protect the public health. Finally, the committee learned of the ongoing and needless delays and frustrations facing health care and consumer product sectors of our economy in working with the FDA. The committee learned of the frustrated attempts to work through the bureaucratic labyrinth of needless regulatory delays. Delays that prohibited people from getting access to vitally needed, life saving medical treatments, drugs, and devices. Since the finish of the committee's hearings we have engaged in an open, collaborative process that has given voice to each party wishing to be heard. For many of these meetings it is worth noting that the agency was a full, cooperating participant and we would not have been able to make the progress made without FDA's collaboration. Several meetings, essentially roundtable discussions, have occurred with bipartisan committee staff, the FDA, and each of the several sectors regulated by the agency. These meetings have given all the participants an opportunity to discuss problems and potential solutions and have been the basis for the consensus bill I am introducing today. Finally, committee staff have had numerous meetings to discuss key provisions in the bill with a wide range of consumer groups including, among others, the Patient Coalition, Public Citizen, the Centers for Science in the Public Interest, the Pediatric AIDS Foundation, and the National Organization for Rare Diseases. It should be clear that no person or group was excluded from this deliberative process. Let me turn to the content of this measure and the steps we have taken to respond to the controversies raised last year. Five key objections were raised against the FDA reform bill that had been reported on a strong bipartisan vote from the Labor and Human Resources Committee during the last Congress. In that vein, we have sought to and have accomplished addressing each of the substantive concerns raised by the minority. Last year's measure was criticized by some for the number of mandatory, but shortened, product review time frames that critics said would overburden the FDA and for the hammers that would have required FDA to contract out some product reviews or to give priority to products approved abroad. Today's legislation eliminates most of the mandatory time frames and retains only those necessary to ensure collaborative, more efficient reviews or to facilitate quick reviews of low risk products. The contracting out and European review hammers that would have forced FDA actions have been eliminated. Last year's provision allowing for third party, outside expert review were criticized for turning central regulatory authority decisions over to private industry, creating conflicts of interest, and depriving FDA of resources and expertise. Today's legislation adopts FDA's current system for accrediting and selecting third-party review organizations. The bill expands FDA's current pilot third-party review program beyond just the lowest risk devices and FDA retains final approval for all devices. Devices that are life- [[Page S5343]] supporting, life-sustaining, or implantable are excluded from third- party review. FDA may allow third-party review for higher risk devices at its sole discretion. This approval will allow FDA to retain, augment, and focus its expertise, at its discretion, on critical areas of its expanding workload. Last year's bill would have required FDA to contract out review of food additive petitions, medical devices, and drugs. Critics argued these changes would weaken consumer protections. We have modified these provisions to give FDA express authority to contract out when deemed by FDA to be more efficient or to add needed expertise. Thsi year the collaborative effort has continued. During our meetings FDA identified a number of enforcement powers that the agency believes will enhance its ability to protect the public health. We have included a number of FDA's specific requests. Many patient and consumer groups raised concerns about insufficient safeguards related to the fast-track drug approval process and the provision improving accelerated access to investigational products and we have adopted several of their key concerns. I would close by saying that this measure embodies a reasonable, moderate approach to balancing the agency's mandate to regulate over one-third of our Nation's economy and provide for the public health and safety with the compelling need to provide new, improved, safe, and effective products to the American public. It is a good bill and I look forward to working with my colleagues to improve it even further. ______ By Mr. SHELBY (for himself, Mr. Bond, Mr. Hagel, Mr. Hutchinson, and Mr. Coverdell): S. 831. A bill to amend chapter 8 of title 5, United States Code, to provide for congressional review of any rule promulgated by the Internal Revenue Service that increases Federal revenue, and for other purposes; to the Committee on Governmental Affairs. the stealth tax prevention act Mr. SHELBY. Mr. President, I rise today to introduce the Stealth Tax Prevention Act. Perhaps the most important power given to the Congress in the Constitution of the United States is bestowed in article I, section 8--the power to tax. This authority is vested in Congress because, as elected representatives, Congress remains accountable to the public when they lay and collect taxes. Last year, Mr. President, Congress passed the Congressional Review Act of 1996, which provides that when a major agency rule takes effect, Congress has 60 days to review it. During this time period, Congress has the option to pass a disapproval resolution. If no such resolution is passed, the rule then goes into effect. The Internal Revenue Service, as the President here knows, has enormous power to affect the lives and the livelihoods of American taxpayers through their authority to interpret the Tax Code. The Stealth Tax Prevention Act that I am introducing today, along with Senator Bond and Senator Hagel, will expand the definition of a major rule to include, Mr. President, any IRS regulation which increases Federal revenue. Why? Because we desperately need this today. For example, if the Office of Management and Budget finds that the implementation and enforcement of a rule has resulted in an increase of Federal revenues over current practices or revenues anticipated from the rule on the date of the enactment of the statute under which the rule is promulgated. Therefore, the Stealth Tax Prevention Act will allow Congress to review the regulation and take appropriate measures to avoid raising taxes on hard-working Americans, in most cases, small businesses. Mr. President, the Founding Fathers' intent, as you know, was to put the power to lay and collect taxes in the hands of elected Members of Congress, not in the hands of bureaucrats who are shielded from public accountability. It is appropriate, I believe, that the IRS's breach of authority is addressed, in light of the fact that we are celebrating this week Small Business Week. The discretionary authority of the Internal Revenue Service exposes small businesses, farmers, and others to the arbitrary whims of bureaucrats, thus creating an uncertain and, under certain cases, hostile environment in which to conduct day-to-day activities. Most of these people do not have lobbyists that work for them, other than their elected Representatives, the way it should be. The Stealth Tax Prevention Act will be particularly helpful in lowering the tax burden on small business which suffers disproportionately, Mr. President, from IRS regulations. This burden discourages the startup of new firms and ultimately the creation of new jobs in the economy, which has really made America great today. Americans pay Federal income taxes. They, Mr. President, as you well know, pay State income taxes. They pay property taxes. On the way to work in the morning they pay a gasoline tax when they fill up their car, and a sales tax when they buy a cup of coffee. Mr. President, average Americans in small businesses are saddled with the highest tax burden in our country's history. Allowing bureaucrats to increase taxes even further, at their own discretion through interpretation of the Tax Code is intolerable. The Stealth Tax Prevention Act will leave tax policy where it belongs, to elected Members of the Congress, not unelected and unaccountable IRS bureaucrats. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 831 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. CONGRESSIONAL REVIEW OF INTERNAL REVENUE SERVICE RULES THAT INCREASE REVENUE. (a) Short Title.--This Act may be cited as the ``Stealth Tax Prevention Act''. (b) In General.--Section 804(2) of title 5, United States Code, is amended to read as follows: ``(2) The term `major rule'-- ``(A) means any rule that-- ``(i) the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget finds has resulted in or is likely to result in-- ``(I) an annual effect on the economy of $100,000,000 or more; ``(II) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or ``(III) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets; or ``(ii)(I) is promulgated by the Internal Revenue Service; and ``(II) the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget finds that the implementation and enforcement of the rule has resulted in or is likely to result in any net increase in Federal revenues over current practices in tax collection or revenues anticipated from the rule on the date of the enactment of the statute under which the rule is promulgated; and ``(B) does not include any rule promulgated under the Telecommunications Act of 1996 and the amendments made by that Act.''. Mr. BOND. Mr. President, I rise today to join my distinguished colleague from Alabama, Senator Shelby, in introducing legislation to ensure that the Treasury Department's Internal Revenue Service does not usurp the power to tax--a power solely vested in Congress by the U.S. Constitution. The Stealth Tax Prevention Act will ensure that the duly elected representatives of the people, who are accountable to the electorate for our actions, will have discretion to exercise the power to tax. This legislation is intended to curb the ability of the Treasury Department to bypass Congress by proposing a tax increase without the authorization or consent of Congress. The Stealth Tax Prevention Act builds on legislation passed unanimously by the Senate just over 1 year ago. As chairman of the Committee on Small Business, I authored the Small Business Regulatory Enforcement Fairness Act--better known as the Red Tape Reduction Act-- to ensure that small businesses are treated fairly in agency rulemaking and enforcement activities. Subtitle E of the Red Tape Reduction Act provides that a final rule issued by a Federal agency and deemed a major rule by the Office of Information and Regulatory Affairs of the Office of Management and Budget [[Page S5344]] cannot go into effect for at least 60 days. This delay is to provide Congress with a window during which it can review the rule and its impact, allowing time for Congress to consider whether a resolution of disapproval should be enacted to strike down the regulation. To become effective, the resolution must pass both the House and Senate and be signed into law by the President or enacted as the result of a veto override. The bill Senator Shelby and I introduce today amends this law to provide that any rule issued by the Treasury Department's Internal Revenue Service that will result in a tax increase--any increase--will be deemed a major rule by OIRA and, consequently, not go into effect for at least 60 days. This procedural safeguard will ensure that the Department of the Treasury and its Internal Revenue Service cannot make an end-run around Congress, as it is currently attempting with the stealth tax it proposed on January 13. As my colleagues are aware, the IRS has issued a proposal that is tantamount to a tax increase on businesses structured as limited liability companies. The IRS proposal disqualifies a taxpayer from being considered as a limited partner if he or she ``participates in the partnership's trade or business for more than 500 hours during a taxable year'' or is involved in a ``service'' partnership, such as lawyers, accountants, engineers, architects, and health-care providers. The IRS alleges that its proposal merely interprets section 1402(a)(13) of the Tax Code, providing clarification, when in actuality it is a tax increase by regulatory fiat. Under the IRS proposal, disqualification as a limited partner will result in a tax increase on income from both capital investments as well as earnings of the partnership. The effect will be to add the self-employment tax--12.4 percent for social security and 2.9 percent for Medicare--to income from investments as well as earnings for limited partners that under current rules can exclude such income from the self-employment tax. Under the bill introduced today, the tax increase proposed by the Internal Revenue Service of the Treasury Department, if later issued as a final rule, could not go into effect for at least 60 days following its publication in the Federal Register. This window, which coincides with issuance of a report by the Comptroller General, would allow Congress the opportunity to review the rule and vote on a resolution to disapprove the tax increase before it is applied to a single taxpayer. The Stealth Tax Prevention Act strengthens the Red Tape Reduction Act and the vital procedural safeguards it provides to ensure that small businesses are not burdened unnecessarily by new Federal regulations. Congress enacted the 1966 provisions to strengthen the effectiveness of the Regulatory Flexibility Act, a law which had been ignored too often by Government agencies, especially the Internal Revenue Service. Three of the top recommendations of the 1995 White House Conference on Small Business sought reforms to the way Government regulations are developed and enforced, and the Red Tape Reduction Act passed the Senate without a single dissenting vote on its way to being signed into law last year. Despite the inclusion of language in the 1996 amendments that expressly addresses coverage of IRS interpretative rules, we find ourselves faced again with an IRS proposal that was not issued in compliance with the Regulatory Flexibility Act. As 18 of my Senate colleagues and I advised Secretary Rubin in an April letter, the proposed IRS regulation on limited partner taxation is precisely the type of rule for which a regulatory flexibility analysis should be done. Although, on its face, the rulemaking seeks merely to define a limited partner or to eliminate uncertainty in determining net earnings from self-employment, the real effect of the rule would be to raise taxes by executive fiat and expand substantially the spirit and letter of the underlying statute. The rule also seeks to impose on small businesses a burdensome new recordkeeping and collection of information requirement that would affect millions of limited partners and members of limited liability companies. The Treasury's IRS proposes this stealth tax increase with the knowledge that Congress declined to adopt a similar tax increase in the Health Security Act proposed in 1994--a provision that the Congressional Joint Committee on Taxation estimated in 1994 would have resulted in a tax increase of approximately $500 million per year. The Stealth Tax Prevention Act would remove any incentive for the Treasury Department to underestimate the cost imposed by an IRS proposed or final rule in an effort to skirt the administration's regulatory review process or its obligations under the Regulatory Flexibility Act. By amending the definition of major rule under the Congressional Review Act, which is subtitle E of the Red Tape Reduction Act, we ensure that an IRS rule that imposes a tax increase will be a major rule, whether or not it has an estimated annual effect on the economy of $100,000,000. Our amendment does not change the trigger for a regulatory flexibility analysis, which still will be required if a proposed rule would have a significant economic impact on a substantial number of small entities. We believe the heightened scrutiny of IRS regulations called for by this legislation will provide an additional incentive for the Treasury Department's Internal Revenue Service to meet all of its procedural obligations under the Regulatory Flexibility Act and the Red Tape Reduction Act. I urge my colleagues to join Senator Shelby and me in supporting this important legislation to ensure that the IRS not usurp the proper role of Congress--nor skirt its obligations to identify the impact of its proposed and final rules. Rules such as that currently proposed by the IRS should be carefully scrutinized by Congress. When the Department of the Treasury issues a final IRS rule that increases taxes, Congress should have the ability to exercise its discretion to enact a resolution of disapproval before the rule is applicable to a single taxpayer. The Stealth Tax Prevention Act Senator Shelby and I introduce today provides that opportunity. ______ By Mr. KOHL (for himself, Mr. Kerrey, Mr. Harkin, Mr. Hatch, Mr. Hagel, and Mr. Grassley): S. 832. A bill to amend the Internal Revenue Code of 1986 to increase the deductibility of business meal expenses for individuals who are subject to Federal limitations on hours of service; to the Committee on Finance. The Business Meal Deduction Fairness Act of 1997 Mr. KOHL. Mr. President, as my colleagues know, I am one of this body's strongest advocates for deficit reduction. I attribute much of my deep commitment to this goal to my days in business. As a businessman, I learned that you must balance your books and live within your means. I also learned that you must treat people fairly and admit when you have made a mistake. I have come to the floor to acknowledge that a mistake has been made, and must be corrected. In August 1993 we passed the omnibus budget reconciliation bill. I am proud to say that this legislation has helped to produce falling deficits and sustained economic growth. However, in our efforts to get our fiscal house in order we unfairly penalized a group of hard working, middle-class Americans: transportation workers. It is for this reason that I rise today, to reintroduce the business meal deduction fairness bill. This measure would increase the deductibility of business meals, from 50 to 80 percent, for individuals who are required to eat away from home due to the nature of their work. In the 1993 reconciliation bill was a provision which lowered the deductible portion of business meals and entertainment expenses from 80 to 50 percent. The change was aimed at the so-called three martini lunches and extravagant entertainment expenses of Wall Street financiers and Hollywood movie moguls. Unfortunately, the change also hit the average truck driver who eats chicken fried steak, hot roast beef sandwiches, and meatloaf in truck stops. And while those who entertain for business purposes can change their practices based on the tax law change, long-haul transportation workers often have no choice but to eat on the road. For these workers, the 1993 decrease in the meal deduction has translated into an undeserved decrease in take home pay. For example, when the allowable deduction was dropped in 1993, [[Page S5345]] it increased taxes on an average truck driver $700 to $2,000 per year. This is a huge increase for a truck driver who normally earns $27,000 to $35,000 per year. Our legislation would increase the take-home pay of hard working, middle-class Americans who were inadvertently hurt by changes in the tax law in 1993. Workers who, due to regulations limiting travel hours, must eat out. They have no control over the length of their trips, the amount of time they must rest during a delivery, or, in many cases, the places they can stop and eat. This legislation is straight forward. It would simply restore the business meal expense deduction to 80 per cent for individuals subject to the Department of Transportation's hours-of- service limitations. I will be the first to admit that the budget deficit is the No. 1 economic problem facing this country. Since being elected to the Senate, I have fought to eliminate this destructive drain on our ability to grow and compete in the world economy, but I have fought to do so in a fair manner. The 1993 reconciliation bill closed a loophole and unintentionally trapped some very hard working Americans. We need to acknowledge that a mistake was made and take the opportunity of a tax bill moving this year to fix that mistake. Therefore my colleagues, Senators Kerrey, Harkin, Hatch, Hagel, Grassley and I are requesting the support and assistance of this entire body to ensure that the business meal deduction fairness bill becomes law. Mr. President, I ask unanimous consent that a copy of my legislation be printed in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 832 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF SERVICE. (a) In General.--Section 274(n) of the Internal Revenue Code of 1986 (relating to only 50 percent of meal and entertainment expenses allowed as deduction) is amended by adding at the end the following new paragraph: ``(3) Special rule for individuals subject to federal limitations on hours of service.--In the case of any expenses for food or beverages consumed by an individual during, or incident to, any period of duty which is subject to the hours of service limitations of the Department of Transportation, paragraph (1) shall be applied by substituting `80 percent' for `50 percent'.'' (b) Effective Date.--The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1997. ______ By Mr. LAUTENBERG (for himself, Mr. DeWine, Mr. Glenn, and Mr. Hatch): S. 833. A bill to designate the Federal building courthouse at Public Square and Superior Avenue in Cleveland, Ohio, as the ``Howard M. Metzenbaum United States Courthouse''; to the Committee on Environment and Public Works. the howard m. metzenbaum united states courthouse designation act of 1997 Mr. LAUTENBERG. Mr. President, I rise today to congratulate my dear friend and former colleague, Howard Metzenbaum, on the occasion of his 80th birthday. In his honor, I am introducing a bill that would designate the Federal Building Courthouse in Cleveland, OH, as the ``Howard M. Metzenbaum United States Courthouse.'' I am joined by Ohio's two Senators, Senator Glenn and Senator DeWine. Mr. President, I propose naming a courthouse after Howard because a courthouse is a symbol of justice where all people can come and be treated equally under the law. Howard Metzenbaum deserves this honor because he was a dedicated public servant, who served his home State of Ohio for 18 years in the U.S. Senate. Howard's sense of fairness and equality for all Americans led one of his former colleagues to suggest that Howard would have made an exceptional U.S. Supreme Court Justice when he retired from the Senate in 1994. Mr. President, naming a courthouse after Howard is only a small gesture in attempting to remember a man so committed to justice and fairness. Howard's contributions to the Senate are extraordinary, so we should commemorate his unique contribution by celebrating his 80th year, his 18 years in the United States Senate, and also the special character he brought to our body. I pay tribute today to a man who always stood up for what he believed was right, fighting hard to preserve opportunity for those yet to come. As a Senator, Howard had a broad range of interests and he pursued them with dogged perseverance, sincerity, and clarity. Howard and I worked on many issues together during our time in the Senate. Individual rights and environmental preservation were major concerns. He poured his energy into clean air protection, nuclear regulation, cleaning up superfund sites, and recycling. Howard provided strong leadership on antitrust issues as Chairman of the Subcommittee on Antitrust, Monopolies and Business Rights on the Judiciary Committee. He was a persistent gun control advocate, taking the lead on many antigun initiatives in the Senate. He was one of the lead sponsors of the Brady bill handgun purchase waiting period, as well as the bans on assault weapons and plastic explosives. But Howard's true passions lay with America's underprivileged and needy communities, which never had a bolder champion. His work on behalf of the poor, the disabled, and the elderly reflect his remarkable compassion for those members of society who face challenges that many of us cannot fully appreciate. He tirelessly defended their interests and fought for their protection. He was dedicated to eradicating discrimination, ensuring adequate health care to those in need, and boosting public education. It has been said many times, but for good reason, that Howard brought not only his conscience to the Senate, but also the courage to act on his convictions. Howard remains a good friend to me, but he was also a mentor and a teacher during his years in the Senate. He gave me good advice and plenty of it. And, I might add, he continues to do so today, which I welcome. But more than that, his dedication to the office of United States Senator is an example by which to live. He stood tall for the little people. Some will affectionately remember Howard as determined, argumentative, and even ``irascible.'' I cannot deny that those words come to my mind every now and then, when describing Howard. He was always at his best then, and for good reason. I heard it said by one Senator, and not a good friend: ``If there wasn't a Metzenbaum here, we'd have to invent one to keep us alert.'' I have missed working with Howard Metzenbaum in this great institution, a place that has been truly enhanced by his presence. I salute him on celebrating his 80th year. I ask unanimous consent that the text of the bill appear at the appropriate place in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 833 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. DESIGNATION OF HOWARD M. METZENBAUM UNITED STATES COURTHOUSE. The Federal building courthouse at Public Square and Superior Avenue in Cleveland, Ohio, shall be known and designated as the ``Howard M. Metzenbaum United States Courthouse''. SEC. 2. REFERENCES. Any reference in a law, map, regulation, document, paper, or other record of the United States to the Federal building courthouse referred to in section 1 shall be deemed to be a reference to the ``Howard M. Metzenbaum United States Courthouse''. ______ By Mr. HARKIN (for himself and Mr. Reed): S. 834. A bill to amend the Public Health Service Act to ensure adequate research and education regarding the drug DES; to the Committee on Labor and Human Resources. the DES Research and Education Amendments of 1997 Mr. HARKIN. Mr. President, today I am pleased to be joined by my distinguished colleague from Rhode Island, Senator Reed, in introducing an important women's health initiative. The DES Research and Education Amendments of 1997 would extend and expand our effort to assist the over 5 million Americans who have been exposed to [[Page S5346]] the drug, DES. Representative Louise Slaughter, a long-time leader on this issue, is introducing companion legislation today in the other body. Between 1938 and 1971, some 5 million American women were given the synthetic drug, diethylstilbestrol, commonly known as DES. Women were given the drug during pregnancy in the mistaken belief it would help prevent miscarriage. The drug was pulled from the market based on studies that found that it was ineffective and might result in damage to children born to the women who had been given it. Since the 1970's, studies have shown that DES does damage the reproductive systems of those exposed in utero and increases these individuals' risk for cancer, infertility, and a wide range of other serious reproductive tract disorders. The women exposed in utero to DES are five times more likely to have an ectopic pregnancy and three times more likely to miscarry when they in turn try to have children. Studies also show that one of every thousand women exposed to DES in utero will develop clear cell cancer. Women who took DES have also been found to face a higher risk for breast cancer. In 1992, while there had been a number of research studies on DES exposure and its effects, much more research was necessary. That year, President Bush signed legislation introduced by myself and Representative Slaughter, that mandated a significant increase in DES research supported by the National Institutes of Health [NIH]. Our legislation also required NIH to support long-term studies of Americans impacted by this drug. Those studies are now underway and must be continued. The legislation we are introducing today will ensure that this critical medical research continues. In addition, there is now preliminary evidence that the grandkids of women who took DES may also be at higher risk for certain health problems, and this legislation would help ensure that further research into this is supported. Another major problem in this area is that millions of Americans don't know the risks they face because of their exposure to DES. Many health professionals who see these people also lack sufficient information about DES exposure and the appropriate steps that should be taken to identify and assist their patients. As a result, many people do not seek or get the appropriate preventive care or take appropriate preventive measures to reduce their risks of adverse affects. For example, women exposed to DES in utero and therefore at higher risk of miscarriage may be able to reduce their risks with appropriate precautionary steps. In an initial attempt to address this need for better information, our 1992 legislation required NIH to test ways to educate the public and health professionals about how to deal with DES exposure. The legislation we are introducing today would give people across the Nation access to the information developed through these pilot programs by requiring a national consumer and health professional education effort. Mr. President, we took a very important step in 1992 to begin to address the significant problem presented by DES exposure. And we did it with strong bipartisan cooperation between a Democratic Congress and a Republican President. That legislation expires this year. We need to make sure that the progress we've made is continued. The 5 million Americans whose health is at risk are depending on us to work together to make sure that happens. I urge my colleagues to join me in support of that effort. I ask unanimous consent that a copy of the legislation be included in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 834 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``DES Research and Education Amendments of 1997''. SEC. 2. FINDINGS. With respect to diethylstilbestrol (a drug commonly known as DES), the Congress finds as follows: (1) DES was widely prescribed to American women from 1938 to 1971 in the mistaken belief it would prevent miscarriage. Approximately 5,000,000 pregnant women took the drug, resulting in DES exposure for approximately 5,000,000 daughters and sons. (2) Studies conducted since the 1970s have shown that DES damages the reproductive systems of those exposed in utero and increases the risk for cancer, infertility, and a wide range of other serious reproductive tract disorders. These disorders include a five-fold increased risk for ectopic pregnancy for DES daughters and a three-fold increase in risk for miscarriage and preterm labor. Studies have indicated that exposure to DES may increase the risk for autoimmune disorders and diseases. (3) An estimated 1 in 1,000 women exposed to DES in utero will develop clear cell cancer of the vagina or cervix. While survival rates for clear cell cancer are over 80 percent when it is detected early, there is still no effective treatment for recurrences of this cancer. (4) Studies also indicate a higher incidence of breast cancer among mothers who took DES during pregnancy. (5) While research on DES and its effects has produced important advances to date, much more remains to be learned. (6) Preliminary research results indicate that DES exposure may have a genetic impact on the third generation--the children of parents exposed to DES in utero--and that estrogen replacement therapy may not be advisable for DES- exposed women. (7) All DES-exposed individuals have special screening and health care needs, especially during gynecological exams and pregnancy for DES daughters, who should receive high risk care. (8) Many Americans remain unaware of their DES exposure or ignorant about proper health care and screening. There remains a great need for a national education effort to inform both the public and health care providers about the health effects and proper health care practices for DES- exposed individuals. SEC. 3. REVISION AND EXTENSION OF PROGRAM FOR RESEARCH AND AUTHORIZATION OF NEW NATIONAL PROGRAM OF EDUCATION REGARDING DRUG DES. (a) Permanent Extension of General Program.--Section 403A(e) of the Public Health Service Act (42 U.S.C. 283a(e)) is amended by striking ``for each of the fiscal years 1993 through 1996'' and inserting ``for fiscal year 1997 and each subsequent fiscal year''. (b) National Program for Education of Health Professionals and Public.--From amounts appropriated for carrying out section 403A of the Public Health Service Act (42 U.S.C. 283a), the Secretary of Health and Human Services, acting through the heads of the appropriate agencies of the Public Health Service, shall carry out a national program for the education of health professionals and the public with respect to the drug diethylstilbestrol (commonly known as DES). To the extent appropriate, such national program shall use methodologies developed through the education demonstration program carried out under such section 403A. In developing and carrying out the national program, the Secretary shall consult closely with representatives of nonprofit private entities that represent individuals who have been exposed to DES and that have expertise in community-based information campaigns for the public and for health care providers. The implementation of the national program shall begin during fiscal year 1998. ______ By Mr. ABRAHAM (for himself, Mr. McConnell, Mr. Coverdell, Mr. Santorum, Mr. McCain and Mr. Ashcroft): S. 836. A bill to offer small businesses certain protections from litigation excesses; to the Committee on the Judiciary. The Small Business Lawsuit Abuse Protection Act of 1997 Mr. ABRAHAM. Mr. President, I rise today to introduce the Small Business Lawsuit Abuse Protection Act of 1997. This bill will provide targeted relief from litigation excesses to small businesses. Small businesses in Michigan and across the Nation have faced increasingly burdensome litigation and desperately need relief from unwarranted and costly lawsuits. While other sectors of our society and our economy also need relief from litigation excesses, small businesses by their very nature are particularly vulnerable to lawsuit abuses and especially unable to bear the high costs of unjustified and unfair litigation against them. As this week is Small Business Week, it provides a fine opportunity for us to focus on relieving the burdens faced by small businesses. Small businesses represent the engine of our growing economy and provide countless benefits to communities across America. The Research Institute for Small and Emerging Business, for example, has estimated that there are over 20 million small businesses in America and that small businesses generate 50 percent of the country's private sector output. When I was in Michigan last week over the Memorial Day recess, I heard story after story from small businesses about the constraints, limitations, and [[Page S5347]] fear imposed on them by the threat of abusive and unwarranted litigation. I also heard about the high costs that they must pay for liability insurance. Those represent costs that could be going to expand small businesses, to provide more jobs, or to offer more benefits. According to a recent Gallup survey, one out of every five small businesses decides not to hire more employees, expand its business, introduce a new product, or improve an existing one out of fear of lawsuits. Before the Memorial Day recess, Congress passed the Volunteer Protection Act, which--if signed by the President--will provide specific protections from abusive litigation to volunteers. The Senate passed that legislation by an overwhelming margin of 99 to 1. That legislation provides a model for further targeted reforms for sectors that are particularly hard hit and in need of immediate relief. Small businesses have carried an often unbearable load from unwarranted and unjustified lawsuits. Data from San Diego's superior court published by the Washington Legal Foundation revealed that punitive damages were requested in 41 percent of suits against small businesses. It is unfathomable that such a large proportion of our small businesses are engaging in the sort of egregious misconduct that would warrant a claim of punitive damages. Unfortunately, those sort of findings are not unusual. The National Federation of Independent Business has reported that 34 percent of Texas small business owners have been sued or threatened with court action seeking punitive damages. Those figures are outrageously high and simply cannot have anything to do with actual wrongdoing. We know of far too many examples of expensive and ridiculous legal threats faced by our small businesses that they must defend every day. In a case reported by the American Consulting Engineers Council, a drunk driver had an accident after speeding and bypassing detour signs. Eight hours after the crash, the driver had a blood alcohol level of 0.09. The driver sued the engineering firm that designed the road, the contractor, the subcontractor, and the State highway department. Five years later, and after expending exorbitant amounts on legal fees, the defendants settled the case for $35,000. The engineering firm--a small 15 person firm--was swamped with over $200,000 in legal costs. That represents an intolerable amount for a small business to have to pay in defending a questionable and unwarranted lawsuit. There are more examples. In an Ann Landers column from October 1995, a case was reported that involved a minister and his wife who sued a guide dog school for $160,000 after a blind man who was learning to use a seeing-eye dog stepped on the woman's toes in a shopping mall. The guide dog school, Southeastern Guide Dogs, Inc., which provided the instructor supervising the man, was the only school of its kind in the Southeast. It trains seeing-eye dogs at no cost to the visually impaired. The couple filed their lawsuit 13 months after the so-called accident, in which witnesses reported that the woman did not move out of the blind man's way because she wanted to see if the dog would walk around her. The experiences of a small business in Michigan, the Michigan Furnace Co., is likewise alarming. The plawsuit in the history of her company has been a nuisance lawsuit. She indicates that if the money the company spends on liability insurance and legal fees was distributed among the employees, it would amount to a $10,000 annual raise per employee. These costs are stifling our small businesses and the people who work there. The straightforward provisions of the Small Business Lawsuit Abuse Protection Act will provide small businesses with relief by discouraging abusive litigation. The bill contains essentially two principal reforms. First, the bill limits punitive damages that may be awarded against a small business. In most civil lawsuits against small businesses, punitive damages would be available against the small business only if the claimant proves by clear and convincing evidence that the harm was caused by the small business through at least a conscious, flagrant indifference to the rights and safety of the claimant. Punitive damages would also be limited in amount. Punitive damages would be limited to the lesser of $250,000 or two times the compensatory damages awarded for the harm. That formulation is exactly the same formulation that appears in the small business protection provision that was included in the product liability conference report that passed in the 104th Congress. Second, joint and several liability reforms for small businesses are included under the exact same formulation that was used both in the Volunteer Protection Act passed this Congress and in the product liability conference report passed last Congress. Joint and several liability would be limited so that a small business would be liable for noneconomic damages only in proportion to the small business's responsibility for causing the harm. If a small business is responsible for 100% of an accident, then it will be liable for 100% of noneconomic damages. But if it is only 70%, 25%, 10%, or any other amount responsible, then the small business will be liable only for that same percent of noneconomic damages. Of course, small businesses would still be jointly and severally liable for economic damages, and any other defendants in the action that were not small businesses could be held jointly and severally liable for all damages. This should provide some protection to small businesses so that they will not be sought out as ``deep pocket'' defendants by trial lawyers who would otherwise try to get them on the hook for harms that they have not caused. The fact is that many small businesses simply do not have deep pockets, and they frequently need all of their resources just to stay in business, take care of their employees, and make ends meet. The other provisions in the bill specify the situations in which those reforms apply. The bill defines small business as any business having fewer than 25 employees. That is the same definition of small business that was included in the Product Liability Conference Report. Like the Volunteer Protection Act, this bill covers all civil lawsuits with the exception of suits involving certain types of egregious conduct. The limitations on liability included in the bill would not apply to any misconduct that constitutes a crime of violence, act of international terrorism, hate crime, sexual offense, or civil rights law violation, or which occurred while the defendant was under the influence of intoxicating alcohol or any drug. Also like the Volunteer Protection Act, the bill includes a State opt-out. A State would be able to opt out of the provisions of the bill provided the State enacts a law indicating its election to do so and containing no other provisions. I do not expect that any State will opt-out of these provisions, but I feel it is important to include one out of respect for principles of federalism. I am pleased to have Senators McConnell, Coverdell, Santorum and McCain as original cosponsors of the legislation and very much appreciate their support for our small businesses and for meaningful litigation reforms. The bill is also supported by the National Federation of Independent Business and by the National Restaurant Association. I ask unanimous consent that letters from those two organizations be inserted in the Record. Finally, I ask unanimous consent that a section-by-section analysis of the bill be printed in the Record, as well as the full text of the bill, and I encourage my colleagues to support this simple and much- needed legislation. There being no objection, the material was ordered to be printed in the Record, as follows: S. 836 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Small Business Lawsuit Abuse Protection Act of 1997''. SEC. 2. FINDINGS. Congress finds that-- (1) the United States civil justice system is inefficient, unpredictable, unfair, costly, and impedes competitiveness in the marketplace for goods, services, business, and employees; (2) the defects in the civil justice system have a direct and undesirable effect on interstate commerce by decreasing the availability of goods and services in commerce; (3) there is a need to restore rationality, certainty, and fairness to the legal system; (4) the spiralling costs of litigation and the magnitude and unpredictability of punitive [[Page S5348]] damage awards and noneconomic damage awards have continued unabated for at least the past 30 years; (5) the Supreme Court of the United States has recognized that a punitive damage award can be unconstitutional if the award is grossly excessive in relation to the legitimate interest of the government in the punishment and deterrence of unlawful conduct; (6) just as punitive damage awards can be grossly excessive, so can it be grossly excessive in some circumstances for a party to be held responsible under the doctrine of joint and several liability for damages that party did not cause; (7) as a result of joint and several liability, entities including small businesses are often brought into litigation despite the fact that their conduct may have little or nothing to do with the accident or transaction giving rise to the lawsuit, and may therefore face increased and unjust costs due to the possibility or result of unfair and disproportionate damage awards; (8) the costs imposed by the civil justice system on small businesses are particularly acute, since small businesses often lack the resources to bear those costs and to challenge unwarranted lawsuits; (9) due to high liability costs and unwarranted litigation costs, small businesses face higher costs in purchasing insurance through interstate insurance markets to cover their activities; (10) liability reform for small businesses will promote the free flow of goods and services, lessen burdens on interstate commerce, and decrease litigiousness; and (11) legislation to address these concerns is an appropriate exercise of Congress powers under Article I, section 8, clauses 3, 9, and 18 of the Constitution, and the fourteenth amendment to the Constitution. SEC. 3. DEFINITIONS. In this Act: (1) Act of international terrorism.--The term ``act of international terrorism'' has the same meaning as in section 2331 of title 18, United States Code). (2) Crime of violence.--The term ``crime of violence'' has the same meaning as in section 16 of title 18, United States Code. (3) Drug.--The term ``drug'' means any controlled substance (as that term is defined in section 102 of the Controlled Substances Act (21 U.S.C. 802(b)) that was not legally prescribed for use by the defendant or that was taken by the defendant other than in accordance with the terms of a lawfully issued prescription. (4) Economic loss.--The term ``economic loss'' means any pecuniary loss resulting from harm (including the loss of earnings or other benefits related to employment, medical expense loss, replacement services loss, loss due to death, burial costs, and loss of business or employment opportunities) to the extent recovery for such loss is allowed under applicable State law. (5) Harm.--The term ``harm'' includes physical, nonphysical, economic, and noneconomic losses. (6) Hate crime.--The term ``hate crime'' means a crime described in section 1(b) of the Hate Crime Statistics Act (28 U.S.C. 534 note)). (7) Noneconomic losses.--The term ``noneconomic losses'' means losses for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), injury to reputation, and all other nonpecuniary losses of any kind or nature. (8) Small business.-- (A) In general.--The term ``small business'' means any unincorporated business, or any partnership, corporation, association, unit of local government, or organization that has less than 25 full-time employees. (B) Calculation of number of employees.--For purposes of subparagraph (A), the number of employees of a subsidiary of a wholly-owned corporation includes the employees of-- (i) a parent corporation; and (ii) any other subsidiary corporation of that parent corporation. (10) State.--The term ``State'' means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, any other territory or possession of the United States, or any political subdivision of any such State, territory, or possession. SEC. 4. LIMITATION ON PUNITIVE DAMAGES FOR SMALL BUSINESSES. (a) General Rule.--Except as provided in section 6, in any civil action against a small business, punitive damages may, to the extent permitted by applicable State law, be awarded against the small business only if the claimant establishes by clear and convincing evidence that conduct carried out by that defendant through willful misconduct or with a conscious, flagrant indifference to the rights or safety of others was the proximate cause of the harm that is the subject of the action. (b) Limitation on Amount.--In any civil action against a small business, punitive damages shall not exceed the lesser of-- (1) two times the total amount awarded to the claimant for economic and noneconomic losses; or (2) $250,000. (c) Application by Court.--This section shall be applied by the court and shall not be disclosed to the jury. SEC. 5. LIMITATION ON SEVERAL LIABILITY FOR NONECONOMIC LOSS FOR SMALL BUSINESSES. (a) General Rule.--Except as provided in section 6, in any civil action against a small business, the liability of each defendant that is a small business, or the agent of a small business, for noneconomic loss shall be determined in accordance with subsection (b). (b) Amount of Liability.-- (1) In General.--In any civil action described in subsection (a)-- (A) each defendant described in that subsection shall be liable only for the amount of noneconomic loss allocated to that defendant in direct proportion to the percentage of responsibility of that defendant (determined in accordance with paragraph (2)) for the harm to the claimant with respect to which the defendant is liable; and (B) the court shall render a separate judgment against each defendant described in that subsection in an amount determined pursuant to subparagraph (A). (2) Percentage of responsibility.--For purposes of determining the amount of noneconomic loss allocated to a defendant under this section, the trier of fact shall determine the percentage of responsibility of each person responsible for the harm to the claimant, regardless of whether or not the person is a party to the action. SEC. 6. EXCEPTIONS TO LIMITATIONS ON LIABILITY. The limitations on liability under sections 4 and 5 do not apply to any misconduct of a defendant-- (1) that constitutes-- (A) a crime of violence; (B) an act of international terrorism; or (C) a hate crime; (2) that involves-- (A) a sexual offense, as defined by applicable State law; or (B) a violation of a Federal or State civil rights law; or (3) if the defendant was under the influence (as determined pursuant to applicable State law) of intoxicating alcohol or a drug at the time of the misconduct, and the fact that the defendant was under the influence was the cause of any harm alleged by the plaintiff in the subject action. SEC. 7. PREEMPTION AND ELECTION OF STATE NONAPPLICABILITY. (a) Preemption.--Subject to subsection (b), this Act preempts the laws of any State to the extent that State laws are inconsistent with this Act, except that this Act shall not preempt any State law that provides additional protections from liability for small businesses. (b) Election of State Regarding Nonapplicability.--This Act does not apply to any action in a State court against a small business in which all parties are citizens of the State, if the State enacts a statute-- (1) citing the authority of this subsection; (2) declaring the election of such State that this Act does not apply as of a date certain to such actions in the State; and (3) containing no other provision. SEC. 8. EFFECTIVE DATE. (a) In General.--This Act shall take effect 90 days after the date of enactment of this Act. (b) Application.--This Act applies to any claim for harm caused by an act or omission of a small business, if the claim is filed on or after the effective date of this Act, without regard to whether the harm that is the subject of the claim or the conduct that caused the harm occurred before such effective date. ____ Section-by-Section Analysis--The Small Business Lawsuit Abuse Protection Act of 1997 section 1. short title This section provides that the act may be cited as the ``Small Business Lawsuit Abuse Protection Act of 1997.'' section 2. findings This section sets out congressional findings concerning the litigation excesses facing small businesses, and the need for litigation reforms to provide certain protections to small businesses from abusive litigation. section 3. definitions Various terms used in the bill are defined in the section. Significantly, for purposes of the legislation, a small business is defined as any business or organization with fewer than 25 full time employees. section 4. limitation on punitive damages for small businesses The bill provides that punitive damages may, to the extent permitted by applicable State law, be awarded against a defendant that is a small business only if the claimant establishes by clear and convincing evidence that conduct carried out by that defendant with a conscious, flagrant indifference to the rights or safety of others was the proximate cause of the harm that is the subject of the action. The bill also limits the amount of punitive damages that may be awarded against a small business. In any civil action against a small business, punitive damages may not exceed the lesser of two times the amount awarded to the claimant for economic and noneconomic losses, or $250,000. section 5. limitation on several liability for noneconomic loss for small businesses This section provides that, in any civil action against a small business, for each defendant that is a small business, the liability of that defendant for noneconomic loss will be in proportion to that defendant's responsibility for causing the harm. Those defendants would continue, however, to be held [[Page S5349]] jointly and severally liable for

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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
(Senate - June 05, 1997)

Text of this article available as: TXT PDF [Pages S5342-S5368] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. JEFFORDS: S. 830. A bill to amend the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act to improve the regulation of food, drugs, devices, and biological products, and for other purposes; to the Committee on Labor and Human Resources. the food and drug administration modernization and accountability act of 1997 Mr. JEFFORDS. Mr. President, today I am introducing legislation to modernize the Food and Drug Administration [FDA] and reauthorize the Prescription Drug User Fee Act for 5 years. This legislation comes as result of over 3 years of consideration by the Congress on steps that could be taken by the agency that would contribute to its mandate to protect the American public while ensuring that life-saving products could be made more readily available. FDA acknowledges that its mandate also requires it to regulate over one-third of our Nation's products. Within its purview the FDA regulates virtually all of the food and all of the cosmetics, medical devices, and drugs made available to our citizens. I believe, and several members of the Labor Committee share my belief, that in an organization the size of FDA there is always room for improvement and modernization. Our objective, which this legislation achieves, was identify areas where improvements could be made that will strengthen the agency's ability to approve safe and effective products more expeditiously. Last year, both the House and the Senate held numerous and extensive hearings on countless proposals for modernizing and reforming the FDA. The Senate Labor and Human Resources Committee successfully reported a bipartisan bill that sought to accomplish many of those reforms. But last year, acrimonious issues remained, time ran out and the bill did not receive floor consideration. This year I have resolved to move forward. I have been committed to addressing last year's most controversial issues. I believe that the legislation I am introducing today addresses virtually all of objections raised last year both in process and in content. This is a better bill and I believe that upon examination, my colleagues will agree that it accomplishes its goal. I want to comment a moment on the open, consensus-building process we followed in developing this legislation. The Labor Committee held two hearings. During the first the committee received testimony from the principal FDA Deputy Commissioner, Dr. Michael Friedman, and all of the FDA Center Directors. The second hearing included representatives from patient and consumer coalitions and from the food, drug, and medical device sectors regulated by the FDA. Committee members learned from the agency of the administrative reforms and the progress it has already undertaken, areas that remain a challenge, and those areas that require legislative authority to change. The committee listened to consumers' concerns with provisions that were considered last year that they felt would weaken the FDA's ability to protect the public health. Finally, the committee learned of the ongoing and needless delays and frustrations facing health care and consumer product sectors of our economy in working with the FDA. The committee learned of the frustrated attempts to work through the bureaucratic labyrinth of needless regulatory delays. Delays that prohibited people from getting access to vitally needed, life saving medical treatments, drugs, and devices. Since the finish of the committee's hearings we have engaged in an open, collaborative process that has given voice to each party wishing to be heard. For many of these meetings it is worth noting that the agency was a full, cooperating participant and we would not have been able to make the progress made without FDA's collaboration. Several meetings, essentially roundtable discussions, have occurred with bipartisan committee staff, the FDA, and each of the several sectors regulated by the agency. These meetings have given all the participants an opportunity to discuss problems and potential solutions and have been the basis for the consensus bill I am introducing today. Finally, committee staff have had numerous meetings to discuss key provisions in the bill with a wide range of consumer groups including, among others, the Patient Coalition, Public Citizen, the Centers for Science in the Public Interest, the Pediatric AIDS Foundation, and the National Organization for Rare Diseases. It should be clear that no person or group was excluded from this deliberative process. Let me turn to the content of this measure and the steps we have taken to respond to the controversies raised last year. Five key objections were raised against the FDA reform bill that had been reported on a strong bipartisan vote from the Labor and Human Resources Committee during the last Congress. In that vein, we have sought to and have accomplished addressing each of the substantive concerns raised by the minority. Last year's measure was criticized by some for the number of mandatory, but shortened, product review time frames that critics said would overburden the FDA and for the hammers that would have required FDA to contract out some product reviews or to give priority to products approved abroad. Today's legislation eliminates most of the mandatory time frames and retains only those necessary to ensure collaborative, more efficient reviews or to facilitate quick reviews of low risk products. The contracting out and European review hammers that would have forced FDA actions have been eliminated. Last year's provision allowing for third party, outside expert review were criticized for turning central regulatory authority decisions over to private industry, creating conflicts of interest, and depriving FDA of resources and expertise. Today's legislation adopts FDA's current system for accrediting and selecting third-party review organizations. The bill expands FDA's current pilot third-party review program beyond just the lowest risk devices and FDA retains final approval for all devices. Devices that are life- [[Page S5343]] supporting, life-sustaining, or implantable are excluded from third- party review. FDA may allow third-party review for higher risk devices at its sole discretion. This approval will allow FDA to retain, augment, and focus its expertise, at its discretion, on critical areas of its expanding workload. Last year's bill would have required FDA to contract out review of food additive petitions, medical devices, and drugs. Critics argued these changes would weaken consumer protections. We have modified these provisions to give FDA express authority to contract out when deemed by FDA to be more efficient or to add needed expertise. Thsi year the collaborative effort has continued. During our meetings FDA identified a number of enforcement powers that the agency believes will enhance its ability to protect the public health. We have included a number of FDA's specific requests. Many patient and consumer groups raised concerns about insufficient safeguards related to the fast-track drug approval process and the provision improving accelerated access to investigational products and we have adopted several of their key concerns. I would close by saying that this measure embodies a reasonable, moderate approach to balancing the agency's mandate to regulate over one-third of our Nation's economy and provide for the public health and safety with the compelling need to provide new, improved, safe, and effective products to the American public. It is a good bill and I look forward to working with my colleagues to improve it even further. ______ By Mr. SHELBY (for himself, Mr. Bond, Mr. Hagel, Mr. Hutchinson, and Mr. Coverdell): S. 831. A bill to amend chapter 8 of title 5, United States Code, to provide for congressional review of any rule promulgated by the Internal Revenue Service that increases Federal revenue, and for other purposes; to the Committee on Governmental Affairs. the stealth tax prevention act Mr. SHELBY. Mr. President, I rise today to introduce the Stealth Tax Prevention Act. Perhaps the most important power given to the Congress in the Constitution of the United States is bestowed in article I, section 8--the power to tax. This authority is vested in Congress because, as elected representatives, Congress remains accountable to the public when they lay and collect taxes. Last year, Mr. President, Congress passed the Congressional Review Act of 1996, which provides that when a major agency rule takes effect, Congress has 60 days to review it. During this time period, Congress has the option to pass a disapproval resolution. If no such resolution is passed, the rule then goes into effect. The Internal Revenue Service, as the President here knows, has enormous power to affect the lives and the livelihoods of American taxpayers through their authority to interpret the Tax Code. The Stealth Tax Prevention Act that I am introducing today, along with Senator Bond and Senator Hagel, will expand the definition of a major rule to include, Mr. President, any IRS regulation which increases Federal revenue. Why? Because we desperately need this today. For example, if the Office of Management and Budget finds that the implementation and enforcement of a rule has resulted in an increase of Federal revenues over current practices or revenues anticipated from the rule on the date of the enactment of the statute under which the rule is promulgated. Therefore, the Stealth Tax Prevention Act will allow Congress to review the regulation and take appropriate measures to avoid raising taxes on hard-working Americans, in most cases, small businesses. Mr. President, the Founding Fathers' intent, as you know, was to put the power to lay and collect taxes in the hands of elected Members of Congress, not in the hands of bureaucrats who are shielded from public accountability. It is appropriate, I believe, that the IRS's breach of authority is addressed, in light of the fact that we are celebrating this week Small Business Week. The discretionary authority of the Internal Revenue Service exposes small businesses, farmers, and others to the arbitrary whims of bureaucrats, thus creating an uncertain and, under certain cases, hostile environment in which to conduct day-to-day activities. Most of these people do not have lobbyists that work for them, other than their elected Representatives, the way it should be. The Stealth Tax Prevention Act will be particularly helpful in lowering the tax burden on small business which suffers disproportionately, Mr. President, from IRS regulations. This burden discourages the startup of new firms and ultimately the creation of new jobs in the economy, which has really made America great today. Americans pay Federal income taxes. They, Mr. President, as you well know, pay State income taxes. They pay property taxes. On the way to work in the morning they pay a gasoline tax when they fill up their car, and a sales tax when they buy a cup of coffee. Mr. President, average Americans in small businesses are saddled with the highest tax burden in our country's history. Allowing bureaucrats to increase taxes even further, at their own discretion through interpretation of the Tax Code is intolerable. The Stealth Tax Prevention Act will leave tax policy where it belongs, to elected Members of the Congress, not unelected and unaccountable IRS bureaucrats. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 831 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. CONGRESSIONAL REVIEW OF INTERNAL REVENUE SERVICE RULES THAT INCREASE REVENUE. (a) Short Title.--This Act may be cited as the ``Stealth Tax Prevention Act''. (b) In General.--Section 804(2) of title 5, United States Code, is amended to read as follows: ``(2) The term `major rule'-- ``(A) means any rule that-- ``(i) the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget finds has resulted in or is likely to result in-- ``(I) an annual effect on the economy of $100,000,000 or more; ``(II) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or ``(III) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets; or ``(ii)(I) is promulgated by the Internal Revenue Service; and ``(II) the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget finds that the implementation and enforcement of the rule has resulted in or is likely to result in any net increase in Federal revenues over current practices in tax collection or revenues anticipated from the rule on the date of the enactment of the statute under which the rule is promulgated; and ``(B) does not include any rule promulgated under the Telecommunications Act of 1996 and the amendments made by that Act.''. Mr. BOND. Mr. President, I rise today to join my distinguished colleague from Alabama, Senator Shelby, in introducing legislation to ensure that the Treasury Department's Internal Revenue Service does not usurp the power to tax--a power solely vested in Congress by the U.S. Constitution. The Stealth Tax Prevention Act will ensure that the duly elected representatives of the people, who are accountable to the electorate for our actions, will have discretion to exercise the power to tax. This legislation is intended to curb the ability of the Treasury Department to bypass Congress by proposing a tax increase without the authorization or consent of Congress. The Stealth Tax Prevention Act builds on legislation passed unanimously by the Senate just over 1 year ago. As chairman of the Committee on Small Business, I authored the Small Business Regulatory Enforcement Fairness Act--better known as the Red Tape Reduction Act-- to ensure that small businesses are treated fairly in agency rulemaking and enforcement activities. Subtitle E of the Red Tape Reduction Act provides that a final rule issued by a Federal agency and deemed a major rule by the Office of Information and Regulatory Affairs of the Office of Management and Budget [[Page S5344]] cannot go into effect for at least 60 days. This delay is to provide Congress with a window during which it can review the rule and its impact, allowing time for Congress to consider whether a resolution of disapproval should be enacted to strike down the regulation. To become effective, the resolution must pass both the House and Senate and be signed into law by the President or enacted as the result of a veto override. The bill Senator Shelby and I introduce today amends this law to provide that any rule issued by the Treasury Department's Internal Revenue Service that will result in a tax increase--any increase--will be deemed a major rule by OIRA and, consequently, not go into effect for at least 60 days. This procedural safeguard will ensure that the Department of the Treasury and its Internal Revenue Service cannot make an end-run around Congress, as it is currently attempting with the stealth tax it proposed on January 13. As my colleagues are aware, the IRS has issued a proposal that is tantamount to a tax increase on businesses structured as limited liability companies. The IRS proposal disqualifies a taxpayer from being considered as a limited partner if he or she ``participates in the partnership's trade or business for more than 500 hours during a taxable year'' or is involved in a ``service'' partnership, such as lawyers, accountants, engineers, architects, and health-care providers. The IRS alleges that its proposal merely interprets section 1402(a)(13) of the Tax Code, providing clarification, when in actuality it is a tax increase by regulatory fiat. Under the IRS proposal, disqualification as a limited partner will result in a tax increase on income from both capital investments as well as earnings of the partnership. The effect will be to add the self-employment tax--12.4 percent for social security and 2.9 percent for Medicare--to income from investments as well as earnings for limited partners that under current rules can exclude such income from the self-employment tax. Under the bill introduced today, the tax increase proposed by the Internal Revenue Service of the Treasury Department, if later issued as a final rule, could not go into effect for at least 60 days following its publication in the Federal Register. This window, which coincides with issuance of a report by the Comptroller General, would allow Congress the opportunity to review the rule and vote on a resolution to disapprove the tax increase before it is applied to a single taxpayer. The Stealth Tax Prevention Act strengthens the Red Tape Reduction Act and the vital procedural safeguards it provides to ensure that small businesses are not burdened unnecessarily by new Federal regulations. Congress enacted the 1966 provisions to strengthen the effectiveness of the Regulatory Flexibility Act, a law which had been ignored too often by Government agencies, especially the Internal Revenue Service. Three of the top recommendations of the 1995 White House Conference on Small Business sought reforms to the way Government regulations are developed and enforced, and the Red Tape Reduction Act passed the Senate without a single dissenting vote on its way to being signed into law last year. Despite the inclusion of language in the 1996 amendments that expressly addresses coverage of IRS interpretative rules, we find ourselves faced again with an IRS proposal that was not issued in compliance with the Regulatory Flexibility Act. As 18 of my Senate colleagues and I advised Secretary Rubin in an April letter, the proposed IRS regulation on limited partner taxation is precisely the type of rule for which a regulatory flexibility analysis should be done. Although, on its face, the rulemaking seeks merely to define a limited partner or to eliminate uncertainty in determining net earnings from self-employment, the real effect of the rule would be to raise taxes by executive fiat and expand substantially the spirit and letter of the underlying statute. The rule also seeks to impose on small businesses a burdensome new recordkeeping and collection of information requirement that would affect millions of limited partners and members of limited liability companies. The Treasury's IRS proposes this stealth tax increase with the knowledge that Congress declined to adopt a similar tax increase in the Health Security Act proposed in 1994--a provision that the Congressional Joint Committee on Taxation estimated in 1994 would have resulted in a tax increase of approximately $500 million per year. The Stealth Tax Prevention Act would remove any incentive for the Treasury Department to underestimate the cost imposed by an IRS proposed or final rule in an effort to skirt the administration's regulatory review process or its obligations under the Regulatory Flexibility Act. By amending the definition of major rule under the Congressional Review Act, which is subtitle E of the Red Tape Reduction Act, we ensure that an IRS rule that imposes a tax increase will be a major rule, whether or not it has an estimated annual effect on the economy of $100,000,000. Our amendment does not change the trigger for a regulatory flexibility analysis, which still will be required if a proposed rule would have a significant economic impact on a substantial number of small entities. We believe the heightened scrutiny of IRS regulations called for by this legislation will provide an additional incentive for the Treasury Department's Internal Revenue Service to meet all of its procedural obligations under the Regulatory Flexibility Act and the Red Tape Reduction Act. I urge my colleagues to join Senator Shelby and me in supporting this important legislation to ensure that the IRS not usurp the proper role of Congress--nor skirt its obligations to identify the impact of its proposed and final rules. Rules such as that currently proposed by the IRS should be carefully scrutinized by Congress. When the Department of the Treasury issues a final IRS rule that increases taxes, Congress should have the ability to exercise its discretion to enact a resolution of disapproval before the rule is applicable to a single taxpayer. The Stealth Tax Prevention Act Senator Shelby and I introduce today provides that opportunity. ______ By Mr. KOHL (for himself, Mr. Kerrey, Mr. Harkin, Mr. Hatch, Mr. Hagel, and Mr. Grassley): S. 832. A bill to amend the Internal Revenue Code of 1986 to increase the deductibility of business meal expenses for individuals who are subject to Federal limitations on hours of service; to the Committee on Finance. The Business Meal Deduction Fairness Act of 1997 Mr. KOHL. Mr. President, as my colleagues know, I am one of this body's strongest advocates for deficit reduction. I attribute much of my deep commitment to this goal to my days in business. As a businessman, I learned that you must balance your books and live within your means. I also learned that you must treat people fairly and admit when you have made a mistake. I have come to the floor to acknowledge that a mistake has been made, and must be corrected. In August 1993 we passed the omnibus budget reconciliation bill. I am proud to say that this legislation has helped to produce falling deficits and sustained economic growth. However, in our efforts to get our fiscal house in order we unfairly penalized a group of hard working, middle-class Americans: transportation workers. It is for this reason that I rise today, to reintroduce the business meal deduction fairness bill. This measure would increase the deductibility of business meals, from 50 to 80 percent, for individuals who are required to eat away from home due to the nature of their work. In the 1993 reconciliation bill was a provision which lowered the deductible portion of business meals and entertainment expenses from 80 to 50 percent. The change was aimed at the so-called three martini lunches and extravagant entertainment expenses of Wall Street financiers and Hollywood movie moguls. Unfortunately, the change also hit the average truck driver who eats chicken fried steak, hot roast beef sandwiches, and meatloaf in truck stops. And while those who entertain for business purposes can change their practices based on the tax law change, long-haul transportation workers often have no choice but to eat on the road. For these workers, the 1993 decrease in the meal deduction has translated into an undeserved decrease in take home pay. For example, when the allowable deduction was dropped in 1993, [[Page S5345]] it increased taxes on an average truck driver $700 to $2,000 per year. This is a huge increase for a truck driver who normally earns $27,000 to $35,000 per year. Our legislation would increase the take-home pay of hard working, middle-class Americans who were inadvertently hurt by changes in the tax law in 1993. Workers who, due to regulations limiting travel hours, must eat out. They have no control over the length of their trips, the amount of time they must rest during a delivery, or, in many cases, the places they can stop and eat. This legislation is straight forward. It would simply restore the business meal expense deduction to 80 per cent for individuals subject to the Department of Transportation's hours-of- service limitations. I will be the first to admit that the budget deficit is the No. 1 economic problem facing this country. Since being elected to the Senate, I have fought to eliminate this destructive drain on our ability to grow and compete in the world economy, but I have fought to do so in a fair manner. The 1993 reconciliation bill closed a loophole and unintentionally trapped some very hard working Americans. We need to acknowledge that a mistake was made and take the opportunity of a tax bill moving this year to fix that mistake. Therefore my colleagues, Senators Kerrey, Harkin, Hatch, Hagel, Grassley and I are requesting the support and assistance of this entire body to ensure that the business meal deduction fairness bill becomes law. Mr. President, I ask unanimous consent that a copy of my legislation be printed in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 832 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF SERVICE. (a) In General.--Section 274(n) of the Internal Revenue Code of 1986 (relating to only 50 percent of meal and entertainment expenses allowed as deduction) is amended by adding at the end the following new paragraph: ``(3) Special rule for individuals subject to federal limitations on hours of service.--In the case of any expenses for food or beverages consumed by an individual during, or incident to, any period of duty which is subject to the hours of service limitations of the Department of Transportation, paragraph (1) shall be applied by substituting `80 percent' for `50 percent'.'' (b) Effective Date.--The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1997. ______ By Mr. LAUTENBERG (for himself, Mr. DeWine, Mr. Glenn, and Mr. Hatch): S. 833. A bill to designate the Federal building courthouse at Public Square and Superior Avenue in Cleveland, Ohio, as the ``Howard M. Metzenbaum United States Courthouse''; to the Committee on Environment and Public Works. the howard m. metzenbaum united states courthouse designation act of 1997 Mr. LAUTENBERG. Mr. President, I rise today to congratulate my dear friend and former colleague, Howard Metzenbaum, on the occasion of his 80th birthday. In his honor, I am introducing a bill that would designate the Federal Building Courthouse in Cleveland, OH, as the ``Howard M. Metzenbaum United States Courthouse.'' I am joined by Ohio's two Senators, Senator Glenn and Senator DeWine. Mr. President, I propose naming a courthouse after Howard because a courthouse is a symbol of justice where all people can come and be treated equally under the law. Howard Metzenbaum deserves this honor because he was a dedicated public servant, who served his home State of Ohio for 18 years in the U.S. Senate. Howard's sense of fairness and equality for all Americans led one of his former colleagues to suggest that Howard would have made an exceptional U.S. Supreme Court Justice when he retired from the Senate in 1994. Mr. President, naming a courthouse after Howard is only a small gesture in attempting to remember a man so committed to justice and fairness. Howard's contributions to the Senate are extraordinary, so we should commemorate his unique contribution by celebrating his 80th year, his 18 years in the United States Senate, and also the special character he brought to our body. I pay tribute today to a man who always stood up for what he believed was right, fighting hard to preserve opportunity for those yet to come. As a Senator, Howard had a broad range of interests and he pursued them with dogged perseverance, sincerity, and clarity. Howard and I worked on many issues together during our time in the Senate. Individual rights and environmental preservation were major concerns. He poured his energy into clean air protection, nuclear regulation, cleaning up superfund sites, and recycling. Howard provided strong leadership on antitrust issues as Chairman of the Subcommittee on Antitrust, Monopolies and Business Rights on the Judiciary Committee. He was a persistent gun control advocate, taking the lead on many antigun initiatives in the Senate. He was one of the lead sponsors of the Brady bill handgun purchase waiting period, as well as the bans on assault weapons and plastic explosives. But Howard's true passions lay with America's underprivileged and needy communities, which never had a bolder champion. His work on behalf of the poor, the disabled, and the elderly reflect his remarkable compassion for those members of society who face challenges that many of us cannot fully appreciate. He tirelessly defended their interests and fought for their protection. He was dedicated to eradicating discrimination, ensuring adequate health care to those in need, and boosting public education. It has been said many times, but for good reason, that Howard brought not only his conscience to the Senate, but also the courage to act on his convictions. Howard remains a good friend to me, but he was also a mentor and a teacher during his years in the Senate. He gave me good advice and plenty of it. And, I might add, he continues to do so today, which I welcome. But more than that, his dedication to the office of United States Senator is an example by which to live. He stood tall for the little people. Some will affectionately remember Howard as determined, argumentative, and even ``irascible.'' I cannot deny that those words come to my mind every now and then, when describing Howard. He was always at his best then, and for good reason. I heard it said by one Senator, and not a good friend: ``If there wasn't a Metzenbaum here, we'd have to invent one to keep us alert.'' I have missed working with Howard Metzenbaum in this great institution, a place that has been truly enhanced by his presence. I salute him on celebrating his 80th year. I ask unanimous consent that the text of the bill appear at the appropriate place in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 833 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. DESIGNATION OF HOWARD M. METZENBAUM UNITED STATES COURTHOUSE. The Federal building courthouse at Public Square and Superior Avenue in Cleveland, Ohio, shall be known and designated as the ``Howard M. Metzenbaum United States Courthouse''. SEC. 2. REFERENCES. Any reference in a law, map, regulation, document, paper, or other record of the United States to the Federal building courthouse referred to in section 1 shall be deemed to be a reference to the ``Howard M. Metzenbaum United States Courthouse''. ______ By Mr. HARKIN (for himself and Mr. Reed): S. 834. A bill to amend the Public Health Service Act to ensure adequate research and education regarding the drug DES; to the Committee on Labor and Human Resources. the DES Research and Education Amendments of 1997 Mr. HARKIN. Mr. President, today I am pleased to be joined by my distinguished colleague from Rhode Island, Senator Reed, in introducing an important women's health initiative. The DES Research and Education Amendments of 1997 would extend and expand our effort to assist the over 5 million Americans who have been exposed to [[Page S5346]] the drug, DES. Representative Louise Slaughter, a long-time leader on this issue, is introducing companion legislation today in the other body. Between 1938 and 1971, some 5 million American women were given the synthetic drug, diethylstilbestrol, commonly known as DES. Women were given the drug during pregnancy in the mistaken belief it would help prevent miscarriage. The drug was pulled from the market based on studies that found that it was ineffective and might result in damage to children born to the women who had been given it. Since the 1970's, studies have shown that DES does damage the reproductive systems of those exposed in utero and increases these individuals' risk for cancer, infertility, and a wide range of other serious reproductive tract disorders. The women exposed in utero to DES are five times more likely to have an ectopic pregnancy and three times more likely to miscarry when they in turn try to have children. Studies also show that one of every thousand women exposed to DES in utero will develop clear cell cancer. Women who took DES have also been found to face a higher risk for breast cancer. In 1992, while there had been a number of research studies on DES exposure and its effects, much more research was necessary. That year, President Bush signed legislation introduced by myself and Representative Slaughter, that mandated a significant increase in DES research supported by the National Institutes of Health [NIH]. Our legislation also required NIH to support long-term studies of Americans impacted by this drug. Those studies are now underway and must be continued. The legislation we are introducing today will ensure that this critical medical research continues. In addition, there is now preliminary evidence that the grandkids of women who took DES may also be at higher risk for certain health problems, and this legislation would help ensure that further research into this is supported. Another major problem in this area is that millions of Americans don't know the risks they face because of their exposure to DES. Many health professionals who see these people also lack sufficient information about DES exposure and the appropriate steps that should be taken to identify and assist their patients. As a result, many people do not seek or get the appropriate preventive care or take appropriate preventive measures to reduce their risks of adverse affects. For example, women exposed to DES in utero and therefore at higher risk of miscarriage may be able to reduce their risks with appropriate precautionary steps. In an initial attempt to address this need for better information, our 1992 legislation required NIH to test ways to educate the public and health professionals about how to deal with DES exposure. The legislation we are introducing today would give people across the Nation access to the information developed through these pilot programs by requiring a national consumer and health professional education effort. Mr. President, we took a very important step in 1992 to begin to address the significant problem presented by DES exposure. And we did it with strong bipartisan cooperation between a Democratic Congress and a Republican President. That legislation expires this year. We need to make sure that the progress we've made is continued. The 5 million Americans whose health is at risk are depending on us to work together to make sure that happens. I urge my colleagues to join me in support of that effort. I ask unanimous consent that a copy of the legislation be included in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 834 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``DES Research and Education Amendments of 1997''. SEC. 2. FINDINGS. With respect to diethylstilbestrol (a drug commonly known as DES), the Congress finds as follows: (1) DES was widely prescribed to American women from 1938 to 1971 in the mistaken belief it would prevent miscarriage. Approximately 5,000,000 pregnant women took the drug, resulting in DES exposure for approximately 5,000,000 daughters and sons. (2) Studies conducted since the 1970s have shown that DES damages the reproductive systems of those exposed in utero and increases the risk for cancer, infertility, and a wide range of other serious reproductive tract disorders. These disorders include a five-fold increased risk for ectopic pregnancy for DES daughters and a three-fold increase in risk for miscarriage and preterm labor. Studies have indicated that exposure to DES may increase the risk for autoimmune disorders and diseases. (3) An estimated 1 in 1,000 women exposed to DES in utero will develop clear cell cancer of the vagina or cervix. While survival rates for clear cell cancer are over 80 percent when it is detected early, there is still no effective treatment for recurrences of this cancer. (4) Studies also indicate a higher incidence of breast cancer among mothers who took DES during pregnancy. (5) While research on DES and its effects has produced important advances to date, much more remains to be learned. (6) Preliminary research results indicate that DES exposure may have a genetic impact on the third generation--the children of parents exposed to DES in utero--and that estrogen replacement therapy may not be advisable for DES- exposed women. (7) All DES-exposed individuals have special screening and health care needs, especially during gynecological exams and pregnancy for DES daughters, who should receive high risk care. (8) Many Americans remain unaware of their DES exposure or ignorant about proper health care and screening. There remains a great need for a national education effort to inform both the public and health care providers about the health effects and proper health care practices for DES- exposed individuals. SEC. 3. REVISION AND EXTENSION OF PROGRAM FOR RESEARCH AND AUTHORIZATION OF NEW NATIONAL PROGRAM OF EDUCATION REGARDING DRUG DES. (a) Permanent Extension of General Program.--Section 403A(e) of the Public Health Service Act (42 U.S.C. 283a(e)) is amended by striking ``for each of the fiscal years 1993 through 1996'' and inserting ``for fiscal year 1997 and each subsequent fiscal year''. (b) National Program for Education of Health Professionals and Public.--From amounts appropriated for carrying out section 403A of the Public Health Service Act (42 U.S.C. 283a), the Secretary of Health and Human Services, acting through the heads of the appropriate agencies of the Public Health Service, shall carry out a national program for the education of health professionals and the public with respect to the drug diethylstilbestrol (commonly known as DES). To the extent appropriate, such national program shall use methodologies developed through the education demonstration program carried out under such section 403A. In developing and carrying out the national program, the Secretary shall consult closely with representatives of nonprofit private entities that represent individuals who have been exposed to DES and that have expertise in community-based information campaigns for the public and for health care providers. The implementation of the national program shall begin during fiscal year 1998. ______ By Mr. ABRAHAM (for himself, Mr. McConnell, Mr. Coverdell, Mr. Santorum, Mr. McCain and Mr. Ashcroft): S. 836. A bill to offer small businesses certain protections from litigation excesses; to the Committee on the Judiciary. The Small Business Lawsuit Abuse Protection Act of 1997 Mr. ABRAHAM. Mr. President, I rise today to introduce the Small Business Lawsuit Abuse Protection Act of 1997. This bill will provide targeted relief from litigation excesses to small businesses. Small businesses in Michigan and across the Nation have faced increasingly burdensome litigation and desperately need relief from unwarranted and costly lawsuits. While other sectors of our society and our economy also need relief from litigation excesses, small businesses by their very nature are particularly vulnerable to lawsuit abuses and especially unable to bear the high costs of unjustified and unfair litigation against them. As this week is Small Business Week, it provides a fine opportunity for us to focus on relieving the burdens faced by small businesses. Small businesses represent the engine of our growing economy and provide countless benefits to communities across America. The Research Institute for Small and Emerging Business, for example, has estimated that there are over 20 million small businesses in America and that small businesses generate 50 percent of the country's private sector output. When I was in Michigan last week over the Memorial Day recess, I heard story after story from small businesses about the constraints, limitations, and [[Page S5347]] fear imposed on them by the threat of abusive and unwarranted litigation. I also heard about the high costs that they must pay for liability insurance. Those represent costs that could be going to expand small businesses, to provide more jobs, or to offer more benefits. According to a recent Gallup survey, one out of every five small businesses decides not to hire more employees, expand its business, introduce a new product, or improve an existing one out of fear of lawsuits. Before the Memorial Day recess, Congress passed the Volunteer Protection Act, which--if signed by the President--will provide specific protections from abusive litigation to volunteers. The Senate passed that legislation by an overwhelming margin of 99 to 1. That legislation provides a model for further targeted reforms for sectors that are particularly hard hit and in need of immediate relief. Small businesses have carried an often unbearable load from unwarranted and unjustified lawsuits. Data from San Diego's superior court published by the Washington Legal Foundation revealed that punitive damages were requested in 41 percent of suits against small businesses. It is unfathomable that such a large proportion of our small businesses are engaging in the sort of egregious misconduct that would warrant a claim of punitive damages. Unfortunately, those sort of findings are not unusual. The National Federation of Independent Business has reported that 34 percent of Texas small business owners have been sued or threatened with court action seeking punitive damages. Those figures are outrageously high and simply cannot have anything to do with actual wrongdoing. We know of far too many examples of expensive and ridiculous legal threats faced by our small businesses that they must defend every day. In a case reported by the American Consulting Engineers Council, a drunk driver had an accident after speeding and bypassing detour signs. Eight hours after the crash, the driver had a blood alcohol level of 0.09. The driver sued the engineering firm that designed the road, the contractor, the subcontractor, and the State highway department. Five years later, and after expending exorbitant amounts on legal fees, the defendants settled the case for $35,000. The engineering firm--a small 15 person firm--was swamped with over $200,000 in legal costs. That represents an intolerable amount for a small business to have to pay in defending a questionable and unwarranted lawsuit. There are more examples. In an Ann Landers column from October 1995, a case was reported that involved a minister and his wife who sued a guide dog school for $160,000 after a blind man who was learning to use a seeing-eye dog stepped on the woman's toes in a shopping mall. The guide dog school, Southeastern Guide Dogs, Inc., which provided the instructor supervising the man, was the only school of its kind in the Southeast. It trains seeing-eye dogs at no cost to the visually impaired. The couple filed their lawsuit 13 months after the so-called accident, in which witnesses reported that the woman did not move out of the blind man's way because she wanted to see if the dog would walk around her. The experiences of a small business in Michigan, the Michigan Furnace Co., is likewise alarming. The plawsuit in the history of her company has been a nuisance lawsuit. She indicates that if the money the company spends on liability insurance and legal fees was distributed among the employees, it would amount to a $10,000 annual raise per employee. These costs are stifling our small businesses and the people who work there. The straightforward provisions of the Small Business Lawsuit Abuse Protection Act will provide small businesses with relief by discouraging abusive litigation. The bill contains essentially two principal reforms. First, the bill limits punitive damages that may be awarded against a small business. In most civil lawsuits against small businesses, punitive damages would be available against the small business only if the claimant proves by clear and convincing evidence that the harm was caused by the small business through at least a conscious, flagrant indifference to the rights and safety of the claimant. Punitive damages would also be limited in amount. Punitive damages would be limited to the lesser of $250,000 or two times the compensatory damages awarded for the harm. That formulation is exactly the same formulation that appears in the small business protection provision that was included in the product liability conference report that passed in the 104th Congress. Second, joint and several liability reforms for small businesses are included under the exact same formulation that was used both in the Volunteer Protection Act passed this Congress and in the product liability conference report passed last Congress. Joint and several liability would be limited so that a small business would be liable for noneconomic damages only in proportion to the small business's responsibility for causing the harm. If a small business is responsible for 100% of an accident, then it will be liable for 100% of noneconomic damages. But if it is only 70%, 25%, 10%, or any other amount responsible, then the small business will be liable only for that same percent of noneconomic damages. Of course, small businesses would still be jointly and severally liable for economic damages, and any other defendants in the action that were not small businesses could be held jointly and severally liable for all damages. This should provide some protection to small businesses so that they will not be sought out as ``deep pocket'' defendants by trial lawyers who would otherwise try to get them on the hook for harms that they have not caused. The fact is that many small businesses simply do not have deep pockets, and they frequently need all of their resources just to stay in business, take care of their employees, and make ends meet. The other provisions in the bill specify the situations in which those reforms apply. The bill defines small business as any business having fewer than 25 employees. That is the same definition of small business that was included in the Product Liability Conference Report. Like the Volunteer Protection Act, this bill covers all civil lawsuits with the exception of suits involving certain types of egregious conduct. The limitations on liability included in the bill would not apply to any misconduct that constitutes a crime of violence, act of international terrorism, hate crime, sexual offense, or civil rights law violation, or which occurred while the defendant was under the influence of intoxicating alcohol or any drug. Also like the Volunteer Protection Act, the bill includes a State opt-out. A State would be able to opt out of the provisions of the bill provided the State enacts a law indicating its election to do so and containing no other provisions. I do not expect that any State will opt-out of these provisions, but I feel it is important to include one out of respect for principles of federalism. I am pleased to have Senators McConnell, Coverdell, Santorum and McCain as original cosponsors of the legislation and very much appreciate their support for our small businesses and for meaningful litigation reforms. The bill is also supported by the National Federation of Independent Business and by the National Restaurant Association. I ask unanimous consent that letters from those two organizations be inserted in the Record. Finally, I ask unanimous consent that a section-by-section analysis of the bill be printed in the Record, as well as the full text of the bill, and I encourage my colleagues to support this simple and much- needed legislation. There being no objection, the material was ordered to be printed in the Record, as follows: S. 836 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Small Business Lawsuit Abuse Protection Act of 1997''. SEC. 2. FINDINGS. Congress finds that-- (1) the United States civil justice system is inefficient, unpredictable, unfair, costly, and impedes competitiveness in the marketplace for goods, services, business, and employees; (2) the defects in the civil justice system have a direct and undesirable effect on interstate commerce by decreasing the availability of goods and services in commerce; (3) there is a need to restore rationality, certainty, and fairness to the legal system; (4) the spiralling costs of litigation and the magnitude and unpredictability of punitive [[Page S5348]] damage awards and noneconomic damage awards have continued unabated for at least the past 30 years; (5) the Supreme Court of the United States has recognized that a punitive damage award can be unconstitutional if the award is grossly excessive in relation to the legitimate interest of the government in the punishment and deterrence of unlawful conduct; (6) just as punitive damage awards can be grossly excessive, so can it be grossly excessive in some circumstances for a party to be held responsible under the doctrine of joint and several liability for damages that party did not cause; (7) as a result of joint and several liability, entities including small businesses are often brought into litigation despite the fact that their conduct may have little or nothing to do with the accident or transaction giving rise to the lawsuit, and may therefore face increased and unjust costs due to the possibility or result of unfair and disproportionate damage awards; (8) the costs imposed by the civil justice system on small businesses are particularly acute, since small businesses often lack the resources to bear those costs and to challenge unwarranted lawsuits; (9) due to high liability costs and unwarranted litigation costs, small businesses face higher costs in purchasing insurance through interstate insurance markets to cover their activities; (10) liability reform for small businesses will promote the free flow of goods and services, lessen burdens on interstate commerce, and decrease litigiousness; and (11) legislation to address these concerns is an appropriate exercise of Congress powers under Article I, section 8, clauses 3, 9, and 18 of the Constitution, and the fourteenth amendment to the Constitution. SEC. 3. DEFINITIONS. In this Act: (1) Act of international terrorism.--The term ``act of international terrorism'' has the same meaning as in section 2331 of title 18, United States Code). (2) Crime of violence.--The term ``crime of violence'' has the same meaning as in section 16 of title 18, United States Code. (3) Drug.--The term ``drug'' means any controlled substance (as that term is defined in section 102 of the Controlled Substances Act (21 U.S.C. 802(b)) that was not legally prescribed for use by the defendant or that was taken by the defendant other than in accordance with the terms of a lawfully issued prescription. (4) Economic loss.--The term ``economic loss'' means any pecuniary loss resulting from harm (including the loss of earnings or other benefits related to employment, medical expense loss, replacement services loss, loss due to death, burial costs, and loss of business or employment opportunities) to the extent recovery for such loss is allowed under applicable State law. (5) Harm.--The term ``harm'' includes physical, nonphysical, economic, and noneconomic losses. (6) Hate crime.--The term ``hate crime'' means a crime described in section 1(b) of the Hate Crime Statistics Act (28 U.S.C. 534 note)). (7) Noneconomic losses.--The term ``noneconomic losses'' means losses for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), injury to reputation, and all other nonpecuniary losses of any kind or nature. (8) Small business.-- (A) In general.--The term ``small business'' means any unincorporated business, or any partnership, corporation, association, unit of local government, or organization that has less than 25 full-time employees. (B) Calculation of number of employees.--For purposes of subparagraph (A), the number of employees of a subsidiary of a wholly-owned corporation includes the employees of-- (i) a parent corporation; and (ii) any other subsidiary corporation of that parent corporation. (10) State.--The term ``State'' means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, any other territory or possession of the United States, or any political subdivision of any such State, territory, or possession. SEC. 4. LIMITATION ON PUNITIVE DAMAGES FOR SMALL BUSINESSES. (a) General Rule.--Except as provided in section 6, in any civil action against a small business, punitive damages may, to the extent permitted by applicable State law, be awarded against the small business only if the claimant establishes by clear and convincing evidence that conduct carried out by that defendant through willful misconduct or with a conscious, flagrant indifference to the rights or safety of others was the proximate cause of the harm that is the subject of the action. (b) Limitation on Amount.--In any civil action against a small business, punitive damages shall not exceed the lesser of-- (1) two times the total amount awarded to the claimant for economic and noneconomic losses; or (2) $250,000. (c) Application by Court.--This section shall be applied by the court and shall not be disclosed to the jury. SEC. 5. LIMITATION ON SEVERAL LIABILITY FOR NONECONOMIC LOSS FOR SMALL BUSINESSES. (a) General Rule.--Except as provided in section 6, in any civil action against a small business, the liability of each defendant that is a small business, or the agent of a small business, for noneconomic loss shall be determined in accordance with subsection (b). (b) Amount of Liability.-- (1) In General.--In any civil action described in subsection (a)-- (A) each defendant described in that subsection shall be liable only for the amount of noneconomic loss allocated to that defendant in direct proportion to the percentage of responsibility of that defendant (determined in accordance with paragraph (2)) for the harm to the claimant with respect to which the defendant is liable; and (B) the court shall render a separate judgment against each defendant described in that subsection in an amount determined pursuant to subparagraph (A). (2) Percentage of responsibility.--For purposes of determining the amount of noneconomic loss allocated to a defendant under this section, the trier of fact shall determine the percentage of responsibility of each person responsible for the harm to the claimant, regardless of whether or not the person is a party to the action. SEC. 6. EXCEPTIONS TO LIMITATIONS ON LIABILITY. The limitations on liability under sections 4 and 5 do not apply to any misconduct of a defendant-- (1) that constitutes-- (A) a crime of violence; (B) an act of international terrorism; or (C) a hate crime; (2) that involves-- (A) a sexual offense, as defined by applicable State law; or (B) a violation of a Federal or State civil rights law; or (3) if the defendant was under the influence (as determined pursuant to applicable State law) of intoxicating alcohol or a drug at the time of the misconduct, and the fact that the defendant was under the influence was the cause of any harm alleged by the plaintiff in the subject action. SEC. 7. PREEMPTION AND ELECTION OF STATE NONAPPLICABILITY. (a) Preemption.--Subject to subsection (b), this Act preempts the laws of any State to the extent that State laws are inconsistent with this Act, except that this Act shall not preempt any State law that provides additional protections from liability for small businesses. (b) Election of State Regarding Nonapplicability.--This Act does not apply to any action in a State court against a small business in which all parties are citizens of the State, if the State enacts a statute-- (1) citing the authority of this subsection; (2) declaring the election of such State that this Act does not apply as of a date certain to such actions in the State; and (3) containing no other provision. SEC. 8. EFFECTIVE DATE. (a) In General.--This Act shall take effect 90 days after the date of enactment of this Act. (b) Application.--This Act applies to any claim for harm caused by an act or omission of a small business, if the claim is filed on or after the effective date of this Act, without regard to whether the harm that is the subject of the claim or the conduct that caused the harm occurred before such effective date. ____ Section-by-Section Analysis--The Small Business Lawsuit Abuse Protection Act of 1997 section 1. short title This section provides that the act may be cited as the ``Small Business Lawsuit Abuse Protection Act of 1997.'' section 2. findings This section sets out congressional findings concerning the litigation excesses facing small businesses, and the need for litigation reforms to provide certain protections to small businesses from abusive litigation. section 3. definitions Various terms used in the bill are defined in the section. Significantly, for purposes of the legislation, a small business is defined as any business or organization with fewer than 25 full time employees. section 4. limitation on punitive damages for small businesses The bill provides that punitive damages may, to the extent permitted by applicable State law, be awarded against a defendant that is a small business only if the claimant establishes by clear and convincing evidence that conduct carried out by that defendant with a conscious, flagrant indifference to the rights or safety of others was the proximate cause of the harm that is the subject of the action. The bill also limits the amount of punitive damages that may be awarded against a small business. In any civil action against a small business, punitive damages may not exceed the lesser of two times the amount awarded to the claimant for economic and noneconomic losses, or $250,000. section 5. limitation on several liability for noneconomic loss for small businesses This section provides that, in any civil action against a small business, for each defendant that is a small business, the liability of that defendant for noneconomic loss will be in proportion to that defendant's responsibility for causing the harm. Those defendants would continue, however, to be held [[Page S5349]] jointly and severally l