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< Back to current issue of Immigration Daily < Back to current issue of Immigrant's Weekly
[Congressional Record: December 15, 2000 (House)]
[Page H12304-H12354]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr15de00-43]
[[pp. H12304-H12354]] CONFERENCE REPORT ON H.R. 4577, DEPARTMENTS OF LABOR, HEALTH AND HUMAN
SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 2001
[[Continued from page H12303]]
[[Page H12304]]
a library from limiting Internet access to or otherwise
protecting against materials other than those referred to in
subclauses (I), (II), and (III) of paragraph (1)(A)(i).
``(3) Disabling during certain use.--An administrator,
supervisor, or other authority may disable a technology
protection measure under paragraph (1) to enable access for
bona fide research or other lawful purposes.
``(4) Timing and applicability of implementation.--
``(A) In general.--A library covered by paragraph (1) shall
certify the compliance of such library with the requirements
of paragraph (1) as part of the application process for the
next program funding year under this Act following the
effective date of this subsection, and for each subsequent
program funding year thereafter.
``(B) Process.--
``(i) Libraries with internet safety policies and
technology protection measures in place.--A library covered
by paragraph (1) that has in place an Internet safety policy
meeting the requirements of paragraph (1) shall certify its
compliance with paragraph (1) during each annual program
application cycle under this Act.
``(ii) Libraries without internet safety policies and
technology protection measures in place.--A library covered
by paragraph (1) that does not have in place an Internet
safety policy meeting the requirements of paragraph (1)--
``(I) for the first program year after the effective date
of this subsection in which the library applies for funds
under this Act, shall certify that it is undertaking such
actions, including any necessary procurement procedures, to
put in place an Internet safety policy that meets such
requirements; and
``(II) for the second program year after the effective date
of this subsection in which the library applies for funds
under this Act, shall certify that such library is in
compliance with such requirements.
Any library covered by paragraph (1) that is unable to
certify compliance with such requirements in such second
program year shall be ineligible for all funding under this
Act for such second program year and all subsequent program
years until such time as such library comes into
compliance with such requirements.
``(iii) Waivers.--Any library subject to a certification
under clause (ii)(II) that cannot make the certification
otherwise required by that clause may seek a waiver of that
clause if State or local procurement rules or regulations or
competitive bidding requirements prevent the making of the
certification otherwise required by that clause. The library
shall notify the Director of the Institute of Museum and
Library Services of the applicability of that clause to the
library. Such notice shall certify that the library will
comply with the requirements in paragraph (1) before the
start of the third program year after the effective date of
this subsection for which the library is applying for funds
under this Act.
``(5) Noncompliance.--
``(A) Use of general education provisions act remedies.--
Whenever the Director of the Institute of Museum and Library
Services has reason to believe that any recipient of funds
this Act is failing to comply substantially with the
requirements of this subsection, the Director may--
``(i) withhold further payments to the recipient under this
Act,
``(ii) issue a complaint to compel compliance of the
recipient through a cease and desist order, or
``(iii) enter into a compliance agreement with a recipient
to bring it into compliance with such requirements.
``(B) Recovery of funds prohibited.--The actions authorized
by subparagraph (A) are the exclusive remedies available with
respect to the failure of a library to comply substantially
with a provision of this subsection, and the Director shall
not seek a recovery of funds from the recipient for such
failure.
``(C) Recommencement of payments.--Whenever the Director
determines (whether by certification or other appropriate
evidence) that a recipient of funds who is subject to the
withholding of payments under subparagraph (A)(i) has cured
the failure providing the basis for the withholding of
payments, the Director shall cease the withholding of
payments to the recipient under that subparagraph.
``(6) Separability.--If any provision of this subsection is
held invalid, the remainder of this subsection shall not be
affected thereby.
``(7) Definitions.--In this section:
``(A) Child pornography.--The term `child pornography' has
the meaning given such term in section 2256 of title 18,
United States Code.
``(B) Harmful to minors.--The term `harmful to minors'
means any picture, image, graphic image file, or other visual
depiction that--
``(i) taken as a whole and with respect to minors, appeals
to a prurient interest in nudity, sex, or excretion;
``(ii) depicts, describes, or represents, in a patently
offensive way with respect to what is suitable for minors, an
actual or simulated sexual act or sexual contact, actual or
simulated normal or perverted sexual acts, or a lewd
exhibition of the genitals; and
``(iii) taken as a whole, lacks serious literary, artistic,
political, or scientific value as to minors.
``(C) Minor.--The term `minor' means an individual who has
not attained the age of 17.
``(D) Obscene.--The term `obscene' has the meaning given
such term in section 1460 of title 18, United States Code.
``(E) Sexual act; sexual contact.--The terms `sexual act'
and `sexual contact' have the meanings given such terms in
section 2246 of title 18, United States Code.''.
(b) Effective Date.--The amendment made by this section
shall take effect 120 days after the date of the enactment of
this Act.
Subtitle B--Universal Service Discounts
SEC. 1721. REQUIREMENT FOR SCHOOLS AND LIBRARIES TO ENFORCE
INTERNET SAFETY POLICIES WITH TECHNOLOGY
PROTECTION MEASURES FOR COMPUTERS WITH INTERNET
ACCESS AS CONDITION OF UNIVERSAL SERVICE
DISCOUNTS.
(a) Schools.--Section 254(h) of the Communications Act of
1934 (47 U.S.C. 254(h)) is amended--
(1) by redesignating paragraph (5) as paragraph (7); and
(2) by inserting after paragraph (4) the following new
paragraph (5):
``(5) Requirements for certain schools with computers
having internet access.--
``(A) Internet safety.--
``(i) In general.--Except as provided in clause (ii), an
elementary or secondary school having computers with Internet
access may not receive services at discount rates under
paragraph (1)(B) unless the school, school board, local
educational agency, or other authority with responsibility
for administration of the school--
``(I) submits to the Commission the certifications
described in subparagraphs (B) and (C);
``(II) submits to the Commission a certification that an
Internet safety policy has been adopted and implemented for
the school under subsection (l); and
``(III) ensures the use of such computers in accordance
with the certifications.
``(ii) Applicability.--The prohibition in clause (i) shall
not apply with respect to a school that receives services at
discount rates under paragraph (1)(B) only for purposes other
than the provision of Internet access, Internet service, or
internal connections.
``(iii) Public notice; hearing.--An elementary or secondary
school described in clause (i), or the school board, local
educational agency, or other authority with responsibility
for administration of the school, shall provide reasonable
public notice and hold at least 1 public hearing or meeting
to address the proposed Internet safety policy. In the case
of an elementary or secondary school other than an elementary
or secondary school as defined in section 14101 of the
Elementary and Secondary Education Act of 1965 (20 U.S.C.
8801), the notice and hearing required by this clause may be
limited to those members of the public with a relationship to
the school.
``(B) Certification with respect to minors.--A
certification under this subparagraph is a certification that
the school, school board, local educational agency, or other
authority with responsibility for administration of the
school--
``(i) is enforcing a policy of Internet safety for minors
that includes monitoring the online activities of minors and
the operation of a technology protection measure with respect
to any of its computers with Internet access that protects
against access through such computers to visual depictions
that are--
``(I) obscene;
``(II) child pornography; or
``(III) harmful to minors; and
``(ii) is enforcing the operation of such technology
protection measure during any use of such computers by
minors.
``(C) Certification with respect to adults.--A
certification under this paragraph is a certification that
the school, school board, local educational agency, or other
authority with responsibility for administration of the
school--
``(i) is enforcing a policy of Internet safety that
includes the operation of a technology protection measure
with respect to any of its computers with Internet access
that protects against access through such computers to visual
depictions that are--
``(I) obscene; or
``(II) child pornography; and
``(ii) is enforcing the operation of such technology
protection measure during any use of such computers.
``(D) Disabling during adult use.--An administrator,
supervisor, or other person authorized by the certifying
authority under subparagraph (A)(i) may disable the
technology protection measure concerned, during use by an
adult, to enable access for bona fide research or other
lawful purpose.
``(E) Timing of implementation.--
``(i) In general.--Subject to clause (ii) in the case of
any school covered by this paragraph as of the effective date
of this paragraph under section 1721(h) of the Children's
Internet Protection Act, the certification under
subparagraphs (B) and (C) shall be made--
``(I) with respect to the first program funding year under
this subsection following such effective date, not later than
120 days after the beginning of such program funding year;
and
``(II) with respect to any subsequent program funding year,
as part of the application process for such program funding
year.
``(ii) Process.--
``(I) Schools with internet safety policy and technology
protection measures in place.--A school covered by clause (i)
that has in place an Internet safety policy and technology
protection measures meeting the requirements necessary for
certification under subparagraphs (B) and (C) shall certify
its compliance with subparagraphs (B) and (C) during each
annual program application cycle under this subsection,
except that with respect to the first program funding year
after the effective date of this paragraph under section
1721(h) of the Children's Internet Protection Act, the
certifications shall be made not later than 120 days after
the beginning of such first program funding year.
``(II) Schools without internet safety policy and
technology protection measures in
[[Page H12305]]
place.--A school covered by clause (i) that does not have in
place an Internet safety policy and technology protection
measures meeting the requirements necessary for certification
under subparagraphs (B) and (C)--
``(aa) for the first program year after the effective date
of this subsection in which it is applying for funds under
this subsection, shall certify that it is undertaking such
actions, including any necessary procurement procedures, to
put in place an Internet safety policy and technology
protection measures meeting the requirements necessary for
certification under subparagraphs (B) and (C); and
``(bb) for the second program year after the effective date
of this subsection in which it is applying for funds under
this subsection, shall certify that it is in compliance with
subparagraphs (B) and (C).
Any school that is unable to certify compliance with such
requirements in such second program year shall be ineligible
for services at discount rates or funding in lieu of services
at such rates under this subsection for such second year and
all subsequent program years under this subsection, until
such time as such school comes into compliance with this
paragraph.
``(III) Waivers.--Any school subject to subclause (II) that
cannot come into compliance with subparagraphs (B) and (C) in
such second year program may seek a waiver of subclause
(II)(bb) if State or local procurement rules or regulations
or competitive bidding requirements prevent the making of the
certification otherwise required by such subclause. A school,
school board, local educational agency, or other authority
with responsibility for administration of the school shall
notify the Commission of the applicability of such subclause
to the school. Such notice shall certify that the school in
question will be brought into compliance before the start of
the third program year after the effective date of this
subsection in which the school is applying for funds under
this subsection.
``(F) Noncompliance.--
``(i) Failure to submit certification.--Any school that
knowingly fails to comply with the application guidelines
regarding the annual submission of certification required
by this paragraph shall not be eligible for services at
discount rates or funding in lieu of services at such
rates under this subsection.
``(ii) Failure to comply with certification.--Any school
that knowingly fails to ensure the use of its computers in
accordance with a certification under subparagraphs (B) and
(C) shall reimburse any funds and discounts received under
this subsection for the period covered by such certification.
``(iii) Remedy of noncompliance.--
``(I) Failure to submit.--A school that has failed to
submit a certification under clause (i) may remedy the
failure by submitting the certification to which the failure
relates. Upon submittal of such certification, the school
shall be eligible for services at discount rates under this
subsection.
``(II) Failure to comply.--A school that has failed to
comply with a certification as described in clause (ii) may
remedy the failure by ensuring the use of its computers in
accordance with such certification. Upon submittal to the
Commission of a certification or other appropriate evidence
of such remedy, the school shall be eligible for services at
discount rates under this subsection.''.
(b) Libraries.--Such section 254(h) is further amended by
inserting after paragraph (5), as amended by subsection (a)
of this section, the following new paragraph:
``(6) Requirements for certain libraries with computers
having internet access.--
``(A) Internet safety.--
``(i) In general.--Except as provided in clause (ii), a
library having one or more computers with Internet access may
not receive services at discount rates under paragraph (1)(B)
unless the library--
``(I) submits to the Commission the certifications
described in subparagraphs (B) and (C); and
``(II) submits to the Commission a certification that an
Internet safety policy has been adopted and implemented for
the library under subsection (l); and
``(III) ensures the use of such computers in accordance
with the certifications.
``(ii) Applicability.--The prohibition in clause (i) shall
not apply with respect to a library that receives services at
discount rates under paragraph (1)(B) only for purposes other
than the provision of Internet access, Internet service, or
internal connections.
``(iii) Public notice; hearing.--A library described in
clause (i) shall provide reasonable public notice and hold at
least 1 public hearing or meeting to address the proposed
Internet safety policy.
``(B) Certification with respect to minors.--A
certification under this subparagraph is a certification that
the library--
``(i) is enforcing a policy of Internet safety that
includes the operation of a technology protection measure
with respect to any of its computers with Internet access
that protects against access through such computers to visual
depictions that are--
``(I) obscene;
``(II) child pornography; or
``(III) harmful to minors; and
``(ii) is enforcing the operation of such technology
protection measure during any use of such computers by
minors.
``(C) Certification with respect to adults.--A
certification under this paragraph is a certification that
the library--
``(i) is enforcing a policy of Internet safety that
includes the operation of a technology protection measure
with respect to any of its computers with Internet access
that protects against access through such computers to visual
depictions that are--
``(I) obscene; or
``(II) child pornography; and
``(ii) is enforcing the operation of such technology
protection measure during any use of such computers.
``(D) Disabling during adult use.--An administrator,
supervisor, or other person authorized by the certifying
authority under subparagraph (A)(i) may disable the
technology protection measure concerned, during use by an
adult, to enable access for bona fide research or other
lawful purpose.
``(E) Timing of implementation.--
``(i) In general.--Subject to clause (ii) in the case of
any library covered by this paragraph as of the effective
date of this paragraph under section 1721(h) of the
Children's Internet Protection Act, the certification under
subparagraphs (B) and (C) shall be made--
``(I) with respect to the first program funding year under
this subsection following such effective date, not later than
120 days after the beginning of such program funding year;
and
``(II) with respect to any subsequent program funding year,
as part of the application process for such program funding
year.
``(ii) Process.--
``(I) Libraries with internet safety policy and technology
protection measures in place.--A library covered by clause
(i) that has in place an Internet safety policy and
technology protection measures meeting the requirements
necessary for certification under subparagraphs (B) and (C)
shall certify its compliance with subparagraphs (B) and (C)
during each annual program application cycle under this
subsection, except that with respect to the first program
funding year after the effective date of this paragraph under
section 1721(h) of the Children's Internet Protection Act,
the certifications shall be made not later than 120 days
after the beginning of such first program funding year.
``(II) Libraries without internet safety policy and
technology protection measures in place.--A library covered
by clause (i) that does not have in place an Internet safety
policy and technology protection measures meeting the
requirements necessary for certification under subparagraphs
(B) and (C)--
``(aa) for the first program year after the effective date
of this subsection in which it is applying for funds under
this subsection, shall certify that it is undertaking such
actions, including any necessary procurement procedures, to
put in place an Internet safety policy and technology
protection measures meeting the requirements necessary for
certification under subparagraphs (B) and (C); and
``(bb) for the second program year after the effective date
of this subsection in which it is applying for funds under
this subsection, shall certify that it is in compliance with
subparagraphs (B) and (C).
Any library that is unable to certify compliance with such
requirements in such second program year shall be ineligible
for services at discount rates or funding in lieu of services
at such rates under this subsection for such second year and
all subsequent program years under this subsection, until
such time as such library comes into compliance with this
paragraph.
``(III) Waivers.--Any library subject to subclause (II)
that cannot come into compliance with subparagraphs (B) and
(C) in such second year may seek a waiver of subclause
(II)(bb) if State or local procurement rules or regulations
or competitive bidding requirements prevent the making of the
certification otherwise required by such subclause. A
library, library board, or other authority with
responsibility for administration of the library shall
notify the Commission of the applicability of such
subclause to the library. Such notice shall certify that
the library in question will be brought into compliance
before the start of the third program year after the
effective date of this subsection in which the library is
applying for funds under this subsection.
``(F) Noncompliance.--
``(i) Failure to submit certification.--Any library that
knowingly fails to comply with the application guidelines
regarding the annual submission of certification required by
this paragraph shall not be eligible for services at discount
rates or funding in lieu of services at such rates under this
subsection.
``(ii) Failure to comply with certification.--Any library
that knowingly fails to ensure the use of its computers in
accordance with a certification under subparagraphs (B) and
(C) shall reimburse all funds and discounts received under
this subsection for the period covered by such certification.
``(iii) Remedy of noncompliance.--
``(I) Failure to submit.--A library that has failed to
submit a certification under clause (i) may remedy the
failure by submitting the certification to which the failure
relates. Upon submittal of such certification, the library
shall be eligible for services at discount rates under this
subsection.
``(II) Failure to comply.--A library that has failed to
comply with a certification as described in clause (ii) may
remedy the failure by ensuring the use of its computers in
accordance with such certification. Upon submittal to the
Commission of a certification or other appropriate evidence
of such remedy, the library shall be eligible for services at
discount rates under this subsection.''.
(c) Definitions.--Paragraph (7) of such section, as
redesignated by subsection (a)(1) of this section, is amended
by adding at the end the following:
``(D) Minor.--The term `minor' means any individual who has
not attained the age of 17 years.
``(E) Obscene.--The term `obscene' has the meaning given
such term in section 1460 of title 18, United States Code.
``(F) Child pornography.--The term `child pornography' has
the meaning given such term in section 2256 of title 18,
United States Code.
[[Page H12306]]
``(G) Harmful to minors.--The term `harmful to minors'
means any picture, image, graphic image file, or other visual
depiction that--
``(i) taken as a whole and with respect to minors, appeals
to a prurient interest in nudity, sex, or excretion;
``(ii) depicts, describes, or represents, in a patently
offensive way with respect to what is suitable for minors, an
actual or simulated sexual act or sexual contact, actual or
simulated normal or perverted sexual acts, or a lewd
exhibition of the genitals; and
``(iii) taken as a whole, lacks serious literary, artistic,
political, or scientific value as to minors.
``(H) Sexual act; sexual contact.--The terms `sexual act'
and `sexual contact' have the meanings given such terms in
section 2246 of title 18, United States Code.
``(I) Technology protection measure.--The term `technology
protection measure' means a specific technology that blocks
or filters Internet access to the material covered by a
certification under paragraph (5) or (6) to which such
certification relates.''.
(d) Conforming Amendment.--Paragraph (4) of such section is
amended by striking ``paragraph (5)(A)'' and inserting
``paragraph (7)(A)''.
(e) Separability.--If any provision of paragraph (5) or (6)
of section 254(h) of the Communications Act of 1934, as
amended by this section, or the application thereof to any
person or circumstance is held invalid, the remainder of such
paragraph and the application of such paragraph to other
persons or circumstances shall not be affected thereby.
(f) Regulations.--
(1) Requirement.--The Federal Communications Commission
shall prescribe regulations for purposes of administering the
provisions of paragraphs (5) and (6) of section 254(h) of the
Communications Act of 1934, as amended by this section.
(2) Deadline.--Notwithstanding any other provision of law,
the Commission shall prescribe regulations under paragraph
(1) so as to ensure that such regulations take effect 120
days after the date of the enactment of this Act.
(g) Availability of Certain Funds for Acquisition of
Technology Protection Measures.
(1) In general.--Notwithstanding any other provision of
law, funds available under section 3134 or part A of title VI
of the Elementary and Secondary Education Act of 1965, or
under section 231 of the Library Services and Technology Act,
may be used for the purchase or acquisition of technology
protection measures that are necessary to meet the
requirements of this title and the amendments made by this
title. No other sources of funds for the purchase or
acquisition of such measures are authorized by this title, or
the amendments made by this title.
(2) Technology protection measure defined.--In this
section, the term ``technology protection measure'' has the
meaning given that term in section 1703.
(h) Effective Date.--The amendments made by this section
shall take effect 120 days after the date of the enactment of
this Act.
Subtitle C--Neighborhood Children's Internet Protection
SEC. 1731. SHORT TITLE.
This subtitle may be cited as the ``Neighborhood Children's
Internet Protection Act''.
SEC. 1732. INTERNET SAFETY POLICY REQUIRED.
Section 254 of the Communications Act of 1934 (47 U.S.C.
254) is amended by adding at the end the following:
``(l) Internet Safety Policy Requirement for Schools and
Libraries.--
``(1) In general.--In carrying out its responsibilities
under subsection (h), each school or library to which
subsection (h) applies shall--
``(A) adopt and implement an Internet safety policy that
addresses--
``(i) access by minors to inappropriate matter on the
Internet and World Wide Web;
``(ii) the safety and security of minors when using
electronic mail, chat rooms, and other forms of direct
electronic communications;
``(iii) unauthorized access, including so-called `hacking',
and other unlawful activities by minors online;
``(iv) unauthorized disclosure, use, and dissemination of
personal identification information regarding minors; and
``(v) measures designed to restrict minors' access to
materials harmful to minors; and
``(B) provide reasonable public notice and hold at least
one public hearing or meeting to address the proposed
Internet safety policy.
``(2) Local determination of content.--A determination
regarding what matter is inappropriate for minors shall be
made by the school board, local educational agency, library,
or other authority responsible for making the determination.
No agency or instrumentality of the United States Government
may--
``(A) establish criteria for making such determination;
``(B) review the determination made by the certifying
school, school board, local educational agency, library, or
other authority; or
``(C) consider the criteria employed by the certifying
school, school board, local educational agency, library, or
other authority in the administration of subsection
(h)(1)(B).
``(3) Availability for review.--Each Internet safety policy
adopted under this subsection shall be made available to the
Commission, upon request of the Commission, by the school,
school board, local educational agency, library, or other
authority responsible for adopting such Internet safety
policy for purposes of the review of such Internet safety
policy by the Commission.
``(4) Effective date.--This subsection shall apply with
respect to schools and libraries on or after the date that is
120 days after the date of the enactment of the Children's
Internet Protection Act.''.
SEC. 1733. IMPLEMENTING REGULATIONS.
Not later than 120 days after the date of enactment of this
Act, the Federal Communications Commission shall prescribe
regulations for purposes of section 254(l) of the
Communications Act of 1934, as added by section 1732 of this
Act.
Subtitle D--Expedited Review
SEC. 1741. EXPEDITED REVIEW.
(a) Three-Judge District Court Hearing.--Notwithstanding
any other provision of law, any civil action challenging the
constitutionality, on its face, of this title or any
amendment made by this title, or any provision thereof, shall
be heard by a district court of 3 judges convened pursuant to
the provisions of section 2284 of title 28, United States
Code.
(b) Appellate Review.--Notwithstanding any other provision
of law, an interlocutory or final judgment, decree, or order
of the court of 3 judges in an action under subsection (a)
holding this title or an amendment made by this title, or any
provision thereof, unconstitutional shall be reviewable as a
matter of right by direct appeal to the Supreme Court. Any
such appeal shall be filed not more than 20 days after entry
of such judgment, decree, or order.
This Act may be cited as the ``Miscellaneous Appropriations
Act, 2001''.
MISCELLANEOUS APPROPRIATIONS
Following is explanatory language on H.R. 5666, as
introduced on December 15, 2000.
The conferees on H.R. 4577 agree with the matter included
in H.R. 5666 and enacted in this conference report by
reference and the following description of it.
DIVISION A
CHAPTER 1
General Provisions--This Chapter
The conference agreement includes language which: provides
that not more than $100,000 shall be available for guarantees
of private sector rural electrification and
telecommunications loans; clarifies that a housing
demonstration program is to be carried out in Mississippi and
Alaska; clarifies that the Initiative for Future Agriculture
and Food Systems shall be used to make grants only to
colleges, universities, or research foundations maintained by
a college or university; makes a technical correction to the
Rural Community Advancement Program to specify that funds may
be used in counties which have received an emergency
designation after January 1, 2000; provides certain transfers
under the livestock assistance program; clarifies eligibility
for quality losses; clarifies that Emergency Conservation
Program funds previously appropriated for the Cerro Grande
fire can be made available for drought benefits; clarifies a
provision regarding payments to producers that suffered
losses because of the insolvency of an agriculture
cooperative in the State of California; provides that Burley,
Flue-cured, and Cigar Binder Type 54-55 tobacco will be
treated identically for loan forfeiture purposes; and
establishes an effective date for a provision of the
Agricultural Risk Protection Act of 2000 regarding
limitations on Burley tobacco quota adjustments. The
effective date of these provisions is the date of enactment
of the Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriations Act,
2001.
The conference agreement includes a section maintaining the
eligibility of certain rural areas for U.S. Department of
Agriculture rural housing programs.
The conference agreement includes a section that authorizes
a study on the feasibility of including ethanol, biodiesel,
and other bio-based fuels as part of the Strategic Petroleum
Reserve.
The conference agreement includes a section that makes the
City of Wilson, NC, eligible for certain U.S. Department of
Agriculture rural development programs.
The conference agreement includes a section that provides
$26,000,000 for the Environmental Quality Incentives Program.
The conference agreement includes a section regarding the
operation of the ongoing bovine tuberculosis eradication
program. The intent of the conferees is that funding for this
program, which is financed through the Commodity Credit
Corporation, shall provide a total of not less than
$60,259,000.
The conferees expect that, in developing any consumer
guidance regarding mercury exposure from seafood consumption,
the Department of Health and Human Services will rely upon
the results of more than one relevant study. The Secretary is
directed to submit a report to the Committees on
Appropriations by February 28, 2001, on any actions regarding
a consumer advisory on this subject.
The conferees urge USDA's Animal and Plant Health
Inspection Service (APHIS) to uphold approved sanitary and
phytosanitary measures in relation to shipping and cargo
materials returning to the United States as a result of trade
with Cuba. The conferees urge APHIS to exercise vigilance in
the adoption of internal measures to insure that returning
containers and shipping materials do not present sanitary or
phytosanitary risks to American agriculture or the
environment, and to explore the formation of a bilateral
cooperative agreement with Cuba to provide for pre-departure
inspections of containers leaving Cuba. The conferees also
encourage APHIS to work in cooperation with the Departments
of Agriculture of the states which will serve as the ports of
reentry for these shipping materials and containers.
The conference agreement includes a section that makes
funding provided in Section
[[Page H12307]]
211(b) of the Agriculture Risk Protection Act of 2000 (P.L.
106-224) available for the Farmland Protection Program.
The conference agreement provides an additional $500,000 to
hire additional attorneys for the Trade Practices Division of
the Office of the General Counsel to enforce the Packers and
Stockyards Act.
The conference agreement provides an additional $200,000
for the Grain Inspection, Packers and Stockyards
Administration to establish a hog contract library.
The conference agreement includes language making available
funds of the Emergency Watershed Program to accelerate
completion of the Hamakua Ditch project in Hawaii.
CHAPTER 2
DEPARTMENT OF JUSTICE
Federal Prison System
Salaries and Expenses
The conference agreement includes $500,000 for the National
Institute of Corrections (NIC) for a comprehensive assessment
of medical care and incidents of inmate mortality in the
Wisconsin State Prison System.
Office of Justice Programs
Justice Assistance
The conference agreement includes $300,000 to expand the
collection of data on prisoner deaths while in law
enforcement custody.
Community Oriented Policing Services
The conference agreement includes $3,080,000 under this
heading, of which $1,880,000 is for a grant to the Pasadena,
California, Police Department for equipment; $200,000 is for
a grant to the City of Signal Hill, California, for equipment
and technology for an emergency operations center; and of
which $1,000,000 is for a grant to the State of Alabama
Department of Forensic Sciences for equipment.
Juvenile Justice Programs
The conference agreement includes $1,000,000 for a grant to
Mobile County, Alabama, for a juvenile court network program.
General Provisions
Sec. 201. The conference agreement includes a provision
making technical changes to Chapter 2 of title II of division
B of Public Law 106-246.
Sec. 202. The conference agreement includes a provision
appropriating $10,000,000 to the State of Texas and
$2,000,000 to the State of Arizona to reimburse county and
municipal governments only for Federal costs associated with
the handling and processing of illegal immigration and drug
and alien smuggling cases.
Sec. 203. The conference agreement includes $9,000,000 to
establishment of the Strom Thurmond Boy & Girls Club National
Training Center.
Sec. 204. The conference agreement includes $500,000 for
the New Hampshire Department of Safety to investigate and
support the prosecution of violations of federal trucking
laws.
Sec. 205. The conference agreement includes $4,000,000 for
the State of South Dakota to establish a regional radio
system.
DEPARTMENT OF COMMERCE
Economic and Statistical Analysis
salaries and expenses
The conference agreement includes $200,000 for the
establishment of satellite accounts for the travel and
tourism industry.
National Oceanic and Atmospheric Administration
operations, research, and facilities
The conference agreement includes $750,000 for a study by
the National Academy of Sciences pursuant to H.R. 2090, as
passed by the House of Representatives on September 12, 2000.
In addition, the conferees encourage the National Oceanic
and Atmospheric Administration (NOAA) and the Federal
Maritime Administration (FMA) to work collaboratively with
the Great Lakes Science Center in Cleveland, Ohio in support
of its Great Lakes Tour simulator and related education
programming.
The conferees also direct the National Oceanic and
Atmospheric Administration (NOAA) to develop a plan to
establish a program for migrating the 8 mm NEXRAD Level II
data archives onto a modern retrievable media, and to report
back to the Committees on Appropriations by February 1, 2001.
Sec. 206. The conference agreement includes a technical
change to funding provided to the National Marine Fisheries
Management Service regarding Stellar sea lion related
funding.
Sec. 207. The conference agreement includes $7,500,000 for
assistance to certain Alaska fisheries.
Sec. 208. The conference agreement includes $3,000,000 for
assistance to certain Hawaii fisheries.
Sec. 209. The conference agreement includes a provision
regarding the Bering Sea/Aleutian Island and Gulf of Alaska
fisheries.
Sec. 210. The conference agreement includes $500,000 for
the Irish Institute.
Sec. 211. The conference agreement includes $5,000,000 to
increase coverage and hours of Radio Free Europe/Radio
Liberty (RFE/RL) and Voice of America (VOA) broadcasts to
Russia and surrounding areas affected by the recent
restrictions on media instituted by the Putin regime. In
addition, the conference agreement includes $5,000,000 for
Radio Free Asia and the Voice of America to increase both the
quantity and quality of their broadcasts to China, in
accordance with authorization contained in the China PNTR
enacting legislation, Section 701(b)(2) of H.R. 4444.
Before using any of the transfer authority provided in this
section and within sixty days of enactment of this act, the
Broadcasting Board of Governors shall provide to the
Committees on Appropriations a spending plan for the total
amount provided. This plan should emphasize new RL and VOA
Russian and related broadcasts in specific areas most
impacted by the recent media restrictions. Also included in
the spending plan should be a projection concerning shortwave
and medium wave technology needs in this newly closed
environment. Amounts proposed for transfer to the
Broadcasting Capital Improvements account should be based
solely on increased broadcasting to Russia and surrounding
areas and to China.
RELATED AGENCIES
Commission on Online Child Protection
The conference agreement includes $750,000 for the
Commission on Online Child Protection.
Small Business Administration
salaries and expenses
The conference agreement includes $1,000,000 for a grant to
establish an electronic commerce technology distribution
center in Scranton, Pennsylvania.
Sec. 212. The conference agreement includes $1,000,000 for
the National Museum of Jazz.
General Provision--This Chapter
Sec. 213. The conference agreement includes a provision
striking sections 406, 635 and 636, and making technical
changes to H.R. 5548.
CHAPTER 3
DEPARTMENT OF DEFENSE
Indirect Airfreight Carriers
The conferees urge the Air Mobility Command (AMC) to ensure
that military air freight is moved in the most time efficient
manner possible. In furtherance of that goal, the conferees
believe that the Civil Reserve Air Fleet (CRAF) program
should admit and encourage indirect airfreight carriers which
have demonstrated ability to provide efficient, cost
effective service.
Distributive Training Technology Program
Public Law 106-259 provided $29,100,000 in ``Other
Procurement, Army'' and $65,700,000 in ``Operation and
Maintenance, Army National Guard'' for the National Guard
Distance Learning Program. It is the conferees' intention
that the funds appropriated for this program shall also be
available for courseware development and commercial off-the-
shelf (COTS) management system software and hardware.
Biological Warfare Defense
The conferees direct that of the funds appropriated in the
Department of Defense Appropriations Act, 2001 (Public Law
106-259) for the Biological Warfare Defense program, under
``Research, Development, Test and Evaluation, Defense-Wide'',
$2,000,000 shall be used only for sensor development in the
Defense Advanced Research Projects Agency's Standoff/Bioagent
Pathogen Detector System program.
Cancer Research
The conferees direct that, using funds appropriated in the
Department of Defense Appropriations Act, 2001 for medical
research programs, the Assistant Secretary of Defense (Health
Affairs) conduct a study on whether environmental factors,
such as air pollutants and electromagnetic radiation,
contribute to a higher than usual rate of incidence of breast
cancer in large populations.
Ballistic Missile Defense Organization
In the Department of Defense Appropriations Act, 2001
(Public Law 106-259), the Congress provided additional funds
for National Missile Defense risk reduction activities. The
Defense Department is reviewing carefully potential
enhancements to the NMD test program, including the addition
of flight tests as well as the collection of data on various
targets and countermeasures. To support these flight test
program enhancements, the conferees direct that $3,000,000 of
the NMD risk reduction increase be allocated to sensor
enhancements and flight test activities outlined in the
Arctic Missile Signature Measurement Program (AMSP).
General Provisions--This Chapter
The conference agreement includes a general provision
(section 301) allowing obligation of a portion of the fiscal
year 2001 procurement funds for the F-22 aircraft, under
specified circumstances.
The conference agreement includes a general provision
(section 302) which transfers primary jurisdiction over
Shemya Island.
The conference agreement includes a general provision
(section 303) requiring the Ballistic Missile Defense
Organization to purchase no less than 40 PAC-3 missiles, the
budgeted quantity, with fiscal year 2001 appropriated funds.
The conference agreement includes a general provision
(section 304) which amends section 8133 of the Department of
Defense Appropriations Act, 2001 (Public Law 106-259),
regarding the amount of transfer authority available to the
Secretary of the Navy for ship cost changes.
The conference agreement includes a general provision
(section 305) which provides
[[Page H12308]]
the Secretary of a military department with authority to
transfer funds in support of Fisher Houses and Fisher Suites.
The conference agreement includes a general provision
(section 306) providing such sums as required to the Defense
Vessel Transfer Program Account for the costs of the lease-
sale transfers authorized by the National Defense
Authorization Act, 2001.
The conference agreement includes a general provision
(section 307) clarifying congressional intent concerning a
Gulf War illness research program.
The conference agreement includes a general provision
(section 308) providing $150,000,000 in emergency
appropriations to the Department of Defense, for ``Operation
and Maintenance, Navy'', for the repair of the U.S.S. Cole,
which was severely damaged in a terrorist attack in the port
of Aden, Yemen, on October 12, 2000. These funds are in
addition to any amounts appropriated in the Department of
Defense Appropriations Act, 2001 (Public Law 106-259), and
are designated as an emergency requirement pursuant to
section 251(b)(2)(A) of the Balanced Budget and Emergency
Deficit Control Act of 1985, as amended. In addition to the
repair, the Navy may expend necessary amounts from these
funds for the necessary stabilization of the vessel and its
transportation to the United States.
The conference agreement includes a general provision
(section 309) making technical corrections to Section 1092 of
the National Defense Authorization Act, 2001, regarding the
establishment of an Aerospace Commission.
The conference agreement includes a general provision
(section 310) which provides $2,000,000 only for planning and
National Environmental Protection Act documentation for the
proposed airfield and heliport at the Marine Corps Air Ground
Task Training Command.
The conference agreement includes a general provision
(section 311) which transfers $5,000,000 to carry out the
provisions of the Minuteman Missile National Historic Site
Establishment Act of 1999 (Public Law 106-115; 113 Stat.
1540).
The conference agreement includes a general provision
(section 312) providing the Secretary of the Air Force with
authority to transfer certain excess property.
The conference agreement includes a general provision
(section 313) providing $100,000,000 in emergency
appropriations for the Overseas Contingency Operations
Transfer Fund, to meet classified requirements requested by
the Administration. Further details are provided in a
classified annex to the Statement of Managers.
The conference agreement includes a general provision
(section 314) providing for the use of up to $3,000,000 for
Marine Corps research into nanotechnology for consequence
management.
The conference agreement includes a general provision
(section 315) specifying the use of funds made available in
the Department of Defense Appropriations Act, 2000, for
certain defense medical initiatives.
The conference agreement includes a general provision
(section 316) providing for the acquisition of certain real
property by the Secretary of the Navy.
The conference agreement includes a general provision
(section 317) regarding the establishment of Marine Fire
Training Centers.
The conference agreement includes a general provision
(section 318) providing the Navy authority to use funds
provided in the Department of Defense Appropriations Act,
2001, for the repair of the ex-Turner Joy.
The conference agreement includes a general provision
(section 319) providing funds to accelerate transition of the
information technology and information services outsourcing
activity within the National Imagery and Mapping Agency.
The conference agreement includes a general provision
(section 320) restricting the use of funds provided in the
Department of Defense Appropriations Act, 2001 for Air Force
radar operations maintenance and support programs or
contracts.
The conference agreement includes a general provision
(section 321) providing $1,000,000 for ``Research,
Development, Test and Evaluation, Air Force'', to develop
rapid diagnostic and fingerprinting techniques along with
molecular monitoring systems for the detection of nosocomial
infections.
The conference agreement includes a general provision
(section 322), making technical adjustments associated with
funding provided in the Department of Defense Appropriations
Act, 2001 for the C3RP initiative.
The conference agreement includes a general provision
(section 323) which establishes procedures under which the
Departments of Defense and Interior shall provide the
Congress with a comprehensive plan and proposed legislation
for expansion of the U.S. Army's National Training Center at
Fort Irwin, California. These procedures, including specific
timelines for developing and implementing a proposed
expansion plan and meeting the requirements of the Endangered
Species and National Environmental Policy Acts, are the joint
recommendations of the Secretaries of Defense and Interior to
the Congress.
The Secretaries have informed the Congress that, given the
urgency of the national security considerations involved and
the significant amount of research and analysis which has
already been conducted, their Departments can expedite the
various substantive and procedural reviews required to
implement this expansion. The conferees commend the
Secretaries of Defense and Interior for the considerable
progress made in recent months amongst the various executive
branch agencies involved in this process, and for committing
their Departments to meet the specific objectives contained
in the general provision.
CHAPTER 4
DISTRICT OF COLUMBIA FEDERAL FUNDS
Federal Payment of the District of Columbia Courts
The conference agreement appropriates $400,000 in Federal
funds to the District of Columbia courts to cover the costs
of a fire that broke out on November 22, 2000, in the H. Carl
Moultrie I Courthouse. The appropriation includes $350,000
for capital repairs and $50,000 for miscellaneous operating
expenses in connection with the fire damage. The conference
agreement also includes language that allows the courts to
reallocate not more than $1,000,000 of funds already
appropriated for fiscal year 2001 in the event the $400,000
is not sufficient to cover the costs. The fire caused
extensive damage to the Superior Court's Family Division
Quality Control Office and less severe damage to six adjacent
judges' chambers, electrical damage to the court's cell block
area, and damage to electrical and communications wiring.
General Provisions--This Chapter
Sec. 401. The conference agreement inserts a new section
concerning water and sewer payments by Federal agencies to
the District of Columbia and requires the inspector general
of each Federal entity to submit quarterly reports to the
House and Senate Committees on Appropriations on the
promptness of payment by the agency for water and sewer
services furnished by the District.
Sec. 402. The conference agreement inserts a new section as
requested by District officials that repeals a Federal
statute enacted in 1866 to convey certain parcels of land to
the District to be used solely for schools. The property is
at 12th and E Streets, N.E., in the North Lincoln Park
neighborhood of Capitol Hill and is the site of the Lovejoy
School which ceased being used as a school in 1984, 118 years
after the land was conveyed. The DC public school system is
under contract to sell the property and although the City
Council has passed local legislation to repeal the 1866 law,
Federal legislation in necessary because the District
government does not have the authority to pass legislation
affecting a Federal land interest.
Sec. 403. The conference agreement inserts a new section
that amends language in section 160 of the FY 2000 DC
Appropriations Act concerning the Victims of Violent Crime
Compensation Act of 1996 that would have required any
unobligated balance in excess of $250,000 to be transferred
to miscellaneous receipts of the U.S. Treasury. The new
section allows the use of $250,000 at the discretion of
District officials and requires that amounts in excess of
$250,000 be used in accordance with a plan developed by the
District and approved by the House and Senate Committees on
Appropriations, the House Committee on Government Reform, and
the Senate Committee on Governmental Affairs. The language
also requires that not less than 80 percent of the amounts in
excess of $250,000 be used for direct compensation payments
to crime victims.
Sec. 404. The conference agreement includes a new section
concerning the Reserve Fund for the District of Columbia
established pursuant to the District of Columbia
Appropriations Act, 2001 (Public Law 106-522, approved
November 22, 2000).
Sec. 405. The conference agreement includes a new section
that conforms the enrollment count of the District of
Columbia charter schools with existing District of Columbia
law.
Sec. 406. The conference agreement amends H.R. 4942 by
repealing the District of Columbia Appropriations Act, 2001,
as contained therein. Since this appropriations Act has
already been enacted in H.R. 5633 (Public Law 106-428)
including it in H.R. 4942 is no longer necessary.
CHAPTER 5
ENERGY AND WATER DEVELOPMENT
DEPARTMENT OF DEFENSE--CIVIL
DEPARTMENT OF THE ARMY
Corps of Engineers--Civil
General Investigations
The conference agreement includes an additional $900,000
for General Investigations. Of the funds provided, $100,000
is for a reconnaissance study of shore protection needs at
North Topsail Beach, North Carolina; $100,000 is for a
reconnaissance study for a water infrastructure project in
Passaic County, New Jersey; $100,000 is for a reconnaissance
study of flooding, drainage, and other related problems in
the Cayuga Creek Watershed, New York; and $600,000 is for a
cost-shared feasibility study of the restoration of the lower
St. Anthony's Falls natural rapids in Minnesota.
Construction, General
The conference agreement includes an additional $2,750,000
for Construction, General. Of the funds provided, $75,000
shall be available for planning and design of a project to
provide for floodplain evacuation in the watershed of Pond
Creek, Kentucky; $100,000 shall be available for the design
of recreation
[[Page H12309]]
and access features at the Louisville Waterfront Park in
Kentucky; $75,000 shall be available for research on the
eradication of Eurasian water milfoil in Houghton Lake,
Michigan; and $500,000 shall be available for a Limited
Reevaluation Report for the Central Boca Raton segment of the
Palm Beach County, Florida, shore protection project. The
conferees are concerned that the utter lack of sand on some
stretches of beach in Boca Raton is negatively impacting the
local economy that is dependent on tourism. Therefore, the
conferees recommend that the Corps of Engineers proceed as
expeditiously as possible to renourish the beach in Boca
Raton.
In addition, $2,000,000 of the funds provided shall be
available to initiate design and construction of the Hawaii
Water Management Project, including Waiahole Ditch on Oahu,
Kau Ditch on Maui, Pioneer Mill Ditch on Hawaii, and the
complex system on the west side of Kauai.
In addition, language has been included which provides that
the Secretary of the Army may use up to $5,000,000 of
previously appropriated funds to carry out the Abandoned and
Inactive Noncoal Mine Restoration program authorized by
section 560 of Public Law 106-53.
Flood Control, Mississippi River and Tributaries, Arkansas, Illinois,
Kentucky, Louisiana, Mississippi, Missouri, and Tennessee
The conference agreement includes an additional $3,500,000
for Flood Control, Mississippi River and Tributaries to be
used for the repair, restoration or maintenance of
Mississippi River levees and for the correction of
deficiencies in the mainline Mississippi River levees.
DEPARTMENT OF THE INTERIOR
Bureau of Reclamation
Water and Related Resources
The conference agreement includes an additional $2,000,000
for Water and Related Resources for construction of the Mid-
Dakota Rural Water System project in South Dakota.
DEPARTMENT OF ENERGY
Energy Programs
Energy Supply
The conference agreement includes an additional $800,000
for Energy Supply for the Prime, LLC, of central South
Dakota, for final engineering and project development of the
integrated ethanol complex, including an ethanol unit, waste
treatment system, and enclosed cattle feed lot.
Science
The conference agreement includes an additional $1,000,000
for Science for high temperature superconducting research and
development at Boston College.
CHATPER 6
General Provisions--This Chapter
Sec. 601. The conference agreement mandates that not less
than $1,350,000 from funds appropriated under this heading in
the Foreign Operations, Export Financing, and Related
Programs Appropriations Act, 2001, shall be available only
for the Protection Project to continue its study of
international trafficking, prostitution, slavery, debt
bondage and other abuses of women and children.
Sec. 602. Embassy Compensation Authority.--The conference
agreement contains language that authorizes the use of funds
appropriated to the account ``Economic Support Fund'' in
Public Law 106-429 for payment to the government of the
People's Republic of China for property loss and damage
arising out of the May 7, 1999 incident in Belgrade, Federal
Republic of Yugoslavia. These funds may be made available
notwithstanding any other provision of law.
CHAPTER 7
DEPARTMENT OF THE INTERIOR
Bureau of Land Management
Land Acquisition
The conference agreement provides $5,000,000 for land
exchanges authorized by Title VI of the Steens Mountain
Cooperative Management and Protection Act.
United States Fish and Wildlife Service
resource management
The conference agreement provides $500,000 for a grant to
the Center for Reproductive Biology at Washington State
University for basic research on reproduction abnormalities
that could be causing reductions in salmon in the Columbia/
Snake River system due to presence of high estrogen levels in
the water. The research may also be beneficial to human
health conditions affected by the same water borne chemicals.
multinational species conservation fund
The conference agreement provides $750,000 for recently
authorized Great Ape conservation activities.
National Park Service
operation of the national park system
The conference agreement provides $100,000 for the National
Capital Region to complete a feasibility study and select a
preferred alternative site for constructing a boathouse in
Arlington County, Virginia.
The Department of Justice, in cooperation with the City of
Alexandria and the National Park Service, is encouraged to
seek expeditious settlement with the remaining six landowners
on the Alexandria, Virginia waterfront to achieve the urban
land use and design objectives of the city and the National
Park Service in bringing this longstanding lawsuit to
resolution. In settling these claims, the Justice Department
should use, to the extent authorized by law, the permanent
judgment appropriation established pursuant to 31 U.S.C. 1304
as the source of any compensation to the landowners that may
be required.
national recreation and preservation
The conference agreement provides $1,600,000 for National
Recreation and Preservation. Within the statutory aid
account, $500,000 is specifically for continued activities at
the National Constitution Center in Philadelphia,
Pennsylvania. The remaining $1,100,000 is for a grant to the
Historic New Bridge Landing Park Commission for acquisition
of land immediately adjacent to the Historic New Bridge
Landing, which is a site listed on the National Register of
Historic Places and is a site of historic significance in the
revolutionary war.
historic preservation fund
The conference agreement provides $100,000 to be provided
to the Massillon Heritage Foundation, Inc. in Massillon,
Ohio. The Secretary is directed to provide this grant as soon
as possible for critical repair and replacement needs.
construction
The conference agreement provides $3,500,000 for
construction. Within that amount $1,500,000 is for
reconstruction and renovation at the Stones River National
Battlefield and $2,000,000 is for the Millennium Cultural
Cooperative Park in Ohio.
Department of Energy
energy conservation
The conference agreement provides $300,000 for a grant to
the Oak Ridge National Laboratory/Nevada Test Site
Development Corporation. These funds will be used to develop
cooling, refrigeration, and thermal energy management
equipment capable of using natural gas or hydrogen fuels, and
to improve the reliability of heat-activated cooling,
refrigeration, and thermal energy management equipment used
in combined heating, cooling, and power applications.
RELATED AGENCY
Woodrow Wilson International Center for Scholars
payment to endowment fund
The conference agreement provides $5,000,000 for the
endowment fund of the Woodrow Wilson International Center for
Scholars.
General Provision--This Chapter
Section 701 appropriates $30 million to the Indian Health
Service, of which $15 million is for Alaska Native alcohol
control and sobriety programs and $15 million is for drug and
alcohol prevention and treatment for non-Alaska tribes.
CHAPTER 8
General Provisions--This Chapter
The conference agreement provides funding to the Health
Resources and Services Administration in the Department of
Health and Human Services, for the construction of the
Christian Nurses Hospice in Brentwood, New York ($400,000).
The conference agreement provides funding to the Institute
of Museum and Library Services, for expansion of the marine
biology program at the Long Island Maritime Museum
($250,000).
CHAPTER 9
LEGISLATIVE BRANCH
CONGRESSIONAL OPERATIONS
House of Representatives
payments to widows and heirs of decreased members of congress
The conference agreement includes the traditional death
gratuity for the widow of Herbert H. Bateman, late a
Representative from the State of Virginia, the widow of Bruce
F. Vento, late a Representative from the State of Minnesota,
and the widow of Julian C. Dixon, late a Representative from
the State of California.
Archtect of the Capitol
Capitol Buildings and Grounds
salaries and expenses
An amount of $1,033,000 is provided to construct an
emergency egress stair from the fourth floor of the Capitol.
These funds are designated as an emergency requirement.
Library of Congress
salaries and expenses
The agreement provides $100,000,000 to the Library of
Congress to establish a national digital information
infrastructure and preservation program. Of this amount,
$25,000,000 is provided immediately and remains available
until expended. An additional amount up to $75,000,000 is
provided to match dollar-for-dollar any non-federal
contributions to this program, including in-kind
contributions, that are received before March 31, 2003. The
information and technology industry that has created this new
medium should be a contributing partner in addressing digital
access and preservation issues inherent in the new digital
information environment. This program is a major undertaking
to develop standards and a nationwide collecting strategy to
build a national repository of digital materials.
The Library is directed to develop a phased implementation
plan for this program jointly with Federal entities with
expertise in
[[Page H12310]]
telecommunications technology and electronic commerce policy
and with participation of other Federal and non-Federal
entities. After consultation with the Joint Committee on the
Library, membership of which is changed to include the chair
of the Legislative Subcommittee of the Committee on
Appropriations of the House of Representatives, the Library
shall seek approval of the program plan from the Committee on
House Administration, the Committee on Rules and
Administration of the Senate, and the Committees on
Appropriations of the House of Representatives and the
Senate. The Library of Congress is authorized to expend up to
$5,000,000, before approval of the plan, for the development
of the plan and for collecting or preserving digital
information that may otherwise vanish during the plan
development and approval cycle.
The overall plan should set forth a strategy for the
Library of Congress, in collaboration with other Federal and
non-Federal entities, to identify a national network of
libraries and other organizations with responsibilities for
collecting digital materials that will provide access to and
maintain those materials. In addition to developing this
strategy, the plan shall set forth, in concert with the
Copyright Office, the policies, protocols, and strategies for
the long-term preservation of such materials, including the
technological infrastructure required at the Library of
Congress. In developing the plan, the Library should be
mindful of the conclusions drawn in a recent National Academy
of Sciences report concerning the Library's trend toward
insularity and isolation from its clients and peers in the
transition toward digital content.
General Provisions--This Chapter
The conference agreement includes a section concerning the
Civil Service Retirement System and the Federal Employees
Retirement System. Under current law, certain service as an
employee of a congressional campaign committee performed
before December 12, 1980 is creditable under the Civil
Service Retirement System (CSRS), provided that the applicant
makes the required employee contributions to the Civil
Service Retirement and Disability Fund. The conference report
extends the date of eligible service to December 31, 1990 and
allows service that began after 1983 to be creditable under
the Federal Employees Retirement System (FERS). The provision
also permits an employee of a legislative service
organization of the House of Representatives to have such
service credited under CSRS or FERS (as applicable), upon
payment of the required employee contributions to the
retirement fund.
The conference agreement amends, at the request of the
managers on the part of the Senate, the amount provided for
Senate ``miscellaneous items'' in the 2001 Legislative Branch
Appropriations Act by striking ``$8,655,000'' and inserting
``$25,155,000''. The managers on the part of the House have
receded to the request of the Senate.
The conferees have included a new provision relating to the
application of Senate procedure to conference reports.
CHAPTER 10
DEPARTMENT OF DEFENSE--MILITARY CONSTRUCTION
The conferees provide a total of $443,500,000 to the
Department of Defense for Planning and Design, Military
Construction, and Family Housing. These amounts are provided
as follows:
Account/location/facility Amount
Military Construction, Army:
Planning and Design for Efficient Basing in Europe........$25,000,000
Presido of Monterey: Information Management Computer Center.2,000,000
Military Construction, Air Force: MacDill AFB, Florida: Runway
Improvements...............................................12,000,000
Military Construction, Army National Guard:
Helena, Montana: Fixed Wing Parking Apron...................3,000,000
Fort Lewis, Washington: Planning and Design for 66th Aviation Brigade
Readiness Center..........................................1,500,000
________________
Total....................................................43,500,000
land transfers
The conferees include two provisions, sections 1002 and
1003 which direct the Department of Interior to transfer,
without consideration, parcels of public domain land to the
Department of the Army and the Department of the Air Force.
Section 1003 transfers land surrounding the Yakima Training
Center in Washington to the Department of the Army, and
section transfers land located near Cannon AFB in New Mexico
to the Department of the Air Force. Both transfers will
facilitate military training exercises.
CHAPTER 11
DEPARTMENT OF TRANSPORTATION
General Provisions--This Chapter
The conference agreement includes a provision that
clarifies that the Dulles corridor project shall include a
rail extension from the West Falls Church, Virginia metrorail
station to Tysons Corner, Virginia.
The conference agreement includes a provision that amends
item 630 of section 1602 of Public Law 105-178 regarding a
highway project in Buffalo, New York.
The conference agreement directs the Secretary of
Transportation to credit the State of Arkansas with the fair
market value of land in Fort Chaffee, Arkansas, incorporated
as right of way on the U.S. 71 relocation project, for the
state share of the relocation project.
The conference agreement includes an appropriation of
$2,500,000 from the airport and airway trust fund for various
airport improvements at the Huntsville International Airport
in Alabama.
The conference agreement includes an appropriation of
$1,000,000 from the mass transit account of the highway trust
fund for the Southeast Corridor light rail project in Dallas,
Texas.
The conference agreement includes a provision that would
designate the Ports-to-Plains corridor within the State of
Texas if the Texas Transportation Commission does not
designate that corridor within the State of Texas by June 30,
2001. The Federal Highway Administration is expected to
submit to the House and Senate Committees on Appropriations,
the Senate Environment and Public Works Committee, and the
House Transportation and Infrastructure Committee a
recommendation for the remaining elements of the Ports-to-
Plains corridor by September 30, 2001 should the states of
New Mexico, Colorado, Oklahoma and Texas not reach a unified
consensus on the designation of the Ports-to-Plains corridor
from Dumas, Texas to Denver, Colorado. The Federal Highway
Administration's recommendation shall also include the basis
for its recommendation.
The conference agreement includes an appropriation of
$3,000,000 from the mass transit account of the highway trust
fund for the Newark-Elizabeth rail link project in New
Jersey.
The conference agreement includes a provision that waives
the requirements of section 5309(m)(3)(C) of title 49, United
States Code, for the capital investment grants made available
in the Department of Transportation and Related Agencies
Appropriations Act, 2001 (Public Law 106-346). The provision
also makes eligible for highway bridge replacement and
rehabilitation program funds in fiscal year 2001 those
projects specified in House report 106-940, the conference
report accompanying the Department of Transportation and
Related Agencies Appropriations Act, 2001 (Public Law 106-
346). The provision also amends section 378 of the Department
of Transportation and Related Agencies Appropriations Act,
2001 by inserting after ``U.S. 101'' the following: ``and
Interstate 5 Trade Corridor''.
The conference agreement includes an appropriation of
$4,000,000 from the highway trust fund for commercial remote
sensing products and spatial information technologies
authorized in section 5113 of Public Law 105-178, as amended.
The conference agreement includes a provision that permits
Amtrak to continue leasing vehicles from the General Services
Administration's interagency fleet management system in
fiscal year 2001 and for each fiscal year thereafter that
Amtrak continues to receive a federal operating grant.
The conference agreement includes a provision which
clarifies financial and project management authority for a
project funded in the Department of Transportation and
Related Agencies Appropriations Act, 2001. The agreement
requires the Secretary of Transportation to transfer to the
City of Oshkosh, Wisconsin the $575,000 previously
appropriated for removal of the Fox River Bridge, and to
assume no management responsibility for this project.
The conference agreement includes a provision authorizing
the Secretary of Transportation to issue a certificate of
documentation with endorsement for employment in the
coastwise trade for the M/V Wells Gray and the Annandale.
The conference agreement includes a provision authorizing
the Administrator of the General Services Administration to
convey Coast Guard property in Middletown, California to Lake
County, California.
The conference agreement includes a provision authorizing
the Administrator of the General Services Administration or
the Commandant of the U.S. Coast Guard to convey to the Town
of Nantucket, Massachusetts part of U.S. Coast Guard LORAN
Station Nantucket and additional land located in Nantucket.
The conference agreement includes a provision authorizing
the Administrator of the General Services Administration or
the Commandant of the U.S. Coast Guard to convey to the City
of Newburyport, Massachusetts the Plum Island Boat House and
the Plum Island Lighthouse, located in Essex County,
Massachusetts.
The conference agreement includes a provision authorizing
the Administrator of General Services Administration to
transfer to the National Oceanic and Atmospheric
Administration the property known as Coast Guard Station
Scituate in Massachusetts, contingent upon the relocation of
Coast Guard Station Scituate to a suitable site.
The conference agreement includes a provision which extends
from 2002 to 2004 the Coast Guard's current practice relating
to the disposal of dry bulk cargo residue on the Great Lakes;
requires a study on the effectiveness of the current
practice; and authorizes the promulgation of regulations to
regulate incidental discharges of such cargo into the Great
Lakes, taking into account the findings of the study required
in this section.
The conference agreement includes a provision that amends
the appointment process
[[Page H12311]]
and qualifications for individuals serving on the Great Lakes
Pilotage Advisory Committee.
The conference agreement includes a provision that requires
only a vessel of the United States may perform certain
specified escort operations and towing assistance, except for
a vessel in distress.
The conference agreement includes a provision authorizing
the expenditure of $100,000 in fiscal year 2001 funding for
Coast Guard environmental compliance and restoration to
reimburse the owner of the former Coast Guard lighthouse
facility in Cape May, New Jersey for costs incurred for
cleanup of lead contaminated soil. The Department of
Transportation and Related Agencies Appropriations Act, 2001
included $100,000 for this purpose.
The conference agreement includes an appropriation of
$2,400,000 to be derived from the Highway Trust Fund, for the
planning, development and construction of rural farm-to-
market roads in Tulare County, California. The non-federal
share of such improvements shall be 20 percent.
The Department of Transportation is instructed that the
grantee for the Nashua, New Hampshire project identified in
section 378 of Public Law 106-346 shall be the City of
Nashua, New Hampshire.
The conference agreement includes a provision authorizing
the Coast Guard to transfer not to exceed $200,000 to the
Traverse City Area Public School District for the demolition
and removal of Building 402 at former Coast Guard property in
Traverse City, Michigan. The provision makes the transfer
contingent upon receipt by the Coast Guard of a detailed,
fixed price estimate for this work. Funding in the amount of
$200,000 was appropriated for this purpose in the Department
of Transportation and Related Agencies Appropriations Act,
2001.
The conference agreement includes an appropriation of
$500,000 from the mass transit account of the highway trust
fund for buses and bus facilities at Alabama A&M University.
These funds are to be available until expended.
The conference agreement includes a provision which directs
the Federal Transit Administration to distribute $7,047,502
to an urbanized area over 200,000 in population which did not
receive fiscal year 1999, 2000 and 2001 fixed guideway
modernization funds to which it was lawfully entitled, prior
to the formula apportionment of ``Fixed guideway
modernization'' funds in fiscal year 2002.
The conference agreement includes a provision that requires
that airport improvement program formula changes provided
under Public Law 106-181 and defined in section 104 of that
Act shall be applied without regard to the overall funding
levels for the airport improvement program in fiscal year
2001.
The conference agreement includes a provision that amends
item number 473 contained in section 1602 of the
Transportation Equity Act for the 21st Century relating to a
high priority project in Minnesota.
The conference agreement includes a provision that delays
the issuance of the final train horn rule until July 1, 2001.
This issue will not be addressed again in subsequent
legislation.
The conference agreement provides $8,700,000 for four
transportation projects in Texas, Minnesota, Wisconsin,
Indiana and Colorado.
CHAPTER 12
GENERAL SERVICES ADMINISTRATION
Real Property Activities
federal buildings fund
The conference agreement includes a new provision providing
$2,070,000 for the renovation and redevelopment of portions
of the historic Federal building in Terre Haute, Indiana. The
conferees direct the General Services Administration to
report to the Committees on Appropriations by March 15, 2001
on steps it will take to ensure long-term Federal occupancy
of this building.
DEPARTMENT OF THE TREASURY
United States Customs Service
operations, maintenance and procurement, air and marine interdiction
programs
The conference agreement includes $7,000,000 for necessary
expenses related to the procurement of two aircraft and
related equipment expenses at the Customs National Aviation
Center in Oklahoma City, Oklahoma. The conference agreement
provides that none of the funds shall be available for
obligation until an expenditure plan is submitted for
approval to the Committees on Appropriations.
UNITED STATES POSTAL SERVICE
tinton falls, new jersey
The conferees are aware that the Postal Service has
identified Tinton Falls, New Jersey as a town to receive a
new postal facility, but are concerned that this need for a
new postal facility is not being addressed in a timely
manner. The conferees urge the Postal Service to give this
project a high priority in its capital facility plan for the
next fiscal year.
CHAPTER 13
DEPARTMENT OF VETERANS AFFAIRS
Departmental Administration
construction, minor projects
The conferees have included $8,840,000 for Construction,
minor projects. Of this amount, $8,440,000 is recommended for
projects related to the integration of facilities at the
Boston VA Medical Center. These funds are to supplement
amounts previously provided for minor construction projects
in fiscal year 2001 in Veterans Integrated Service Network 1.
In addition, the conferees recommend $400,000 to be used
towards construction costs of a cover for the Riverside
National Cemetery amphitheater.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Community Planning and Development
empowerment zones/enterprise communities
Provides an additional $110,000,000 for urban empowerment
zones, as authorized by the Taxpayer Relief Act of 1997.
community development fund
Language is included which makes a technical amendment to
an economic development initiative grant provided in Public
Law 106-377.
Language is included which transfers unobligated grant
funds from a specific city to a county in order to carry out
the purposes for which the grant was made.
The conferees have amended Public Law 106-377 to provide an
additional $66,128,000 for targeted Economic Development
Initiative grants under the terms and conditions as provided
in Public Law 106-377, as follows:
--$425,000 for Project Home, Allied-Dunn's Marsh
Neighborhood Center and Prairie Crossing low income housing
rehabilitation project in Wisconsin;
--$1,000,000 for F.E.A.T. for the establishment of the
Merle Travis Park in Muhlenberg County, Kentucky;
--$750,000 for the Washington County Commission for the
World Wildlife Educational Museum addition to the Dixie
Chapter in St. George, Utah;
--$250,000 for the Henry Ford Museum--Greefield Village in
Dearborn, Michigan for expenses related to the design,
planning and construction of the ``Great American Road
Exhibit'';
--$6,000,000 for Shepherd College in Shepherdstown, West
Virginia for construction, related activities, and programs
at the Scarborough Library;
--$633,000 for the State of Nevada to establish a state-
wide computer database of utilities and infrastructure needs
for rural communities and Indian reservations;
--$850,000 for the University of South Carolina for the
operation of an historical archive at the University of South
Carolina, Department of Archives, South Carolina;
--$500,000 for the Idaho City Parks and Recreation
Commission for the Idaho City Mien Tailings Site Restoration
Project and Park in Idaho City, Idaho;
--$250,000 for the Swiss Center of North America, New
Glarus, Wisconsin;
--$750,000 for the City of Madison, Wisconsin for the Troy
Housing and Gardens Development;
--$750,000 for the City of New Loft, Wisconsin for
acquisition and restoration of a teen facility;
--$2,000,000 for the City of Pasadena, Texas for a Police
Academy driver training track;
--$1,300,000 for the City of Baytown, Texas for its
Emergency Operations Center;
--$750,000 for the City of Las Vegas, Nevada for downtown
development initiatives;
--$800,000 to support the Innovative Brownfields Site
Assessment and Remediation Technology Demonstration at the
Defense Fuel Support Point, in Lynn Haven, Florida;
--$200,000 for the Tri-County Agricultural Complex in
Calhoun, Gulf, and Liberty Counties, Florida
--$100,000 for the CCTV Central Coast partnership
(California) to promote environmentally friendly, sustainable
agriculture practices;
--$600,000 for the Central California Coast Research
Partnership;
--$500,000 for the Santa Barbara County, California Water
Agency for costs associated with emergency sediment removal
in the Twitchell Reservoir;
--$500,000 for the City of Paso Robles, California for the
Oak Parks Housing Project for modernization and
rehabilitation projects;
--$100,000 for the Cambridge, Massachusetts Redevelopment
Authority public spaces initiative;
--$1,000,000 for the Sidney R. Yates and Addie Yates
Exhibition Center at the Field Museum in Chicago, Illinois;
--$750,000 for the Greater Dwight Development Corporation
in New Haven, Connecticut for its child care center and
offices;
--$500,000 for methamphetamine site clean-up activities of
the Fresno, California Sheriff's Department;
--$3,000,000 to the Cross Valley Rail Corridor Joint Powers
Authority, California for rehabilitation of the San Joaquin
Railroad;
--$1,000,000 to the City of Monterrey, California to
upgrade 911 emergency response services;
--$2,035,000 for Eastern Connecticut University for upgrade
of its technology systems;
--$500,000 for the City of Vernon, Connecticut for
brownfields remediation activities;
--$1,000,000 for the Mystic Seaport Maritime Education and
Research Center in Mystic, Connecticut;
--$2,700,000 for the Southeastern Pennsylvania Consortium
on Higher Education for a collaborative Math and Science
Institute;
--$900,000 for the Town of Towamencin, Pennsylvania for its
urban park and recreation recovery project;
[[Page H12312]]
--$1,400,000 for Temple University, Pennsylvania for its
Center for a Sustainable Environment;
--$600,000 for the Township of Plainsboro, New Jersey for
its Nature and Education Center;
--$300,000 for the Saint Mary's County, Maryland River
Project;
--$450,000 for the Truitt Laboratory of the Chesapeake
Biological Laboratory for the Bayscapes Habitat
Reconstruction Project, Maryland;
--$800,000 for the Edmonds Community College Foundation,
Washington for a Center on Families;
--$400,000 for the Access Community Health Network in
Chicago, Illinois;
--$500,000 for the City of Seymour, Connecticut Police
Department for upgrades of law enforcement technology;
--$2,500,000 for the Town of Beacon Falls, Connecticut for
the Pinebridge Industrial Park;
--$150,000 for the City of Sacramento, California for the
Emerging Technology Institute;
--$200,000 for the Kansas City, Kansas foresics crime
laboratory;
--$700,000 for the Kansas City, Kansas Humane Society for
expenses associated with relocation of its facilities;
--$350,000 for the expansion of the Dunbar Community Center
in Springfield, Massachusetts;
--$500,000 to the West Virginia High Technology Consortium
Foundation, Inc. for high priority economic development
initiatives including land acquisition;
--$1,000,000 for the Medford Area School District,
Wisconsin for after-school programs;
--$300,000 for the North Central Wisconsin Workforce
Development Board for education, training, counseling,
emergency assistance and related services for displaced
workers and their families in central Wisconsin;
--$250,000 for the Portage County, Wisconsin Business
Council Foundation in Stevens Point for activities including
construction and training related to a business education and
training center and a regional training clearinghouse;
--$200,000 for the Development Association of Superior/
Douglas Counties, Wisconsin for a microenterprise loan and
technical assistance fund;
--$500,000 for the Chippewa County Economic Corporation in
Wisconsin for construction of a workforce development center;
--$365,000 for the City of Wausau, Wisconsin for
brownfields remediation in Marathon County;
--$1,000,000 for the Unity School District, Balsam Lake,
Wisconsin for after-school activities;
--$100,000 for the Marathon County, Wisconsin Sheriff's
Department for Central Wisconsin drug prevention initiatives;
--$500,000 for the Santa Ana, California Police Department
crime analysis unit;
--$1,300,000 for the City of Jackson, Mississippi for its
brownfields clean-up activities;
--$500,000 for Essex County, Massachusetts for its
wastewater and combined sewer overflow program;
--$500,000 for Pacific Union College, California for the
Napa Valley Resource in Napa County, California
--$400,000 for the establishment of the Wolfe Center for
teen substance abuse in Napa County, California;
--$500,000 for Dyer, Indiana for a water diversion project;
--$500,000 for the Community and Family Resource Center
renovation project in Newberg, Oregon;
--$2,000,000 for the George Meany Center for Labor Studies
in Silver Spring, Maryland;
--$1,000,000 for the Rhode Island State Police for
technology upgrade initiatives;
--$2,000,000 for the War Memorial Museum in Milwaukee,
Wisconsin;
--$500,000 for the Mott Community College Workforce
Development Institute in Michigan;
--$1,000,000 for Maricopa County Community College for the
Achieving a College Education Initiative (ACE) in Arizona;
--$1,000,000 to Coffee County, Tennessee for the Coffee
County Industrial Park;
--$1,500,000 to the Tennessee Fire Services and Codes
Enforcement Academy in Bedford County, Tennessee;
--$600,000 to the 21st Century Council of Lawrence for the
Lawrence County Industrial Park in Tennessee;
--$350,000 to the Fayetteville-Lincoln County Library Board
in Tennessee for the Lincoln County Library;
--$150,000 to the University of Tennessee Center for
Business and Economic Research to study the economic impact
of alternative management policies of TVA-managed lakes in
rural East Tennessee;
--$2,500,000 to Winston-Salem University in Winston-Salem,
North Carolina for the reconstruction of St. Phillips Church
($2,000,000) and Atkins House ($500,000);
--$1,575,000 to Escambia County in Florida for development
costs for infrastructure of Central Commerce Park;
--$1,000,000 to Ashland University in Ashland, Ohio for
rehabilitation and expansion of the Kettering Science Center;
--$640,000 to Waukegan, Illinois for renovation of the
historic Genesee Theater;
--$1,155,000 to the Tampa Housing Authority in Tampa,
Florida for costs associated with the Tom Dyer Elderly
Housing Redevelopment Project.
DEPARTMENT OF THE TREASURY
Community Development Financial Institutions
community development financial institutions fund program account
Increases the cap on administrative expenses by $1,000,000,
in order to accommodate increased responsibilities assigned
to the Fund by the New Markets Initiative. The conferees
direct the CDFI Fund to submit a report to the Committees on
Appropriations within 60 days of enactment describing plans
for carrying out these responsibilities, including staffing
and resource requirements. The conferees would consider
supplemental appropriations for this purpose if CDFI
demonstrates that additional funds are needed.
Environmental Protection Agency
science and technology
Language is included which provides $1,000,000 in
additional appropriations for the continuation of the South
Bronx Air Pollution Study being conducted by New York
University.
environmental programs and management
Language is included which makes a technical correction to
a grant provided to the San Bernardino Valley Municipal Water
District in Public Law 106-377.
state and tribal assistance grants
Language is included which clarifies that funds
appropriated for infrastructure needs in the New York City
watershed shall be awarded under section 1443(d) of the Safe
Drinking Water Act, as amended.
Language is included which makes funds appropriated in
Public Law 106-377 for a specific project in Indiana
available for an alternative project.
The conferees have amended Public Law 106-377 to include an
additional $20,630,000 to communities or other entities for
construction of water and wastewater treatment facilities.
Cost share requirements and all other terms and conditions
provided in Public Law 106-377 for these grants shall also
apply to these grants, distributed as follows:
1. $1,000,000 for combined sewer overflow infrastructure
improvements on the Connecticut River.
2. $7,280,000 to Grand Rapids, Michigan for combined sewer
overflow infrastructure improvements.
3. $3,000,000 for water delivery system infrastructure
improvements for the cities of Arcadia and Sierra Madre,
California.
4. $7,850,000 for wastewater facility, drinking water, and
water system delivery infrastructure improvements in Milton
Township ($5,000,000), the Village of McDonald ($350,000),
and the Village of Wellsville ($2,500,000), Ohio.
5. $1,000,000 for wastewater treatment infrastructure
improvements in Carmel, Indiana.
Federal Emergency Management Agency
emergency management planning and assistance
Language is included which provides $100,000,000 for new
fire fighting programs as authorized by the Federal Fire
Prevention and Control Act, as amended.
CHAPTER 14
General Provisions--This Chapter
The conference agreement includes the adoption of H. Con.
Res. 234 by the Senate.
The conference agreement includes a new provision relating
to the application of the Federal Reports Elimination and
Sunset Act of 1995 to certain reports.
The conferees direct the Comptroller General of the United
States to (1) ascertain the ownership of the West Campus
Buildings of the Saint Elizabeth's Hospital complex in the
District of Columbia; (2) review and comment on existing cost
estimates for mothballing/stabilization, phase II
environmental mediation, phase II archaeological study,
environmental impact study, and land use study; (3) report on
any existing historic designations and corresponding
responsibilities; and (4) identify action required to
facilitate transfer of the property. The conferees request
that the report be completed and submitted to the House and
Senate Committees on Appropriations within 45 days of the
enactment of this Act.
The conference agreement includes a new provisions
rescinding 0.22 percent of the discretionary budget authority
provided (or obligation limit imposed) for fiscal year 2001,
except for those programs, projects, and activities which are
specifically exempted. The provision exempts from rescission
the Military Personnel accounts of the of the Department of
Defense Appropriations Act, 2001, and fiscal year 2001
amounts for activities funded in the Departments of Labor,
Health and Human Services, and Education, and Related
Agencies Appropriations Act.
DIVISION B
TITLE I
The conference agreement includes a section that provides
greater availability of food assistance in day care centers
by modifying eligibility criteria in the Child and Adult Care
Food Program.
The conference agreement includes a section to authorize a
pilot program through the Summer Food Service Program to
examine whether reducing burdensome paperwork would increase
the availability of food assistance for children during the
summer who, during the school year, have access to meals
through the School Lunch Program.
The conference agreement includes language which authorizes
the Secretary of the
[[Page H12313]]
Interior to conduct a feasibility study for a Sacramento
River, California, diversion project.
The conference agreement includes language which modifies
the authorization for the Saint Francis River Basin, Missouri
and Arkansas, project to expand the boundaries of the project
to include Ten- and Fifteen-Mile Bayous near West Memphis,
Arkansas.
The conference agreement includes language which authorizes
the Secretary of the Army to enter into an agreement to
permit the City of Alton, Illinois, to construct recreational
facilities at the Melvin Price Lock and Dam.
The conference agreement includes language which authorizes
the Secretary of the Interior, in cooperation with Washoe
County, Nevada, to participate in the planning, design, and
construction of the Truckee Watershed Reclamation Project.
The conference agreement includes language which authorizes
the Secretary of the Army to widen and deepen the Alafia
Channel in Tampa Harbor, Florida.
The conference agreement includes language which authorizes
a number of environmental infrastructure projects.
The conference agreement includes language which authorizes
the Secretary of the Army to provide technical and financial
assistance to carry out projects to improve the water quality
in the Florida Keys National Marine Sanctuary.
The conference agreement includes language to provide for
the restoration of the San Gabriel Basin in California.
The conference agreement includes language which authorizes
the Secretary of the Army to participate in studies and the
planning and design of projects which offer a long-term
solution to the problem of groundwater pollution caused by
perchlorates.
The conference agreement includes language which authorizes
the construction of fish passage facilities at the New
Savannah Bluff Lock and Dam in Georgia and South Carolina.
The conference agreement includes language which provides
for the extinguishment of reversionary interests and use
restrictions at the Port of Umatilla, Oregon.
The conference agreement includes language which repeals
section 101(b)(6) of the Water Resources Development Act of
2000.
The conference agreement includes language which directs
the Secretary of the Army to reimburse the East Bay Municipal
Water District for the Federal share of costs incurred by the
district for the Penn Mine, Calaveras County, California,
aquatic ecosystem restoration project.
The conference agreement includes language which authorizes
the Secretary of the Army to construct intake facilities at
Greer Ferry Lake, Arkansas, for the benefit of Lonoke and
White Counties in Arkansas.
The conference agreement includes language which authorizes
the Secretary of the Army to provide the non-Federal sponsor
of the Chehalis River and Tributaries, Washington, project
credit toward the non-Federal share of the cost of the
project for work carried out by the non-Federal sponsor
before the date of enactment of a project cooperation
agreement.
Section 119 includes a technical correction to permit the
National Park Service to issue a grant to the city of Ocean
Beach, New York.
Section 120 directs the National Park Service to work with
Fort Sumter Tours, Inc., the concessionaire at Fort Sumter
National Monument in South Carolina, on an amicable solution
to the current legal dispute. In addition, the Director shall
immediately extend the current contract through March 15,
2001, and for 180 days if the final settlement is agreed to
by both parties.
Section 121 amends title VIII of the Department of the
Interior and Related Agencies Appropriations Act, 2001 to
derive funding under that title from the Land and Water
Conservation Fund. This reference was inadvertently omitted
from the original legislation.
Section 122 amends the Energy Policy Act of 1992 to include
a reference to liquid fuels domestically produced from
natural gas.
Section 123 incorporates by reference the text of the bill
H.R. 4904, as passed by the House of Representatives on
September 26, 2000, expressing the policy of the United
States regarding the U.S. relationship with Native Hawaiians.
The text of H.R. 4904 is as follows:
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled.
SECTION 1. FINDINGS.
Congress makes the following findings:
(1) The Constitution vests Congress with the authority to
address the conditions of the indigenous, native people of
the United States.
(2) Native Hawaiians, the native people of the Hawaiian
archipelago which is now part of the United States, are
indigenous, native people of the United States.
(3) The United States has a special trust relationship to
promote the welfare of the native people of the United
States, including Native Hawaiians.
(4) Under the treaty making power of the United States,
Congress exercised its constitutional authority to confirm a
treaty between the United States and the government that
represented the Hawaiian people, and from 1826 until 1893,
the United States recognized the independence of the Kingdom
of Hawaii, extended full diplomatic recognition to the
Hawaiian government, and entered into treaties and
conventions with the Hawaiian monarchs to govern commerce and
navigation in 1826, 1842, 1849, 1875, and 1887.
(5) Pursuant to the provisions of the Hawaiian Homes
Commission Act, 1920 (42 Stat. 108, chapter 42), the United
States set aside 203,500 acres of land in the Federal
territory that later became the State of Hawaii to address
the conditions of Native Hawaiians.
(6) By setting aside 203,500 acres of land for Native
Hawaiian homesteads and farms, the Act assists the Native
Hawaiian community in maintaining distinct native settlements
throughout the State of Hawaii.
(7) Approximately 6,800 Native Hawaiian lessees and their
family members reside on Hawaiian Home Lands and
approximately 18,000 Native Hawaiians who are eligible to
reside on the Home Lands are on a waiting list to receive
assignments of land.
(8) In 1959, as part of the compact admitting Hawaii into
the United States, Congress established the Ceded Lands Trust
for five purposes, one of which is the betterment of the
conditions of Native Hawaiians. Such trust consists of
approximately 1,800,000 acres of land, submerged lands, and
the revenues derived from such lands, the assets of which
have never been completely inventoried or segregated.
(9) Throughout the years, Native Hawaiians have repeatedly
sought access to the Ceded Lands Trust and its resources and
revenues in order to establish and maintain native
settlements and distinct native communities throughout the
State.
(10) The Hawaiian Home Lands and the Ceded Lands provide an
important foundation for the ability of the Native Hawaiian
community to maintain the practice of Native Hawaiian
culture, language, and traditions, and for the survival of
the Native Hawaiian people.
(11) Native Hawaiians have maintained other distinctly
native areas in Hawaii.
(12) On November 23, 1993, Public Law 103-150 (107 Stat.
1510) (commonly known as the Apology Resolution) was enacted
into law, extending an apology on behalf of the United States
to the Native people of Hawaii for the United States role in
the overthrow of the Kingdom of Hawaii.
(13) The Apology Resolution acknowledges that the overthrow
of the Kingdom of Hawaii occurred with the active
participation of agents and citizens of the United States and
further acknowledges that the Native Hawaiian people never
directly relinquished their claims to their inherent
sovereignty as a people over their national lands to the
United States, either through their monarchy or through a
plebiscite or referendum.
(14) The Apology Resolution expresses the commitment of
Congress and the President to acknowledge the ramifications
of the overthrow of the Kingdom of Hawaii and to support
reconciliation efforts between the United States and Native
Hawaiians; and to have Congress and the President, through
the President's designated officials, consult with Native
Hawaiians on the reconciliation process as called for under
the Apology Resolution.
(15) Despite the overthrow of the Hawaiian government,
Native Hawaiians have continued to maintain their separate
identity as a distinct native community through the formation
of cultural, social, and political institutions, and to give
expression to their rights as native people to self-
determination and self-governance as evidenced through their
participation in the Office of Hawaiian Affairs.
(16) Native Hawaiians also maintain a distinct Native
Hawaiian community through the provision of governmental
services to Native Hawaiians, including the provision of
health care services, educational programs, employment and
training programs, children's services, conservation
programs, fish and wildlife protection, agricultural
programs, native language immersion programs and native
language immersion schools from kindergarten through high
school, as well as college and master's degree programs in
native language immersion instruction, and traditional
justice programs, and by continuing their efforts to
enhance Native Hawaiian self-determination and local
control.
(17) Native Hawaiians are actively engaged in Native
Hawaiian cultural practices, traditional agricultural
methods, fishing and subsistence practices, maintenance of
cultural use areas and sacred sites, protection of burial
sites, and the exercise of their traditional rights to gather
medicinal plants and herbs, and food sources.
(18) The Native Hawaiian people wish to preserve, develop,
and transmit to future Native Hawaiian generations their
ancestral lands and Native Hawaiian political and cultural
identity in accordance with their traditions, beliefs,
customs and practices, language, and social and political
institutions, and to achieve greater self-determination over
their own affairs.
(19) This Act provides for a process within the framework
of Federal law for the Native Hawaiian people to exercise
their inherent rights as a distinct aboriginal, indigenous,
native community to reorganize a Native Hawaiian government
for the purpose of giving expression to their rights as
native people to self-determination and self-governance.
(20) The United States has declared that--
(A) the United States has a special responsibility for the
welfare of the native peoples of the United States, including
Native Hawaiians;
(B) Congress has identified Native Hawaiians as a distinct
indigenous group within the scope of its Indian affairs
power, and has enacted dozens of statutes on their behalf
pursuant to its recognized trust responsibility; and
(C) Congress has also delegated broad authority to
administer a portion of the Federal trust responsibility to
the State of Hawaii.
(21) The United States has recognized and reaffirmed the
special trust relationship with the Native Hawaiian people
through--
[[Page H12314]]
(A) the enactment of the Act entitled ``An Act to provide
for the admission of the State of Hawaii into the Union'',
approved March 18, 1959 (Public Law 86-3; 73 Stat. 4) by--
(i) ceding to the State of Hawaii title to the public lands
formerly held by the United States, and mandating that those
lands be held in public trust for five purposes, one of which
is for the betterment of the conditions of Native Hawaiians;
and
(ii) transferring the United States responsibility for the
administration of the Hawaiian Home Lands to the State of
Hawaii, but retaining the authority to enforce the trust,
including the exclusive right of the United States to consent
to any actions affecting the lands which comprise the corpus
of the trust and any amendments to the Hawaiian Homes
Commission Act, 1920 (42 Stat. 108, chapter 42) that are
enacted by the legislature of the State of Hawaii affecting
the beneficiaries under the Act.
(22) The United States continually has recognized and
reaffirmed that--
(A) Native Hawaiians have a cultural, historic, and land-
based link to the aboriginal, native people who exercised
sovereignty over the Hawaiian Islands;
(B) Native Hawaiians have never relinquished their claims
to sovereignty or their sovereign lands;
(C) the United States extends services to Native Hawaiians
because of their unique status as the aboriginal, native
people of a once sovereign nation with whom the United States
has a political and legal relationship; and
(D) the special trust relationship of American Indians,
Alaska Natives, and Native Hawaiians to the United States
arises out of their status as aboriginal, indigenous, native
people of the United States.
SEC. 2. DEFINITIONS.
In this Act:
(1) Aboriginal, indigenous, native people.--The term
``aboriginal, indigenous, native people'' means those people
whom Congress has recognized as the original inhabitants of
the lands and who exercised sovereignty prior to European
contact in the areas that later became part of the United
States.
(2) Adult members.--The term ``adult members'' means those
Native Hawaiians who have attained the age of 18 at the time
the Secretary publishes the final roll, as provided in
section 7(a)(3) of this Act.
(3) Apology resolution.--The term ``Apology Resolution''
means Public Law 103-150 (107 Stat. 1510), a joint resolution
offering an apology to Native Hawaiians on behalf of the
United States for the participation of agents of the United
States in the January 17, 1893 overthrow of the Kingdom of
Hawaii.
(4) Ceded lands.--The term ``ceded lands'' means those
lands which were ceded to the United States by the Republic
of Hawaii under the Joint Resolution to provide for annexing
the Hawaiian Islands to the United States of July 7, 1898 (30
Stat. 750), and which were later transferred to the State of
Hawaii in the Act entitled ``An Act to provide for the
admission of the State of Hawaii into the Union'' approved
March 18, 1959 (Public Law 86-3; 73 Stat. 4).
(5) Commission.--The term ``Commission'' means the
commission established in section 7 of this Act to certify
that the adult members of the Native Hawaiian community
contained on the roll developed under that section meet the
definition of Native Hawaiian, as defined in paragraph
(7)(A).
(6) Indigenous, native people.--The term ``indigenous,
native people'' means the lineal descendants of the
aboriginal, indigenous, native people of the United States.
(7) Native hawaiian.--
(A) Prior to the recognition by the United States of a
Native Hawaiian government under the authority of section
7(d)(2) of this Act, the term ``Native Hawaiian'' means the
indigenous, native people of Hawaii who are the lineal
descendants of the aboriginal, indigenous, native people who
resided in the islands that now comprise the State of Hawaii
on or before January 1, 1893, and who occupied and exercised
sovereignty in the Hawaiian archipelago, including the area
that now constitutes the State of Hawaii, and includes all
Native Hawaiians who were eligible in 1921 for the programs
authorized by the Hawaiian Homes Commission Act (42 Stat.
108, chapter 42) and their lineal descendants.
(B) Following the recognition by the United States of the
Native Hawaiian government under section 7(d)(2) of this Act,
the term ``Native Hawaiian'' shall have the meaning given to
such term in the organic governing documents of the Native
Hawaiian government.
(8) Native hawaiian government.--The term ``Native Hawaiian
government'' means the citizens of the government of the
Native Hawaiian people that is recognized by the United
States under the authority of section 7(d)(2) of this Act.
(9) Native hawaiian interim governing council.--The term
``Native Hawaiian Interim Governing Council'' means the
interim governing council that is organized under section
7(c) of this Act.
(10) Roll.--The term ``roll'' means the roll that is
developed under the authority of section 7(a) of this Act.
(11) Secretary.--The term ``Secretary'' means the Secretary
of the Interior.
(12) Task force.--The term ``Task Force'' means the Native
Hawaiian Interagency Task Force established under the
authority of section 6 of this Act.
SEC. 3. UNITED STATES POLICY AND PURPOSE.
(a) Policy.--The United States reaffirms that--
(1) Native Hawaiians are a unique and distinct aboriginal,
indigenous, native people, with whom the United States has a
political and legal relationship;
(2) the United States has a special trust relationship to
promote the welfare of Native Hawaiians;
(3) Congress possesses the authority under the Constitution
to enact legislation to address the conditions of Native
Hawaiians and has exercised this authority through the
enactment of--
(A) the Hawaiian Homes Commission Act, 1920 (42 Stat. 108,
chapter 42);
(B) the Act entitled ``An Act to provide for the admission
of the State of Hawaii into the Union'', approved March 18,
1959 (Public Law 86-3; 73 Stat. 4); and
(C) more than 150 other Federal laws addressing the
conditions of Native Hawaiians;
(4) Native Hawaiians have--
(A) an inherent right to autonomy in their internal
affairs;
(B) an inherent right of self-determination and self-
governance;
(C) the right to reorganize a Native Hawaiian government;
and
(D) the right to become economically self-sufficient; and
(5) the United States shall continue to engage in a process
of reconciliation and political relations with the Native
Hawaiian people.
(b) Purpose.--It is the intent of Congress that the purpose
of this Act is to provide a process for the reorganization of
a Native Hawaiian government and for the recognition by the
United States of the Native Hawaiian government for purposes
of continuing a government-to-government relationship.
SEC. 4. ESTABLISHMENT OF THE UNITED STATES OFFICE FOR NATIVE
HAWAIIAN AFFAIRS.
(a) In General.--There is established within the Office of
the Secretary the United States Office for Native Hawaiian
Affairs.
(b) Duties of the Office.--The United States Office for
Native Hawaiian Affairs shall--
(1) effectuate and coordinate the special trust
relationship between the Native Hawaiian people and the
United States through the Secretary, and with all other
Federal agencies;
(2) upon the recognition of the Native Hawaiian government
by the United States as provided for in section 7(d)(2) of
this Act, effectuate and coordinate the special trust
relationship between the Native Hawaiian government and the
United States through the Secretary, and with all other
Federal agencies;
(3) fully integrate the principle and practice of
meaningful, regular, and appropriate consultation with the
Native Hawaiian people by providing timely notice to, and
consulting with the Native Hawaiian people prior to taking
any actions that may affect traditional or current Native
Hawaiian practices and matters that may have the potential to
significantly or uniquely affect Native Hawaiian resources,
rights, or lands, and upon the recognition of the Native
Hawaiian government as provided for in section 7(d)(2) of
this Act, fully integrate the principle and practice of
meaningful, regular, and appropriate consultation with the
Native Hawaiian government by providing timely notice to, and
consulting with the Native Hawaiian people and the Native
Hawaiian government prior to taking any actions that may have
the potential to significantly affect Native Hawaiian
resources, rights, or lands;
(4) consult with the Native Hawaiian Interagency Task
Force, other Federal agencies, and with relevant agencies of
the State of Hawaii on policies, practices, and proposed
actions affecting Native Hawaiian resources, rights, or
lands;
(5) be responsible for the preparation and submittal to the
Committee on Indian Affairs of the Senate, the Committee on
Energy and Natural Resources of the Senate, and the Committee
on Resources of the House of Representatives of an annual
report detailing the activities of the Interagency Task Force
established under section 6 of this Act that are undertaken
with respect to the continuing process of reconciliation and
to effect meaningful consultation with the Native Hawaiian
people and the Native Hawaiian government and providing
recommendations for any necessary changes to existing Federal
statutes or regulations promulgated under the authority of
Federal law;
(6) be responsible for continuing the process of
reconciliation with the Native Hawaiian people, and upon the
recognition of the Native Hawaiian government by the United
States as provided for in section 7(d)(2) of this Act, be
responsible for continuing the process of reconciliation with
the Native Hawaiian government; and
(7) assist the Native Hawaiian people in facilitating a
process for self-determination, including but not limited to
the provision of technical assistance in the development of
the roll under section 7(a) of this Act, the organization of
the Native Hawaiian Interim Governing Council as provided for
in section 7(c) of this Act, and the recognition of the
Native Hawaiian government as provided for in section 7(d) of
this Act.
(c) Authority.--The United States Office for Native
Hawaiian Affairs is authorized to enter into a contract with
or make grants for the purposes of the activities authorized
or addressed in section 7 of this Act for a period of 3 years
from the date of the enactment of this Act.
SEC. 5. DESIGNATION OF DEPARTMENT OF JUSTICE REPRESENTATIVE.
The Attorney General shall designate an appropriate
official within the Department of Justice to assist the
United States Office for Native Hawaiian Affairs in the
implementation and protection of the rights of Native
Hawaiians and their political, legal, and trust relationship
with the United States, and upon the recognition of
the Native Hawaiian government as provided for in section
7(d)(2) of this Act, in the implementation and protection
of the rights of the Native Hawaiian government and its
political, legal, and trust relationship with the United
States.
[[Page H12315]]
SEC. 6. NATIVE HAWAIIAN INTERAGENCY TASK FORCE.
(a) Establishment.--There is established an interagency
task force to be known as the ``Native Hawaiian Interagency
Task Force''.
(b) Composition.--The Task Force shall be composed of
officials, to be designated by the President, from--
(1) each Federal agency that establishes or implements
policies that affect Native Hawaiians or whose actions may
significantly or uniquely impact on Native Hawaiian
resources, rights, or lands;
(2) the United States Office for Native Hawaiian Affairs
established under section 4 of this Act; and
(3) the Executive Office of the President.
(c) Lead Agencies.--The Department of the Interior and the
Department of Justice shall serve as the lead agencies of the
Task Force, and meetings of the Task Force shall be convened
at the request of either of the lead agencies.
(d) Co-Chairs.--The Task Force representative of the United
States Office for Native Hawaiian Affairs established under
the authority of section 4 of this Act and the Attorney
General's designee under the authority of section 5 of this
Act shall serve as co-chairs of the Task Force.
(e) Duties.--The responsibilities of the Task Force shall
be--
(1) the coordination of Federal policies that affect Native
Hawaiians or actions by any agency or agencies of the Federal
Government which may significantly or uniquely impact on
Native Hawaiian resources, rights, or lands;
(2) to assure that each Federal agency develops a policy on
consultation with the Native Hawaiian people, and upon
recognition of the Native Hawaiian government by the United
States as provided in section 7(d)(2) of this Act,
consultation with the Native Hawaiian government; and
(3) to assure the participation of each Federal agency in
the development of the report to Congress authorized in
section 4(b)(5) of this Act.
SEC. 7. PROCESS FOR THE DEVELOPMENT OF A ROLL FOR THE
ORGANIZATION OF A NATIVE HAWAIIAN INTERIM
GOVERNING COUNCIL, FOR THE ORGANIZATION OF A
NATIVE HAWAIIAN INTERIM GOVERNING COUNCIL AND A
NATIVE HAWAIIAN GOVERNMENT, AND FOR THE
RECOGNITION OF THE NATIVE HAWAIIAN GOVERNMENT.
(a) Roll.--
(1) Preparation of roll.--The United States Office for
Native Hawaiian Affairs shall assist the adult members of the
Native Hawaiian community who wish to participate in the
reorganization of a Native Hawaiian government in preparing a
roll for the purpose of the organization of a Native Hawaiian
Interim Governing Council. The roll shall include the names
of the--
(A) adult members of the Native Hawaiian community who wish
to become citizens of a Native Hawaiian government and who
are--
(i) the lineal descendants of the aboriginal, indigenous,
native people who resided in the islands that now comprise
the State of Hawaii on or before January 1, 1893, and who
occupied and exercised sovereignty in the Hawaiian
archipelago; or
(ii) Native Hawaiians who were eligible in 1921 for the
programs authorized by the Hawaiian Homes Commission Act (42
Stat. 108, chapter 42) or their lineal descendants; and
(B) the children of the adult members listed on the roll
prepared under this subsection.
(2) Certification and submission.--
(A) Commission.--
(i) In general.--There is authorized to be established a
Commission to be composed of nine members for the purpose of
certifying that the adult members of the Native Hawaiian
community on the roll meet the definition of Native Hawaiian,
as defined in section 2(7)(A) of this Act.
(ii) Membership.--
(I) Appointment.--The Secretary shall appoint the members
of the Commission in accordance with subclause (II). Any
vacancy on the Commission shall not affect its powers and
shall be filled in the same manner as the original
appointment.
(II) Requirements.--The members of the Commission shall be
Native Hawaiian, as defined in section 2(7)(A) of this Act,
and shall have expertise in the certification of Native
Hawaiian ancestry.
(III) Congressional submission of suggested candidates.--In
appointing members of the Commission, the Secretary may
choose such members from among--
(aa) five suggested candidates submitted by the Majority
Leader of the Senate and the Minority Leader of the Senate
from a list of candidates provided to such leaders by the
Chairman and Vice Chairman of the Committee on Indian Affairs
of the Senate; and
(bb) four suggested candidates submitted by the Speaker of
the House of Representatives and the Minority Leader of the
House of Representatives from a list provided to the Speaker
and the Minority Leader by the Chairman and Ranking member of
the Committee on Resources of the House of Representatives.
(iii) Expenses.--Each member of the Commission shall be
allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of
business in the performance of services for the Commission.
(B) Certification.--The Commission shall certify that the
individuals listed on the roll developed under the authority
of this subsection are Native Hawaiians, as defined in
section 2(7)(A) of this Act.
(3) Secretary.--
(A) Certification.--The Secretary shall review the
Commission's certification of the membership roll and
determine whether it is consistent with applicable Federal
law, including the special trust relationship between the
United States and the indigenous, native people of the United
States.
(B) Publication.--Upon making the determination authorized
in subparagraph (A), the Secretary shall publish a final
roll.
(C) Appeal.--
(i) Establishment of mechanism.--The Secretary is
authorized to establish a mechanism for an appeal of the
Commission's determination as it concerns--
(I) the exclusion of the name of a person who meets the
definition of Native Hawaiian, as defined in section 2(7)(A)
of this Act, from the roll; or
(II) a challenge to the inclusion of the name of a person
on the roll on the grounds that the person does not meet the
definition of Native Hawaiian, as so defined.
(ii) Publication; update.--The Secretary shall publish the
final roll while appeals are pending, and shall update the
final roll and the publication of the final roll upon the
final disposition of any appeal.
(D) Failure to act.--If the Secretary fails to make the
certification authorized in subparagraph (A) within 90 days
of the date that the Commission submits the membership roll
to the Secretary, the certification shall be deemed to have
been made, and the Commission shall publish the final roll.
(4) Effect of publication.--The publication of the final
roll shall serve as the basis for the eligibility of adult
members listed on the roll to participate in all referenda
and elections associated with the organization of a Native
Hawaiian Interim Governing Council and the Native Hawaiian
government.
(b) Recognition of Rights.--The right of the Native
Hawaiian people to organize for their common welfare and to
adopt appropriate organic governing documents is hereby
recognized by the United States.
(c) Organization of the Native Hawaiian Interim Governing
Council.--
(1) Organization.--The adult members listed on the roll
developed under the authority of subsection (a) are
authorized to--
(A) develop criteria for candidates to be elected to serve
on the Native Hawaiian Interim Governing Council;
(B) determine the structure of the Native Hawaiian Interim
Governing Council; and
(C) elect members to the Native Hawaiian Interim Governing
Council.
(2) Election.--Upon the request of the adult members listed
on the roll developed under the authority of subsection (a),
the United States Office for Native Hawaiian Affairs may
assist the Native Hawaiian community in holding an election
by secret ballot (absentee and mail balloting permitted), to
elect the membership of the Native Hawaiian Interim Governing
Council.
(3) Powers.--
(A) In general.--The Native Hawaiian Interim Governing
Council is authorized to represent those on the roll in the
implementation of this Act and shall have no powers other
than those given to it in accordance with this Act.
(B) Funding.--The Native Hawaiian Interim Governing Council
is authorized to enter into a contract or grant with any
Federal agency, including but not limited to, the United
States Office for Native Hawaiian Affairs within the
Department of the Interior and the Administration for Native
Americans within the Department of Health and Human Services,
to carry out the activities set forth in subparagraph (C).
(C) Activities.--
(i) In general.--The Native Hawaiian Interim Governing
Council is authorized to conduct a referendum of the adult
members listed on the roll developed under the authority of
subsection (a) for the purpose of determining (but not
limited to) the following:
(I) The proposed elements of the organic governing
documents of a Native Hawaiian government.
(II) The proposed powers and authorities to be exercised by
a Native Hawaiian government, as well as the proposed
privileges and immunities of a Native Hawaiian government.
(III) The proposed civil rights and protection of such
rights of the citizens of a Native Hawaiian government and
all persons subject to the authority of a Native Hawaiian
government.
(ii) Development of organic governing documents.--Based
upon the referendum, the Native Hawaiian Interim Governing
Council is authorized to develop proposed organic governing
documents for a Native Hawaiian government.
(iii) Distribution.--The Native Hawaiian Interim Governing
Council is authorized to distribute to all adult members of
those listed on the roll, a copy of the proposed organic
governing documents, as drafted by the Native Hawaiian
Interim Governing Council, along with a brief impartial
description of the proposed organic governing documents.
(iv) Consultation.--The Native Hawaiian Interim Governing
Council is authorized to freely consult with those members
listed on the roll concerning the text and description of the
proposed organic governing documents.
(D) Elections.--
(i) In general.--The Native Hawaiian Interim Governing
Council is authorized to hold elections for the purpose of
ratifying the proposed organic governing documents, and upon
ratification of the organic governing documents, to hold
elections for the officers of the Native Hawaiian government.
(ii) Assistance.--Upon the request of the Native Hawaiian
Interim Governing Council, the United States Office of Native
Hawaiian Affairs may assist the Council in conducting such
elections.
(4) Termination.--The Native Hawaiian Interim Governing
Council shall have no power or
[[Page H12316]]
authority under this Act after the time at which the duly
elected officers of the Native Hawaiian government take
office.
(d) Recognition of the Native Hawaiian Government.--
(1) Process for recognition.--
(A) Submittal of organic governing documents.--The duly
elected officers of the Native Hawaiian government shall
submit the organic governing documents of the Native Hawaiian
government to the Secretary.
(B) Certifications.--Within 90 days of the date that the
duly elected officers of the Native Hawaiian government
submit the organic governing documents to the Secretary, the
Secretary shall certify that the organic governing
documents--
(i) were adopted by a majority vote of the adult members
listed on the roll prepared under the authority of subsection
(a);
(ii) are consistent with applicable Federal law and the
special trust relationship between the United States and the
indigenous native people of the United States;
(iii) provide for the exercise of those governmental
authorities that are recognized by the United States as the
powers and authorities that are exercised by other
governments representing the indigenous, native people of the
United States;
(iv) provide for the protection of the civil rights of the
citizens of the Native Hawaiian government and all persons
subject to the authority of the Native Hawaiian government,
and to assure that the Native Hawaiian government exercises
its authority consistent with the requirements of section 202
of the Act of April 11, 1968 (25 U.S.C. 1302);
(v) prevent the sale, disposition, lease, or encumbrance of
lands, interests in lands, or other assets of the Native
Hawaiian government without the consent of the Native
Hawaiian government;
(vi) establish the criteria for citizenship in the Native
Hawaiian government; and
(vii) provide authority for the Native Hawaiian government
to negotiate with Federal, State, and local governments, and
other entities.
(C) Failure to act.--If the Secretary fails to act within
90 days of the date that the duly elected officers of the
Native Hawaiian government submitted the organic governing
documents of the Native Hawaiian government to the Secretary,
the certifications authorized in subparagraph (B) shall be
deemed to have been made.
(D) Resubmission in case of noncompliance with federal
law.--
(i) Resubmission by the secretary.--If the Secretary
determines that the organic governing documents, or any part
thereof, are not consistent with applicable Federal law, the
Secretary shall resubmit the organic governing documents to
the duly elected officers of the Native Hawaiian government
along with a justification for each of the Secretary's
findings as to why the provisions are not consistent with
such law.
(ii) Amendment and resubmission by the native hawaiian
government.--If the organic governing documents are
resubmitted to the duly elected officers of the Native
Hawaiian government by the Secretary under clause (i), the
duly elected officers of the Native Hawaiian government
shall--
(I) amend the organic governing documents to ensure that
the documents comply with applicable Federal law; and
(II) resubmit the amended organic governing documents to
the Secretary for certification in accordance with
subparagraphs (B) and (C).
(2) Federal recognition.--
(A) Recognition.--Notwithstanding any other provision of
law, upon the election of the officers of the Native Hawaiian
government and the certifications (or deemed certifications)
by the Secretary authorized in paragraph (1), Federal
recognition is hereby extended to the Native Hawaiian
government as the representative governing body of the Native
Hawaiian people.
(B) No diminishment of rights or privileges.--Nothing
contained in this Act shall diminish, alter, or amend any
existing rights or privileges enjoyed by the Native Hawaiian
people which are not inconsistent with the provisions of this
Act.
SEC. 8. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated such sums as may be
necessary to carry out the activities authorized in this Act.
SEC. 9. REAFFIRMATION OF DELEGATION OF FEDERAL AUTHORITY;
NEGOTIATIONS.
(a) Reaffirmation.--The delegation by the United States of
authority to the State of Hawaii to address the conditions of
Native Hawaiians contained in the Act entitled ``An Act to
provide for the admission of the State of Hawaii into the
Union'' approved March 18, 1959 (Public Law 86-3; 73 Stat. 5)
is hereby reaffirmed.
(b) Negotiations.--Upon the Federal recognition of the
Native Hawaiian government pursuant to section 7(d)(2) of
this Act, the United States is authorized to negotiate and
enter into an agreement with the State of Hawaii and the
Native Hawaiian government regarding the transfer of lands,
resources, and assets dedicated to Native Hawaiian use under
existing law as in effect on the date of the enactment of
this Act to the Native Hawaiian government.
SEC. 10. DISCLAIMER.
Nothing in this Act is intended to serve as a settlement of
any claims against the United States, or to affect the rights
of the Native Hawaiian people under international law.
SEC. 11. REGULATIONS.
The Secretary is authorized to make such rules and
regulations and such delegations of authority as the
Secretary deems necessary to carry out the provisions of this
Act.
SEC. 12. SEVERABILITY.
In the event that any section or provision of this Act, or
any amendment made by this Act is held invalid, it is the
intent of Congress that the remaining sections or provisions
of this Act, and the amendments made by this Act, shall
continue in full force and effect.
Section 124 includes a technical correction to allow the
use of National Park Service funds for the acquisition of
lands near Saddleback Mountain, Maine for inclusion in the
Appalachian National Scenic Trail.
Section 125 incorporates by reference the text of the bill
S. 2273, the Black Rock Desert-High Rock Canyon Emigrant
Trails National Conservation Area Act of 2000, as passed by
the United States Senate on October 5, 2000. The text of S.
2273 is as follows:
AN ACT To establish the Black Rock Desert-High Rock Canyon
Emigrant Trails National Conservation Area, and for other
purposes.
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 ``Black Rock Desert-High Rock
Canyon Emigrant Trails National Conservation Area Act of
2000''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The areas of northwestern Nevada known as the Black
Rock Desert and High Rock Canyon contain and surround the
last nationally significant, untouched segments of the
historic California emigrant Trails, including wagon ruts,
historic inscriptions, and a wilderness landscape largely
unchanged since the days of the pioneers.
(2) The relative absence of development in the Black Rock
Desert and high Rock Canyon areas from emigrant times to the
present day offers a unique opportunity to capture the
terrain, sights, and conditions of the overland trails as
they were experienced by the emigrants and to make available
to both present and future generations of Americans the
opportunity of experiencing emigrant conditions in an
unaltered setting.
(3) The Black Rock Desert and High Rock Canyon areas are
unique segments of the Northern Great Basin and contain broad
representation of the Great Basin's land forms and plant and
animal species, including golden eagles and other birds of
prey, sage grouse, mule deer, pronghorn antelope, bighorn
sheep, free roaming horses and burros, threatened fish and
sensitive plants.
(4) The Black Rock-High Rock region contains a number of
cultural and natural resources that have been declared
eligible for National Historic Landmark and Natural Landmark
status, including a portion of the 1843-44 John Charles
Fremont exploration route, the site of the death of Peter
Lassen, early military facilities, and examples of early
homesteading and mining.
(5) The archeological, paleontological, and geographical
resources of the Black Rock-High Rock region include numerous
prehistoric and historic Native American sites, wooly mammoth
sites, some of the largest natural potholes of North America,
and a remnant dry Pleistocene lakebed (playa) where the
curvature of the Earth may be observed.
(6) The two large wilderness mosaics that frame the
conservation area offer exceptional opportunities for
solitude and serve to protect the integrity of the viewshed
of the historic emigrant trails.
(7) Public lands in the conservation area have been used
for domestic livestock grazing for over a century, with
resultant benefits to community stability and contributions
to the local and State economies. It has not been
demonstrated that continuation of this use would be
incompatible with appropriate protection and sound management
of the resource values of these lands; therefore, it is
expected that such grazing will continue in accordance with
the management plan for the conservation area and other
applicable laws and regulations.
(8) The Black Rock Desert playa is a unique natural
resource that serves as the primary destination for the
majority of visitors to the conservation area, including
visitors associated with large-scale permitted events. It is
expected that such permitted events will continue to be
administered in accordance with the management plan for the
conservation area and other applicable laws and regulations.
SEC. 3. DEFINITIONS.
As used in this Act:
(1) The term ``Secretary'' means the Secretary of the
Interior.
(2) The term ``public lands'' has the meaning stated in
section 103(e) of the Federal Land Policy and Management Act
of 1976 (43 U.S.C. 1702(e)).
(3) The term ``conservation area'' means the Black Rock
Desert-High Rock Canyon Emigrant Trails National Conservation
Area established pursuant to section 4 of this Act.
SEC. 4. ESTABLISHMENT OF THE CONSERVATION AREA.
(a) Establishment and Purposes.--In order to conserve,
protect, and enhance for the benefit and enjoyment of present
and future generations the unique and nationally important
historical, cultural, paleontological, scenic, scientific,
biological, educational, wildlife, riparian, wilderness,
endangered species, and recreational values and resources
associated with the Applegate-Lassen and Nobles Trails
corridors and surrounding areas, there is hereby established
the Black Rock Desert-High Rock Canyon Emigrant Trails
National Conservation Area in the State of Nevada.
(b) Areas Included.--The conservation area shall consist of
approximately 797,100 acres of public lands as generally
depicted on the map entitled ``Black Rock Desert Emigrant
Trail National Conservation Area'' and dated July 19, 2000.
[[Page H12317]]
(c) Maps and Legal Description.--As soon as practicable
after the date of the enactment of this Act, the Secretary
shall submit to Congress a map and legal description of the
conservation area. The map and legal description shall have
the same force and effect as if included in this Act, except
the Secretary may correct clerical and typographical errors
in such map and legal description. Copies of the map and
legal description shall be on file and available for public
inspection in the appropriate offices of the Bureau of Land
Management.
SEC. 5. MANAGEMENT.
(a) Management.--The Secretary, acting through the Bureau
of Land Management, shall manage the conservation area in a
manner that conserves, protects and enhances its resources
and values, including those resources and values specified in
subsection 4(a), in accordance with this Act, the Federal
Land Policy and Management Act of 1976 (43 U.S.C. 1701 et
seq.), and other applicable provisions of law.
(b) Access.--
(1) In general.--The Secretary shall maintain adequate
access for the reasonable use and enjoyment of the
conservation area.
(2) Private land.--The Secretary shall provide reasonable
access to privately owned land or interests in land within
the boundaries of the conservation area.
(3) Existing public roads.--The Secretary is authorized to
maintain existing public access within the boundaries of the
conservation area in a manner consistent with the purposes
for which the conservation area was established.
(c) Uses.--
(1) In general.--The Secretary shall only allow such uses
of the conservation area as the Secretary finds will further
the purposes for which the conservation area is established.
(2) Off-highway vehicle use.--Except where needed for
administrative purposes or to respond to an emergency, use of
motorized vehicles in the conservation area shall be
permitted only on roads and trails and in other areas
designated for use of motorized vehicles as part of the
management plan prepared pursuant to subsection (e).
(3) Permitted events.--The Secretary may continue to permit
large-scale events in defined, low impact areas of the Black
Rock Desert playa in the conservation area in accordance with
the management plan prepared pursuant to subsection (e).
(d) Hunting, Trapping, and Fishing.--Nothing in this Act
shall be deemed to diminish the jurisdiction of the State of
Nevada with respect to fish and wildlife management,
including regulation of hunting and fishing, on public lands
within the conservation area.
(e) Management Plan.--Within three years following the date
of enactment of this Act, the Secretary shall develop a
comprehensive resource management plan for the long-term
protection and management of the conservation area. The plan
shall be developed with full public participation and shall
describe the appropriate uses and management of the
conservation area consistent with the provisions of this Act.
The plan may incorporate appropriate decisions contained in
any current management or activity plan for the area and may
use information developed in previous studies of the lands
within or adjacent to the conservation area.
(f) Grazing.--Where the Secretary of the Interior currently
permits livestock grazing in the conservation area, such
grazing shall be allowed to continue subject to all
applicable laws, regulations, and executive orders.
(g) Visitor Service Facilities.--The Secretary is
authorized to establish, in cooperation with other public or
private entities as the Secretary may deem appropriate,
visitor service facilities for the purpose of providing
information about the historical, cultural, ecological,
recreational, and other resources of the conservation area.
SEC. 6. WITHDRAWAL.
(a) In General.--Subject to valid existing rights, all
Federal lands within the conservation area and all lands and
interests therein which are hereafter acquired by the United
States are hereby withdrawn from all forms of entry,
appropriation, or disposal under the public land laws, from
location, entry, and patent under the mining laws, from
operation of the mineral leasing and geothermal leasing
laws and from the minerals materials laws and all
amendments thereto.
SEC. 7. NO BUFFER ZONES.
The Congress does not intend for the establishment of the
conservation area to lead to the creation of protective
perimeters or buffer zones around the conservation area. The
fact that there may be activities or uses on lands outside
the conservation area that would not be permitted in the
conservation area shall not preclude such activities or uses
on such lands up to the boundary of the conservation area
consistent with other applicable laws.
SEC. 8. WILDERNESS.
(a) Designation.--In furtherance of the purposes of the
Wilderness Act of 1964 (16 U.S.C. 1131 et seq.), the
following lands in the State of Nevada are designated as
wilderness, and, therefore, as components of the National
Wilderness Preservation System:
(1) Certain lands in the Black Rock Desert Wilderness Study
Area comprised of approximately 315,700 acres, as generally
depicted on a map entitled ``Black Rock Desert Wilderness--
Proposed'' and dated July 19, 2000, and which shall be known
as the Black Rock Desert Wilderness.
(2) Certain lands in the Pahute Peak Wilderness Study Area
comprised of approximately 57,400 acres, as generally
depicted on a map entitled ``Pahute Peak Wilderness--
Proposed'' and dated July 19, 2000, and which shall be known
as the Pahute Peak Wilderness.
(3) Certain lands in the North Black Rock Range Wilderness
Study Area comprised of approximately 30,800 acres, as
generally depicted on a map entitled ``North Black Rock Range
Wilderness--Proposed'' and dated July 19, 2000, and which
shall be known as the North Black Rock Range Wilderness.
(4) Certain lands in the East Fork High Rock Canyon
Wilderness Study Area comprised of approximately 52,800
acres, as generally depicted on a map entitled ``East Fork
High Rock Canyon Wilderness--Proposed'' and dated July 19,
2000, and which shall be known as the East Fork High Rock
Canyon Wilderness.
(5) Certain lands in the High Rock Lake Wilderness Study
Area comprised of approximately 59,300 acres, as generally
depicted on a map entitled ``High Rock Lake Wilderness--
Proposed'' and dated July 19, 2000, and which shall be known
as the High Rock Lake Wilderness.
(6) Certain lands in the Little High Rock Canyon Wilderness
Study Area comprised of approximately 48,700 acres, as
generally depicted on a map entitled ``Little High Rock
Canyon Wilderness--Proposed'' and dated July 19, 2000, and
which shall be known as the Little High Rock Canyon
Wilderness.
(7) Certain lands in the High Rock Canyon Wilderness Study
Area and Yellow Rock Canyon Wilderness Study Area comprised
of approximately 46,600 acres, as generally depicted on a map
entitled ``High Rock Canyon Wilderness--Proposed'' and dated
July 19, 2000, and which shall be known as the High Rock
Canyon Wilderness.
(8) Certain lands in the Calico Mountains Wilderness Study
Area comprised of approximately 65,400 acres, as generally
depicted on a map entitled ``Calico Mountains Wilderness--
Proposed'' and dated July 19, 2000, and which shall be known
as the Calico Mountains Wilderness.
(9) Certain lands in the South Jackson Mountains Wilderness
Study Area comprised of approximately 56,800 acres, as
generally depicted on a map entitled ``South Jackson
Mountains Wilderness--Proposed'' and dated July 19, 2000, and
which shall be known as the South Jackson Mountains
Wilderness.
(10) Certain lands in the North Jackson Mountains
Wilderness Study Area comprised of approximately 24,000
acres, as generally depicted on a map entitled ``North
Jackson Mountains Wilderness--Proposed'' and dated July 19,
2000, and which shall be known as the North Jackson Mountains
Wilderness.
(b) Administration of Wilderness Areas.--Subject to valid
existing rights, each wilderness area designated by this Act
shall be administered by the Secretary in accordance with the
provisions of the Wilderness Act, except that any reference
in such provisions to the effective date of the Wilderness
Act shall be deemed to be a reference to the date of
enactment of this Act and any reference to the Secretary of
Agriculture shall be deemed to be a reference to the
Secretary of the Interior.
(c) Maps and Legal Description.--As soon as practicable
after the date of the enactment of this Act, the Secretary
shall submit to Congress a map and legal description of the
wilderness areas designated under this Act. The map and legal
description shall have the same force and effect as if
included in this Act, except the Secretary may correct
clerical and typographical errors in such map and legal
description. Copies of the map and legal description shall
be on file and available for public inspection in the
appropriate offices of the Bureau of Land Management.
(d) Grazing.--Within the wilderness areas designated under
subsection (a), the grazing of livestock, where established
prior to the date of enactment of this Act, shall be
permitted to continue subject to such reasonable regulations,
policies, and practices as the Secretary deems necessary, as
long as such regulations, policies, and practices fully
conform with and implement the intent of Congress regarding
grazing in such areas as such intent is expressed in the
Wilderness Act and section 101(f) of Public Law 101-628.
SEC. 9. AUTHORIZATION OF APPROPRIATIONS.
There is hereby authorized to be appropriated such sums as
may be necessary to carry out the provisions of this Act.
Section 126 increases the annual authorized funding level
for the Illinois and Michigan Canal National Heritage
Corridor Commission from $250,000 to $1,000,000.
Section 127. The bill S. 2885, the Jamestown 400th
Commemoration Commission Act of 2000, as passed in the United
States Senate on October 5, 2000, is incorporated by
reference. The text of S. 2885 is as follows:
An Act to establish the Jamestown 400th Commemoration Commission, and
for other purposes
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 ``Jamestown 400th
Commemoration Commission Act of 2000''.
SEC. 2. FINDINGS AND PURPOSE.
(a) Findings.--Congress finds that--
(1) the founding of the colony at Jamestown, Virginia in
1607, the first permanent English colony in the New World,
and the capital of Virginia for 92 years, has major
significance in the history of the United States;
(2) the settlement brought people from throughout the
Atlantic Basin together to form a multicultural society,
including English, other Europeans, Native Americans, and
Africans;
(3) the economic, political, religious, and social
institutions that developed during the first 9 decades of the
existence of Jamestown continue to have profound effects on
the United States, particularly in English common law and
[[Page H12318]]
language, cross cultural relationships, and economic
structure and status;
(4) the National Park Service, the Association for the
Preservation of Virginia Antiquities, and the Jamestown-
Yorktown Foundation of the Commonwealth of Virginia
collectively own and operate significant resources related to
the early history of Jamestown; and
(5) in 1996--
(A) the Commonwealth of Virginia designated the Jamestown-
Yorktown Foundation as the State agency responsible for
planning and implementing the Commonwealth's portion of the
commemoration of the 400th anniversary of the founding of the
Jamestown settlement;
(B) the Foundation created the Celebration 2007 Steering
Committee, known as the Jamestown 2007 Steering Committee;
and
(C) planning for the commemoration began.
(b) Purpose.--The purpose of this Act is to establish the
Jamestown 400th Commemoration Commission to--
(1) ensure a suitable national observance of the Jamestown
2007 anniversary by complementing the programs and activities
of the Commonwealth of Virginia;
(2) cooperate with and assist the programs and activities
of the State in observance of the Jamestown 2007 anniversary;
(3) assist in ensuring that Jamestown 2007 observances
provide an excellent visitor experience and beneficial
interaction between visitors and the natural and cultural
resources of the Jamestown sites;
(4) assist in ensuring that the Jamestown 2007 observances
are inclusive and appropriately recognize the experiences of
all people present in 17th century Jamestown;
(5) provide assistance to the development of Jamestown-
related programs and activities;
(6) facilitate international involvement in the Jamestown
2007 observances;
(7) support and facilitate marketing efforts for a
commemorative coin, stamp, and related activities for the
Jamestown 2007 observances; and
(8) assist in the appropriate development of heritage
tourism and economic benefits to the United States.
SEC. 3. DEFINITIONS.
In this Act:
(1) Commemoration.--The term ``commemoration'' means the
commemoration of the 400th anniversary of the founding of the
Jamestown settlement.
(2) Commission.--The term ``Commission'' means the
Jamestown 400th Commemoration Commission established by
section 4(a).
(3) Governor.--The term ``Governor'' means the Governor of
Virginia.
(4) Secretary.--The term ``Secretary'' means the Secretary
of the Interior.
(5) State.--The term ``State'' means the Commonwealth of
Virginia, including agencies and entities of the
Commonwealth.
SEC. 4. JAMESTOWN 400TH COMMEMORATION COMMISSION.
(a) In General.--There is established a commission to be
known as the ``Jamestown 400th Commemoration Commission''.
(b) Membership.--
(1) In general.--The Commission shall be composed of 15
members, of whom--
(A) 4 members shall be appointed by the Secretary, taking
into consideration the recommendations of the Chairperson of
the Jamestown 2007 Steering Committee;
(B) 4 members shall be appointed by the Secretary, taking
into consideration the recommendations of the Governor;
(C) 2 members shall be employees of the National Park
Service, of which--
(i) 1 shall be the Director of the National Park Service
(or a designee); and
(ii) 1 shall be an employee of the National Park Service
having experience relevant to the commemoration, to be
appointed by the Secretary; and
(D) 5 members shall be individuals that have an interest
in, support for, and expertise appropriate to, the
commemoration, to be appointed by the Secretary.
(2) Term; vacancies.--
(A) Term.--A member of the Commission shall be appointed
for the life of the Commission.
(B) Vacancies.--
(i) In general.--A vacancy on the Commission shall be
filled in the same manner in which the original appointment
was made.
(ii) Partial term.--A member appointed to fill a vacancy on
the Commission shall serve for the remainder of the term for
which the predecessor of the member was appointed.
(3) Meetings.--
(A) In general.--The Commission shall meet--
(i) at least twice each year; or
(ii) at the call of the Chairperson or the majority of the
members of the Commission.
(B) Initial meeting.--Not later than 30 days after the date
on which all members of the Commission have been appointed,
the Commission shall hold the initial meeting of the
Commission.
(4) Voting.--
(A) In general.--The Commission shall act only on an
affirmative vote of a majority of the members of the
Commission.
(B) Quorum.--A majority of the Commission shall constitute
a quorum.
(5) Chairperson.--The Secretary shall appoint a Chairperson
of the Commission, taking into consideration any
recommendations of the Governor.
(c) Duties.--
(1) In general.--The Commission shall--
(A) plan, develop, and execute programs and activities
appropriate to commemorate the 400th anniversary of the
founding of Jamestown;
(B) generally facilitate Jamestown-related activities
throughout the United States;
(C) encourage civic, patriotic, historical, educational,
religious, economic, and other organizations throughout the
United States to organize and participate in anniversary
activities to expand the understanding and appreciation of
the significance of the founding and early history of
Jamestown;
(D) coordinate and facilitate for the public scholarly
research on, publication about, and interpretation of,
Jamestown; and
(E) ensure that the 400th anniversary of Jamestown provides
a lasting legacy and long-term public benefit by assisting in
the development of appropriate programs and facilities.
(2) Plans; reports.--
(A) Strategic plan; annual performance plans.--In
accordance with the Government Performance and Results Act of
1993 (Public Law 103-62; 107 Stat. 285), the Commission shall
prepare a strategic plan and annual performance plans for the
activities of the Commission carried out under this Act.
(B) Final report.--Not later than September 30, 2008, the
Commission shall complete a final report that contains--
(i) a summary of the activities of the Commission;
(ii) a final accounting of funds received and expended by
the Commission; and
(iii) the findings and recommendations of the Commission.
(d) Powers of the Commission.--The Commission may--
(1) accept donations and make dispersions of money,
personal services, and real and personal property related to
Jamestown and of the significance of Jamestown in the history
of the United States;
(2) appoint such advisory committees as the Commission
determines to be necessary to carry out this Act;
(3) authorize any member or employee of the Commission to
take any action that the Commission is authorized to take by
this Act;
(4) procure supplies, services, and property, and make or
enter into contracts, leases or other legal agreements, to
carry out this Act (except that any contracts, leases or
other legal agreements made or entered into by the Commission
shall not extend beyond the date of termination of the
Commission);
(5) use the United States mails in the same manner and
under the same conditions as other Federal agencies;
(6) subject to approval by the Commission, make grants in
amounts not to exceed $10,000 to communities and nonprofit
organizations to develop programs to assist in the
commemoration;
(7) make grants to research and scholarly organizations to
research, publish, or distribute information relating to the
early history of Jamestown; and
(8) provide technical assistance to States, localities, and
nonprofit organizations to further the commemoration.
(e) Commission Personnel Matters.--
(1) Compensation of members of the commission.--
(A) In general.--Except as provided in subparagraph (B), a
member of the Commission shall serve without compensation.
(B) Federal employees.--A member of the Commission who is
an officer or employee of the Federal Government shall serve
without compensation in addition to the compensation received
for the services of the member as an officer or employee of
the Federal Government.
(C) Travel expenses.--A member of the Commission shall be
allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for an employee of an agency
under subchapter I of chapter 57 of title 5, United States
Code, while away from the home or regular place of business
of the member in the performance of the duties of the
Commission.
(2) Staff.--
(A) In general.--The Chairperson of the Commission may,
without regard to the civil service laws (including
regulations), appoint and terminate an executive director and
such other additional personnel as are necessary to enable
the Commission to perform the duties of the Commission.
(B) Confirmation of executive director.--The employment of
an executive director shall be subject to confirmation by the
Commission.
(3) Compensation.--
(A) In general.--Except as provided in subparagraph (B),
the Chairperson of the Commission may fix the compensation of
the executive director and other personnel without regard to
the provisions of chapter 51 and subchapter III of chapter 53
of title 5, United States Code, relating to classification of
positions and General Schedule pay rates.
(B) Maximum rate of pay.--The rate of pay for the executive
director and other personnel shall not exceed the rate
payable for level V of the Executive Schedule under section
5316 of title 5, United States Code.
(4) Detail of government employees.--
(A) Federal employees.--
(i) In general.--On the request of the Commission, the head
of any Federal agency may detail, on a reimbursable or non-
reimbursable basis, any of the personnel of the agency to the
Commission to assist the Commission in carrying out the
duties of the Commission under this Act.
(ii) Civil service status.--The detail of an employee under
clause (i) shall be without interruption or loss of civil
service status or privilege.
(B) State employees.--The Commission may--
(i) accept the services of personnel detailed from States
(including subdivisions of States); and
(ii) reimburse States for services of detailed personnel.
(5) Volunteer and uncompensated services.--Notwithstanding
section 1342 of title 31, United States Code, the Commission
may accept and use voluntary and uncompensated services as
the Commission determines necessary.
[[Page H12319]]
(6) Support services.--The Director of the National Park
Service shall provide to the Commission, on a reimbursable
basis, such administrative support services as the Commission
may request.
(f) Procurement of Temporary and Intermittent Services.--
The Chairperson of the Commission may procure temporary and
intermittent services in accordance with section 3109(b) of
title 5, United States Code, at rates for individuals that do
not exceed the daily equivalent of the annual rate of basic
pay prescribed for level V of the Executive Schedule under
section 5316 of that title.
(g) FACA Nonapplicability.--Section 14(b) of the Federal
Advisory Committee Act (5 U.S.C. App.) shall not apply to the
Commission.
(h) No Effect on Authority.--Nothing in this section
supersedes the authority of the State, the National Park
Service, or the Association for the Preservation of Virginia
Antiquities, concerning the commemoration.
(i) Termination.--The Commission shall terminate on
December 31, 2008.
SEC. 5. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as are
necessary to carry out this Act.
Section 128 provides guidance to the National Park Service
on restricting the use of snowmobiles in units of the
National Park System.
Section 129 extends an agreement, through March 31, 2001,
dealing with seven campsite leases in the Biscayne Bay,
Miami/Dade County area of Florida, collectively known as
``Stiltsville''.
Section 130 authorizes a grant of $1.3 million for the
National Park Service to acquire land in Lower Phalen Creek
near St. Paul, Minnesota for the Mississippi National River
and Recreation Area. The land is for a trail that is being
named after the late Congressman Bruce Vento.
Section 131 authorizes the transfer of funds to the George
Washington's Fredericksburg Foundation, Inc. for a
cooperative agreement to manage Ferry Farm, which was George
Washington's boyhood home.
Section 132 prohibits the Secretary of the Interior from
using funds to pay the salaries or expenses related to the
issuance of a request for proposal related to a light rail
system at Grand Canyon National Park until June 1, 2001. In
addition, the Secretary is directed to report directly to the
Committee prior to any additional action regarding a request
for proposal on alternative transportation options for the
park. These options should include a phase-in period based on
newly updated visitation numbers. The report should also
address using a bus/transit option only during high peak
visitation months. Alternatives to be analyzed and costed in
the report include: (1) an alternative fueled bus alternative
with parking outside the park; (2) a rapid transit
alternative and (3) a combination bus/rapid transit
alternative.
Section 133 prohibits the Secretary of the Interior from
removing a white cross erected in 1934 by the Veterans of
Foreign Wars to honor the memory of fallen World War I
veterans. The cross is located within the boundary of the
Mojave National Preserve along Cima Road, approximately 11
miles south of Interstate 15.
Section 134 extends the term of the Chesapeake and Ohio
Canal National Historical Park Commission.
Section 135 allows funds provided in Public Law 106-291 for
land acquisition by the National Park Service in fiscal year
2001 for Brandywine Battlefield, Ice Age National Scenic
Trail, Mississippi National River and Recreation Area,
Shenandoah National Heritage Area, and Fallen Timbers
Battlefield and Fort Miamis National Historic Site to be used
for a grant to a state, local government, or to a land
management entity.
Section 137 extends the boundary of Gulf Islands National
Seashore in Mississippi to include Cat Island.
Section 138. The conference agreement includes a new
provision regarding limitations on Federal Thrift Savings
Plan contributions.
Section 139. The conference agreement includes a new
provision regarding the exclusion of elements of the United
States Secret Service from certain activities.
Section 140. The conference agreement includes a new
provision providing for an average 3.7 percent salary
adjustment for Federal employees in January, 2001, consistent
with the alternative pay plan submitted by the Administration
on November 30, 2000.
Section 141. The conference agreement includes a new
provision repealing mandatory retirement for the Alaska
Railroad.
Section 142. The conference agreement includes a provision
amending the Juvenile Justice and Delinquency Prevention Act
to allow a two year exception for the State of Alaska with
respect to the holding of juveniles in adult facilities.
Section 143. The conference agreement contains the ``LPTV
Pilot Project Digital Data Services Act''.
Section 144. The conference agreement includes a provision
to amend the following: the Magnuson-Stevens Fishery
Conservation and Management Act; P.L. 106-246; P.L. 105-83;
P.L. 99-5; P.L. 106-113 regarding a fishery research vessel;
the implementation of a fishing capacity reduction program
for the Commercial King and Tanner Crab Fisheries in the
Bering Sea and Aleutian Islands; P.L. 89-702 to be referred
to as the Fur Seal Act of 1966; the National Marine
Sanctuaries Act (16 U.S.C. 1433, 1434); and the Sustainable
Fisheries Act (16 U.S.C. 1855 note).
Section 145. The conference agreement includes language
amending the Department of State Special Agents Retirment Act
of 1998 to allow agents who retired between January 1, 1997,
and the enactment of the Act on November 13, 1998, to also be
eligible for the increased benefits provided by the Act.
Section 146. The conference agreement includes a provision
expressing the sense of Congress calling upon the President
of the United States to take action to provide relief from
injury caused by steel imports.
Section 147. The conference agreement includes a provision
amending the Johnson Act to prohibit gambling on peri-
Hawaiian cruises.
Section 148. The conference agreement includes language to
ban political advertising by public broadcasters.
Section 149. The conference agreement includes language
extending a certain small business program, which would
otherwise expire.
Section 150. The conference agreement includes $105,000,000
in direct spending to the Department of Health and Human
Services for the Ricky Ray Hemophilia Relief Fund, of which
$10,000,000 is for program management.
Section 151. The conference agreement includes $60,400,000
in direct spending to the Department of Labor for costs
related to administering the Energy Employees Occupational
Illness Compensation Program enacted as Title XXXVI of the
Defense Authorization Act of 2000. This program was
established to compensate individuals who have suffered
disabling and potentially fatal illnesses as a result of
their work in the Department of Energy's nuclear weapons
complex. The Secretary of Labor is authorized to transfer
these funds to other federal agencies to the extent necessary
to implement the Energy Employees Occupational Illness
Compensation Act.
Section 152. The conference agreement includes a provision
to make certain technical and conforming amendments to the
Medicare/PPS law to allow the Moffit Cancer Research and
Treatment Center to be treated under existing law the same as
the other ten Medicare/PPS exempt institutions in the United
States.
The conference agreement includes language which provides
that the Secretary of the Army may establish a pilot program
to provide environmental assistance to non-Federal interests
in northern Wisconsin.
TITLE II--VIETNAM EDUCATION FOUNDATION ACT OF 2000
This title enacts a bill to establish a Vietnam Education
Foundation, to provide fellowships for Vietnamese to study in
the United States at the graduate and post-graduate level in
the sciences, math, and medicine. It would also support
American professors to teach these subjects in appropriate
Vietnamese institutions. The bill authorizes an appropriation
of $5,000,000 in fiscal year 2001. Beginning in FY2002, the
Secretary of the Treasury would transfer $5,000,000 annually
to the Foundation from debt repayments that Vietnam has
agreed to make to the United States in settlement of debt
incurred prior to 1976 by the Republic of South Vietnam. The
Foundation can also solicit and accept private funds.
TITLE III--COLORADO UTE SETTLEMENT ACT AMENDMENTS OF 2000
The conference agreement includes the text of S. 2508, the
Colorado Ute Settlement Act Amendments of 2000.
TITLE IV--DESIGNATION OF AMERICAN MUSEUM OF SCIENCE AND ENERGY
The conference agreement includes language which will
permit the American Museum of Science and Energy located in
Oak Ridge, Tennessee, to accept and use donations, fees, and
gifts to offset the cost of operating the facility.
TITLE V--DELTA REGIONAL AUTHORITY ACT OF 2000
The conference agreement includes language which authorizes
the Delta Regional Authority.
TITLE VI--DAKOTA WATER RESOURCES ACT OF 2000
The conference agreement includes the text of S. 623, the
Dakota Water Resources Act of 2000.
TITLE VII
The conference agreement includes an Act authorizing the
construction of a Reconciliation Place in Fort Pierre, South
Dakota.
TITLE VIII--ERIE CANALWAY NATIONAL
HERITAGE CORRIDOR
The conference agreement includes an Act to designate the
Erie Canalway a National Heritage Corridor.
TITLE IX--LAW ENFORCEMENT PAY EQUITY ACT
The conference agreement includes a new provision regarding
pay comparability for the United States Park Police, the
Uniformed Division of the United States Secret Service, and
the D.C. Metropolitan Police Department.
TITLE X--DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
administrative provisions
Language is included which makes technical changes to the
fiscal year 2000 Appropriations Act regarding the Millennial
Housing Commission.
Language is included which codifies the multiplier the
Federal Home Loan Mortgage Corporation can use for reaching
the multi-family affordable housing goal.
[[Page H12320]]
Language is included to allow the conversion of a HUD
rental housing project in Toledo, Ohio to condominiums as
long as the housing remains affordable, either as rental or
homeownership housing, to low- and very-low income families
that currently reside in the apartments.
Language has been included which directs the General
Accounting Office to study and report on financial standards
related to the Federal Home Loan Bank System.
TITLE XI--DEPARTMENT OF THE TREASURY
administrative provision
Language is included which honors the Navajo Code Talkers
of World War II by authorizing the striking and presentation
of a gold medal of appropriate design to each of the original
29 Navajo Code Talkers or a surviving family member, striking
and presentation of a silver medal to each man or surviving
family member qualified as a Navajo Code Talker, and by
further authorizing the striking of duplicate medals in
bronze for sale to the general public.
TITLE XII--ENVIRONMENTAL PROTECTION AGENCY
administrative provisions
Language is included authorizing the aboveground storage
tank grant program.
TITLE XIII--NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
administrative provision
Language is included which permits NASA to use certain
proceeds from the sale of timber on lands associated with the
John C. Stennis Space Center for the purchase of additional
property to establish education and visitor programs and
facilities, and for wetlands mitigation.
TITLE XIV--CERTAIN ALASKAN CRUISE SHIP OPERATIONS
Language is included which regulates the discharge of
sewage and wastewater from cruise ships in certain waters in
and adjacent to the State of Alaska.
TITLE XV--LIFE ACT AMENDMENTS
The conference agreement includes a new title, titled the
LIFE Act Amendments of 2000.
TITLE XVI--IMPROVING LITERACY THROUGH FAMILY LITERACY PROJECTS
The conference agreement includes the Literacy Involves
Families Together Act of 2000.
TITLE XVII--CHILDREN'S INTERNET PROTECTION
The conference agreement includes the Children's Internet
Protection Act of 2000.
COMMODITY FUTURES MODERNIZATION ACT OF 2000
The conference agreement would enact the provisions of H.R.
5660, as introduced on December 14, 2000. The text of that
bill follows:
A BILL To reauthorize and amend the Commodity Exchange Act to
promote legal certainty, enhance competition, and reduce
systemic risk in markets for futures and over-the-counter
derivatives, and for other purposes
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Commodity
Futures Modernization Act of 2000''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
TITLE I--COMMODITY FUTURES MODERNIZATION
Sec. 101. Definitions.
Sec. 102. Agreements, contracts, and transactions in foreign currency,
government securities, and certain other commodities.
Sec. 103. Legal certainty for excluded derivative transactions.
Sec. 104. Excluded electronic trading facilities.
Sec. 105. Hybrid instruments; swap transactions.
Sec. 106. Transactions in exempt commodities.
Sec. 107. Application of commodity futures laws.
Sec. 108. Protection of the public interest.
Sec. 109. Prohibited transactions.
Sec. 110. Designation of boards of trade as contract markets.
Sec. 111. Derivatives transaction execution facilities.
Sec. 112. Derivatives clearing.
Sec. 113. Common provisions applicable to registered entities.
Sec. 114. Exempt boards of trade.
Sec. 115. Suspension or revocation of designation as contract market.
Sec. 116. Authorization of appropriations.
Sec. 117. Preemption.
Sec. 118. Predispute resolution agreements for institutional customers.
Sec. 119. Consideration of costs and benefits and antitrust laws.
Sec. 120. Contract enforcement between eligible counterparties.
Sec. 121. Special procedures to encourage and facilitate bona fide
hedging by agricultural producers.
Sec. 122. Rule of construction.
Sec. 123. Technical and conforming amendments.
Sec. 124. Privacy.
Sec. 125. Report to Congress.
Sec. 126. International activities of the Commodity Futures Trading
Commission.
TITLE II--COORDINATED REGULATION OF SECURITY FUTURES PRODUCTS
Subtitle A--Securities Law Amendments
Sec. 201. Definitions under the Securities Exchange Act of 1934.
Sec. 202. Regulatory relief for markets trading security futures
products.
Sec. 203. Regulatory relief for intermediaries trading security futures
products.
Sec. 204. Special provisions for interagency cooperation.
Sec. 205. Maintenance of market integrity for security futures
products.
Sec. 206. Special provisions for the trading of security futures
products.
Sec. 207. Clearance and settlement.
Sec. 208. Amendments relating to registration and disclosure issues
under the Securities Act of 1933 and the Securities
Exchange Act of 1934.
Sec. 209. Amendments to the Investment Company Act of 1940 and the
Investment Advisers Act of 1940.
Sec. 210. Preemption of State laws.
Subtitle B--Amendments To the Commodity Exchange Act
Sec. 251. Jurisdiction of Securities and Exchange Commission; other
provisions.
Sec. 252. Application of the Commodity Exchange Act to national
securities exchanges and national securities associations
that trade security futures.
Sec. 253. Notification of investigations and enforcement actions.
TITLE III--LEGAL CERTAINTY FOR SWAP AGREEMENTS
Sec. 301. Swap agreement.
Sec. 302. Amendments to the Securities Act of 1933.
Sec. 303. Amendments to the Securities Exchange Act of 1934.
Sec. 304. Savings provision.
TITLE IV--REGULATORY RESPONSIBILITY FOR BANK PRODUCTS
Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Exclusion of identified banking products commonly offered on
or before December 5, 2000.
Sec. 404. Exclusion of certain identified banking products offered by
banks after December 5, 2000.
Sec. 405. Exclusion of certain other identified banking products.
Sec. 406. Administration of the predominance test.
Sec. 407. Exclusion of covered swap agreements.
Sec. 408. Contract enforcement.
SEC. 2. PURPOSES.
The purposes of this Act are--
(1) to reauthorize the appropriation for the Commodity
Futures Trading Commission;
(2) to streamline and eliminate unnecessary regulation for
the commodity futures exchanges and other entities regulated
under the Commodity Exchange Act;
(3) to transform the role of the Commodity Futures Trading
Commission to oversight of the futures markets;
(4) to provide a statutory and regulatory framework for
allowing the trading of futures on securities;
(5) to clarify the jurisdiction of the Commodity Futures
Trading Commission over certain retail foreign exchange
transactions and bucket shops that may not be otherwise
regulated;
(6) to promote innovation for futures and derivatives and
to reduce systemic risk by enhancing legal certainty in the
markets for certain futures and derivatives transactions;
(7) to reduce systemic risk and provide greater stability
to markets during times of market disorder by allowing the
clearing of transactions in over-the-counter derivatives
through appropriately regulated clearing organizations; and
(8) to enhance the competitive position of United States
financial institutions and financial markets.
TITLE I--COMMODITY FUTURES MODERNIZATION
SEC. 101. DEFINITIONS.
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is
amended--
(1) by redesignating paragraphs (1) through (7), (8)
through (12), (13) through (15), and (16) as paragraphs (2)
through (8), (16) through (20), (22) through (24), and (28),
respectively;
(2) by inserting before paragraph (2) (as redesignated by
paragraph (1)) the following:
``(1) Alternative trading system.--The term `alternative
trading system' means an organization, association, or group
of persons that--
``(A) is registered as a broker or dealer pursuant to
section 15(b) of the Securities Exchange Act of 1934 (except
paragraph (11) thereof);
``(B) performs the functions commonly performed by an
exchange (as defined in section 3(a)(1) of the Securities
Exchange Act of 1934);
``(C) does not--
``(i) set rules governing the conduct of subscribers other
than the conduct of such subscribers' trading on the
alternative trading system; or
``(ii) discipline subscribers other than by exclusion from
trading; and
``(D) is exempt from the definition of the term `exchange'
under such section 3(a)(1) by rule or regulation of the
Securities and Exchange Commission on terms that require
compliance with regulations of its trading functions.'';
(3) by striking paragraph (2) (as redesignated by paragraph
(1)) and inserting the following:
``(2) Board of trade.--The term `board of trade' means any
organized exchange or other trading facility.'';
(4) by inserting after paragraph (8) (as redesignated by
paragraph (1)) the following:
``(9) Derivatives clearing organization.--
``(A) In general.--The term `derivatives clearing
organization' means a clearinghouse,
[[Page H12321]]
clearing association, clearing corporation, or similar
entity, facility, system, or organization that, with respect
to an agreement, contract, or transaction--
``(i) enables each party to the agreement, contract, or
transaction to substitute, through novation or otherwise, the
credit of the derivatives clearing organization for the
credit of the parties;
``(ii) arranges or provides, on a multilateral basis, for
the settlement or netting of obligations resulting from such
agreements, contracts, or transactions executed by
participants in the derivatives clearing organization; or
``(iii) otherwise provides clearing services or
arrangements that mutualize or transfer among participants in
the derivatives clearing organization the credit risk arising
from such agreements, contracts, or transactions executed by
the participants.
``(B) Exclusions.--The term `derivatives clearing
organization' does not include an entity, facility, system,
or organization solely because it arranges or provides for--
``(i) settlement, netting, or novation of obligations
resulting from agreements, contracts, or transactions, on a
bilateral basis and without a central counterparty;
``(ii) settlement or netting of cash payments through an
interbank payment system; or
``(iii) settlement, netting, or novation of obligations
resulting from a sale of a commodity in a transaction in the
spot market for the commodity.
``(10) Electronic trading facility.--The term `electronic
trading facility' means a trading facility that--
``(A) operates by means of an electronic or
telecommunications network; and
``(B) maintains an automated audit trail of bids, offers,
and the matching of orders or the execution of transactions
on the facility.
``(11) Eligible commercial entity.--The term `eligible
commercial entity' means, with respect to an agreement,
contract or transaction in a commodity--
``(A) an eligible contract participant described in clause
(i), (ii), (v), (vii), (viii), or (ix) of paragraph (12)(A)
that, in connection with its business--
``(i) has a demonstrable ability, directly or through
separate contractual arrangements, to make or take delivery
of the underlying commodity;
``(ii) incurs risks, in addition to price risk, related to
the commodity; or
``(iii) is a dealer that regularly provides risk management
or hedging services to, or engages in market-making
activities with, the foregoing entities involving
transactions to purchase or sell the commodity or derivative
agreements, contracts, or transactions in the commodity;
``(B) an eligible contract participant, other than a
natural person or an instrumentality, department, or agency
of a State or local governmental entity, that--
``(i) regularly enters into transactions to purchase or
sell the commodity or derivative agreements, contracts, or
transactions in the commodity; and
``(ii) either--
``(I) in the case of a collective investment vehicle whose
participants include persons other than--
``(aa) qualified eligible persons, as defined in Commission
rule 4.7(a) (17 C.F.R. 4.7(a));
``(bb) accredited investors, as defined in Regulation D of
the Securities and Exchange Commission under the Securities
Act of 1933 (17 C.F.R. 230.501(a)), with total assets of
$2,000,000; or
``(cc) qualified purchasers, as defined in section
2(a)(51)(A) of the Investment Company Act of 1940;
in each case as in effect on the date of the enactment of the
Commodity Futures Modernization Act of 2000, has, or is one
of a group of vehicles under common control or management
having in the aggregate, $1,000,000,000 in total assets; or
``(II) in the case of other persons, has, or is one of a
group of persons under common control or management having in
the aggregate, $100,000,000 in total assets; or
``(C) such other persons as the Commission shall determine
appropriate and shall designate by rule, regulation, or
order.
``(12) Eligible contract participant.--The term `eligible
contract participant' means--
``(A) acting for its own account--
``(i) a financial institution;
``(ii) an insurance company that is regulated by a State,
or that is regulated by a foreign government and is subject
to comparable regulation as determined by the Commission,
including a regulated subsidiary or affiliate of such an
insurance company;
``(iii) an investment company subject to regulation under
the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.)
or a foreign person performing a similar role or function
subject as such to foreign regulation (regardless of whether
each investor in the investment company or the foreign person
is itself an eligible contract participant);
``(iv) a commodity pool that--
``(I) has total assets exceeding $5,000,000; and
``(II) is formed and operated by a person subject to
regulation under this Act or a foreign person performing a
similar role or function subject as such to foreign
regulation (regardless of whether each investor in the
commodity pool or the foreign person is itself an eligible
contract participant);
``(v) a corporation, partnership, proprietorship,
organization, trust, or other entity--
``(I) that has total assets exceeding $10,000,000;
``(II) the obligations of which under an agreement,
contract, or transaction are guaranteed or otherwise
supported by a letter of credit or keepwell, support, or
other agreement by an entity described in subclause (I), in
clause (i), (ii), (iii), (iv), or (vii), or in subparagraph
(C); or
``(III) that--
``(aa) has a net worth exceeding $1,000,000; and
``(bb) enters into an agreement, contract, or transaction
in connection with the conduct of the entity's business or to
manage the risk associated with an asset or liability owned
or incurred or reasonably likely to be owned or incurred by
the entity in the conduct of the entity's business;
``(vi) an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1001 et
seq.), a governmental employee benefit plan, or a foreign
person performing a similar role or function subject as such
to foreign regulation--
``(I) that has total assets exceeding $5,000,000; or
``(II) the investment decisions of which are made by--
``(aa) an investment adviser or commodity trading advisor
subject to regulation under the Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.) or this Act;
``(bb) a foreign person performing a similar role or
function subject as such to foreign regulation;
``(cc) a financial institution; or
``(dd) an insurance company described in clause (ii), or a
regulated subsidiary or affiliate of such an insurance
company;
``(vii)(I) a governmental entity (including the United
States, a State, or a foreign government) or political
subdivision of a governmental entity;
``(II) a multinational or supranational government entity;
or
``(III) an instrumentality, agency, or department of an
entity described in subclause (I) or (II);
except that such term does not include an entity,
instrumentality, agency, or department referred to in
subclause (I) or (III) of this clause unless (aa) the entity,
instrumentality, agency, or department is a person described
in clause (i), (ii), or (iii) of section 1a(11)(A); (bb) the
entity, instrumentality, agency, or department owns and
invests on a discretionary basis $25,000,000 or more in
investments; or (cc) the agreement, contract, or transaction
is offered by, and entered into with, an entity that is
listed in any of subclauses (I) through (VI) of section
2(c)(2)(B)(ii);
``(viii)(I) a broker or dealer subject to regulation under
the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
or a foreign person performing a similar role or function
subject as such to foreign regulation, except that, if the
broker or dealer or foreign person is a natural person or
proprietorship, the broker or dealer or foreign person shall
not be considered to be an eligible contract participant
unless the broker or dealer or foreign person also meets the
requirements of clause (v) or (xi);
``(II) an associated person of a registered broker or
dealer concerning the financial or securities activities of
which the registered person makes and keeps records under
section 15C(b) or 17(h) of the Securities Exchange Act of
1934 (15 U.S.C. 78o-5(b), 78q(h));
``(III) an investment bank holding company (as defined in
section 17(i) of the Securities Exchange Act of 1934 (15
U.S.C. 78q(i));
``(ix) a futures commission merchant subject to regulation
under this Act or a foreign person performing a similar role
or function subject as such to foreign regulation, except
that, if the futures commission merchant or foreign person is
a natural person or proprietorship, the futures commission
merchant or foreign person shall not be considered to be an
eligible contract participant unless the futures commission
merchant or foreign person also meets the requirements of
clause (v) or (xi);
``(x) a floor broker or floor trader subject to regulation
under this Act in connection with any transaction that takes
place on or through the facilities of a registered entity
or an exempt board of trade, or any affiliate thereof, on
which such person regularly trades; or
``(xi) an individual who has total assets in an amount in
excess of--
``(I) $10,000,000; or
``(II) $5,000,000 and who enters into the agreement,
contract, or transaction in order to manage the risk
associated with an asset owned or liability incurred, or
reasonably likely to be owned or incurred, by the individual;
``(B)(i) a person described in clause (i), (ii), (iv), (v),
(viii), (ix), or (x) of subparagraph (A) or in subparagraph
(C), acting as broker or performing an equivalent agency
function on behalf of another person described in
subparagraph (A) or (C); or
``(ii) an investment adviser subject to regulation under
the Investment Advisers Act of 1940, a commodity trading
advisor subject to regulation under this Act, a foreign
person performing a similar role or function subject as such
to foreign regulation, or a person described in clause (i),
(ii), (iv), (v), (viii), (ix), or (x) of subparagraph (A) or
in subparagraph (C), in any such case acting as investment
manager or fiduciary (but excluding a person acting as broker
or performing an equivalent agency function) for another
person described in subparagraph (A) or (C) and who is
authorized by such person to commit such person to the
transaction; or
``(C) any other person that the Commission determines to be
eligible in light of the financial or other qualifications of
the person.
``(13) Excluded commodity.--The term `excluded commodity'
means--
``(i) an interest rate, exchange rate, currency, security,
security index, credit risk or measure, debt or equity
instrument, index or measure of inflation, or other
macroeconomic index or measure;
``(ii) any other rate, differential, index, or measure of
economic or commercial risk, return, or value that is--
[[Page H12322]]
``(I) not based in substantial part on the value of a
narrow group of commodities not described in clause (i); or
``(II) based solely on 1 or more commodities that have no
cash market;
``(iii) any economic or commercial index based on prices,
rates, values, or levels that are not within the control of
any party to the relevant contract, agreement, or
transaction; or
``(iv) an occurrence, extent of an occurrence, or
contingency (other than a change in the price, rate, value,
or level of a commodity not described in clause (i)) that
is--
``(I) beyond the control of the parties to the relevant
contract, agreement, or transaction; and
``(II) associated with a financial, commercial, or economic
consequence.
``(14) Exempt commodity.--The term `exempt commodity' means
a commodity that is not an excluded commodity or an
agricultural commodity.
``(15) Financial institution.--The term `financial
institution' means--
``(A) a corporation operating under the fifth undesignated
paragraph of section 25 of the Federal Reserve Act (12 U.S.C.
603), commonly known as `an agreement corporation';
``(B) a corporation organized under section 25A of the
Federal Reserve Act (12 U.S.C. 611 et seq.), commonly known
as an `Edge Act corporation';
``(C) an institution that is regulated by the Farm Credit
Administration;
``(D) a Federal credit union or State credit union (as
defined in section 101 of the Federal Credit Union Act (12
U.S.C. 1752));
``(E) a depository institution (as defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813));
``(F) a foreign bank or a branch or agency of a foreign
bank (each as defined in section 1(b) of the International
Banking Act of 1978 (12 U.S.C. 3101(b)));
``(G) any financial holding company (as defined in section
2 of the Bank Holding Company Act of 1956);
``(H) a trust company; or
``(I) a similarly regulated subsidiary or affiliate of an
entity described in any of subparagraphs (A) through (H).'';
(5) by inserting after paragraph (20) (as redesignated by
paragraph (1)) the following:
``(21) Hybrid instrument.--The term `hybrid instrument'
means a security having 1 or more payments indexed to the
value, level, or rate of, or providing for the delivery of, 1
or more commodities.'';
(6) by striking paragraph (24) (as redesignated by
paragraph (1)) and inserting the following:
``(24) Member of a contract market; member of a derivatives
transaction execution facility.--The term `member' means,
with respect to a contract market or derivatives transaction
execution facility, an individual, association, partnership,
corporation, or trust--
``(A) owning or holding membership in, or admitted to
membership representation on, the contract market or
derivatives transaction execution facility; or
``(B) having trading privileges on the contract market or
derivatives transaction execution facility.
``(25) Narrow-based security index.--
``(A) The term `narrow-based security index' means an
index--
``(i) that has 9 or fewer component securities;
``(ii) in which a component security comprises more than 30
percent of the index's weighting;
``(iii) in which the 5 highest weighted component
securities in the aggregate comprise more than 60 percent of
the index's weighting; or
``(iv) in which the lowest weighted component securities
comprising, in the aggregate, 25 percent of the index's
weighting have an aggregate dollar value of average daily
trading volume of less than $50,000,000 (or in the case of an
index with 15 or more component securities, $30,000,000),
except that if there are two or more securities with equal
weighting that could be included in the calculation of the
lowest weighted component securities comprising, in the
aggregate, 25 percent of the index's weighting, such
securities shall be ranked from lowest to highest dollar
value of average daily trading volume and shall be included
in the calculation based on their ranking starting with the
lowest ranked security.
``(B) Notwithstanding subparagraph (A), an index is not a
narrow-based security index if--
``(i)(I) it has at least 9 component securities;
``(II) no component security comprises more than 30 percent
of the index's weighting; and
``(III) each component security is--
``(aa) registered pursuant to section 12 of the Securities
Exchange Act of 1934;
``(bb) 1 of 750 securities with the largest market
capitalization; and
``(cc) 1 of 675 securities with the largest dollar value of
average daily trading volume;
``(ii) a board of trade was designated as a contract market
by the Commodity Futures Trading Commission with respect to a
contract of sale for future delivery on the index, before the
date of enactment of the Commodity Futures Modernization Act
of 2000;
``(iii)(I) a contract of sale for future delivery on the
index traded on a designated contract market or registered
derivatives transaction execution facility for at least 30
days as a contract of sale for future delivery on an index
that was not a narrow-based security index; and
``(II) it has been a narrow-based security index for no
more than 45 business days over 3 consecutive calendar
months;
``(iv) a contract of sale for future delivery on the index
is traded on or subject to the rules of a foreign board of
trade and meets such requirements as are jointly established
by rule or regulation by the Commission and the Securities
and Exchange Commission;
``(v) no more than 18 months have passed since the date of
enactment of the Commodity Futures Modernization Act of 2000
and--
``(I) it is traded on or subject to the rules of a foreign
board of trade;
``(II) the offer and sale in the United States of a
contract of sale for future delivery on the index was
authorized before the date of the enactment of the Commodity
Futures Modernization Act of 2000; and
``(III) the conditions of such authorization continue to be
met; or
``(vi) a contract of sale for future delivery on the index
is traded on or subject to the rules of a board of trade and
meets such requirements as are jointly established by rule,
regulation, or order by the Commission and the Securities and
Exchange Commission.
``(C) Within 1 year after the date of the enactment of the
Commodity Futures Modernization Act of 2000, the Commission
and the Securities and Exchange Commission jointly shall
adopt rules or regulations that set forth the requirements
under subparagraph (B)(iv).
``(D) An index that is a narrow-based security index solely
because it was a narrow-based security index for more than 45
business days over 3 consecutive calendar months pursuant to
clause (iii) of subparagraph (B) shall not be a narrow-based
security index for the 3 following calendar months.
``(E) For purposes of subparagraphs (A) and (B)--
``(i) the dollar value of average daily trading volume and
the market capitalization shall be calculated as of the
preceding 6 full calendar months; and
``(ii) the Commission and the Securities and Exchange
Commission shall, by rule or regulation, jointly specify the
method to be used to determine market capitalization and
dollar value of average daily trading volume.
``(26) Option.--The term `option' means an agreement,
contract, or transaction that is of the character of, or is
commonly known to the trade as, an `option', `privilege',
`indemnity', `bid', `offer', `put', `call', `advance
guaranty', or `decline guaranty'.
``(27) Organized exchange.--The term `organized exchange'
means a trading facility that--
``(A) permits trading--
``(i) by or on behalf of a person that is not an eligible
contract participant; or
``(ii) by persons other than on a principal-to-principal
basis; or
``(B) has adopted (directly or through another
nongovernmental entity) rules that--
``(i) govern the conduct of participants, other than rules
that govern the submission of orders or execution of
transactions on the trading facility; and
``(ii) include disciplinary sanctions other than the
exclusion of participants from trading.''; and
(7) by adding at the end the following:
``(29) Registered entity.--The term `registered entity'
means--
``(A) a board of trade designated as a contract market
under section 5;
``(B) a derivatives transaction execution facility
registered under section 5a;
``(C) a derivatives clearing organization registered under
section 5b; and
``(D) a board of trade designated as a contract market
under section 5f.
``(30) Security.--The term `security' means a security as
defined in section 2(a)(1) of the Securities Act of 1933 (15
U.S.C. 77b(a)(1)) or section 3(a)(10) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(10)).
``(31) Security future.--The term `security future' means a
contract of sale for future delivery of a single security or
of a narrow-based security index, including any interest
therein or based on the value thereof, except an exempted
security under section 3(a)(12) of the Securities Exchange
Act of 1934 as in effect on the date of enactment of the
Futures Trading Act of 1982 (other than any municipal
security as defined in section 3(a)(29) of the Securities
Exchange Act of 1934 as in effect on the date of enactment of
the Futures Trading Act of 1982). The term `security future'
does not include any agreement, contract, or transaction
excluded from this Act under section 2(c), 2(d), 2(f), or
2(g) of this Act (as in effect on the date of the enactment
of the Commodity Futures Modernization Act of 2000) or title
IV of the Commodity Futures Modernization Act of 2000.
``(32) Security futures product.--The term `security
futures product' means a security future or any put, call,
straddle, option, or privilege on any security future.
``(33) Trading facility.--
``(A) In general.--The term `trading facility' means a
person or group of persons that constitutes, maintains, or
provides a physical or electronic facility or system in which
multiple participants have the ability to execute or trade
agreements, contracts, or transactions by accepting bids and
offers made by other participants that are open to multiple
participants in the facility or system.
``(B) Exclusions.--The term `trading facility' does not
include--
``(i) a person or group of persons solely because the
person or group of persons constitutes, maintains, or
provides an electronic facility or system that enables
participants to negotiate the terms of and enter into
bilateral transactions as a result of communications
exchanged by the parties and not from interaction of multiple
bids and multiple offers within a predetermined,
nondiscretionary automated trade matching and execution
algorithm;
``(ii) a government securities dealer or government
securities broker, to the extent that the dealer or broker
executes or trades agreements, contracts, or transactions in
government securities, or assists persons in communicating
about, negotiating, entering into, executing, or trading an
agreement, contract, or transaction in government securities
(as the terms `government securities dealer', `government
securities broker',
[[Page H12323]]
and `government securities' are defined in section 3(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))); or
``(iii) facilities on which bids and offers, and
acceptances of bids and offers effected on the facility, are
not binding.
Any person, group of persons, dealer, broker, or facility
described in clause (i) or (ii) is excluded from the meaning
of the term `trading facility' for the purposes of this Act
without any prior specific approval, certification, or other
action by the Commission.
``(C) Special rule.--A person or group of persons that
would not otherwise constitute a trading facility shall not
be considered to be a trading facility solely as a result of
the submission to a derivatives clearing organization of
transactions executed on or through the person or group of
persons.''.
SEC. 102. AGREEMENTS, CONTRACTS, AND TRANSACTIONS IN FOREIGN
CURRENCY, GOVERNMENT SECURITIES, AND CERTAIN
OTHER COMMODITIES.
Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3,
4, 4a) is amended by adding at the end the following:
``(c) Agreements, Contracts, and Transactions in Foreign
Currency, Government Securities, and Certain Other
Commodities.--
``(1) In general.--Except as provided in paragraph (2),
nothing in this Act (other than section 5a (to the extent
provided in section 5a(g)), 5b, 5d, or 12(e)(2)(B)) governs
or applies to an agreement, contract, or transaction in--
``(A) foreign currency;
``(B) government securities;
``(C) security warrants;
``(D) security rights;
``(E) resales of installment loan contracts;
``(F) repurchase transactions in an excluded commodity; or
``(G) mortgages or mortgage purchase commitments.
``(2) Commission jurisdiction.--
``(A) Agreements, contracts, and transactions traded on an
organized exchange.--This Act applies to, and the Commission
shall have jurisdiction over, an agreement, contract, or
transaction described in paragraph (1) that is--
``(i) a contract of sale of a commodity for future delivery
(or an option on such a contract), or an option on a
commodity (other than foreign currency or a security or a
group or index of securities), that is executed or traded on
an organized exchange; or
``(ii) an option on foreign currency executed or traded on
an organized exchange that is not a national securities
exchange registered pursuant to section 6(a) of the
Securities Exchange Act of 1934.
``(B) Agreements, contracts, and transactions in retail
foreign currency.--This Act applies to, and the Commission
shall have jurisdiction over, an agreement, contract, or
transaction in foreign currency that--
``(i) is a contract of sale of a commodity for future
delivery (or an option on such a contract) or an option
(other than an option executed or traded on a national
securities exchange registered pursuant to section 6(a) of
the Securities Exchange Act of 1934); and
``(ii) is offered to, or entered into with, a person that
is not an eligible contract participant, unless the
counterparty, or the person offering to be the counterparty,
of the person is--
``(I) a financial institution;
``(II) a broker or dealer registered under section 15(b) or
15C of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b),
78o-5) or a futures commission merchant registered under this
Act;
``(III) an associated person of a broker or dealer
registered under section 15(b) or 15C of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(b), 78o-5), or an
affiliated person of a futures commission merchant registered
under this Act, concerning the financial or securities
activities of which the registered person makes and keeps
records under section 15C(b) or 17(h) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-5(b), 78q(h)) or section
4f(c)(2)(B) of this Act;
``(IV) an insurance company described in section
1a(12)(A)(ii) of this Act, or a regulated subsidiary or
affiliate of such an insurance company;
``(V) a financial holding company (as defined in section 2
of the Bank Holding Company Act of 1956); or
``(VI) an investment bank holding company (as defined in
section 17(i) of the Securities Exchange Act of 1934).
``(C) Notwithstanding subclauses (II) and (III) of
subparagraph (B)(ii), agreements, contracts, or transactions
described in subparagraph (B) shall be subject to sections
4b, 4c(b), 6(c) and 6(d) (to the extent that sections 6(c)
and 6(d) prohibit manipulation of the market price of any
commodity, in interstate commerce, or for future delivery on
or subject to the rules of any market), 6c, 6d, and 8(a) if
they are entered into by a futures commission merchant or an
affiliate of a futures commission merchant that is not also
an entity described in subparagraph (B)(ii) of this
paragraph.''.
SEC. 103. LEGAL CERTAINTY FOR EXCLUDED DERIVATIVE
TRANSACTIONS.
Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3,
4, 4a) is further amended by adding at the end the following:
``(d) Excluded Derivative Transactions.--
``(1) In general.--Nothing in this Act (other than section
5b or 12(e)(2)(B)) governs or applies to an agreement,
contract, or transaction in an excluded commodity if--
``(A) the agreement, contract, or transaction is entered
into only between persons that are eligible contract
participants at the time at which the persons enter into the
agreement, contract, or transaction; and
``(B) the agreement, contract, or transaction is not
executed or traded on a trading facility.
``(2) Electronic trading facility exclusion.--Nothing in
this Act (other than section 5a (to the extent provided in
section 5a(g)), 5b, 5d, or 12(e)(2)(B)) governs or applies to
an agreement, contract, or transaction in an excluded
commodity if--
``(A) the agreement, contract, or transaction is entered
into on a principal-to-principal basis between parties
trading for their own accounts or as described in section
1a(12)(B)(ii);
``(B) the agreement, contract, or transaction is entered
into only between persons that are eligible contract
participants described in subparagraph (A), (B)(ii), or (C)
of section 1a(12)) at the time at which the persons enter
into the agreement, contract, or transaction; and
``(C) the agreement, contract, or transaction is executed
or traded on an electronic trading facility.''.
SEC. 104. EXCLUDED ELECTRONIC TRADING FACILITIES.
Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3,
4, 4a) is further amended by adding at the end the following:
``(e) Excluded Electronic Trading Facilities.--
``(1) In general.--Nothing in this Act (other than section
12(e)(2)(B)) governs or is applicable to an electronic
trading facility that limits transactions authorized to be
conducted on its facilities to those satisfying the
requirements of section 2(d)(2), 2(g), or 2(h)(3).
``(2) Effect on authority to establish and operate.--
Nothing in this Act shall prohibit a board of trade
designated by the Commission as a contract market or
derivatives transaction execution facility, or operating as
an exempt board of trade from establishing and operating an
electronic trading facility excluded under this Act pursuant
to paragraph (1).
``(3) Effect on transactions.--No failure by an electronic
trading facility to limit transactions as required by
paragraph (1) of this subsection or to comply with section
2(h)(5) shall in itself affect the legality, validity, or
enforceability of an agreement, contract, or transaction
entered into or traded on the electronic trading facility or
cause a participant on the system to be in violation of this
Act.
``(4) Special rule.--A person or group of persons that
would not otherwise constitute a trading facility shall not
be considered to be a trading facility solely as a result of
the submission to a derivatives clearing organization of
transactions executed on or through the person or group of
persons.''.
SEC. 105. HYBRID INSTRUMENTS; SWAP TRANSACTIONS.
(a) Hybrid Instruments.--Section 2 of the Commodity
Exchange Act (7 U.S.C. 2, 2a, 3, 4, 4a) is further amended by
adding at the end the following:
``(f) Exclusion for Qualifying Hybrid Instruments.--
``(1) In general.--Nothing in this Act (other than section
12(e)(2)(B)) governs or is applicable to a hybrid instrument
that is predominantly a security.
``(2) Predominance.--A hybrid instrument shall be
considered to be predominantly a security if--
``(A) the issuer of the hybrid instrument receives payment
in full of the purchase price of the hybrid instrument,
substantially contemporaneously with delivery of the hybrid
instrument;
``(B) the purchaser or holder of the hybrid instrument is
not required to make any payment to the issuer in addition to
the purchase price paid under subparagraph (A), whether as
margin, settlement payment, or otherwise, during the life of
the hybrid instrument or at maturity;
``(C) the issuer of the hybrid instrument is not subject by
the terms of the instrument to mark-to-market margining
requirements; and
``(D) the hybrid instrument is not marketed as a contract
of sale of a commodity for future delivery (or option on such
a contract) subject to this Act.
``(3) Mark-to-market margining requirements.--For the
purposes of paragraph (2)(C), mark-to-market margining
requirements do not include the obligation of an issuer of a
secured debt instrument to increase the amount of collateral
held in pledge for the benefit of the purchaser of the
secured debt instrument to secure the repayment obligations
of the issuer under the secured debt instrument.''.
(b) Swap Transactions.--Section 2 of the Commodity Exchange
Act (7 U.S.C. 2, 2a, 3, 4, 4a) is further amended by adding
at the end the following:
``(g) Excluded Swap Transactions.--No provision of this Act
(other than section 5a (to the extent provided in section
5a(g)), 5b, 5d, or 12(e)(2)) shall apply to or govern any
agreement, contract, or transaction in a commodity other than
an agricultural commodity if the agreement, contract, or
transaction is--
``(1) entered into only between persons that are eligible
contract participants at the time they enter into the
agreement, contract, or transaction;
``(2) subject to individual negotiation by the parties; and
``(3) not executed or traded on a trading facility.''.
(c) Study Regarding Retail Swaps.--
(1) In general.--The Board of Governors of the Federal
Reserve System, the Secretary of the Treasury, the Commodity
Futures Trading Commission, and the Securities and Exchange
Commission shall conduct a study of issues involving the
offering of swap agreements to persons other than eligible
contract participants (as defined in section 1a of the
Commodity Exchange Act).
(2) Matters to be addressed.--The study shall address--
(A) the potential uses of swap agreements by persons other
than eligible contract participants;
[[Page H12324]]
(B) the extent to which financial institutions are willing
to offer swap agreements to persons other than eligible
contract participants;
(C) the appropriate regulatory structure to address
customer protection issues that may arise in connection with
the offer of swap agreements to persons other than eligible
contract participants; and
(D) such other relevant matters deemed necessary or
appropriate to address.
(3) Report.--Before the end of the 1-year period beginning
on the date of enactment of this Act, a report on the
findings and conclusions of the study required by paragraph
(1) shall be submitted to Congress, together with such
recommendations for legislative action as are deemed
necessary and appropriate.
SEC. 106. TRANSACTIONS IN EXEMPT COMMODITIES.
Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3,
4, 4a) is further amended by adding at the end the following.
``(h) Legal Certainty for Certain Transactions in Exempt
Commodities.--
``(1) Except as provided in paragraph (2), nothing in this
Act shall apply to a contract, agreement or transaction in an
exempt commodity which--
``(A) is entered into solely between persons that are
eligible contract participants at the time the persons enter
into the agreement, contract, or transaction; and
``(B) is not entered into on a trading facility.
``(2) An agreement, contract, or transaction described in
paragraph (1) of this subsection shall be subject to--
``(A) sections 5b and 12(e)(2)(B);
``(B) sections 4b, 4o, 6(c), 6(d), 6c, 6d, and 8a, and the
regulations of the Commission pursuant to section 4c(b)
proscribing fraud in connection with commodity option
transactions, to the extent the agreement, contract, or
transaction is not between eligible commercial entities
(unless 1 of the entities is an instrumentality, department,
or agency of a State or local governmental entity) and would
otherwise be subject to such sections and regulations; and
``(C) sections 6(c), 6(d), 6c, 6d, 8a, and 9(a)(2), to the
extent such sections prohibit manipulation of the market
price of any commodity in interstate commerce and the
agreement, contract, or transaction would otherwise be
subject to such sections.
``(3) Except as provided in paragraph (4), nothing in this
Act shall apply to an agreement, contract, or transaction in
an exempt commodity which is--
``(A) entered into on a principal-to-principal basis solely
between persons that are eligible commercial entities at the
time the persons enter into the agreement, contract, or
transaction; and
``(B) executed or traded on an electronic trading facility.
``(4) An agreement, contract, or transaction described in
paragraph (3) of this subsection shall be subject to--
``(A) sections 5a (to the extent provided in section
5a(g)), 5b, 5d, and 12(e)(2)(B);
``(B) sections 4b and 4o and the regulations of the
Commission pursuant to section 4c(b) proscribing fraud in
connection with commodity option transactions to the extent
the agreement, contract, or transaction would otherwise be
subject to such sections and regulations;
``(C) sections 6(c) and 9(a)(2), to the extent such
sections prohibit manipulation of the market price of any
commodity in interstate commerce and to the extent the
agreement, contract, or transaction would otherwise be
subject to such sections; and
``(D) such rules and regulations as the Commission may
prescribe if necessary to ensure timely dissemination by the
electronic trading facility of price, trading volume, and
other trading data to the extent appropriate, if the
Commission determines that the electronic trading facility
performs a significant price discovery function for
transactions in the cash market for the commodity underlying
any agreement, contract, or transaction executed or traded on
the electronic trading facility.
``(5) An electronic trading facility relying on the
exemption provided in paragraph (3) shall--
``(A) notify the Commission of its intention to operate an
electronic trading facility in reliance on the exemption set
forth in paragraph (3), which notice shall include--
``(i) the name and address of the facility and a person
designated to receive communications from the Commission;
``(ii) the commodity categories that the facility intends
to list or otherwise make available for trading on the
facility in reliance on the exemption set forth in paragraph
(3);
``(iii) certifications that--
``(I) no executive officer or member of the governing board
of, or any holder of a 10 percent or greater equity interest
in, the facility is a person described in any of
subparagraphs (A) through (H) of section 8a(2);
``(II) the facility will comply with the conditions for
exemption under this paragraph; and
``(III) the facility will notify the Commission of any
material change in the information previously provided by the
facility to the Commission pursuant to this paragraph; and
``(iv) the identity of any derivatives clearing
organization to which the facility transmits or intends to
transmit transaction data for the purpose of facilitating the
clearance and settlement of transactions conducted on the
facility in reliance on the exemption set forth in paragraph
(3);
``(B)(i)(I) provide the Commission with access to the
facility's trading protocols and electronic access to the
facility with respect to transactions conducted in reliance
on the exemption set forth in paragraph (3); or
``(II) provide such reports to the Commission regarding
transactions executed on the facility in reliance on the
exemption set forth in paragraph (3) as the Commission may
from time to time request to enable the Commission to satisfy
its obligations under this Act;
``(ii) maintain for 5 years, and make available for
inspection by the Commission upon request, records of
activities related to its business as an electronic trading
facility exempt under paragraph (3), including--
``(I) information relating to data entry and transaction
details sufficient to enable the Commission to reconstruct
trading activity on the facility conducted in reliance on the
exemption set forth in paragraph (3); and
``(II) the name and address of each participant on the
facility authorized to enter into transactions in reliance on
the exemption set forth in paragraph (3); and
``(iii) upon special call by the Commission, provide to the
Commission, in a form and manner and within the period
specified in the special call, such information related to
its business as an electronic trading facility exempt under
paragraph (3), including information relating to data entry
and transaction details in respect of transactions entered
into in reliance on the exemption set forth in paragraph (3),
as the Commission may determine appropriate--
``(I) to enforce the provisions specified in subparagraphs
(B) and (C) of paragraph (4);
``(II) to evaluate a systemic market event; or
``(III) to obtain information requested by a Federal
financial regulatory authority in order to enable the
regulator to fulfill its regulatory or supervisory
responsibilities;
``(C)(i) upon receipt of any subpoena issued by or on
behalf of the Commission to any foreign person who the
Commission believes is conducting or has conducted
transactions in reliance on the exemption set forth in
paragraph (3) on or through the electronic trading facility
relating to the transactions, promptly notify the foreign
person of, and transmit to the foreign person, the subpoena
in a manner reasonable under the circumstances, or as
specified by the Commission; and
``(ii) if the Commission has reason to believe that a
person has not timely complied with a subpoena issued by or
on behalf of the Commission pursuant to clause (i), and the
Commission in writing has directed that a facility relying on
the exemption set forth in paragraph (3) deny or limit
further transactions by the person, the facility shall
deny that person further trading access to the facility
or, as applicable, limit that person's access to the
facility for liquidation trading only;
``(D) comply with the requirements of this paragraph
applicable to the facility and require that each participant,
as a condition of trading on the facility in reliance on the
exemption set forth in paragraph (3), agree to comply with
all applicable law;
``(E) have a reasonable basis for believing that
participants authorized to conduct transactions on the
facility in reliance on the exemption set forth in paragraph
(3) are eligible commercial entities; and
``(F) not represent to any person that the facility is
registered with, or designated, recognized, licensed or
approved by the Commission.
``(6) A person named in a subpoena referred to in paragraph
(5)(C) that believes the person is or may be adversely
affected or aggrieved by action taken by the Commission under
this section, shall have the opportunity for a prompt hearing
after the Commission acts under procedures that the
Commission shall establish by rule, regulation, or order.''.
SEC. 107. APPLICATION OF COMMODITY FUTURES LAWS.
Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3,
4, 4a) is further amended by adding at the end the following:
``(i) Application of Commodity Futures Laws.--
``(1) No provision of this Act shall be construed as
implying or creating any presumption that--
``(A) any agreement, contract, or transaction that is
excluded from this Act under section 2(c), 2(d), 2(e), 2(f),
or 2(g) of this Act or title IV of the Commodity Futures
Modernization Act of 2000, or exempted under section 2(h) or
4(c) of this Act; or
``(B) any agreement, contract, or transaction, not
otherwise subject to this Act, that is not so excluded or
exempted,
is or would otherwise be subject to this Act.
``(2) No provision of, or amendment made by, the Commodity
Futures Modernization Act of 2000 shall be construed as
conferring jurisdiction on the Commission with respect to any
such agreement, contract, or transaction, except as expressly
provided in section 5a of this Act (to the extent provided in
section 5a(g) of this Act), 5b of this Act, or 5d of this
Act.''.
SEC. 108. PROTECTION OF THE PUBLIC INTEREST.
The Commodity Exchange Act is amended by striking section 3
(7 U.S.C. 5) and inserting the following:
``SEC. 3. FINDINGS AND PURPOSE.
``(a) Findings.--The transactions subject to this Act are
entered into regularly in interstate and international
commerce and are affected with a national public interest by
providing a means for managing and assuming price risks,
discovering prices, or disseminating pricing information
through trading in liquid, fair and financially secure
trading facilities.
``(b) Purpose.--It is the purpose of this Act to serve the
public interests described in subsection (a) through a system
of effective self-regulation of trading facilities, clearing
systems, market participants and market professionals under
the oversight of the Commission. To foster these public
interests, it is further the purpose of this Act to deter and
prevent price manipulation or any other disruptions to market
integrity; to ensure the financial integrity of all
transactions subject to this Act and the avoidance of
systemic risk; to protect all market participants from
fraudulent or other abusive sales practices and
[[Page H12325]]
misuses of customer assets; and to promote responsible
innovation and fair competition among boards of trade, other
markets and market participants.''.
SEC. 109. PROHIBITED TRANSACTIONS.
Section 4c of the Commodity Exchange Act (7 U.S.C. 6c) is
amended by striking ``Sec. 4c.'' and all that follows through
subsection (a) and inserting the following:
``SEC. 4C. PROHIBITED TRANSACTIONS.
``(a) In General.--
``(1) Prohibition.--It shall be unlawful for any person to
offer to enter into, enter into, or confirm the execution of
a transaction described in paragraph (2) involving the
purchase or sale of any commodity for future delivery (or any
option on such a transaction or option on a commodity) if the
transaction is used or may be used to--
``(A) hedge any transaction in interstate commerce in the
commodity or the product or byproduct of the commodity;
``(B) determine the price basis of any such transaction in
interstate commerce in the commodity; or
``(C) deliver any such commodity sold, shipped, or received
in interstate commerce for the execution of the transaction.
``(2) Transaction.--A transaction referred to in paragraph
(1) is a transaction that--
``(A)(i) is, is of the character of, or is commonly known
to the trade as, a `wash sale' or `accommodation trade'; or
``(ii) is a fictitious sale; or
``(B) is used to cause any price to be reported,
registered, or recorded that is not a true and bona fide
price.''.
SEC. 110. DESIGNATION OF BOARDS OF TRADE AS CONTRACT MARKETS.
The Commodity Exchange Act is amended--
(1) by redesignating section 5b (7 U.S.C. 7b) as section
5e; and
(2) by striking sections 5 and 5a (7 U.S.C. 7, 7a) and
inserting the following:
``SEC. 5. DESIGNATION OF BOARDS OF TRADE AS CONTRACT MARKETS.
``(a) Applications.--A board of trade applying to the
Commission for designation as a contract market shall submit
an application to the Commission that includes any relevant
materials and records the Commission may require consistent
with this Act.
``(b) Criteria for Designation.--
``(1) In general.--To be designated as a contract market,
the board of trade shall demonstrate to the Commission that
the board of trade meets the criteria specified in this
subsection.
``(2) Prevention of market manipulation.--The board of
trade shall have the capacity to prevent market manipulation
through market surveillance, compliance, and enforcement
practices and procedures, including methods for conducting
real-time monitoring of trading and comprehensive and
accurate trade reconstructions.
``(3) Fair and equitable trading.--The board of trade shall
establish and enforce trading rules to ensure fair and
equitable trading through the facilities of the contract
market, and the capacity to detect, investigate, and
discipline any person that violates the rules. The rules may
authorize--
``(A) transfer trades or office trades;
``(B) an exchange of--
``(i) futures in connection with a cash commodity
transaction;
``(ii) futures for cash commodities; or
``(iii) futures for swaps; or
``(C) a futures commission merchant, acting as principal or
agent, to enter into or confirm the execution of a contract
for the purchase or sale of a commodity for future delivery
if the contract is reported, recorded, or cleared in
accordance with the rules of the contract market or a
derivatives clearing organization.
``(4) Trade execution facility.--The board of trade shall--
``(A) establish and enforce rules defining, or
specifications detailing, the manner of operation of the
trade execution facility maintained by the board of trade,
including rules or specifications describing the operation of
any electronic matching platform; and
``(B) demonstrate that the trade execution facility
operates in accordance with the rules or specifications.
``(5) Financial integrity of transactions.--The board of
trade shall establish and enforce rules and procedures for
ensuring the financial integrity of transactions entered into
by or through the facilities of the contract market,
including the clearance and settlement of the transactions
with a derivatives clearing organization.
``(6) Disciplinary procedures.--The board of trade shall
establish and enforce disciplinary procedures that authorize
the board of trade to discipline, suspend, or expel members
or market participants that violate the rules of the board of
trade, or similar methods for performing the same functions,
including delegation of the functions to third parties.
``(7) Public access.--The board of trade shall provide the
public with access to the rules, regulations, and contract
specifications of the board of trade.
``(8) Ability to obtain information.--The board of trade
shall establish and enforce rules that will allow the board
of trade to obtain any necessary information to perform any
of the functions described in this subsection, including the
capacity to carry out such international information-sharing
agreements as the Commission may require.
``(c) Existing Contract Markets.--A board of trade that is
designated as a contract market on the date of the enactment
of the Commodity Futures Modernization Act of 2000 shall be
considered to be a designated contract market under this
section.
``(d) Core Principles for Contract Markets.--
``(1) In general.--To maintain the designation of a board
of trade as a contract market, the board of trade shall
comply with the core principles specified in this subsection.
The board of trade shall have reasonable discretion in
establishing the manner in which it complies with the core
principles.
``(2) Compliance with rules.--The board of trade shall
monitor and enforce compliance with the rules of the contract
market, including the terms and conditions of any contracts
to be traded and any limitations on access to the contract
market.
``(3) Contracts not readily subject to manipulation.--The
board of trade shall list on the contract market only
contracts that are not readily susceptible to manipulation.
``(4) Monitoring of trading.--The board of trade shall
monitor trading to prevent manipulation, price distortion,
and disruptions of the delivery or cash-settlement process.
``(5) Position limitations or accountability.--To reduce
the potential threat of market manipulation or congestion,
especially during trading in the delivery month, the board of
trade shall adopt position limitations or position
accountability for speculators, where necessary and
appropriate.
``(6) Emergency authority.--The board of trade shall adopt
rules to provide for the exercise of emergency authority, in
consultation or cooperation with the Commission, where
necessary and appropriate, including the authority to--
``(A) liquidate or transfer open positions in any contract;
``(B) suspend or curtail trading in any contract; and
``(C) require market participants in any contract to meet
special margin requirements.
``(7) Availability of general information.--The board of
trade shall make available to market authorities, market
participants, and the public information concerning--
``(A) the terms and conditions of the contracts of the
contract market; and
``(B) the mechanisms for executing transactions on or
through the facilities of the contract market.
``(8) Daily publication of trading information.--The board
of trade shall make public daily information on settlement
prices, volume, open interest, and opening and closing ranges
for actively traded contracts on the contract market.
``(9) Execution of transactions.--The board of trade shall
provide a competitive, open, and efficient market and
mechanism for executing transactions.
``(10) Trade information.--The board of trade shall
maintain rules and procedures to provide for the recording
and safe storage of all identifying trade information in a
manner that enables the contract market to use the
information for purposes of assisting in the prevention of
customer and market abuses and providing evidence of any
violations of the rules of the contract market.
``(11) Financial integrity of contracts.--The board of
trade shall establish and enforce rules providing for the
financial integrity of any contracts traded on the contract
market (including the clearance and settlement of the
transactions with a derivatives clearing organization), and
rules to ensure the financial integrity of any futures
commission merchants and introducing brokers and the
protection of customer funds.
``(12) Protection of market participants.--The board of
trade shall establish and enforce rules to protect market
participants from abusive practices committed by any party
acting as an agent for the participants.
``(13) Dispute resolution.--The board of trade shall
establish and enforce rules regarding and provide facilities
for alternative dispute resolution as appropriate for market
participants and any market intermediaries.
``(14) Governance fitness standards.--The board of trade
shall establish and enforce appropriate fitness standards for
directors, members of any disciplinary committee, members of
the contract market, and any other persons with direct access
to the facility (including any parties affiliated with any of
the persons described in this paragraph).
``(15) Conflicts of interest.--The board of trade shall
establish and enforce rules to minimize conflicts of interest
in the decisionmaking process of the contract market and
establish a process for resolving such conflicts of interest.
``(16) Composition of boards of mutually owned contract
markets.--In the case of a mutually owned contract market,
the board of trade shall ensure that the composition of the
governing board reflects market participants.
``(17) Recordkeeping.--The board of trade shall maintain
records of all activities related to the business of the
contract market in a form and manner acceptable to the
Commission for a period of 5 years.
``(18) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the board of
trade shall endeavor to avoid--
``(A) adopting any rules or taking any actions that result
in any unreasonable restraints of trade; or
``(B) imposing any material anticompetitive burden on
trading on the contract market.
``(e) Current Agricultural Commodities.--
``(1) Subject to paragraph (2) of this subsection, a
contract for purchase or sale for future delivery of an
agricultural commodity enumerated in section 1a(4) that is
available for trade on a contract market, as of the date of
the enactment of this subsection, may be traded only on a
contract market designated under this section.
``(2) In order to promote responsible economic or financial
innovation and fair competition, the Commission, on
application by any person,
[[Page H12326]]
after notice and public comment and opportunity for hearing,
may prescribe rules and regulations to provide for the offer
and sale of contracts for future delivery or options on such
contracts to be conducted on a derivatives transaction
execution facility.''.
SEC. 111. DERIVATIVES TRANSACTION EXECUTION FACILITIES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 5 (as amended by section 110(2))
the following:
``SEC. 5A. DERIVATIVES TRANSACTION EXECUTION FACILITIES.
``(a) In General.--In lieu of compliance with the contract
market designation requirements of sections 4(a) and 5, a
board of trade may elect to operate as a registered
derivatives transaction execution facility if the facility
is--
``(1) designated as a contract market and meets the
requirements of this section; or
``(2) registered as a derivatives transaction execution
facility under subsection (c) of this section.
``(b) Requirements for Trading.--
``(1) In general.--A registered derivatives transaction
execution facility under subsection (a) may trade any
contract of sale of a commodity for future delivery (or
option on such a contract) on or through the facility only by
satisfying the requirements of this section.
``(2) Requirements for underlying commodities.--A
registered derivatives transaction execution facility may
trade any contract of sale of a commodity for future delivery
(or option on such a contract) only if--
``(A) the underlying commodity has a nearly inexhaustible
deliverable supply;
``(B) the underlying commodity has a deliverable supply
that is sufficiently large that the contract is highly
unlikely to be susceptible to the threat of manipulation;
``(C) the underlying commodity has no cash market;
``(D)(i) the contract is a security futures product, and
(ii) the registered derivatives transaction execution
facility is a national securities exchange registered under
the Securities Exchange Act of 1934;
``(E) the Commission determines, based on the market
characteristics, surveillance history, self-regulatory
record, and capacity of the facility that trading in the
contract (or option) is highly unlikely to be susceptible to
the threat of manipulation; or
``(F) except as provided in section 5(e)(2), the underlying
commodity is a commodity other than an agricultural commodity
enumerated in section 1a(4), and trading access to the
facility is limited to eligible commercial entities trading
for their own account.
``(3) Eligible traders.--To trade on a registered
derivatives transaction execution facility, a person shall--
``(A) be an eligible contract participant; or
``(B) be a person trading through a futures commission
merchant that--
``(i) is registered with the Commission;
``(ii) is a member of a futures self-regulatory
organization or, if the person trades only security futures
products on the facility, a national securities
association registered under section 15A(a) of the
Securities Exchange Act of 1934;
``(iii) is a clearing member of a derivatives clearing
organization; and
``(iv) has net capital of at least $20,000,000.
``(4) Trading by contract markets.--A board of trade that
is designated as a contract market shall, to the extent that
the contract market also operates a registered derivatives
transaction execution facility--
``(A) provide a physical location for the contract market
trading of the board of trade that is separate from trading
on the derivatives transaction execution facility of the
board of trade; or
``(B) if the board of trade uses the same electronic
trading system for trading on the contract market and
derivatives transaction execution facility of the board of
trade, identify whether the electronic trading is taking
place on the contract market or the derivatives transaction
execution facility.
``(c) Criteria for Registration.--
``(1) In general.--To be registered as a registered
derivatives transaction execution facility, the board of
trade shall be required to demonstrate to the Commission only
that the board of trade meets the criteria specified in
subsection (b) and this subsection.
``(2) Deterrence of abuses.--The board of trade shall
establish and enforce trading and participation rules that
will deter abuses and has the capacity to detect,
investigate, and enforce those rules, including means to--
``(A) obtain information necessary to perform the functions
required under this section; or
``(B) use technological means to--
``(i) provide market participants with impartial access to
the market; and
``(ii) capture information that may be used in establishing
whether rule violations have occurred.
``(3) Trading procedures.--The board of trade shall
establish and enforce rules or terms and conditions defining,
or specifications detailing, trading procedures to be used in
entering and executing orders traded on the facilities of the
board of trade. The rules may authorize--
``(A) transfer trades or office trades;
``(B) an exchange of--
``(i) futures in connection with a cash commodity
transaction;
``(ii) futures for cash commodities; or
``(iii) futures for swaps; or
``(C) a futures commission merchant, acting as principal or
agent, to enter into or confirm the execution of a contract
for the purchase or sale of a commodity for future delivery
if the contract is reported, recorded, or cleared in
accordance with the rules of the registered derivatives
transaction execution facility or a derivatives clearing
organization.
``(4) Financial integrity of transactions.--The board of
trade shall establish and enforce rules or terms and
conditions providing for the financial integrity of
transactions entered on or through the facilities of the
board of trade, and rules or terms and conditions to ensure
the financial integrity of any futures commission merchants
and introducing brokers and the protection of customer funds.
``(d) Core Principles for Registered Derivatives
Transaction Execution Facilities.--
``(1) In general.--To maintain the registration of a board
of trade as a derivatives transaction execution facility, a
board of trade shall comply with the core principles
specified in this subsection. The board of trade shall have
reasonable discretion in establishing the manner in which the
board of trade complies with the core principles.
``(2) Compliance with rules.--The board of trade shall
monitor and enforce the rules of the facility, including any
terms and conditions of any contracts traded on or through
the facility and any limitations on access to the facility.
``(3) Monitoring of trading.--The board of trade shall
monitor trading in the contracts of the facility to ensure
orderly trading in the contract and to maintain an orderly
market while providing any necessary trading information to
the Commission to allow the Commission to discharge the
responsibilities of the Commission under the Act.
``(4) Disclosure of general information.--The board of
trade shall disclose publicly and to the Commission
information concerning--
``(A) contract terms and conditions;
``(B) trading conventions, mechanisms, and practices;
``(C) financial integrity protections; and
``(D) other information relevant to participation in
trading on the facility.
``(5) Daily publication of trading information.--The board
of trade shall make public daily information on settlement
prices, volume, open interest, and opening and closing ranges
for contracts traded on the facility if the Commission
determines that the contracts perform a significant price
discovery function for transactions in the cash market for
the commodity underlying the contracts.
``(6) Fitness standards.--The board of trade shall
establish and enforce appropriate fitness standards for
directors, members of any disciplinary committee, members,
and any other persons with direct access to the facility,
including any parties affiliated with any of the persons
described in this paragraph.
``(7) Conflicts of interest.--The board of trade shall
establish and enforce rules to minimize conflicts of interest
in the decision making process of the derivatives transaction
execution facility and establish a process for resolving such
conflicts of interest.
``(8) Recordkeeping.--The board of trade shall maintain
records of all activities related to the business of the
derivatives transaction execution facility in a form and
manner acceptable to the Commission for a period of 5 years.
``(9) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the board of
trade shall endeavor to avoid--
``(A) adopting any rules or taking any actions that result
in any unreasonable restraint of trade; or
``(B) imposing any material anticompetitive burden on
trading on the derivatives transaction execution facility.
``(e) Use of Broker-Dealers, Depository Institutions, and
Farm Credit System Institutions as Intermediaries.--
``(1) In general.--With respect to transactions other than
transactions in security futures products, a registered
derivatives transaction execution facility may by rule allow
a broker-dealer, depository institution, or institution of
the Farm Credit System that meets the requirements of
paragraph (2) to--
``(A) act as an intermediary in transactions executed on
the facility on behalf of customers of the broker-dealer,
depository institution, or institution of the Farm Credit
System; and
``(B) receive funds of customers to serve as margin or
security for the transactions.
``(2) Requirements.--The requirements referred to in
paragraph (1) are that--
``(A) the broker-dealer be in good standing with the
Securities and Exchange Commission, or the depository
institution or institution of the Farm Credit System be in
good standing with Federal bank regulatory agencies
(including the Farm Credit Administration), as applicable;
and
``(B) if the broker-dealer, depository institution, or
institution of the Farm Credit System carries or holds
customer accounts or funds for transactions on the
derivatives transaction execution facility for more than 1
business day, the broker-dealer, depository institution, or
institution of the Farm Credit System is registered as a
futures commission merchant and is a member of a registered
futures association.
``(3) Implementation.--The Commission shall cooperate and
coordinate with the Securities and Exchange Commission, the
Secretary of the Treasury, and Federal banking regulatory
agencies (including the Farm Credit Administration) in
adopting rules and taking any other appropriate action to
facilitate the implementation of this subsection.
``(f) Segregation of Customer Funds.--Not later than 180
days after the date of the enactment of the Commodity Futures
Modernization Act of 2000, consistent with regulations
adopted by the Commission, a registered derivatives
transaction execution facility may authorize a futures
commission merchant to offer any customer of the futures
commission merchant that is an eligible contract participant
the right to not segregate the customer funds of the customer
that are carried with the futures commission merchant for
purposes of trading on or
[[Page H12327]]
through the facilities of the registered derivatives
transaction execution facility.
``(g) Election To Trade Excluded and Exempt Commodities.--
``(1) In general.--Notwithstanding subsection (b)(2) of
this section, a board of trade that is or elects to become a
registered derivatives transaction execution facility may
trade on the facility any agreements, contracts, or
transactions involving excluded or exempt commodities
other than securities, except contracts of sale for future
delivery of exempt securities under section 3(a)(12) of
the Securities Exchange Act of 1934 as in effect on the
date of enactment of the Futures Trading Act of 1982, that
are otherwise excluded from this Act under section 2(c),
2(d), or 2(g) of this Act, or exempt under section 2(h) of
this Act.
``(2) Exclusive jurisdiction of the commission.--The
Commission shall have exclusive jurisdiction over agreements,
contracts, or transactions described in paragraph (1) to the
extent that the agreements, contracts, or transactions are
traded on a derivatives transaction execution facility.''.
SEC. 112. DERIVATIVES CLEARING.
(a) In General.--Subtitle A of title IV of the Federal
Deposit Insurance Corporation Improvement Act of 1991 is
amended--
(1) by inserting before the section heading for section
401, the following new heading:
``CHAPTER 1--BILATERAL AND CLEARING ORGANIZATION NETTING'';
(2) in section 402, by striking ``this subtitle'' and
inserting ``this chapter''; and
(3) by inserting after section 407, the following new
chapter:
``CHAPTER 2--MULTILATERAL CLEARING ORGANIZATIONS
``SEC. 408. DEFINITIONS.
For purposes of this chapter, the following definitions
shall apply:
``(1) Multilateral clearing organization.--The term
`multilateral clearing organization' means a system utilized
by more than 2 participants in which the bilateral credit
exposures of participants arising from the transactions
cleared are effectively eliminated and replaced by a system
of guarantees, insurance, or mutualized risk of loss.
``(2) Over-the-counter derivative instrument.--The term
`over-the-counter derivative instrument' includes--
``(A) any agreement, contract, or transaction, including
the terms and conditions incorporated by reference in any
such agreement, contract, or transaction, which is an
interest rate swap, option, or forward agreement, including a
rate floor, rate cap, rate collar, cross-currency rate swap,
basis swap, and forward rate agreement; a same day-tomorrow,
tomorrow-next, forward, or other foreign exchange or precious
metals agreement; a currency swap, option, or forward
agreement; an equity index or equity swap, option, or forward
agreement; a debt index or debt swap, option, or forward
agreement; a credit spread or credit swap, option, or forward
agreement; a commodity index or commodity swap, option, or
forward agreement; and a weather swap, weather derivative, or
weather option;
``(B) any agreement, contract or transaction similar to any
other agreement, contract, or transaction referred to in this
clause that is presently, or in the future becomes, regularly
entered into by parties that participate in swap transactions
(including terms and conditions incorporated by reference in
the agreement) and that is a forward, swap, or option on 1 or
more occurrences of any event, rates, currencies,
commodities, equity securities or other equity instruments,
debt securities or other debt instruments, economic or other
indices or measures of economic or other risk or value;
``(C) any agreement, contract, or transaction excluded from
the Commodity Exchange Act under section 2(c), 2(d), 2(f), or
2(g) of such Act, or exempted under section 2(h) or 4(c) of
such Act; and
``(D) any option to enter into any, or any combination of,
agreements, contracts or transactions referred to in this
subparagraph.
``(3) Other definitions.--The terms `insured State
nonmember bank', `State member bank', and `affiliate' have
the same meanings as in section 3 of the Federal Deposit
Insurance Act.
``SEC. 409. MULTILATERAL CLEARING ORGANIZATIONS.
``(a) In General.--Except with respect to clearing
organizations described in subsection (b), no person may
operate a multilateral clearing organization for over-the-
counter derivative instruments, or otherwise engage in
activities that constitute such a multilateral clearing
organization unless the person is a national bank, a State
member bank, an insured State nonmember bank, an affiliate of
a national bank, a State member bank, or an insured State
nonmember bank, or a corporation chartered under section 25A
of the Federal Reserve Act.
``(b) Clearing Organizations.--Subsection (a) shall not
apply to any clearing organization that--
``(1) is registered as a clearing agency under the
Securities Exchange Act of 1934;
``(2) is registered as a derivatives clearing organization
under the Commodity Exchange Act; or
``(3) is supervised by a foreign financial regulator that
the Comptroller of the Currency, the Board of Governors of
the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Securities and Exchange Commission, or the
Commodity Futures Trading Commission, as applicable, has
determined satisfies appropriate standards.''.
(b) Resolution of Clearing Banks.--The Federal Reserve Act
(12 U.S.C. 221 et seq.) is amended by inserting after section
9A the following new section:
``SEC. 9B. RESOLUTION OF CLEARING BANKS.
``(a) Conservatorship or Receivership.--
``(1) Appointment.--The Board may appoint a conservator or
receiver to take possession and control of any uninsured
State member bank which operates, or operates as, a
multilateral clearing organization pursuant to section 409 of
the Federal Deposit Insurance Corporation Improvement Act of
1991 to the same extent and in the same manner as the
Comptroller of the Currency may appoint a conservator or
receiver for a national bank.
``(2) Powers.--The conservator or receiver for an uninsured
State member bank referred to in paragraph (1) shall exercise
the same powers, functions, and duties, subject to the same
limitations, as a conservator or receiver for a national
bank.
``(b) Board Authority.--The Board shall have the same
authority with respect to any conservator or receiver
appointed under subsection (a), and the uninsured State
member bank for which the conservator or receiver has been
appointed, as the Comptroller of the Currency has with
respect to a conservator or receiver for a national bank and
the national bank for which the conservator or receiver has
been appointed.
``(c) Bankruptcy Proceedings.--The Board (in the case of an
uninsured State member bank which operates, or operates as,
such a multilateral clearing organization) may direct a
conservator or receiver appointed for the bank to file a
petition pursuant to title 11, United States Code, in which
case, title 11, United States Code, shall apply to the bank
in lieu of otherwise applicable Federal or State insolvency
law.''.
(c) Technical and Conforming Amendments to Title 11, United
States Code.--
(1) Bankruptcy code debtors.--Section 109(b)(2) of title
11, United States Code, is amended by striking ``; or'' and
inserting the following: ``, except that an uninsured State
member bank, or a corporation organized under section 25A of
the Federal Reserve Act, which operates, or operates as, a
multilateral clearing organization pursuant to section 409 of
the Federal Deposit Insurance Corporation Improvement Act of
1991 may be a debtor if a petition is filed at the direction
of the Board of Governors of the Federal Reserve System;
or''.
(2) Chapter 7 debtors.--Section 109(d) of title 11, United
States Code, is amended to read as follows:
``(d) Only a railroad, a person that may be a debtor under
chapter 7 of this title (except a stockbroker or a commodity
broker), and an uninsured State member bank, or a corporation
organized under section 25A of the Federal Reserve Act, which
operates, or operates as, a multilateral clearing
organization pursuant to section 409 of the Federal Deposit
Insurance Corporation Improvement Act of 1991 may be a debtor
under chapter 11 of this title.''.
(3) Definition of financial institution.--Section 101(22)
of title 11, United States Code, is amended to read as
follows:
``(22) the term `financial institution'--
``(A) means--
``(i) a Federal reserve bank or an entity (domestic or
foreign) that is a commercial or savings bank, industrial
savings bank, savings and loan association, trust company, or
receiver or conservator for such entity and, when any such
Federal reserve bank, receiver, conservator, or entity is
acting as agent or custodian for a customer in connection
with a securities contract, as defined in section 741 of this
title, the customer; or
``(ii) in connection with a securities contract, as defined
in section 741 of this title, an investment company
registered under the Investment Company Act of 1940; and
``(B) includes any person described in subparagraph (A)
which operates, or operates as, a multilateral clearing
organization pursuant to section 409 of the Federal Deposit
Insurance Corporation Improvement Act of 1991;''.
(4) Definition of uninsured state member bank.--Section 101
of title 11, United States Code, is amended by inserting
after paragraph (54) the following new paragraph--
``(54A) the term `uninsured State member bank' means a
State member bank (as defined in section 3 of the Federal
Deposit Insurance Act) the deposits of which are not insured
by the Federal Deposit Insurance Corporation; and''.
(5) Subchapter v of chapter 7.--
(A) In general.--Section 103 of title 11, United States
Code, is amended--
(i) by redesignating subsections (e) through (i) as
subsections (f) through (j), respectively; and
(ii) by inserting after subsection (d) the following new
subsection:
``(e) Scope of Application.--Subchapter V of chapter 7 of
this title shall apply only in a case under such chapter
concerning the liquidation of an uninsured State member bank,
or a corporation organized under section 25A of the Federal
Reserve Act, which operates, or operates as, a multilateral
clearing organization pursuant to section 409 of the Federal
Deposit Insurance Corporation Improvement Act of 1991.''.
(B) Clearing bank liquidation.--Chapter 7 of title 11,
United States Code, is amended by adding at the end the
following new subchapter:
``SUBCHAPTER V--CLEARING BANK LIQUIDATION
``Sec. 781. Definitions
``For purposes of this subchapter, the following
definitions shall apply:
``(1) Board.--The term `Board' means the Board of Governors
of the Federal Reserve System.
``(2) Depository institution.--The term `depository
institution' has the same meaning as in section 3 of the
Federal Deposit Insurance Act.
``(3) Clearing bank.--The term `clearing bank' means an
uninsured State member bank, or a corporation organized under
section 25A of
[[Page H12328]]
the Federal Reserve Act, which operates, or operates as, a
multilateral clearing organization pursuant to section 409 of
the Federal Deposit Insurance Corporation Improvement Act of
1991.
``Sec. 782. Selection of trustee
``(a) In General.--
``(1) Appointment.--Notwithstanding any other provision of
this title, the conservator or receiver who files the
petition shall be the trustee under this chapter, unless the
Board designates an alternative trustee.
``(2) Successor.--The Board may designate a successor
trustee if required.
``(b) Authority of Trustee.--Whenever the Board appoints or
designates a trustee, chapter 3 and sections 704 and 705 of
this title shall apply to the Board in the same way and to
the same extent that they apply to a United States trustee.
``Sec. 783. Additional powers of trustee
``(a) Distribution of Property Not of the Estate.--The
trustee under this subchapter has power to distribute
property not of the estate, including distributions to
customers that are mandated by subchapters III and IV of this
chapter.
``(b) Disposition of Institution.--The trustee under this
subchapter may, after notice and a hearing--
``(1) sell the clearing bank to a depository institution or
consortium of depository institutions (which consortium may
agree on the allocation of the clearing bank among the
consortium);
``(2) merge the clearing bank with a depository
institution;
``(3) transfer contracts to the same extent as could a
receiver for a depository institution under paragraphs (9)
and (10) of section 11(e) of the Federal Deposit Insurance
Act;
``(4) transfer assets or liabilities to a depository
institution;
``(5) transfer assets and liabilities to a bridge bank as
provided in paragraphs (1), (3)(A), (5), (6), of section
11(n) of the Federal Deposit Insurance Act, paragraphs (9)
through (13) of such section, and subparagraphs (A) through
(H) and subparagraph (K) of paragraph (4) of such section
11(n), except that--
``(A) the bridge bank to which such assets or liabilities
are transferred shall be treated as a clearing bank for the
purpose of this subsection; and
``(B) any references in any such provision of law to the
Federal Deposit Insurance Corporation shall be construed to
be references to the appointing agency and that references to
deposit insurance shall be omitted.
``(c) Certain Transfers Included.--Any reference in this
section to transfers of liabilities includes a ratable
transfer of liabilities within a priority class.
``Sec. 784. Right to be heard
``The Board or a Federal reserve bank (in the case of a
clearing bank that is a member of that bank) may raise and
may appear and be heard on any issue in a case under this
subchapter.''.
(6) Definitions of clearing organization, contract market,
and related definitions.--
(A) Section 761(2) of title 11, United States Code, is
amended to read as follows:
``(2) `clearing organization' means a derivatives clearing
organization registered under the Act;''.
(B) Section 761(7) of title 11, United States Code, is
amended to read as follows:
``(7) `contract market' means a registered entity;''.
(C) Section 761(8) of title 11, United States Code, is
amended to read as follows:
``(8) `contract of sale', `commodity', `derivatives
clearing organization', `future delivery', `board of trade',
`registered entity', and `futures commission merchant' have
the meanings assigned to those terms in the Act;''.
(d) Clerical Amendment.--The table of sections for chapter
7 of title 11, United States Code, is amended by adding at
the end the following new items:
``SUBCHAPTER V--CLEARING BANK LIQUIDATION
``Sec.
``781. Definitions.
``782. Selection of trustee.
``783. Additional powers of trustee.
``784. Right to be heard.''.
(e) Resolution of Edge Act Corporations.--The 16th
undesignated paragraph of section 25A of the Federal Reserve
Act (12 U.S.C. 624) is amended to read as follows:
``(16) Appointment of receiver or conservator.--
``(A) In general.--The Board may appoint a conservator or
receiver for a corporation organized under the provisions of
this section to the same extent and in the same manner as the
Comptroller of the Currency may appoint a conservator or
receiver for a national bank, and the conservator or receiver
for such corporation shall exercise the same powers,
functions, and duties, subject to the same limitations, as a
conservator or receiver for a national bank.
``(B) Equivalent authority.--The Board shall have the same
authority with respect to any conservator or receiver
appointed for a corporation organized under the provisions of
this section under this paragraph and any such corporation as
the Comptroller of the Currency has with respect to a
conservator or receiver of a national bank and the national
bank for which a conservator or receiver has been appointed.
``(C) Title 11 petitions.--The Board may direct the
conservator or receiver of a corporation organized under the
provisions of this section to file a petition pursuant to
title 11, United States Code, in which case, title 11, United
States Code, shall apply to the corporation in lieu of
otherwise applicable Federal or State insolvency law.''.
(f) Derivatives Clearing Organizations.--The Commodity
Exchange Act (7 U.S.C. 1 et seq.) is amended by inserting
after section 5a, as added by section 111 of this Act, the
following:
``SEC. 5B. DERIVATIVES CLEARING ORGANIZATIONS.
``(a) Registration Requirement.--It shall be unlawful for a
derivatives clearing organization, unless registered with the
Commission, directly or indirectly to make use of the mails
or any means or instrumentality of interstate commerce to
perform the functions of a derivatives clearing organization
described in section 1a(9) of this Act with respect to a
contract of sale of a commodity for future delivery (or
option on such a contract) or option on a commodity, in each
case unless the contract or option--
``(1) is excluded from this Act by section 2(a)(1)(C)(i),
2(c), 2(d), 2(f), or 2(g) of this Act or title IV of the
Commodity Futures Modernization Act of 2000, or exempted
under section 2(h) or 4(c) of this Act; or
``(2) is a security futures product cleared by a clearing
agency registered under the Securities Exchange Act of 1934.
``(b) Voluntary Registration.--A derivatives clearing
organization that clears agreements, contracts, or
transactions excluded from this Act by section 2(c), 2(d),
2(f) or 2(g) of this Act or title IV of the Commodity Futures
Modernization Act of 2000, or exempted under section 2(h) or
4(c) of this Act, or other over-the-counter derivative
instruments (as defined in the Federal Deposit Insurance
Corporation Improvement Act of 1991) may register with the
Commission as a derivatives clearing organization.
``(c) Registration of Derivatives Clearing Organizations.--
``(1) Application.--A person desiring to register as a
derivatives clearing organization shall submit to the
Commission an application in such form and containing such
information as the Commission may require for the purpose of
making the determinations required for approval under
paragraph (2).
``(2) Core principles.--
``(A) In general.--To be registered and to maintain
registration as a derivatives clearing organization, an
applicant shall demonstrate to the Commission that the
applicant complies with the core principles specified in this
paragraph. The applicant shall have reasonable discretion in
establishing the manner in which it complies with the core
principles.
``(B) Financial resources.--The applicant shall demonstrate
that the applicant has adequate financial, operational, and
managerial resources to discharge the responsibilities of a
derivatives clearing organization.
``(C) Participant and product eligibility.--The applicant
shall establish--
``(i) appropriate admission and continuing eligibility
standards (including appropriate minimum financial
requirements) for members of and participants in the
organization; and
``(ii) appropriate standards for determining eligibility of
agreements, contracts, or transactions submitted to the
applicant.
``(D) Risk management.--The applicant shall have the
ability to manage the risks associated with discharging the
responsibilities of a derivatives clearing organization
through the use of appropriate tools and procedures.
``(E) Settlement procedures.--The applicant shall have the
ability to--
``(i) complete settlements on a timely basis under varying
circumstances;
``(ii) maintain an adequate record of the flow of funds
associated with each transaction that the applicant clears;
and
``(iii) comply with the terms and conditions of any
permitted netting or offset arrangements with other clearing
organizations.
``(F) Treatment of funds.--The applicant shall have
standards and procedures designed to protect and ensure the
safety of member and participant funds.
``(G) Default rules and procedures.--The applicant shall
have rules and procedures designed to allow for efficient,
fair, and safe management of events when members or
participants become insolvent or otherwise default on their
obligations to the derivatives clearing organization.
``(H) Rule enforcement.--The applicant shall--
``(i) maintain adequate arrangements and resources for the
effective monitoring and enforcement of compliance with rules
of the applicant and for resolution of disputes; and
``(ii) have the authority and ability to discipline, limit,
suspend, or terminate a member's or participant's activities
for violations of rules of the applicant.
``(I) System safeguards.--The applicant shall demonstrate
that the applicant--
``(i) has established and will maintain a program of
oversight and risk analysis to ensure that the automated
systems of the applicant function properly and have adequate
capacity and security; and
``(ii) has established and will maintain emergency
procedures and a plan for disaster recovery, and will
periodically test backup facilities sufficient to ensure
daily processing, clearing, and settlement of transactions.
``(J) Reporting.--The applicant shall provide to the
Commission all information necessary for the Commission to
conduct the oversight function of the applicant with respect
to the activities of the derivatives clearing organization.
``(K) Recordkeeping.--The applicant shall maintain records
of all activities related to the business of the applicant as
a derivatives clearing organization in a form and manner
acceptable to the Commission for a period of 5 years.
``(L) Public information.--The applicant shall make
information concerning the rules and operating procedures
governing the clearing and settlement systems (including
default procedures) available to market participants.
``(M) Information sharing.--The applicant shall--
[[Page H12329]]
``(i) enter into and abide by the terms of all appropriate
and applicable domestic and international information-sharing
agreements; and
``(ii) use relevant information obtained from the
agreements in carrying out the clearing organization's risk
management program.
``(N) Antitrust considerations.--Unless appropriate to
achieve the purposes of this Act, the derivatives clearing
organization shall avoid--
``(i) adopting any rule or taking any action that results
in any unreasonable restraint of trade; or
``(ii) imposing any material anticompetitive burden on
trading on the contract market.
``(3) Orders concerning competition.--A derivatives
clearing organization may request the Commission to issue an
order concerning whether a rule or practice of the applicant
is the least anticompetitive means of achieving the
objectives, purposes, and policies of this Act.
``(d) Existing Derivatives Clearing Organizations.--A
derivatives clearing organization shall be deemed to be
registered under this section to the extent that the
derivatives clearing organization clears agreements,
contracts, or transactions for a board of trade that has been
designated by the Commission as a contract market for such
agreements, contracts, or transactions before the date of
enactment of this section.
``(e) Appointment of Trustee.--
``(1) In general.--If a proceeding under section 5e results
in the suspension or revocation of the registration of a
derivatives clearing organization, or if a derivatives
clearing organization withdraws from registration, the
Commission, on notice to the derivatives clearing
organization, may apply to the appropriate United States
district court where the derivatives clearing organization is
located for the appointment of a trustee.
``(2) Assumption of jurisdiction.--If the Commission
applies for appointment of a trustee under paragraph (1)--
``(A) the court may take exclusive jurisdiction over the
derivatives clearing organization and the records and assets
of the derivatives clearing organization, wherever located;
and
``(B) if the court takes jurisdiction under subparagraph
(A), the court shall appoint the Commission, or a person
designated by the Commission, as trustee with power to take
possession and continue to operate or terminate the
operations of the derivatives clearing organization in an
orderly manner for the protection of participants, subject to
such terms and conditions as the court may prescribe.
``(f) Linking of Regulated Clearing Facilities.--
``(1) In general.--The Commission shall facilitate the
linking or coordination of derivatives clearing organizations
registered under this Act with other regulated clearance
facilities for the coordinated settlement of cleared
transactions.
``(2) Coordination.--In carrying out paragraph (1), the
Commission shall coordinate with the Federal banking agencies
and the Securities and Exchange Commission.''.
SEC. 113. COMMON PROVISIONS APPLICABLE TO REGISTERED
ENTITIES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 5b (as added by section 112(f))
the following:
``SEC. 5C. COMMON PROVISIONS APPLICABLE TO REGISTERED
ENTITIES.
``(a) Acceptable Business Practices Under Core
Principles.--
``(1) In general.--Consistent with the purposes of this
Act, the Commission may issue interpretations, or approve
interpretations submitted to the Commission, of sections
5(d), 5a(d), and 5b(d)(2) to describe what would constitute
an acceptable business practice under such sections.
``(2) Effect of interpretation.--An interpretation issued
under paragraph (1) shall not provide the exclusive means for
complying with such sections.
``(b) Delegation of Functions Under Core Principles.--
``(1) In general.--A contract market or derivatives
transaction execution facility may comply with any applicable
core principle through delegation of any relevant function to
a registered futures association or another registered
entity.
``(2) Responsibility.--A contract market or derivatives
transaction execution facility that delegates a function
under paragraph (1) shall remain responsible for carrying out
the function.
``(3) Noncompliance.--If a contract market or derivatives
transaction execution facility that delegates a function
under paragraph (1) becomes aware that a delegated function
is not being performed as required under this Act, the
contract market or derivatives transaction execution facility
shall promptly take steps to address the noncompliance.
``(c) New Contracts, New Rules, and Rule Amendments.--
``(1) In general.--Subject to paragraph (2), a registered
entity may elect to list for trading or accept for clearing
any new contract or other instrument, or may elect to approve
and implement any new rule or rule amendment, by providing to
the Commission (and the Secretary of the Treasury, in the
case of a contract of sale of a government security for
future delivery (or option on such a contract) or a rule or
rule amendment specifically related to such a contract) a
written certification that the new contract or instrument or
clearing of the new contract or instrument, new rule, or rule
amendment complies with this Act (including regulations under
this Act).
``(2) Prior approval.--
``(A) In general.--A registered entity may request that the
Commission grant prior approval to any new contract or other
instrument, new rule, or rule amendment.
``(B) Prior approval required.--Notwithstanding any other
provision of this section, a designated contract market shall
submit to the Commission for prior approval each rule
amendment that materially changes the terms and conditions,
as determined by the Commission, in any contract of sale for
future delivery of a commodity specifically enumerated in
section 1a(4) (or any option thereon) traded through its
facilities if the rule amendment applies to contracts and
delivery months which have already been listed for trading
and have open interest.
``(C) Deadline.--If prior approval is requested under
subparagraph (A), the Commission shall take final action on
the request not later than 90 days after submission of the
request, unless the person submitting the request agrees to
an extension of the time limitation established under this
subparagraph.
``(3) Approval.--The Commission shall approve any such new
contract or instrument, new rule, or rule amendment unless
the Commission finds that the new contract or instrument, new
rule, or rule amendment would violate this Act.
``(d) Violation of Core Principles.--
``(1) In general.--If the Commission determines, on the
basis of substantial evidence, that a registered entity is
violating any applicable core principle specified in section
5(d), 5a(d), or 5b(d)(2), the Commission shall--
``(A) notify the registered entity in writing of the
determination; and
``(B) afford the registered entity an opportunity to make
appropriate changes to bring the registered entity into
compliance with the core principles.
``(2) Failure to make changes.--If, not later than 30 days
after receiving a notification under paragraph (1), a
registered entity fails to make changes that, in the opinion
of the Commission, are necessary to comply with the core
principles, the Commission may take further action in
accordance with this Act.
``(e) Reservation of Emergency Authority.--Nothing in this
section shall limit or in any way affect the emergency powers
of the Commission provided in section 8a(9).''.
SEC. 114. EXEMPT BOARDS OF TRADE.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 5c (as added by section 113) the
following:
``SEC. 5D. EXEMPT BOARDS OF TRADE.
``(a) Election To Register With the Commission.--A board of
trade that meets the requirements of subsection (b) of this
section may operate as an exempt board of trade on receipt
from the board of trade of a notice, provided in such manner
as the Commission may by rule or regulation prescribe, that
the board of trade elects to operate as an exempt board of
trade. Except as otherwise provided in this section, no
provision of this Act (other than subparagraphs (C) and (D)
of section 2(a)(1) and section 12(e)(2)(B)) shall apply with
respect to a contract of sale of a commodity for future
delivery (or option on such a contract) traded on or through
the facilities of an exempt board of trade.
``(b) Criteria for Exemption.--To qualify for an exemption
under subsection (a), a board of trade shall limit trading on
or through the facilities of the board of trade to contracts
of sale of a commodity for future delivery (or options on
such contracts or on a commodity)--
``(1) for which the underlying commodity has--
``(A) a nearly inexhaustible deliverable supply;
``(B) a deliverable supply that is sufficiently large, and
a cash market sufficiently liquid, to render any contract
traded on the commodity highly unlikely to be susceptible to
the threat of manipulation; or
``(C) no cash market;
``(2) that are entered into only between persons that are
eligible contract participants at the time at which the
persons enter into the contract; and
``(3) that are not contracts of sale (or options on such a
contract or on a commodity) for future delivery of any
security, including any group or index of securities or any
interest in, or based on the value of, any security or any
group or index of securities.
``(c) Antimanipulation Requirements.--A party to a contract
of sale of a commodity for future delivery (or option on such
a contract or on a commodity) that is traded on an exempt
board of trade shall be subject to sections 4b, 4c(b), 4o,
6(c), and 9(a)(2), and the Commission shall enforce those
provisions with respect to any such trading.
``(d) Price Discovery.--If the Commission finds that an
exempt board of trade is a significant source of price
discovery for transactions in the cash market for the
commodity underlying any contract, agreement, or transaction
traded on or through the facilities of the board of trade,
the board of trade shall disseminate publicly on a daily
basis trading volume, opening and closing price ranges, open
interest, and other trading data as appropriate to the
market.
``(e) Jurisdiction.--The Commission shall have exclusive
jurisdiction over any account, agreement, contract, or
transaction involving a contract of sale of a commodity for
future delivery, or option on such a contract or on a
commodity, to the extent that the account, agreement,
contract, or transaction is traded on an exempt board of
trade.
``(f) Subsidiaries.--A board of trade that is designated as
a contract market or registered as a derivatives transaction
execution facility may operate an exempt board of trade by
establishing a separate subsidiary or other legal entity and
otherwise satisfying the requirements of this section.
``(g) An exempt board of trade that meets the requirements
of subsection (b) shall not represent to any person that the
board of trade is
[[Page H12330]]
registered with, or designated, recognized, licensed, or
approved by the Commission.''.
SEC. 115. SUSPENSION OR REVOCATION OF DESIGNATION AS CONTRACT
MARKET.
Section 5e of the Commodity Exchange Act (7 U.S.C. 7b) (as
redesignated by section 20(1)) is amended to read as follows:
``SEC. 5E. SUSPENSION OR REVOCATION OF DESIGNATION AS
REGISTERED ENTITY.
``The failure of a registered entity to comply with any
provision of this Act, or any regulation or order of the
Commission under this Act, shall be cause for the suspension
of the registered entity for a period not to exceed 180 days,
or revocation of designation as a registered entity in
accordance with the procedures and subject to the judicial
review provided in section 6(b).''.
SEC. 116. AUTHORIZATION OF APPROPRIATIONS.
Section 12(d) of the Commodity Exchange Act (7 U.S.C.
16(d)) is amended by striking ``2000'' and inserting
``2005''.
SEC. 117. PREEMPTION.
Section 12 of the Commodity Exchange Act (7 U.S.C. 16(e))
is amended by striking subsection (e) and inserting the
following:
``(e) Relation to Other Law, Departments, or Agencies.--
``(1) Nothing in this Act shall supersede or preempt--
``(A) criminal prosecution under any Federal criminal
statute;
``(B) the application of any Federal or State statute
(except as provided in paragraph (2)), including any rule or
regulation thereunder, to any transaction in or involving any
commodity, product, right, service, or interest--
``(i) that is not conducted on or subject to the rules of a
registered entity or exempt board of trade;
``(ii) (except as otherwise specified by the Commission by
rule or regulation) that is not conducted on or subject to
the rules of any board of trade, exchange, or market located
outside the United States, its territories or possessions; or
``(iii) that is not subject to regulation by the Commission
under section 4c or 19; or
``(C) the application of any Federal or State statute,
including any rule or regulation thereunder, to any person
required to be registered or designated under this Act who
shall fail or refuse to obtain such registration or
designation.
``(2) This Act shall supersede and preempt the application
of any State or local law that prohibits or regulates gaming
or the operation of bucket shops (other than antifraud
provisions of general applicability) in the case of--
``(A) an electronic trading facility excluded under section
2(e) of this Act;
``(B) an agreement, contract, or transaction that is
excluded from this Act under section 2(c), 2(d), 2(f), or
2(g) of this Act or title IV of the Commodity Futures
Modernization Act of 2000, or exempted under section 2(h) or
4(c) of this Act (regardless of whether any such agreement,
contract, or transaction is otherwise subject to this
Act).''.
SEC. 118. PREDISPUTE RESOLUTION AGREEMENTS FOR INSTITUTIONAL
CUSTOMERS.
Section 14 of the Commodity Exchange Act (7 U.S.C. 18) is
amended by striking subsection (g) and inserting the
following:
``(g) Predispute Resolution Agreements for Institutional
Customers.--Nothing in this section prohibits a registered
futures commission merchant from requiring a customer that is
an eligible contract participant, as a condition to the
commission merchant's conducting a transaction for the
customer, to enter into an agreement waiving the right to
file a claim under this section.''.
SEC. 119. CONSIDERATION OF COSTS AND BENEFITS AND ANTITRUST
LAWS.
Section 15 of the Commodity Exchange Act (7 U.S.C. 19) is
amended by striking ``Sec. 15. The Commission'' and inserting
the following:
``SEC. 15. CONSIDERATION OF COSTS AND BENEFITS AND ANTITRUST
LAWS.
``(a) Costs and Benefits.--
``(1) In general.--Before promulgating a regulation under
this Act or issuing an order (except as provided in paragraph
(3)), the Commission shall consider the costs and benefits of
the action of the Commission.
``(2) Considerations.--The costs and benefits of the
proposed Commission action shall be evaluated in light of--
``(A) considerations of protection of market participants
and the public;
``(B) considerations of the efficiency, competitiveness,
and financial integrity of futures markets;
``(C) considerations of price discovery;
``(D) considerations of sound risk management practices;
and
``(E) other public interest considerations.
``(3) Applicability.--This subsection does not apply to the
following actions of the Commission:
``(A) An order that initiates, is part of, or is the result
of an adjudicatory or investigative process of the
Commission.
``(B) An emergency action.
``(C) A finding of fact regarding compliance with a
requirement of the Commission.
``(b) Antitrust Laws.--The Commission''.
SEC. 120. CONTRACT ENFORCEMENT BETWEEN ELIGIBLE
COUNTERPARTIES.
Section 22(a) of the Commodity Exchange Act (7 U.S.C.
25(a)) is amended by adding at the end the following:
``(4) Contract enforcement between eligible
counterparties.--No agreement, contract, or transaction
between eligible contract participants or persons reasonably
believed to be eligible contract participants, and no hybrid
instrument sold to any investor, shall be void, voidable, or
unenforceable, and no such party shall be entitled to
rescind, or recover any payment made with respect to, such an
agreement, contract, transaction, or instrument under this
section or any other provision of Federal or State law, based
solely on the failure of the agreement, contract,
transaction, or instrument to comply with the terms or
conditions of an exemption or exclusion from any provision of
this Act or regulations of the Commission.''.
SEC. 121. SPECIAL PROCEDURES TO ENCOURAGE AND FACILITATE BONA
FIDE HEDGING BY AGRICULTURAL PRODUCERS.
The Commodity Exchange Act, as otherwise amended by this
Act, is amended by inserting after section 4o the following:
``SEC. 4P. SPECIAL PROCEDURES TO ENCOURAGE AND FACILITATE
BONA FIDE HEDGING BY AGRICULTURAL PRODUCERS.
``(a) Authority.--The Commission shall consider issuing
rules or orders which--
``(1) prescribe procedures under which each contract market
is to provide for orderly delivery, including temporary
storage costs, of any agricultural commodity enumerated in
section 1a(4) which is the subject of a contract for purchase
or sale for future delivery;
``(2) increase the ease with which domestic agricultural
producers may participate in contract markets, including by
addressing cost and margin requirements, so as to better
enable the producers to hedge price risk associated with
their production;
``(3) provide flexibility in the minimum quantities of such
agricultural commodities that may be the subject of a
contract for purchase or sale for future delivery that is
traded on a contract market, to better allow domestic
agricultural producers to hedge such price risk; and
``(4) encourage contract markets to provide information and
otherwise facilitate the participation of domestic
agricultural producers in contract markets.
``(b) Report.--Within 1 year after the date of enactment of
this section, the Commission shall submit to the Committee on
Agriculture of the House of Representatives and the Committee
on Agriculture, Nutrition, and Forestry of the Senate a
report on the steps it has taken to implement this section
and on the activities of contract markets pursuant to this
section.''.
SEC. 122. RULE OF CONSTRUCTION.
Except as expressly provided in this Act or an amendment
made by this Act, nothing in this Act or an amendment made by
this Act supersedes, affects, or otherwise limits or expands
the scope and applicability of laws governing the Securities
and Exchange Commission.
SEC. 123. TECHNICAL AND CONFORMING AMENDMENTS.
(a) Commodity Exchange Act.--
(1) Section 1a of the Commodity Exchange Act (7 U.S.C. 1a)
(as amended by section 101) is amended--
(A) in paragraphs (5), (6), (16), (17), (20), and (23), by
inserting ``or derivatives transaction execution facility''
after ``contract market'' each place it appears; and
(B) in paragraph (24)--
(i) in the paragraph heading, by striking ``contract
market'' and inserting ``registered entity'';
(ii) by striking ``contract market'' each place it appears
and inserting ``registered entity''; and
(iii) by adding at the end the following:
``A participant in an alternative trading system that is
designated as a contract market pursuant to section 5f is
deemed a member of the contract market for purposes of
transactions in security futures products through the
contract market.''.
(2) Section 2 of the Commodity Exchange Act (7 U.S.C. 2,
2a, 4, 4a, 3) is amended--
(A) by striking ``Sec. 2. (a)(1)(A)(i) The'' and inserting
the following:
``SEC. 2. JURISDICTION OF COMMISSION; LIABILITY OF PRINCIPAL
FOR ACT OF AGENT; COMMODITY FUTURES TRADING
COMMISSION; TRANSACTION IN INTERSTATE COMMERCE.
``(a) Jurisdiction of Commission; Commodity Futures Trading
Commission.--
``(1) Jurisdiction of commission.--
``(A) In general.--The''; and
(B) in subsection (a)(1)--
(i) in subparagraph (A) (as amended by subparagraph (A) of
this paragraph)--
(II) by striking ``subparagraph (B) of this subparagraph''
and inserting ``subparagraphs (C) and (D) of this paragraph
and subsections (c) through (i) of this section'';
(III) by striking ``contract market designated pursuant to
section 5 of this Act'' and inserting ``contract market
designated or derivatives transaction execution facility
registered pursuant to section 5 or 5a'';
(IV) by striking clause (ii); and
(V) in clause (iii), by striking ``(iii) The'' and
inserting the following:
``(B) Liability of principal for act of agent.--The''; and
(ii) in subparagraph (B)--
(I) by striking ``(B)'' and inserting ``(C)'';
(II) in clause (v)--
(aa) by striking ``section 3 of the Securities Act of
1933''; and
(bb) by inserting ``or subparagraph (D)'' after
``subparagraph''; and
(III) by moving clauses (i) through (v) 4 ems to the right;
(C) in subsection (a)(7), by striking ``contract market''
and inserting ``registered entity'';
(D) in subsection (a)(8)(B)(ii)--
(i) in the first sentence, by striking ``designation as a
contract market'' and inserting ``designation or registration
as a contract market or derivatives transaction execution
facility'';
(ii) in the second sentence, by striking ``designate a
board of trade as a contract market'' and inserting
``designate or register a board of trade as a contract market
or derivatives transaction execution facility''; and
(iii) in the fourth sentence, by striking ``designating, or
refusing, suspending, or revoking the
[[Page H12331]]
designation of, a board of trade as a contract market
involving transactions for future delivery referred to in
this clause or in considering possible emergency action under
section 8a(9) of this Act'' and inserting ``designating,
registering, or refusing, suspending, or revoking the
designation or registration of, a board of trade as a
contract market or derivatives transaction execution facility
involving transactions for future delivery referred to in
this clause or in considering any possible action under this
Act (including without limitation emergency action under
section 8a(9))'', and by striking ``designation, suspension,
revocation, or emergency action'' and inserting
``designation, registration, suspension, revocation, or
action''; and
(E) in subsection (a), by moving paragraphs (2) through (9)
2 ems to the right.
(3) Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is
amended--
(A) in subsection (a)--
(i) in paragraph (1), by striking ``designated by the
Commission as a `contract market' for'' and inserting
``designated or registered by the Commission as a contract
market or derivatives transaction execution facility for'';
(ii) in paragraph (2), by striking ``member of such''; and
(iii) in paragraph (3), by inserting ``or derivatives
transaction execution facility'' after ``contract market'';
and
(B) in subsection (c)--
(i) in paragraph (1)--
(I) by striking ``designated as a contract market'' and
inserting ``designated or registered as a contract market or
derivatives transaction execution facility''; and
(II) by striking ``section 2(a)(1)(B)'' and inserting
``subparagraphs (C)(ii) and (D) of section 2(a)(1), except
that the Commission and the Securities and Exchange
Commission may by rule, regulation, or order jointly exclude
any agreement, contract, or transaction from section
2(a)(1)(D)''; and
(ii) in paragraph (2)(B)(ii), by inserting ``or derivatives
transaction execution facility'' after ``contract market''.
(4) Section 4a of the Commodity Exchange Act (7 U.S.C. 6a)
is amended--
(A) in subsection (a)--
(i) in the first sentence, by inserting ``or derivatives
transaction execution facilities'' after ``contract
markets''; and
(ii) in the second sentence, by inserting ``or derivatives
transaction execution facility'' after ``contract market'';
(B) in subsection (b)--
(i) in paragraph (1), by inserting ``, or derivatives
transaction execution facility or facilities,'' after
``markets''; and
(ii) in paragraph (2), by inserting ``or derivatives
transaction execution facility'' after ``contract market'';
and
(C) in subsection (e)--
(i) by striking ``contract market or'' each place it
appears and inserting ``contract market, derivatives
transaction execution facility, or'';
(ii) by striking ``licensed or designated'' each place it
appears and inserting ``licensed, designated, or
registered''; and
(iii) by striking ``contract market, or'' and inserting
``contract market or derivatives transaction execution
facility, or''.
(5) Section 4b(a) of the Commodity Exchange Act (7 U.S.C.
6b(a)) is amended by striking ``contract market'' each place
it appears and inserting ``registered entity''.
(6) Sections 4c(g), 4d, 4e, and 4f of the Commodity
Exchange Act (7 U.S.C. 6c(g), 6d, 6e, 6f) are amended by
inserting ``or derivatives transaction execution facility''
after ``contract market'' each place it appears.
(7) Section 4g of the Commodity Exchange Act (7 U.S.C. 6g)
is amended--
(A) in subsection (b), by striking ``clearinghouse and
contract market'' and inserting ``registered entity''; and
(B) in subsection (f), by striking ``clearinghouses,
contract markets, and exchanges'' and inserting ``registered
entities''.
(8) Section 4h of the Commodity Exchange Act (7 U.S.C. 6h)
is amended by striking ``contract market'' each place it
appears and inserting ``registered entity''.
(9) Section 4i of the Commodity Exchange Act (7 U.S.C. 6i)
is amended in the first sentence by inserting ``or
derivatives transaction execution facility'' after ``contract
market''.
(10) Section 4l of the Commodity Exchange Act (7 U.S.C. 6l)
is amended by inserting ``or derivatives transaction
execution facilities'' after ``contract markets'' each place
it appears.
(11) Section 4p of the Commodity Exchange Act (7 U.S.C. 6p)
is amended--
(A) in the third sentence of subsection (a), by striking
``Act or contract markets'' and inserting ``Act, contract
markets, or derivatives transaction execution facilities'';
and
(B) in subsection (b), by inserting ``derivatives
transaction execution facility,'' after ``contract market,''.
(12) Section 6 of the Commodity Exchange Act (7 U.S.C. 8,
9, 9a, 9b, 13b, 15) is amended--
(A) in subsection (a)--
(i) in the first sentence--
(I) by striking ``board of trade desiring to be designated
a `contract market' shall make application to the Commission
for such designation'' and inserting ``person desiring to be
designated or registered as a contract market or derivatives
transaction execution facility shall make application to the
Commission for the designation or registration'';
(II) by striking ``above conditions'' and inserting
``conditions set forth in this Act''; and
(III) by striking ``above requirements'' and inserting
``the requirements of this Act'';
(ii) in the second sentence, by striking ``designation as a
contract market within one year'' and inserting ``designation
or registration as a contract market or derivatives
transaction execution facility within 180 days'';
(iii) in the third sentence--
(I) by striking ``board of trade'' and inserting
``person''; and
(II) by striking ``one-year period'' and inserting ``180-
day period''; and
(iv) in the last sentence, by striking ``designate as a
`contract market' any board of trade that has made
application therefor, such board of trade'' and inserting
``designate or register as a contract market or derivatives
transaction execution facility any person that has made
application therefor, the person'';
(B) in subsection (b)--
(i) in the first sentence--
(I) by striking ``designation of any board of trade as a
`contract market' upon'' and inserting ``designation or
registration of any contract market or derivatives
transaction execution facility on'';
(II) by striking ``board of trade'' each place it appears
and inserting ``contract market or derivatives transaction
execution facility''; and
(III) by striking ``designation as set forth in section 5
of this Act'' and inserting ``designation or registration as
set forth in sections 5 through 5b or section 5f'';
(ii) in the second sentence--
(I) by striking ``board of trade'' the first place it
appears and inserting ``contract market or derivatives
transaction execution facility''; and
(II) by striking ``board of trade'' the second and third
places it appears and inserting ``person''; and
(iii) in the last sentence, by striking ``board of trade''
each place it appears and inserting ``person'';
(C) in subsection (c)--
(i) by striking ``contract market'' each place it appears
and inserting ``registered entity'';
(ii) by striking ``contract markets'' each place it appears
and inserting ``registered entities''; and
(iii) by striking ``trading privileges'' each place it
appears and inserting ``privileges'';
(D) in subsection (d), by striking ``contract market'' each
place it appears and inserting ``registered entity''; and
(E) in subsection (e), by striking ``trading on all
contract markets'' each place it appears and inserting ``the
privileges of all registered entities''.
(13) Section 6a of the Commodity Exchange Act (7 U.S.C.
10a) is amended--
(A) in the first sentence of subsection (a), by striking
``designated as a `contract market' shall'' and inserting
``designated or registered as a contract market or a
derivatives transaction execution facility''; and
(B) in subsection (b), by striking ``designated as a
contract market'' and inserting ``designated or registered as
a contract market or a derivatives transaction execution
facility''.
(14) Section 6b of the Commodity Exchange Act (7 U.S.C.
13a) is amended--
(A) by striking ``contract market'' each place it appears
and inserting ``registered entity'';
(B) in the first sentence, by striking ``designation as set
forth in section 5 of this Act'' and inserting ``designation
or registration as set forth in sections 5 through 5c''; and
(C) in the last sentence, by striking ``the contract
market's ability'' and inserting ``the ability of the
registered entity''.
(15) Section 6c(a) of the Commodity Exchange Act (7 U.S.C.
13a-1(a)) by striking ``contract market'' and inserting
``registered entity''.
(16) Section 6d(1) of the Commodity Exchange Act (7 U.S.C.
13a-2(1)) is amended by inserting ``derivatives transaction
execution facility,'' after ``contract market,''.
(17) Section 7 of the Commodity Exchange Act (7 U.S.C. 11)
is amended--
(A) in the first sentence--
(i) by striking ``board of trade'' and inserting
``person'';
(ii) by inserting ``or registered'' after ``designated'';
(iii) by inserting ``or registration'' after
``designation'' each place it appears; and
(iv) by striking ``contract market'' each place it appears
and inserting ``registered entity'';
(B) in the second sentence--
(i) by striking ``designation of such board of trade as a
contract market'' and inserting ``designation or registration
of the registered entity''; and
(ii) by striking ``contract markets'' and inserting
``registered entities''; and
(C) in the last sentence--
(i) by striking ``board of trade'' and inserting
``person''; and
(ii) by striking ``designated again a contract market'' and
inserting ``designated or registered again a registered
entity''.
(18) Section 8(c) of the Commodity Exchange Act (7 U.S.C.
12(c)) is amended in the first sentence by striking ``board
of trade'' and inserting ``registered entity''.
(19) Section 8a of the Commodity Exchange Act (7 U.S.C.
12a) is amended--
(A) by striking ``contract market'' each place it appears
and inserting ``registered entity''; and
(B) in paragraph (2)(F), by striking ``trading privileges''
and inserting ``privileges''.
(20) Sections 8b and 8c(e) of the Commodity Exchange Act (7
U.S.C. 12b, 12c(e)) are amended by striking ``contract
market'' each place it appears and inserting ``registered
entity''.
(21) Section 8e of the Commodity Exchange Act (7 U.S.C.
12e) is repealed.
(22) Section 9 of the Commodity Exchange Act (7 U.S.C. 13)
is amended by striking ``contract market'' each place it
appears and inserting ``registered entity''.
(23) Section 14 of the Commodity Exchange Act (7 U.S.C. 18)
is amended--
(A) in subsection (a)(1)(B), by striking ``contract
market'' and inserting ``registered entity''; and
(B) in subsection (f), by striking ``contract markets'' and
inserting ``registered entities''.
(24) Section 17 of the Commodity Exchange Act (7 U.S.C. 21)
is amended by striking ``contract market'' each place it
appears and inserting ``registered entity''.
[[Page H12332]]
(25) Section 22 of the Commodity Exchange Act (7 U.S.C. 25)
is amended--
(A) in subsection (a)--
(i) in paragraph (1)--
(I) by striking ``contract market, clearing organization of
a contract market, licensed board of trade,'' and inserting
``registered entity''; and
(II) in subparagraph (C)(i), by striking ``contract
market'' and inserting ``registered entity'';
(ii) in paragraph (2), by striking ``sections 5a(11),'' and
inserting ``sections 5(d)(13), 5b(b)(1)(E),''; and
(iii) in paragraph (3), by striking ``contract market'' and
inserting ``registered entity''; and
(B) in subsection (b)--
(i) in paragraph (1)--
(I) by striking ``contract market or clearing organization
of a contract market'' and inserting ``registered entity'';
(II) by striking ``section 5a(8) and section 5a(9) of this
Act'' and inserting ``sections 5 through 5c'';
(III) by striking ``contract market, clearing organization
of a contract market, or licensed board of trade'' and
inserting ``registered entity''; and
(IV) by striking ``contract market or licensed board of
trade'' and inserting ``registered entity'';
(ii) in paragraph (3)--
(I) by striking ``a contract market, clearing organization,
licensed board of trade,'' and inserting ``registered
entity''; and
(II) by striking ``contract market, licensed board of
trade'' and inserting ``registered entity'';
(iii) in paragraph (4), by striking ``contract market,
licensed board of trade, clearing organization,'' and
inserting ``registered entity''; and
(iv) in paragraph (5), by striking ``contract market,
licensed board of trade, clearing organization,'' and
inserting ``registered entity''.
(b) Federal Deposit Insurance Corporation Improvement Act
of 1991.--Section 402(2) of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4402(2)) is
amended by striking subparagraph (B) and inserting the
following:
``(B) that is registered as a derivatives clearing
organization under section 5b of the Commodity Exchange
Act.''.
SEC. 124. PRIVACY.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 5f (as added by section 252) the
following:
``SEC. 5G. PRIVACY.
``(a) Treatment as Financial Institutions.--Notwithstanding
section 509(3)(B) of the Gramm-Leach-Bliley Act, any futures
commission merchant, commodity trading advisor, commodity
pool operator, or introducing broker that is subject to the
jurisdiction of the Commission under this Act with respect to
any financial activity shall be treated as a financial
institution for purposes of title V of such Act with respect
to such financial activity.
``(b) Treatment of CFTC as Federal Functional Regulator.--
For purposes of title V of such Act, the Commission shall be
treated as a Federal functional regulator within the meaning
of section 509(2) of such Act and shall prescribe regulations
under such title within 6 months after the date of enactment
of this section.''.
SEC. 125. REPORT TO CONGRESS.
(a) The Commodity Futures Trading Commission (in this
section referred to as the ``Commission'') shall undertake
and complete a study of the Commodity Exchange Act (in this
section referred to as ``the Act'') and the Commission's
rules, regulations and orders governing the conduct of
persons required to be registered under the Act, not later
than 1 year after the date of the enactment of this Act. The
study shall identify--
(1) the core principles and interpretations of acceptable
business practices that the Commission has adopted or intends
to adopt to replace the provisions of the Act and the
Commission's rules and regulations thereunder;
(2) the rules and regulations that the Commission has
determined must be retained and the reasons therefor;
(3) the extent to which the Commission believes it can
effect the changes identified in paragraph (1) of this
subsection through its exemptive authority under section 4(c)
of the Act; and
(4) the regulatory functions the Commission currently
performs that can be delegated to a registered futures
association (within the meaning of the Act) and the
regulatory functions that the Commission has determined must
be retained and the reasons therefor.
(b) In conducting the study, the Commission shall solicit
the views of the public as well as Commission registrants,
registered entities, and registered futures associations (all
within the meaning of the Act).
(c) The Commission shall transmit to the Committee on
Agriculture of the House of Representatives and the Committee
on Agriculture, Nutrition, and Forestry of the Senate a
report of the results of its study, which shall include an
analysis of comments received.
SEC. 126. INTERNATIONAL ACTIVITIES OF THE COMMODITY FUTURES
TRADING COMMISSION.
(a) Findings.--The Congress finds that--
(1) derivatives markets serving United States industry are
increasingly global in scope;
(2) developments in data processing and communications
technologies enable users of risk management services to
analyze and compare those services on a worldwide basis;
(3) financial services regulatory policy must be flexible
to account for rapidly changing derivatives industry business
practices;
(4) regulatory impediments to the operation of global
business interests can compromise the competitiveness of
United States businesses;
(5) events that disrupt financial markets and economies are
often global in scope, require rapid regulatory response, and
coordinated regulatory effort across international
jurisdictions;
(6) through its membership in the International
Organisation of Securities Commissions, the Commodity Futures
Trading Commission has promoted beneficial communication
among market regulators and international regulatory
cooperation; and
(7) the Commodity Futures Trading Commission and other
United States financial regulators and self-regulatory
organizations should continue to foster productive and
cooperative working relationships with their counterparts in
foreign jurisdictions.
(b) Sense of the Congress.--It is the sense of the Congress
that, consistent with its responsibilities under the
Commodity Exchange Act, the Commodity Futures Trading
Commission should, as part of its international activities,
continue to coordinate with foreign regulatory authorities,
to participate in international regulatory organizations and
forums, and to provide technical assistance to foreign
government authorities, in order to encourage--
(1) the facilitation of cross-border transactions through
the removal or lessening of any unnecessary legal or
practical obstacles;
(2) the development of internationally accepted regulatory
standards of best practice;
(3) the enhancement of international supervisory
cooperation and emergency procedures;
(4) the strengthening of international cooperation for
customer and market protection; and
(5) improvements in the quality and timeliness of
international information sharing.
TITLE II--COORDINATED REGULATION OF SECURITY FUTURES PRODUCTS
Subtitle A--Securities Law Amendments
SEC. 201. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF
1934.
Section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)) is amended--
(1) in paragraph (10), by inserting ``security future,''
after ``treasury stock,'';
(2) by striking paragraph (11) and inserting the following:
``(11) The term `equity security' means any stock or
similar security; or any security future on any such
security; or any security convertible, with or without
consideration, into such a security, or carrying any warrant
or right to subscribe to or purchase such a security; or any
such warrant or right; or any other security which the
Commission shall deem to be of similar nature and consider
necessary or appropriate, by such rules and regulations as it
may prescribe in the public interest or for the protection of
investors, to treat as an equity security.'';
(3) in paragraph (13), by adding at the end the following:
``For security futures products, such term includes any
contract, agreement, or transaction for future delivery.'';
(4) in paragraph (14), by adding at the end the following:
``For security futures products, such term includes any
contract, agreement, or transaction for future delivery.'';
and
(5) by adding at the end the following:
``(55)(A) The term `security future' means a contract of
sale for future delivery of a single security or of a narrow-
based security index, including any interest therein or based
on the value thereof, except an exempted security under
section 3(a)(12) of the Securities Exchange Act of 1934 as in
effect on the date of enactment of the Futures Trading Act of
1982 (other than any municipal security as defined in section
3(a)(29) as in effect on the date of enactment of the Futures
Trading Act of 1982). The term `security future' does not
include any agreement, contract, or transaction excluded from
the Commodity Exchange Act under section 2(c), 2(d), 2(f) or
2(g) of the Commodity Exchange Act (as in effect on the date
of enactment of the Commodity Futures Modernization Act of
2000) or title IV of the Commodity Futures Modernization Act
of 2000.
``(B) The term `narrow-based security index' means an
index--
``(i) that has 9 or fewer component securities;
``(ii) in which a component security comprises more than 30
percent of the index's weighting;
``(iii) in which the 5 highest weighted component
securities in the aggregate comprise more than 60 percent of
the index's weighting; or
``(iv) in which the lowest weighted component securities
comprising, in the aggregate, 25 percent of the index's
weighting have an aggregate dollar value of average daily
trading volume of less than $50,000,000 (or in the case of an
index with 15 or more component securities, $30,000,000),
except that if there are two or more securities with equal
weighting that could be included in the calculation of the
lowest weighted component securities comprising, in the
aggregate, 25 percent of the index's weighting, such
securities shall be ranked from lowest to highest dollar
value of average daily trading volume and shall be included
in the calculation based on their ranking starting with the
lowest ranked security.
``(C) Notwithstanding subparagraph (B), an index is not a
narrow-based security index if--
``(i)(I) it has at least 9 component securities;
``(II) no component security comprises more than 30 percent
of the index's weighting; and
``(III) each component security is--
``(aa) registered pursuant to section 12 of the Securities
Exchange Act of 1934;
``(bb) 1 of 750 securities with the largest market
capitalization; and
``(cc) 1 of 675 securities with the largest dollar value of
average daily trading volume;
``(ii) a board of trade was designated as a contract market
by the Commodity Futures Trading Commission with respect to a
contract of sale for future delivery on the index, before the
date of enactment of the Commodity Futures Modernization Act
of 2000;
``(iii)(I) a contract of sale for future delivery on the
index traded on a designated contract
[[Page H12333]]
market or registered derivatives transaction execution
facility for at least 30 days as a contract of sale for
future delivery on an index that was not a narrow-based
security index; and
``(II) it has been a narrow-based security index for no
more than 45 business days over 3 consecutive calendar
months;
``(iv) a contract of sale for future delivery on the index
is traded on or subject to the rules of a foreign board of
trade and meets such requirements as are jointly established
by rule or regulation by the Commission and the Commodity
Futures Trading Commission;
``(v) no more than 18 months have passed since the date of
enactment of the Commodity Futures Modernization Act of 2000
and--
``(I) it is traded on or subject to the rules of a foreign
board of trade;
``(II) the offer and sale in the United States of a
contract of sale for future delivery on the index was
authorized before the date of the enactment of the Commodity
Futures Modernization Act of 2000; and
``(III) the conditions of such authorization continue to be
met; or
``(vi) a contract of sale for future delivery on the index
is traded on or subject to the rules of a board of trade and
meets such requirements as are jointly established by rule,
regulation, or order by the Commission and the Commodity
Futures Trading Commission.
``(D) Within 1 year after the enactment of the Commodity
Futures Modernization Act of 2000, the Commission and the
Commodity Futures Trading Commission jointly shall adopt
rules or regulations that set forth the requirements under
clause (iv) of subparagraph (C).
``(E) An index that is a narrow-based security index solely
because it was a narrow-based security index for more than 45
business days over 3 consecutive calendar months pursuant to
clause (iii) of subparagraph (C) shall not be a narrow-based
security index for the 3 following calendar months.
``(F) For purposes of subparagraphs (B) and (C) of this
paragraph--
``(i) the dollar value of average daily trading volume and
the market capitalization shall be calculated as of the
preceding 6 full calendar months; and
``(ii) the Commission and the Commodity Futures Trading
Commission shall, by rule or regulation, jointly specify the
method to be used to determine market capitalization and
dollar value of average daily trading volume.
``(56) The term `security futures product' means a security
future or any put, call, straddle, option, or privilege on
any security future.
``(57)(A) The term `margin', when used with respect to a
security futures product, means the amount, type, and form of
collateral required to secure any extension or maintenance of
credit, or the amount, type, and form of collateral required
as a performance bond related to the purchase, sale, or
carrying of a security futures product.
``(B) The terms `margin level' and `level of margin', when
used with respect to a security futures product, mean the
amount of margin required to secure any extension or
maintenance of credit, or the amount of margin required as a
performance bond related to the purchase, sale, or carrying
of a security futures product.
``(C) The terms `higher margin level' and `higher level of
margin', when used with respect to a security futures
product, mean a margin level established by a national
securities exchange registered pursuant to section 6(g) that
is higher than the minimum amount established and in effect
pursuant to section 7(c)(2)(B).''.
SEC. 202. REGULATORY RELIEF FOR MARKETS TRADING SECURITY
FUTURES PRODUCTS.
(a) Expedited Registration and Exemption.--Section 6 of the
Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by
adding at the end the following:
``(g) Notice Registration of Security Futures Product
Exchanges.--
``(1) Registration required.--An exchange that lists or
trades security futures products may register as a national
securities exchange solely for the purposes of trading
security futures products if--
``(A) the exchange is a board of trade, as that term is
defined by the Commodity Exchange Act (7 U.S.C. 1a(2)),
that--
``(i) has been designated a contract market by the
Commodity Futures Trading Commission and such designation is
not suspended by order of the Commodity Futures Trading
Commission; or
``(ii) is registered as a derivative transaction execution
facility under section 5a of the Commodity Exchange Act and
such registration is not suspended by the Commodity Futures
Trading Commission; and
``(B) such exchange does not serve as a market place for
transactions in securities other than--
``(i) security futures products; or
``(ii) futures on exempted securities or groups or indexes
of securities or options thereon that have been authorized
under section 2(a)(1)(C) of the Commodity Exchange Act.
``(2) Registration by notice filing.--
``(A) Form and content.--An exchange required to register
only because such exchange lists or trades security futures
products may register for purposes of this section by filing
with the Commission a written notice in such form as the
Commission, by rule, may prescribe containing the rules of
the exchange and such other information and documents
concerning such exchange, comparable to the information and
documents required for national securities exchanges under
section 6(a), as the Commission, by rule, may prescribe as
necessary or appropriate in the public interest or for the
protection of investors. If such exchange has filed documents
with the Commodity Futures Trading Commission, to the extent
that such documents contain information satisfying the
Commission's informational requirements, copies of such
documents may be filed with the Commission in lieu of the
required written notice.
``(B) Immediate effectiveness.--Such registration shall be
effective contemporaneously with the submission of notice, in
written or electronic form, to the Commission, except that
such registration shall not be effective if such registration
would be subject to suspension or revocation.
``(C) Termination.--Such registration shall be terminated
immediately if any of the conditions for registration set
forth in this subsection are no longer satisfied.
``(3) Public availability.--The Commission shall promptly
publish in the Federal Register an acknowledgment of receipt
of all notices the Commission receives under this subsection
and shall make all such notices available to the public.
``(4) Exemption of exchanges from specified provisions.--
``(A) Transaction exemptions.--An exchange that is
registered under paragraph (1) of this subsection shall be
exempt from, and shall not be required to enforce compliance
by its members with, and its members shall not, solely with
respect to those transactions effected on such exchange in
security futures products, be required to comply with, the
following provisions of this title and the rules thereunder:
``(i) Subsections (b)(2), (b)(3), (b)(4), (b)(7), (b)(9),
(c), (d), and (e) of this section.
``(ii) Section 8.
``(iii) Section 11.
``(iv) Subsections (d), (f), and (k) of section 17.
``(v) Subsections (a), (f), and (h) of section 19.
``(B) Rule change exemptions.--An exchange that registered
under paragraph (1) of this subsection shall also be exempt
from submitting proposed rule changes pursuant to section
19(b) of this title, except that--
``(i) such exchange shall file proposed rule changes
related to higher margin levels, fraud or manipulation,
recordkeeping, reporting, listing standards, or decimal
pricing for security futures products, sales practices for
security futures products for persons who effect transactions
in security futures products, or rules effectuating such
exchange's obligation to enforce the securities laws pursuant
to section 19(b)(7);
``(ii) such exchange shall file pursuant to sections
19(b)(1) and 19(b)(2) proposed rule changes related to
margin, except for changes resulting in higher margin levels;
and
``(iii) such exchange shall file pursuant to section
19(b)(1) proposed rule changes that have been abrogated by
the Commission pursuant to section 19(b)(7)(C).
``(5) Trading in security futures products.--
``(A) In general.--Subject to subparagraph (B), it shall be
unlawful for any person to execute or trade a security
futures product until the later of--
``(i) 1 year after the date of enactment of the Commodity
Futures Modernization Act of 2000; or
``(ii) such date that a futures association registered
under section 17 of the Commodity Exchange Act has met the
requirements set forth in section 15A(k)(2) of this title.
``(B) Principal-to-principal transactions.--Notwithstanding
subparagraph (A), a person may execute or trade a security
futures product transaction if--
``(i) the transaction is entered into--
``(I) on a principal-to-principal basis between parties
trading for their own accounts or as described in section
1a(12)(B)(ii) of the Commodity Exchange Act; and
``(II) only between eligible contract participants (as
defined in subparagraphs (A), (B)(ii), and (C) of such
section 1a(12)) at the time at which the persons enter into
the agreement, contract, or transaction; and
``(ii) the transaction is entered into on or after the
later of--
``(I) 8 months after the date of enactment of the Commodity
Futures Modernization Act of 2000; or
``(II) such date that a futures association registered
under section 17 of the Commodity Exchange Act has met the
requirements set forth in section 15A(k)(2) of this title.''.
(b) Commission Review of Proposed Rule Changes.--
(1) Expedited review.--Section 19(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding
at the end the following:
``(7) Security futures product rule changes.--
``(A) Filing required.--A self-regulatory organization that
is an exchange registered with the Commission pursuant to
section 6(g) of this title or that is a national securities
association registered pursuant to section 15A(k) of this
title shall file with the Commission, in accordance with such
rules as the Commission may prescribe, copies of any proposed
rule change or any proposed change in, addition to, or
deletion from the rules of such self-regulatory organization
(hereinafter in this paragraph collectively referred to as a
`proposed rule change') that relates to higher margin levels,
fraud or manipulation, recordkeeping, reporting, listing
standards, or decimal pricing for security futures products,
sales practices for security futures products for persons who
effect transactions in security futures products, or rules
effectuating such self-regulatory organization's obligation
to enforce the securities laws. Such proposed rule change
shall be accompanied by a concise general statement of the
basis and purpose of such proposed rule change. The
Commission shall, upon the filing of any proposed rule
change, promptly publish notice thereof together with the
terms of substance of the proposed rule change or a
description of the subjects and issues involved. The
Commission shall give interested persons an opportunity to
submit data,
[[Page H12334]]
views, and arguments concerning such proposed rule change.
``(B) Filing with cftc.--A proposed rule change filed with
the Commission pursuant to subparagraph (A) shall be filed
concurrently with the Commodity Futures Trading Commission.
Such proposed rule change may take effect upon filing of a
written certification with the Commodity Futures Trading
Commission under section 5c(c) of the Commodity Exchange Act,
upon a determination by the Commodity Futures Trading
Commission that review of the proposed rule change is not
necessary, or upon approval of the proposed rule change by
the Commodity Futures Trading Commission.
``(C) Abrogation of rule changes.--Any proposed rule change
of a self-regulatory organization that has taken effect
pursuant to subparagraph (B) may be enforced by such self-
regulatory organization to the extent such rule is not
inconsistent with the provisions of this title, the rules and
regulations thereunder, and applicable Federal law. At any
time within 60 days of the date of the filing of a written
certification with the Commodity Futures Trading Commission
under section 5c(c) of the Commodity Exchange Act, the
date the Commodity Futures Trading Commission determines
that review of such proposed rule change is not necessary,
or the date the Commodity Futures Trading Commission
approves such proposed rule change, the Commission, after
consultation with the Commodity Futures Trading
Commission, may summarily abrogate the proposed rule
change and require that the proposed rule change be
refiled in accordance with the provisions of paragraph
(1), if it appears to the Commission that such proposed
rule change unduly burdens competition or efficiency,
conflicts with the securities laws, or is inconsistent
with the public interest and the protection of investors.
Commission action pursuant to the preceding sentence shall
not affect the validity or force of the rule change during
the period it was in effect and shall not be reviewable
under section 25 of this title nor deemed to be a final
agency action for purposes of section 704 of title 5,
United States Code.
``(D) Review of resubmitted abrogated rules.--
``(i) Proceedings.--Within 35 days of the date of
publication of notice of the filing of a proposed rule change
that is abrogated in accordance with subparagraph (C) and
refiled in accordance with paragraph (1), or within such
longer period as the Commission may designate up to 90 days
after such date if the Commission finds such longer period to
be appropriate and publishes its reasons for so finding or as
to which the self-regulatory organization consents, the
Commission shall--
``(I) by order approve such proposed rule change; or
``(II) after consultation with the Commodity Futures
Trading Commission, institute proceedings to determine
whether the proposed rule change should be disapproved.
Proceedings under subclause (II) shall include notice of the
grounds for disapproval under consideration and opportunity
for hearing and be concluded within 180 days after the date
of publication of notice of the filing of the proposed rule
change. At the conclusion of such proceedings, the
Commission, by order, shall approve or disapprove such
proposed rule change. The Commission may extend the time for
conclusion of such proceedings for up to 60 days if the
Commission finds good cause for such extension and publishes
its reasons for so finding or for such longer period as to
which the self-regulatory organization consents.
``(ii) Grounds for approval.--The Commission shall approve
a proposed rule change of a self-regulatory organization
under this subparagraph if the Commission finds that such
proposed rule change does not unduly burden competition or
efficiency, does not conflict with the securities laws, and
is not inconsistent with the public interest or the
protection of investors. The Commission shall disapprove such
a proposed rule change of a self-regulatory organization if
it does not make such finding. The Commission shall not
approve any proposed rule change prior to the 30th day after
the date of publication of notice of the filing thereof,
unless the Commission finds good cause for so doing and
publishes its reasons for so finding.''.
(2) Decimal pricing provisions.--Section 19(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended
by inserting after paragraph (7), as added by paragraph (1),
the following:
``(8) Decimal pricing.--Not later than 9 months after the
date on which trading in any security futures product
commences under this title, all self-regulatory organizations
listing or trading security futures products shall file
proposed rule changes necessary to implement decimal pricing
of security futures products. The Commission may not require
such rules to contain equal minimum increments in such
decimal pricing.''.
(3) Consultation provisions.--Section 19(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended
by inserting after paragraph (8), as added by paragraph (2),
the following:
``(9) Consultation with cftc.--
``(A) Consultation required.--The Commission shall consult
with and consider the views of the Commodity Futures
Trading Commission prior to approving or disapproving a
proposed rule change filed by a national securities
association registered pursuant to section 15A(a) or a
national securities exchange subject to the provisions of
subsection (a) that primarily concerns conduct related to
transactions in security futures products, except where
the Commission determines that an emergency exists
requiring expeditious or summary action and publishes its
reasons therefor.
``(B) Responses to cftc comments and findings.--If the
Commodity Futures Trading Commission comments in writing to
the Commission on a proposed rule that has been published for
comment, the Commission shall respond in writing to such
written comment before approving or disapproving the proposed
rule. If the Commodity Futures Trading Commission determines,
and notifies the Commission, that such rule, if implemented
or as applied, would--
``(i) adversely affect the liquidity or efficiency of the
market for security futures products; or
``(ii) impose any burden on competition not necessary or
appropriate in furtherance of the purposes of this section,
the Commission shall, prior to approving or disapproving the
proposed rule, find that such rule is necessary and
appropriate in furtherance of the purposes of this section
notwithstanding the Commodity Futures Trading Commission's
determination.''.
(c) Review of Disciplinary Proceedings.--Section 19(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78s(d)) is
amended by adding at the end the following:
``(3) The provisions of this subsection shall apply to an
exchange registered pursuant to section 6(g) of this title or
a national securities association registered pursuant to
section 15A(k) of this title only to the extent that such
exchange or association imposes any final disciplinary
sanction for--
``(A) a violation of the Federal securities laws or the
rules and regulations thereunder; or
``(B) a violation of a rule of such exchange or
association, as to which a proposed change would be required
to be filed under section 19 of this title, except that, to
the extent that the exchange or association rule violation
relates to any account, agreement, contract, or transaction,
this subsection shall apply only to the extent such violation
involves a security futures product.''.
SEC. 203. REGULATORY RELIEF FOR INTERMEDIARIES TRADING
SECURITY FUTURES PRODUCTS.
(a) Expedited Registration and Exemptions.--
(1) Amendment.--Section 15(b) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o(b)) is amended by adding at the
end the following:
``(11) Broker/dealer registration with respect to
transactions in security futures products.--
``(A) Notice registration.--
``(i) Contents of notice.--Notwithstanding paragraphs (1)
and (2), a broker or dealer required to register only because
it effects transactions in security futures products on an
exchange registered pursuant to section 6(g) may register for
purposes of this section by filing with the Commission a
written notice in such form and containing such information
concerning such broker or dealer and any persons associated
with such broker or dealer as the Commission, by rule, may
prescribe as necessary or appropriate in the public interest
or for the protection of investors. A broker or dealer may
not register under this paragraph unless that broker or
dealer is a member of a national securities association
registered under section 15A(k).
``(ii) Immediate effectiveness.--Such registration shall be
effective contemporaneously with the submission of notice, in
written or electronic form, to the Commission, except that
such registration shall not be effective if the registration
would be subject to suspension or revocation under paragraph
(4).
``(iii) Suspension.--Such registration shall be suspended
immediately if a national securities association registered
pursuant to section 15A(k) of this title suspends the
membership of that broker or dealer.
``(iv) Termination.--Such registration shall be terminated
immediately if any of the above stated conditions for
registration set forth in this paragraph are no longer
satisfied.
``(B) Exemptions for registered brokers and dealers.--A
broker or dealer registered pursuant to the requirements of
subparagraph (A) shall be exempt from the following
provisions of this title and the rules thereunder with
respect to transactions in security futures products:
``(i) Section 8.
``(ii) Section 11.
``(iii) Subsections (c)(3) and (c)(5) of this section.
``(iv) Section 15B.
``(v) Section 15C.
``(vi) Subsections (d), (e), (f), (g), (h), and (i) of
section 17.''.
(2) Conforming amendment.--Section 28(e) of the Securities
Exchange Act of 1934 (15 U.S.C. 78bb(e)) is amended by adding
at the end the following:
``(4) The provisions of this subsection shall not apply
with regard to securities that are security futures
products.''.
(b) Floor Brokers and Floor Traders.--Section 15(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) is amended
by inserting after paragraph (11), as added by subsection
(a), the following:
``(12) Exemption for security futures product exchange
members.--
``(A) Registration exemption.--A natural person shall be
exempt from the registration requirements of this section if
such person--
``(i) is a member of a designated contract market
registered with the Commission as an exchange pursuant to
section 6(g);
``(ii) effects transactions only in securities on the
exchange of which such person is a member; and
``(iii) does not directly accept or solicit orders from
public customers or provide advice to public customers in
connection with the trading of security futures products.
[[Page H12335]]
``(B) Other exemptions.--A natural person exempt from
registration pursuant to subparagraph (A) shall also be
exempt from the following provisions of this title and the
rules thereunder:
``(i) Section 8.
``(ii) Section 11.
``(iii) Subsections (c)(3), (c)(5), and (e) of this
section.
``(iv) Section 15B.
``(v) Section 15C.
``(vi) Subsections (d), (e), (f), (g), (h), and (i) of
section 17.''.
(c) Limited Purpose National Securities Association.--
Section 15A of the Securities Exchange Act of 1934 (15 U.S.C.
78o-3) is amended by adding at the end the following:
``(k) Limited Purpose National Securities Association.--
``(1) Regulation of members with respect to security
futures products.--A futures association registered under
section 17 of the Commodity Exchange Act shall be a
registered national securities association for the limited
purpose of regulating the activities of members who are
registered as brokers or dealers in security futures products
pursuant to section 15(b)(11).
``(2) Requirements for registration.--Such a securities
association shall--
``(A) be so organized and have the capacity to carry out
the purposes of the securities laws applicable to security
futures products and to comply, and (subject to any rule or
order of the Commission pursuant to section 19(g)(2)) to
enforce compliance by its members and persons associated with
its members, with the provisions of the securities laws
applicable to security futures products, the rules and
regulations thereunder, and its rules;
``(B) have rules that--
``(i) are designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles
of trade, and, in general, to protect investors and the
public interest, including rules governing sales practices
and the advertising of security futures products reasonably
comparable to those of other national securities associations
registered pursuant to subsection (a) that are applicable to
security futures products; and
``(ii) are not designed to regulate by virtue of any
authority conferred by this title matters not related to the
purposes of this title or the administration of the
association;
``(C) have rules that provide that (subject to any rule or
order of the Commission pursuant to section 19(g)(2)) its
members and persons associated with its members shall be
appropriately disciplined for violation of any provision of
the securities laws applicable to security futures products,
the rules or regulations thereunder, or the rules of the
association, by expulsion, suspension, limitation of
activities, functions, and operations, fine, censure, being
suspended or barred from being associated with a member, or
any other fitting sanction; and
``(D) have rules that ensure that members and natural
persons associated with members meet such standards of
training, experience, and competence necessary to effect
transactions in security futures products and are tested for
their knowledge of securities and security futures products.
``(3) Exemption from rule change submission.--Such a
securities association shall be exempt from submitting
proposed rule changes pursuant to section 19(b) of this
title, except that--
``(A) the association shall file proposed rule changes
related to higher margin levels, fraud or manipulation,
recordkeeping, reporting, listing standards, or decimal
pricing for security futures products, sales practices for,
advertising of, or standards of training, experience,
competence, or other qualifications for security futures
products for persons who effect transactions in security
futures products, or rules effectuating the association's
obligation to enforce the securities laws pursuant to section
19(b)(7);
``(B) the association shall file pursuant to sections
19(b)(1) and 19(b)(2) proposed rule changes related to
margin, except for changes resulting in higher margin levels;
and
``(C) the association shall file pursuant to section
19(b)(1) proposed rule changes that have been abrogated by
the Commission pursuant to section 19(b)(7)(C).
``(4) Other exemptions.--Such a securities association
shall be exempt from and shall not be required to enforce
compliance by its members, and its members shall not, solely
with respect to their transactions effected in security
futures products, be required to comply, with the following
provisions of this title and the rules thereunder:
``(A) Section 8.
``(B) Subsections (b)(1), (b)(3), (b)(4), (b)(5), (b)(8),
(b)(10), (b)(11), (b)(12), (b)(13), (c), (d), (e), (f), (g),
(h), and (i) of this section.
``(C) Subsections (d), (f), and (k) of section 17.
``(D) Subsections (a), (f), and (h) of section 19.''.
(d) Exemption Under the Securities Investor Protection Act
of 1970.--
(1) Section 16(14) of the Securities Investor Protection
Act of 1970 (15 U.S.C. 78lll(14)) is amended by inserting
``or any security future as that term is defined in section
3(a)(55)(A) of the Securities Exchange Act of 1934,'' after
``certificate of deposit for a security,''.
(2) Section 3(a)(2)(A) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78ccc(a)(2)(A)) is
amended--
(A) in clause (i), by striking ``and'' after the semicolon;
(B) in clause (ii), by striking the period and inserting
``; and''; and
(C) by adding at the end the following:
``(iii) persons who are registered as a broker or dealer
pursuant to section 15(b)(11)(A) of the Securities Exchange
Act of 1934.''.
SEC. 204. SPECIAL PROVISIONS FOR INTERAGENCY COOPERATION.
Section 17(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78q(b)) is amended--
(1) by striking ``(b) All'' and inserting the following:
``(b) Records Subject to Examination.--
``(1) Procedures for cooperation with other agencies.--
All'';
(2) by striking ``prior to conducting any such examination
of a registered clearing'' and inserting the following:
``prior to conducting any such examination of a--
``(A) registered clearing'';
(3) by redesignating the last sentence as paragraph (4)(C);
(4) by striking the period at the end of the first sentence
and inserting the following: ``; or
``(B) broker or dealer registered pursuant to section
15(b)(11), exchange registered pursuant to section 6(g), or
national securities association registered pursuant to
section 15A(k) gives notice to the Commodity Futures Trading
Commission of such proposed examination and consults with the
Commodity Futures Trading Commission concerning the
feasibility and desirability of coordinating such examination
with examinations conducted by the Commodity Futures Trading
Commission in order to avoid unnecessary regulatory
duplication or undue regulatory burdens for such broker or
dealer or exchange.'';
(5) by adding at the end the following new paragraphs:
``(2) Furnishing data and reports to cftc.--The Commission
shall notify the Commodity Futures Trading Commission of any
examination conducted of any broker or dealer registered
pursuant to section 15(b)(11), exchange registered pursuant
to section 6(g), or national securities association
registered pursuant to section 15A(k) and, upon request,
furnish to the Commodity Futures Trading Commission any
examination report and data supplied to, or prepared by, the
Commission in connection with such examination.
``(3) Use of cftc reports.--Prior to conducting an
examination under paragraph (1), the Commission shall use the
reports of examinations, if the information available therein
is sufficient for the purposes of the examination, of--
``(A) any broker or dealer registered pursuant to section
15(b)(11);
``(B) exchange registered pursuant to section 6(g); or
``(C) national securities association registered pursuant
to section 15A(k);
that is made by the Commodity Futures Trading Commission, a
national securities association registered pursuant to
section 15A(k), or an exchange registered pursuant to section
6(g).
``(4) Rules of construction.--
``(A) Notwithstanding any other provision of this
subsection, the records of a broker or dealer registered
pursuant to section 15(b)(11), an exchange registered
pursuant to section 6(g), or a national securities
association registered pursuant to section 15A(k) described
in this subparagraph shall not be subject to routine periodic
examinations by the Commission.
``(B) Any recordkeeping rules adopted under this subsection
for a broker or dealer registered pursuant to section
15(b)(11), an exchange registered pursuant to section 6(g),
or a national securities association registered pursuant to
section 15A(k) shall be limited to records with respect to
persons, accounts, agreements, contracts, and transactions
involving security futures products.''; and
(6) in paragraph (4)(C) (as redesignated by paragraph (3)
of this section), by striking ``Nothing in the proviso to the
preceding sentence'' and inserting ``Nothing in the proviso
in paragraph (1)''.
SEC. 205. MAINTENANCE OF MARKET INTEGRITY FOR SECURITY
FUTURES PRODUCTS.
(a) Addition of Security Futures Products to Option-
Specific Enforcement Provisions.--
(1) Prohibition against manipulation.--Section 9(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78i(b)) is
amended--
(A) in paragraph (1)--
(i) by inserting ``(A)'' after ``acquires''; and
(ii) by striking ``; or'' and inserting ``; or (B) any
security futures product on the security; or'';
(B) in paragraph (2)--
(i) by inserting ``(A)'' after ``interest in any''; and
(ii) by striking ``; or'' and inserting ``; or (B) such
security futures product; or''; and
(C) in paragraph (3)--
(i) by inserting ``(A)'' after ``interest in any''; and
(ii) by inserting ``; or (B) such security futures
product'' after ``privilege''.
(2) Manipulation in options and other derivative
products.--Section 9(g) of the Securities Exchange Act of
1934 (15 U.S.C. 78i(g)) is amended--
(A) by inserting ``(1)'' after ``(g)'';
(B) by inserting ``other than a security futures product''
after ``future delivery''; and
(C) by adding at the end following:
``(2) Notwithstanding the Commodity Exchange Act, the
Commission shall have the authority to regulate the trading
of any security futures product to the extent provided in the
securities laws.''.
(3) Liability of controlling persons and persons who aid
and abet violations.--Section 20(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78t(d)) is amended by
striking ``or privilege'' and inserting ``, privilege, or
security futures product''.
(4) Liability to contemporaneous traders for insider
trading.--Section 21A(a)(1) of the Securities Exchange Act of
1934 (15 U.S.C. 78u-1(a)(1)) is amended by striking
``standardized options, the Commission--'' and inserting
``standardized options or security futures products, the
Commission--''.
(5) Enforcement consultation.--Section 21 of the Securities
Exchange Act of 1934 (15 U.S.C.
[[Page H12336]]
78u) is amended by adding at the end the following:
``(i) Information to CFTC.--The Commission shall provide
the Commodity Futures Trading Commission with notice of the
commencement of any proceeding and a copy of any order
entered by the Commission against any broker or dealer
registered pursuant to section 15(b)(11), any exchange
registered pursuant to section 6(g), or any national
securities association registered pursuant to section
15A(k).''.
SEC. 206. SPECIAL PROVISIONS FOR THE TRADING OF SECURITY
FUTURES PRODUCTS.
(a) Listing Standards and Conditions for Trading.--Section
6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is
amended by inserting after subsection (g), as added by
section 202, the following:
``(h) Trading in Security Futures Products.--
``(1) Trading on exchange or association required.--It
shall be unlawful for any person to effect transactions in
security futures products that are not listed on a national
securities exchange or a national securities association
registered pursuant to section 15A(a).
``(2) Listing standards required.--Except as otherwise
provided in paragraph (7), a national securities exchange or
a national securities association registered pursuant to
section 15A(a) may trade only security futures products that
(A) conform with listing standards that such exchange or
association files with the Commission under section 19(b) and
(B) meet the criteria specified in section 2(a)(1)(D)(i) of
the Commodity Exchange Act.
``(3) Requirements for listing standards and conditions for
trading.--Such listing standards shall--
``(A) except as otherwise provided in a rule, regulation,
or order issued pursuant to paragraph (4), require that any
security underlying the security future, including each
component security of a narrow-based security index, be
registered pursuant to section 12 of this title;
``(B) require that if the security futures product is not
cash settled, the market on which the security futures
product is traded have arrangements in place with a
registered clearing agency for the payment and delivery of
the securities underlying the security futures product;
``(C) be no less restrictive than comparable listing
standards for options traded on a national securities
exchange or national securities association registered
pursuant to section 15A(a) of this title;
``(D) except as otherwise provided in a rule, regulation,
or order issued pursuant to paragraph (4), require that the
security future be based upon common stock and such other
equity securities as the Commission and the Commodity Futures
Trading Commission jointly determine appropriate;
``(E) require that the security futures product is cleared
by a clearing agency that has in place provisions for linked
and coordinated clearing with other clearing agencies that
clear security futures products, which permits the security
futures product to be purchased on one market and offset on
another market that trades such product;
``(F) require that only a broker or dealer subject to
suitability rules comparable to those of a national
securities association registered pursuant to section 15A(a)
effect transactions in the security futures product;
``(G) require that the security futures product be subject
to the prohibition against dual trading in section 4j of the
Commodity Exchange Act (7 U.S.C. 6j) and the rules and
regulations thereunder or the provisions of section 11(a)
of this title and the rules and regulations thereunder,
except to the extent otherwise permitted under this title
and the rules and regulations thereunder;
``(H) require that trading in the security futures product
not be readily susceptible to manipulation of the price of
such security futures product, nor to causing or being used
in the manipulation of the price of any underlying security,
option on such security, or option on a group or index
including such securities;
``(I) require that procedures be in place for coordinated
surveillance among the market on which the security futures
product is traded, any market on which any security
underlying the security futures product is traded, and other
markets on which any related security is traded to detect
manipulation and insider trading;
``(J) require that the market on which the security futures
product is traded has in place audit trails necessary or
appropriate to facilitate the coordinated surveillance
required in subparagraph (I);
``(K) require that the market on which the security futures
product is traded has in place procedures to coordinate
trading halts between such market and any market on which any
security underlying the security futures product is traded
and other markets on which any related security is traded;
and
``(L) require that the margin requirements for a security
futures product comply with the regulations prescribed
pursuant to section 7(c)(2)(B), except that nothing in this
subparagraph shall be construed to prevent a national
securities exchange or national securities association from
requiring higher margin levels for a security futures product
when it deems such action to be necessary or appropriate.
``(4) Authority to modify certain listing standard
requirements.--
``(A) Authority to modify.--The Commission and the
Commodity Futures Trading Commission, by rule, regulation, or
order, may jointly modify the listing standard requirements
specified in subparagraph (A) or (D) of paragraph (3) to the
extent such modification fosters the development of fair and
orderly markets in security futures products, is necessary or
appropriate in the public interest, and is consistent with
the protection of investors.
``(B) Authority to grant exemptions.--The Commission and
the Commodity Futures Trading Commission, by order, may
jointly exempt any person from compliance with the listing
standard requirement specified in subparagraph (E) of
paragraph (3) to the extent such exemption fosters the
development of fair and orderly markets in security futures
products, is necessary or appropriate in the public interest,
and is consistent with the protection of investors.
``(5) Requirements for other persons trading security
future products.--It shall be unlawful for any person (other
than a national securities exchange or a national securities
association registered pursuant to section 15A(a)) to
constitute, maintain, or provide a marketplace or facilities
for bringing together purchasers and sellers of security
future products or to otherwise perform with respect to
security future products the functions commonly performed by
a stock exchange as that term is generally understood, unless
a national securities association registered pursuant to
section 15A(a) or a national securities exchange of which
such person is a member--
``(A) has in place procedures for coordinated surveillance
among such person, the market trading the securities
underlying the security future products, and other markets
trading related securities to detect manipulation and insider
trading;
``(B) has rules to require audit trails necessary or
appropriate to facilitate the coordinated surveillance
required in subparagraph (A); and
``(C) has rules to require such person to coordinate
trading halts with markets trading the securities underlying
the security future products and other markets trading
related securities.
``(6) Deferral of options on security futures trading.--No
person shall offer to enter into, enter into, or confirm the
execution of any put, call, straddle, option, or privilege on
a security future, except that, after 3 years after the date
of enactment of this subsection, the Commission and the
Commodity Futures Trading Commission may by order jointly
determine to permit trading of puts, calls, straddles,
options, or privileges on any security future authorized
to be traded under the provisions of this Act and the
Commodity Exchange Act.
``(7) Deferral of linked and coordinated clearing.--
``(A) Notwithstanding paragraph (2), until the compliance
date, a national securities exchange or national securities
association registered pursuant to section 15A(a) may trade a
security futures product that does not--
``(i) conform with any listing standard promulgated to meet
the requirement specified in subparagraph (E) of paragraph
(3); or
``(ii) meet the criterion specified in section
2(a)(1)(D)(i)(IV) of the Commodity Exchange Act.
``(B) The Commission and the Commodity Futures Trading
Commission shall jointly publish in the Federal Register a
notice of the compliance date no later than 165 days before
the compliance date.
``(C) For purposes of this paragraph, the term `compliance
date' means the later of--
``(i) 180 days after the end of the first full calendar
month period in which the average aggregate comparable share
volume for all security futures products based on single
equity securities traded on all national securities
exchanges, any national securities associations registered
pursuant to section 15A(a), and all other persons equals or
exceeds 10 percent of the average aggregate comparable share
volume of options on single equity securities traded on all
national securities exchanges and any national securities
associations registered pursuant to section 15A(a); or
``(ii) 2 years after the date on which trading in any
security futures product commences under this title.''.
(b) Margin.--Section 7 of the Securities Exchange Act of
1934 (15 U.S.C. 78g) is amended--
(1) in subsection (a), by inserting ``or a security futures
product'' after ``exempted security'';
(2) in subsection (c)(1)(A), by inserting ``except as
provided in paragraph (2),'' after ``security),'';
(3) by redesignating paragraph (2) of subsection (c) as
paragraph (3) of such subsection; and
(4) by inserting after paragraph (1) of such subsection the
following:
``(2) Margin regulations.--
``(A) Compliance with margin rules required.--It shall be
unlawful for any broker, dealer, or member of a national
securities exchange to, directly or indirectly, extend or
maintain credit to or for, or collect margin from any
customer on, any security futures product unless such
activities comply with the regulations--
``(i) which the Board shall prescribe pursuant to
subparagraph (B); or
``(ii) if the Board determines to delegate the authority to
prescribe such regulations, which the Commission and the
Commodity Futures Trading Commission shall jointly prescribe
pursuant to subparagraph (B).
If the Board delegates the authority to prescribe such
regulations under clause (ii) and the Commission and the
Commodity Futures Trading Commission have not jointly
prescribed such regulations within a reasonable period of
time after the date of such delegation, the Board shall
prescribe such regulations pursuant to subparagraph (B).
``(B) Criteria for issuance of rules.--The Board shall
prescribe, or, if the authority is delegated pursuant to
subparagraph (A)(ii), the Commission and the Commodity
Futures Trading Commission shall jointly prescribe, such
regulations to establish margin requirements, including the
establishment of levels of margin
[[Page H12337]]
(initial and maintenance) for security futures products under
such terms, and at such levels, as the Board deems
appropriate, or as the Commission and the Commodity Futures
Trading Commission jointly deem appropriate--
``(i) to preserve the financial integrity of markets
trading security futures products;
``(ii) to prevent systemic risk;
``(iii) to require that--
``(I) the margin requirements for a security future product
be consistent with the margin requirements for comparable
option contracts traded on any exchange registered
pursuant to section 6(a) of this title; and
``(II) initial and maintenance margin levels for a security
future product not be lower than the lowest level of margin,
exclusive of premium, required for any comparable option
contract traded on any exchange registered pursuant to
section 6(a) of this title, other than an option on a
security future;
except that nothing in this subparagraph shall be construed
to prevent a national securities exchange or national
securities association from requiring higher margin levels
for a security future product when it deems such action to be
necessary or appropriate; and
``(iv) to ensure that the margin requirements (other than
levels of margin), including the type, form, and use of
collateral for security futures products, are and remain
consistent with the requirements established by the Board,
pursuant to subparagraphs (A) and (B) of paragraph (1).''.
(c) Incorporation of Security Futures Products Into the
National Market System.--Section 11A of the Securities
Exchange Act of 1934 (15 U.S.C. 78k-1) is amended by adding
at the end the following:
``(e) National Markets System for Security Futures
Products.--
``(1) Consultation and cooperation required.--With respect
to security futures products, the Commission and the
Commodity Futures Trading Commission shall consult and
cooperate so that, to the maximum extent practicable, their
respective regulatory responsibilities may be fulfilled and
the rules and regulations applicable to security futures
products may foster a national market system for security
futures products if the Commission and the Commodity Futures
Trading Commission jointly determine that such a system would
be consistent with the congressional findings in subsection
(a)(1). In accordance with this objective, the Commission
shall, at least 15 days prior to the issuance for public
comment of any proposed rule or regulation under this section
concerning security futures products, consult and request the
views of the Commodity Futures Trading Commission.
``(2) Application of rules by order of cftc.--No rule
adopted pursuant to this section shall be applied to any
person with respect to the trading of security futures
products on an exchange that is registered under section 6(g)
unless the Commodity Futures Trading Commission has issued an
order directing that such rule is applicable to such
persons.''.
(d) Incorporation of Security Futures Products Into the
National System for Clearance and Settlement.--Section 17A(b)
of the Securities Exchange Act of 1934 (15 U.S.C. 78q-1(b))
is amended by adding at the end the following:
``(7)(A) A clearing agency that is regulated directly or
indirectly by the Commodity Futures Trading Commission
through its association with a designated contract market for
security futures products that is a national securities
exchange registered pursuant to section 6(g), and that would
be required to register pursuant to paragraph (1) of this
subsection only because it performs the functions of a
clearing agency with respect to security futures products
effected pursuant to the rules of the designated contract
market with which such agency is associated, is exempted from
the provisions of this section and the rules and regulations
thereunder, except that if such a clearing agency performs
the functions of a clearing agency with respect to a security
futures product that is not cash settled, it must have
arrangements in place with a registered clearing agency to
effect the payment and delivery of the securities underlying
the security futures product.
``(B) Any clearing agency that performs the functions of a
clearing agency with respect to security futures products
must coordinate with and develop fair and reasonable links
with any and all other clearing agencies that perform the
functions of a clearing agency with respect to security
futures products, in order to permit, as of the compliance
date (as defined in section 6(h)(6)(C)), security futures
products to be purchased on one market and offset on another
market that trades such products.''.
(e) Market Emergency Powers and Circuit Breakers.--Section
12(k) of the Securities Exchange Act of 1934 (15 U.S.C.
78l(k)) is amended--
(1) in paragraph (1), by adding at the end the following:
``If the actions described in subparagraph (A) or (B) involve
a security futures product, the Commission shall consult with
and consider the views of the Commodity Futures Trading
Commission.''; and
(2) in paragraph (2)(B), by inserting after the first
sentence the following: ``If the actions described in
subparagraph (A) involve a security futures product, the
Commission shall consult with and consider the views of the
Commodity Futures Trading Commission.''.
(f) Transaction Fees.--Section 31 of the Securities
Exchange Act of 1934 (15 U.S.C. 78ee) is amended--
(1) in subsection (a), by inserting ``and assessments''
after ``fees'';
(2) in subsections (b), (c), and (d)(1), by striking ``and
other evidences of indebtedness'' and inserting ``other
evidences of indebtedness, and security futures products'';
(3) in subsection (f), by inserting ``or assessment'' after
``fee'';
(4) in subsection (g), by inserting ``and assessment''
after ``fee'';
(5) by redesignating subsections (e), (f), and (g) as
subsections (f), (g), and (h), respectively; and
(6) by inserting after subsection (d) the following new
subsection:
``(e) Assessments on Security Futures Transactions.--Each
national securities exchange and national securities
association shall pay to the Commission an assessment equal
to $0.02 for each round turn transaction (treated as
including one purchase and one sale of a contract of sale for
future delivery) on a security future traded on such national
securities exchange or by or through any member of such
association otherwise than on a national securities exchange,
except that for fiscal year 2007 or any succeeding fiscal
year such assessment shall be equal to $0.0075 for each such
transaction. Assessments collected pursuant to this
subsection shall be deposited and collected as general
revenue of the Treasury.''.
(g) Exemption From Short Sale Provisions.--Section 10(a) of
the Securities Exchange Act of 1934 (15 U.S.C 78j(a)) is
amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end the following:
``(2) Paragraph (1) of this subsection shall not apply to
security futures products.''.
(h) Rulemaking Authority To Address Duplicative Regulation
of Dual Registrants.--Section 15(c)(3) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(c)(3))is amended--
(1) by inserting ``(A)'' after ``(3)''; and
(2) by adding at the end the following:
``(B) Consistent with this title, the Commission, in
consultation with the Commodity Futures Trading Commission,
shall issue such rules, regulations, or orders as are
necessary to avoid duplicative or conflicting regulations
applicable to any broker or dealer registered with the
Commission pursuant to section 15(b) (except paragraph (11)
thereof), that is also registered with the Commodity Futures
Trading Commission pursuant to section 4f(a) of the Commodity
Exchange Act (except paragraph (2) thereof), with respect to
the application of (i) the provisions of section 8, section
15(c)(3), and section 17 of this title and the rules and
regulations thereunder related to the treatment of customer
funds, securities, or property, maintenance of books and
records, financial reporting, or other financial
responsibility rules, involving security futures products and
(ii) similar provisions of the Commodity Exchange Act and
rules and regulations thereunder involving security futures
products.''.
(i) Obligation To Address Duplicative Regulation of Dual
Registrants.--Section 6 of the Securities Exchange Act of
1934 (15 U.S.C 78f) is amended by inserting after subsection
(h), as added by subsection (a) of this section, the
following:
``(i) Consistent with this title, each national securities
exchange registered pursuant to subsection (a) of this
section shall issue such rules as are necessary to avoid
duplicative or conflicting rules applicable to any broker or
dealer registered with the Commission pursuant to section
15(b) (except paragraph (11) thereof), that is also
registered with the Commodity Futures Trading Commission
pursuant to section 4f(a) of the Commodity Exchange Act
(except paragraph (2) thereof), with respect to the
application of--
(1) rules of such national securities exchange of the type
specified in section 15(c)(3)(B) involving security futures
products; and
(2) similar rules of national securities exchanges
registered pursuant to section 6(g) and national securities
associations registered pursuant to section 15A(k) involving
security futures products.''.
(j) Obligation To Address Duplicative Regulation of Dual
Registrants.--Section 15A of the Securities Exchange Act of
1934 (15 U.S.C 78o-3) is amended by inserting after
subsection (k), as added by section 203, the following:
``(l) Consistent with this title, each national securities
association registered pursuant to subsection (a) of this
section shall issue such rules as are necessary to avoid
duplicative or conflicting rules applicable to any broker or
dealer registered with the Commission pursuant to section
15(b) (except paragraph (11) thereof), that is also
registered with the Commodity Futures Trading
Commission pursuant to section 4f(a) of the Commodity
Exchange Act (except paragraph (2) thereof), with respect
to the application of--
``(1) rules of such national securities association of the
type specified in section 15(c)(3)(B) involving security
futures products; and
``(2) similar rules of national securities associations
registered pursuant to subsection (k) of this section and
national securities exchanges registered pursuant to section
6(g) involving security futures products.''.
(k) Obligation To Put in Place Procedures and Adopt
Rules.--
(1) National securities associations.--Section 15A of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-3) is amended
by inserting after subsection (l), as added by subsection (j)
of this section, the following new subsection:
``(m) Procedures and Rules for Security Future Products.--A
national securities association registered pursuant to
subsection (a) shall, not later than 8 months after the date
of enactment of the Commodity Futures Modernization Act of
2000, implement the procedures specified in section
6(h)(5)(A) of this title and adopt the rules specified in
subparagraphs (B) and (C) of section 6(h)(5) of this
title.''.
(2) National securities exchanges.--Section 6 of the
Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by
inserting after subsection (i), as added by subsection (i) of
this section, the following new subsection:
[[Page H12338]]
``(j) Procedures and Rules for Security Future Products.--A
national securities exchange registered pursuant to
subsection (a) shall implement the procedures specified in
section 6(h)(5)(A) of this title and adopt the rules
specified in subparagraphs (B) and (C) of section 6(h)(5) of
this title not later than 8 months after the date of receipt
of a request from an alternative trading system for such
implementation and rules.''.
(l) Obligation To Address Security Futures Products Traded
on Foreign Exchanges.--Section 6 of the Securities Exchange
Act of 1934 (15 U.S.C. 78f) is amended by adding after
subsection (j), as added by subsection (k) of this section,
the following--
``(k)(1) To the extent necessary or appropriate in the
public interest, to promote fair competition, and consistent
with the promotion of market efficiency, innovation, and
expansion of investment opportunities, the protection of
investors, and the maintenance of fair and orderly markets,
the Commission and the Commodity Futures Trading Commission
shall jointly issue such rules, regulations, or orders as are
necessary and appropriate to permit the offer and sale of a
security futures product traded on or subject to the rules of
a foreign board of trade to United States persons.
``(2) The rules, regulations, or orders adopted under
paragraph (1) shall take into account, as appropriate, the
nature and size of the markets that the securities underlying
the security futures product reflect.''.
SEC. 207. CLEARANCE AND SETTLEMENT.
Section 17A(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78q-1(b)) is amended--
(1) in paragraph (3)(A), by inserting ``and derivative
agreements, contracts, and transactions'' after ``prompt and
accurate clearance and settlement of securities
transactions'';
(2) in paragraph (3)(F), by inserting ``and, to the extent
applicable, derivative agreements, contracts, and
transactions'' after ``designed to promote the prompt and
accurate clearance and settlement of securities
transactions''; and
(3) by inserting after paragraph (7), as added by section
206(d), the following:
``(8) A registered clearing agency shall be permitted to
provide facilities for the clearance and settlement of any
derivative agreements, contracts, or transactions that are
excluded from the Commodity Exchange Act, subject to the
requirements of this section and to such rules and
regulations as the Commission may prescribe as necessary or
appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of
this title.''.
SEC. 208. AMENDMENTS RELATING TO REGISTRATION AND DISCLOSURE
ISSUES UNDER THE SECURITIES ACT OF 1933 AND THE
SECURITIES EXCHANGE ACT OF 1934.
(a) Amendments to the Securities Act of 1933.--
(1) Treatment of security futures products.--Section 2(a)
of the Securities Act of 1933 (15 U.S.C. 77b(a)) is amended--
(A) in paragraph (1), by inserting ``security future,''
after ``treasury stock,'';
(B) in paragraph (3), by adding at the end the following:
``Any offer or sale of a security futures product by or on
behalf of the issuer of the securities underlying the
security futures product, an affiliate of the issuer, or an
underwriter, shall constitute a contract for sale of, sale
of, offer for sale, or offer to sell the underlying
securities.'';
(C) by adding at the end the following:
``(16) The terms `security future', `narrow-based security
index', and `security futures product' have the same meanings
as provided in section 3(a)(55) of the Securities Exchange
Act of 1934.''.
(2) Exemption from registration.--Section 3(a) of the
Securities Act of 1933 (15 U.S.C. 77c(a)) is amended by
adding at the end the following:
``(14) Any security futures product that is--
``(A) cleared by a clearing agency registered under section
17A of the Securities Exchange Act of 1934 or exempt from
registration under subsection (b)(7) of such section 17A; and
``(B) traded on a national securities exchange or a
national securities association registered pursuant to
section 15A(a) of the Securities Exchange Act of 1934.''.
(3) Conforming amendment.--Section 12(a)(2) of the
Securities Act of 1933 (15 U.S.C. 77l(a)(2)) is amended by
striking ``paragraph (2)'' and inserting ``paragraphs (2) and
(14)''.
(b) Amendments to the Securities Exchange Act of 1934.--
(1) Exemption from registration.--Section 12(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78l(a)) is amended
by adding at the end the following: ``The provisions of this
subsection shall not apply in respect of a security futures
product traded on a national securities exchange.''.
(2) Exemptions from reporting requirement.--Section
12(g)(5) of the Securities Exchange Act of 1934 (15 U.S.C.
78l(g)(5)) is amended by adding at the end the following:
``For purposes of this subsection, a security futures product
shall not be considered a class of equity security of the
issuer of the securities underlying the security futures
product.''.
(3) Transactions by corporate insiders.--Section 16 of the
Securities Exchange Act of 1934 (15 U.S.C. 78p) is amended by
adding at the end the following:
``(f) Treatment of Transactions in Security Futures
Products.--The provisions of this section shall apply to
ownership of and transactions in security futures
products.''.
SEC. 209. AMENDMENTS TO THE INVESTMENT COMPANY ACT OF 1940
AND THE INVESTMENT ADVISERS ACT OF 1940.
(a) Definitions Under the Investment Company Act of 1940
and the Investment Advisers Act of 1940.--
(1) Section 2(a)(36) of the Investment Company Act of 1940
(15 U.S.C. 80a-2(a)(36)) is amended by inserting ``security
future,'' after ``treasury stock,''.
(2) Section 202(a)(18) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)(18)) is amended by inserting
``security future,'' after ``treasury stock,''.
(3) Section 2(a) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)) is amended by adding at the end the
following:
``(52) The terms `security future' and `narrow-based
security index' have the same meanings as provided in section
3(a)(55) of the Securities Exchange Act of 1934.''.
(4) Section 202(a) of the Investment Advisers Act of 1940
(15 U.S.C. 80b-2(a)) is amended by adding at the end the
following:
``(27) The terms `security future' and `narrow-based
security index' have the same meanings as provided in section
3(a)(55) of the Securities Exchange Act of 1934.''.
(b) Other Provision.--Section 203(b) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-3(b)) is amended--
(1) by striking ``or'' at the end of paragraph (4);
(2) by striking the period at the end of paragraph (5) and
inserting ``; or''; and
(3) by adding at the end the following:
``(6) any investment adviser that is registered with the
Commodity Futures Trading Commission as a commodity trading
advisor whose business does not consist primarily of acting
as an investment adviser, as defined in section 202(a)(11) of
this title, and that does not act as an investment adviser
to--
``(A) an investment company registered under title I of
this Act; or
``(B) a company which has elected to be a business
development company pursuant to section 54 of title I of this
Act and has not withdrawn its election.''.
SEC. 210. PREEMPTION OF STATE LAWS.
Section 28(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78bb(a)) is amended--
(1) in the last sentence--
(A) by inserting ``subject to this title'' after
``privilege, or other security''; and
(B) by striking ``any such instrument, if such instrument
is traded pursuant to rules and regulations of a self-
regulatory organization that are filed with the Commission
pursuant to section 19(b) of this Act'' and inserting ``any
such security''; and
(2) by adding at the end the following new sentence: ``No
provision of State law regarding the offer, sale, or
distribution of securities shall apply to any transaction in
a security futures product, except that this sentence shall
not be construed as limiting any State antifraud law of
general applicability.''.
Subtitle B--Amendments to the Commodity Exchange Act
SEC. 251. JURISDICTION OF SECURITIES AND EXCHANGE COMMISSION;
OTHER PROVISIONS.
(a) Jurisdiction of Securities and Exchange Commission.--
(1) Section 2(a)(1)(C) of the Commodity Exchange Act (7
U.S.C. 2a) (as redesignated by section 34(a)(2)(C)) is
amended--
(A) in clause (ii)--
(i) by inserting ``or register a derivatives transaction
execution facility that trades or executes,'' after
``contract market in,'';
(ii) by inserting after ``contracts) for future delivery''
the following: ``, and no derivatives transaction execution
facility shall trade or execute such contracts of sale (or
options on such contracts) for future delivery,'';
(iii) by striking ``making such application demonstrates
and the Commission expressly finds that the specific contract
(or option on such contract) with respect to which the
application has been made meets'' and inserting ``or the
derivatives transaction execution facility, and the
applicable contract, meet'';
(iv) by striking subclause (III) of clause (ii) and
inserting the following:
``(III) Such group or index of securities shall not
constitute a narrow-based security index.'';
(B) by striking clause (iii);
(C) by striking clause (iv) and inserting the following:
``(iii) If, in its discretion, the Commission determines
that a stock index futures contract, notwithstanding its
conformance with the requirements in clause (ii) of this
subparagraph, can reasonably be used as a surrogate for
trading a security (including a security futures product), it
may, by order, require such contract and any option thereon
be traded and regulated as security futures products as
defined in section 3(a)(56) of the Securities Exchange Act of
1934 and section 1a of this Act subject to all rules and
regulations applicable to security futures products under
this Act and the securities laws as defined in section
3(a)(47) of the Securities Exchange Act of 1934.''; and
(D) by redesignating clause (v) as clause (iv).
(2) Section 2(a)(1) of the Commodity Exchange Act (7 U.S.C.
2, 2a, 4) is amended by adding at the end the following:
``(D)(i) Notwithstanding any other provision of this Act,
the Securities and Exchange Commission shall have
jurisdiction and authority over security futures as defined
in section 3(a)(55) of the Securities Exchange Act of 1934,
section 2(a)(16) of the Securities Act of 1933, section
2(a)(52) of the Investment Company Act of 1940, and section
202(a)(27) of the Investment Advisers Act of 1940, options on
security futures, and persons effecting transactions in
security futures and options thereon, and this Act shall
apply to and the Commission shall have jurisdiction with
respect to accounts, agreements (including any transaction
which is of the character of, or is commonly known to the
trade as, an `option', `privilege', `indemnity', `bid',
`offer', `put', `call', `advance guaranty', or `decline
guaranty'), contracts, and transactions involving, and may
designate a board of trade as
[[Page H12339]]
a contract market in, or register a derivatives transaction
execution facility that trades or executes, a security
futures product as defined in section 1a of this Act:
Provided, however, That, except as provided in clause (vi) of
this subparagraph, no board of trade shall be designated as a
contract market with respect to, or registered as a
derivatives transaction execution facility for, any such
contracts of sale for future delivery unless the board of
trade and the applicable contract meet the following
criteria:
``(I) Except as otherwise provided in a rule, regulation,
or order issued pursuant to clause (v) of this subparagraph,
any security underlying the security future, including each
component security of a narrow-based security index, is
registered pursuant to section 12 of the Securities Exchange
Act of 1934.
``(II) If the security futures product is not cash settled,
the board of trade on which the security futures product is
traded has arrangements in place with a clearing agency
registered pursuant to section 17A of the Securities Exchange
Act of 1934 for the payment and delivery of the securities
underlying the security futures product.
``(III) Except as otherwise provided in a rule, regulation,
or order issued pursuant to clause (v) of this subparagraph,
the security future is based upon common stock and such other
equity securities as the Commission and the Securities and
Exchange Commission jointly determine appropriate.
``(IV) The security futures product is cleared by a
clearing agency that has in place provisions for linked and
coordinated clearing with other clearing agencies that clear
security futures products, which permits the security futures
product to be purchased on a designated contract market,
registered derivatives transaction execution facility,
national securities exchange registered under section 6(a) of
the Securities Exchange Act of 1934, or national securities
association registered pursuant to section 15A(a) of the
Securities Exchange Act of 1934 and offset on another
designated contract market, registered derivatives
transaction execution facility, national securities exchange
registered under section 6(a) of the Securities Exchange Act
of 1934, or national securities association registered
pursuant to section 15A(a) of the Securities Exchange Act of
1934.
``(V) Only futures commission merchants, introducing
brokers, commodity trading advisors, commodity pool operators
or associated persons subject to suitability rules comparable
to those of a national securities association registered
pursuant to section 15A(a) of the Securities Exchange Act of
1934 solicit, accept any order for, or otherwise deal in any
transaction in or in connection with the security futures
product.
``(VI) The security futures product is subject to a
prohibition against dual trading in section 4j of this Act
and the rules and regulations thereunder or the provisions of
section 11(a) of the Securities Exchange Act of 1934 and the
rules and regulations thereunder, except to the extent
otherwise permitted under the Securities Exchange Act of 1934
and the rules and regulations thereunder.
``(VII) Trading in the security futures product is not
readily susceptible to manipulation of the price of such
security futures product, nor to causing or being used in the
manipulation of the price of any underlying security, option
on such security, or option on a group or index including
such securities;
``(VIII) The board of trade on which the security futures
product is traded has procedures in place for coordinated
surveillance among such board of trade, any market on which
any security underlying the security futures product is
traded, and other markets on which any related security is
traded to detect manipulation and insider trading, except
that, if the board of trade is an alternative trading system,
a national securities association registered pursuant to
section 15A(a) of the Securities Exchange Act of 1934 or
national securities exchange registered pursuant to section
6(a) of the Securities Exchange Act of 1934 of which such
alternative trading system is a member has in place such
procedures.
``(IX) The board of trade on which the security futures
product is traded has in place audit trails necessary or
appropriate to facilitate the coordinated surveillance
required in subclause (VIII), except that, if the board of
trade is an alternative trading system, a national securities
association registered pursuant to section 15A(a) of the
Securities Exchange Act of 1934 or national securities
exchange registered pursuant to section 6(a) of the
Securities Exchange Act of 1934 of which such alternative
trading system is a member has rules to require such audit
trails.
``(X) The board of trade on which the security futures
product is traded has in place procedures to coordinate
trading halts between such board of trade and markets on
which any security underlying the security futures product is
traded and other markets on which any related security is
traded, except that, if the board of trade is an alternative
trading system, a national securities association
registered pursuant to section 15A(a) of the Securities
Exchange Act of 1934 or national securities exchange
registered pursuant to section 6(a) of the Securities
Exchange Act of 1934 of which such alternative trading
system is a member has rules to require such coordinated
trading halts.
``(XI) The margin requirements for a security futures
product comply with the regulations prescribed pursuant to
section 7(c)(2)(B) of the Securities Exchange Act of 1934,
except that nothing in this subclause shall be construed to
prevent a board of trade from requiring higher margin levels
for a security futures product when it deems such action to
be necessary or appropriate.
``(ii) It shall be unlawful for any person to offer, to
enter into, to execute, to confirm the execution of, or to
conduct any office or business anywhere in the United States,
its territories or possessions, for the purpose of
soliciting, or accepting any order for, or otherwise dealing
in, any transaction in, or in connection with, a security
futures product unless--
``(I) the transaction is conducted on or subject to the
rules of a board of trade that--
``(aa) has been designated by the Commission as a contract
market in such security futures product; or
``(bb) is a registered derivatives transaction execution
facility for the security futures product that has provided a
certification with respect to the security futures product
pursuant to clause (vii);
``(II) the contract is executed or consummated by, through,
or with a member of the contract market or registered
derivatives transaction execution facility; and
``(III) the security futures product is evidenced by a
record in writing which shows the date, the parties to such
security futures product and their addresses, the property
covered, and its price, and each contract market member or
registered derivatives transaction execution facility member
shall keep the record for a period of 3 years from the date
of the transaction, or for a longer period if the Commission
so directs, which record shall at all times be open to the
inspection of any duly authorized representative of the
Commission.
``(iii)(I) Except as provided in subclause (II) but
notwithstanding any other provision of this Act, no person
shall offer to enter into, enter into, or confirm the
execution of any option on a security future.
``(II) After 3 years after the date of the enactment of the
Commodity Futures Modernization Act of 2000, the Commission
and the Securities and Exchange Commission may by order
jointly determine to permit trading of options on any
security future authorized to be traded under the provisions
of this Act and the Securities Exchange Act of 1934.
``(iv)(I) All relevant records of a futures commission
merchant or introducing broker registered pursuant to section
4f(a)(2), floor broker or floor trader exempt from
registration pursuant to section 4f(a)(3), associated person
exempt from registration pursuant to section 4k(6), or board
of trade designated as a contract market in a security
futures product pursuant to section 5f shall be subject to
such reasonable periodic or special examinations by
representatives of the Commission as the Commission deems
necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the
purposes of this Act, and the Commission, before conducting
any such examination, shall give notice to the Securities and
Exchange Commission of the proposed examination and consult
with the Securities and Exchange Commission concerning the
feasibility and desirability of coordinating the examination
with examinations conducted by the Securities and Exchange
Commission in order to avoid unnecessary regulatory
duplication or undue regulatory burdens for the registrant or
board of trade.
``(II) The Commission shall notify the Securities and
Exchange Commission of any examination conducted of any
futures commission merchant or introducing broker registered
pursuant to section 4f(a)(2), floor broker or floor trader
exempt from registration pursuant to section 4f(a)(3),
associated person exempt from registration pursuant to
section 4k(6), or board of trade designated as a contract
market in a security futures product pursuant to section 5f,
and, upon request, furnish to the Securities and Exchange
Commission any examination report and data supplied to or
prepared by the Commission in connection with the
examination.
``(III) Before conducting an examination under subclause
(I), the Commission shall use the reports of examinations,
unless the information sought is unavailable in the reports,
of any futures commission merchant or introducing broker
registered pursuant to section 4f(a)(2), floor broker or
floor trader exempt from registration pursuant to section
4f(a)(3), associated person exempt from registration pursuant
to section 4k(6), or board of trade designated as a contract
market in a security futures product pursuant to section 5f
that is made by the Securities and Exchange Commission, a
national securities association registered pursuant to
section 15A(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-3(a)), or a national securities exchange
registered pursuant to section 6(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78f(a)).
``(IV) Any records required under this subsection for a
futures commission merchant or introducing broker registered
pursuant to section 4f(a)(2), floor broker or floor trader
exempt from registration pursuant to section 4f(a)(3),
associated person exempt from registration pursuant to
section 4k(6), or board of trade designated as a contract
market in a security futures product pursuant to section 5f,
shall be limited to records with respect to accounts,
agreements, contracts, and transactions involving security
futures products.
``(v)(I) The Commission and the Securities and Exchange
Commission, by rule, regulation, or order, may jointly modify
the criteria specified in subclause (I) or (III) of clause
(i), including the trading of security futures based on
securities other than equity securities, to the extent such
modification fosters the development of fair and orderly
markets in security futures products, is necessary or
appropriate in the public interest, and is consistent with
the protection of investors.
``(II) The Commission and the Securities and Exchange
Commission, by order, may jointly exempt any person from
compliance with the criterion specified in clause (i)(IV) to
the extent such exemption fosters the development of fair and
orderly markets in security futures products, is necessary or
appropriate in the public
[[Page H12340]]
interest, and is consistent with the protection of investors.
``(vi)(I) Notwithstanding clauses (i) and (vii), until the
compliance date, a board of trade shall not be required to
meet the criterion specified in clause (i)(IV).
``(II) The Commission and the Securities and Exchange
Commission shall jointly publish in the Federal Register a
notice of the compliance date no later than 165 days before
the compliance date.
``(III) For purposes of this clause, the term `compliance
date' means the later of--
``(aa) 180 days after the end of the first full calendar
month period in which the average aggregate comparable share
volume for all security futures products based on single
equity securities traded on all designated contract markets
and registered derivatives transaction execution facilities
equals or exceeds 10 percent of the average aggregate
comparable share volume of options on single equity
securities traded on all national securities exchanges
registered pursuant to section 6(a) of the Securities
Exchange Act of 1934 and any national securities associations
registered pursuant to section 15A(a) of such Act; or
``(bb) 2 years after the date on which trading in any
security futures product commences under this Act.
``(vii) It shall be unlawful for a board of trade to trade
or execute a security futures product unless the board of
trade has provided the Commission with a certification that
the specific security futures product and the board of trade,
as applicable, meet the criteria specified in subclauses (I)
through (XI) of clause (i), except as otherwise provided in
clause (vi).''.
(b) Margin on Security Futures.--Section 2(a)(1)(C)(vi) of
the Commodity Exchange Act (7 U.S.C. 2a(vi)) (as redesignated
by section 34) is amended--
(1) by redesignating subclause (V) as subclause (VI); and
(2) by striking ``(vi)(I)'' and all that follows through
subclause (IV) and inserting the following:
``(v)(I) Notwithstanding any other provision of this Act,
any contract market in a stock index futures contract (or
option thereon) other than a security futures product, or any
derivatives transaction execution facility on which such
contract or option is traded, shall file with the Board of
Governors of the Federal Reserve System any rule establishing
or changing the levels of margin (initial and maintenance)
for such stock index futures contract (or option thereon)
other than security futures products.
``(II) The Board may at any time request any contract
market or derivatives transaction execution facility to set
the margin for any stock index futures contract (or option
thereon), other than for any security futures product, at
such levels as the Board in its judgment determines are
appropriate to preserve the financial integrity of the
contract market or derivatives transaction execution
facility, or its clearing system, or to prevent systemic
risk. If the contract market or derivatives transaction
execution facility fails to do so within the time specified
by the Board in its request, the Board may direct the
contract market or derivatives transaction execution facility
to alter or supplement the rules of the contract market or
derivatives transaction execution facility as specified in
the request.
``(III) Subject to such conditions as the Board may
determine, the Board may delegate any or all of its
authority, relating to margin for any stock index futures
contract (or option thereon), other than security futures
products, under this clause to the Commission.
``(IV) It shall be unlawful for any futures commission
merchant to, directly or indirectly, extend or maintain
credit to or for, or collect margin from any customer on any
security futures product unless such activities comply with
the regulations prescribed pursuant to section 7(c)(2)(B) of
the Securities Exchange Act of 1934.
``(V) Nothing in this clause shall supersede or limit the
authority granted to the Commission in section 8a(9) to
direct a contract market or registered derivatives
transaction execution facility, on finding an emergency to
exist, to raise temporary margin levels on any futures
contract, or option on the contract covered by this clause,
or on any security futures product.''.
(c) Dual Trading.--Section 4j of the Commodity Exchange Act
(7 U.S.C. 6j) is amended to read as follows:
``SEC. 4J. RESTRICTIONS ON DUAL TRADING IN SECURITY FUTURES
PRODUCTS ON DESIGNATED CONTRACT MARKETS AND
REGISTERED DERIVATIVES TRANSACTION EXECUTION
FACILITIES.
``(a) The Commission shall issue regulations to prohibit
the privilege of dual trading in security futures products on
each contract market and registered derivatives transaction
execution facility. The regulations issued by the Commission
under this section--
``(1) shall provide that the prohibition of dual trading
thereunder shall take effect upon issuance of the
regulations; and
``(2) shall provide exceptions, as the Commission
determines appropriate, to ensure fairness and orderly
trading in security futures product markets, including--
``(A) exceptions for spread transactions and the correction
of trading errors;
``(B) allowance for a customer to designate in writing not
less than once annually a named floor broker to execute
orders for such customer, notwithstanding the regulations to
prohibit the privilege of dual trading required under this
section; and
``(C) other measures reasonably designed to accommodate
unique or special characteristics of individual boards of
trade or contract markets, to address emergency or unusual
market conditions, or otherwise to further the public
interest consistent with the promotion of market efficiency,
innovation, and expansion of investment opportunities, the
protection of investors, and with the purposes of this
section.
``(b) As used in this section, the term `dual trading'
means the execution of customer orders by a floor broker
during the same trading session in which the floor broker
executes any trade in the same contract market or registered
derivatives transaction execution facility for--
``(1) the account of such floor broker;
``(2) an account for which such floor broker has trading
discretion; or
``(3) an account controlled by a person with whom such
floor broker has a relationship through membership in a
broker association.
``(c) As used in this section, the term `broker
association' shall include two or more contract market
members or registered derivatives transaction execution
facility members with floor trading privileges of whom at
least one is acting as a floor broker, who--
``(1) engage in floor brokerage activity on behalf of the
same employer,
``(2) have an employer and employee relationship which
relates to floor brokerage activity,
``(3) share profits and losses associated with their
brokerage or trading activity, or
``(4) regularly share a deck of orders.''.
(d) Exemption From Registration for Investment Advisers.--
Section 4m of the Commodity Exchange Act (7 U.S.C. 6m) is
amended by adding at the end the following:
``(3) Subsection (1) of this section shall not apply to any
commodity trading advisor that is registered with the
Securities and Exchange Commission as an investment adviser
whose business does not consist primarily of acting as a
commodity trading advisor, as defined in section 1a(6), and
that does not act as a commodity trading advisor to any
investment trust, syndicate, or similar form of enterprise
that is engaged primarily in trading in any commodity for
future delivery on or subject to the rules of any contract
market or registered derivatives transaction execution
facility.''.
(e) Exemption From Investigations of Markets in Underlying
Securities.--Section 16 of the Commodity Exchange Act (7
U.S.C. 20) is amended by adding at the end the following:
``(e) This section shall not apply to investigations
involving any security underlying a security futures
product.''.
(f) Rulemaking Authority To Address Duplicative Regulation
of Dual Registrants.--Section 4d of the Commodity Exchange
Act (7 U.S.C. 6d) is amended--
(1) by inserting ``(a)'' before the first undesignated
paragraph;
(2) by inserting ``(b)'' before the second undesignated
paragraph; and
(3) by adding at the end the following:
``(c) Consistent with this Act, the Commission, in
consultation with the Securities and Exchange Commission,
shall issue such rules, regulations, or orders as are
necessary to avoid duplicative or conflicting regulations
applicable to any futures commission merchant registered with
the Commission pursuant to section 4f(a) (except paragraph
(2) thereof), that is also registered with the Securities and
Exchange Commission pursuant to section 15(b) of the
Securities Exchange Act (except paragraph (11) thereof),
involving the application of--
``(1) section 8, section 15(c)(3), and section 17 of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder related to the treatment of customer funds,
securities, or property, maintenance of books and records,
financial reporting or other financial responsibility rules
(as defined in section 3(a)(40) of the Securities Exchange
Act of 1934), involving security futures products; and
``(2) similar provisions of this Act and the rules and
regulations thereunder involving security futures
products.''.
(g) Obligation To Address Duplicative Regulation of Dual
Registrants.--Section 17 of the Commodity Exchange Act (7
U.S.C. 21) is amended by adding at the end the following:
``(r) Consistent with this Act, each futures association
registered under this section shall issue such rules as are
necessary to avoid duplicative or conflicting rules
applicable to any futures commission merchant registered with
the Commission pursuant to section 4f(a) of this Act (except
paragraph (2) thereof), that is also registered with the
Securities and Exchange Commission pursuant to section 15(b)
of the Securities and Exchange Act of 1934 (except paragraph
(11) thereof), with respect to the application of--
``(1) rules of such futures association of the type
specified in section 4d(3) of this Act involving security
futures products; and
``(2) similar rules of national securities associations
registered pursuant to section 15A(a) of the Securities and
Exchange Act of 1934 involving security futures products.''.
(h) Obligation to Address Duplicative Regulation of Dual
Registrants.--Section 5c of the Commodity Exchange Act (as
added by section 114) is amended by adding at the end the
following:
``(f) Consistent with this Act, each designated contract
market and registered derivatives transaction execution
facility shall issue such rules as are necessary to avoid
duplicative or conflicting rules applicable to any futures
commission merchant registered with the Commission pursuant
to section 4f(a) of this Act (except paragraph (2) thereof),
that is also registered with the Securities and Exchange
Commission pursuant to section 15(b) of the Securities
Exchange Act of 1934 (except paragraph (11) thereof) with
respect to the application of--
``(1) rules of such designated contract market or
registered derivatives transaction execution facility of the
type specified in section 4d(3) of this Act involving
security futures products; and
``(2) similar rules of national securities associations
registered pursuant to section 15A(a) of the Securities
Exchange Act of 1934 and national securities exchanges
registered pursuant to section 6(g) of such Act involving
security futures products.''.
[[Page H12341]]
(i) Obligation To Address Security Futures Products Traded
on Foreign Exchanges.--Section 2(a)(1) of the Commodity
Exchange Act (7 U.S.C. 2, 2a, and 4)) is amended by adding at
the end the following:
``(E)(i) To the extent necessary or appropriate in the
public interest, to promote fair competition, and consistent
with promotion of market efficiency, innovation, and
expansion of investment opportunities, the protection of
investors, and the maintenance of fair and orderly markets,
the Commission and the Securities and Exchange Commission
shall jointly issue such rules, regulations, or orders as are
necessary and appropriate to permit the offer and sale of a
security futures product traded on or subject to the rules of
a foreign board of trade to United States persons.
``(ii) The rules, regulations, or orders adopted under
clause (i) shall take into account, as appropriate, the
nature and size of the markets that the securities underlying
the security futures product reflects.''.
(j) Security Futures Products Traded on Foreign Boards of
Trade.--Section 2(a)(1) of the Commodity Exchange Act (7
U.S.C. 2, 2a, and 4) is amended by adding at the end the
following:
``(F)(i) Nothing in this Act is intended to prohibit a
futures commission merchant from carrying security futures
products traded on or subject to the rules of a foreign board
of trade in the accounts of persons located outside of the
United States.
``(ii) Nothing in this Act is intended to prohibit any
eligible contract participant located in the United States
from purchasing or carrying securities futures products
traded on or subject to the rules of a foreign board of
trade, exchange, or market to the same extent such person may
be authorized to purchase or carry other securities traded on
a foreign board of trade, exchange, or market so long as any
underlying security for such security futures products is
traded principally on, by, or through any exchange or market
located outside the United States.''.
SEC. 252. APPLICATION OF THE COMMODITY EXCHANGE ACT TO
NATIONAL SECURITIES EXCHANGES AND NATIONAL
SECURITIES ASSOCIATIONS THAT TRADE SECURITY
FUTURES.
(a) Notice Designation of National Securities Exchanges and
National Securities Associations.--The Commodity Exchange Act
is amended by inserting after section 5e (7 U.S.C. 7b), as
redesignated by section 21(1), the following:
``SEC. 5F. DESIGNATION OF SECURITIES EXCHANGES AND
ASSOCIATIONS AS CONTRACT MARKETS.
``(a) Any board of trade that is registered with the
Securities and Exchange Commission as a national securities
exchange, is a national securities association registered
pursuant to section 15A(a) of the Securities Exchange Act of
1934, or is an alternative trading system shall be a
designated contract market in security futures products if--
``(1) such national securities exchange, national
securities association, or alternative trading system lists
or trades no other contracts of sale for future delivery,
except for security futures products;
``(2) such national securities exchange, national
securities association, or alternative trading system files
written notice with the Commission in such form as the
Commission, by rule, may prescribe containing such
information as the Commission, by rule, may prescribe as
necessary or appropriate in the public interest or for the
protection of customers; and
``(3) the registration of such national securities
exchange, national securities association, or alternative
trading system is not suspended pursuant to an order by the
Securities and Exchange Commission.
Such designation shall be effective contemporaneously with
the submission of notice, in written or electronic form, to
the Commission.
``(b)(1) A national securities exchange, national
securities association, or alternative trading system that is
designated as a contract market pursuant to section 5f shall
be exempt from the following provisions of this Act and the
rules thereunder:
``(A) Subsections (c), (e), and (g) of section 4c.
``(B) Section 4j.
``(C) Section 5.
``(D) Section 5c.
``(E) Section 6a.
``(F) Section 8(d).
``(G) Section 9(f).
``(H) Section 16.
``(2) An alternative trading system that is a designated
contract market under this section shall be required to be a
member of a futures association registered under section 17
and shall be exempt from any provision of this Act that would
require such alternative trading system to--
``(A) set rules governing the conduct of subscribers other
than the conduct of such subscribers' trading on such
alternative trading system; or
``(B) discipline subscribers other than by exclusion from
trading.
``(3) To the extent that an alternative trading system is
exempt from any provision of this Act pursuant to paragraph
(2) of this subsection, the futures association registered
under section 17 of which the alternative trading system is a
member shall set rules governing the conduct of subscribers
to the alternative trading system and discipline the
subscribers.
``(4)(A) Except as provided in subparagraph (B), but
notwithstanding any other provision of this Act, the
Commission, by rule, regulation, or order, may conditionally
or unconditionally exempt any designated contract market in
security futures subject to the designation requirement of
this section from any provision of this Act or of any rule or
regulation thereunder, to the extent such exemption is
necessary or appropriate in the public interest and is
consistent with the protection of investors.
``(B) The Commission shall, by rule or regulation,
determine the procedures under which an exemptive order under
this section is granted and may, in its sole discretion,
decline to entertain any application for an order of
exemption under this section.
``(C) An alternative trading system shall not be deemed to
be an exchange for any purpose as a result of the designation
of such alternative trading system as a contract market
under this section.''.
(b) Notice Registration of Certain Securities Broker-
Dealers; Exemption From Registration for Certain Securities
Broker-Dealers.--Section 4f(a) of the Commodity Exchange Act
(7 U.S.C. 6f(a)) is amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end the following:
``(2) Notwithstanding paragraph (1), and except as provided
in paragraph (3), any broker or dealer that is registered
with the Securities and Exchange Commission shall be
registered as a futures commission merchant or introducing
broker, as applicable, if--
``(A) the broker or dealer limits its solicitation of
orders, acceptance of orders, or execution of orders, or
placing of orders on behalf of others involving any contracts
of sale of any commodity for future delivery, on or subject
to the rules of any contract market or registered derivatives
transaction execution facility to security futures products;
``(B) the broker or dealer files written notice with the
Commission in such form as the Commission, by rule, may
prescribe containing such information as the Commission, by
rule, may prescribe as necessary or appropriate in the public
interest or for the protection of investors;
``(C) the registration of the broker or dealer is not
suspended pursuant to an order of the Securities and Exchange
Commission; and
``(D) the broker or dealer is a member of a national
securities association registered pursuant to section 15A(a)
of the Securities Exchange Act of 1934.
The registration shall be effective contemporaneously with
the submission of notice, in written or electronic form, to
the Commission.
``(3) A floor broker or floor trader shall be exempt from
the registration requirements of section 4e and paragraph (1)
of this subsection if--
``(A) the floor broker or floor trader is a broker or
dealer registered with the Securities and Exchange
Commission;
``(B) the floor broker or floor trader limits its
solicitation of orders, acceptance of orders, or execution of
orders, or placing of orders on behalf of others involving
any contracts of sale of any commodity for future delivery,
on or subject to the rules of any contract market to security
futures products; and
``(C) the registration of the floor broker or floor trader
is not suspended pursuant to an order of the Securities and
Exchange Commission.''.
(c) Exemption for Securities Broker-Dealers From Certain
Provisions of the Commodity Exchange Act.--Section 4f(a) of
the Commodity Exchange Act (7 U.S.C. 6f(a)) is amended by
inserting after paragraph (3), as added by subsection (b) of
this section, the following:
``(4)(A) A broker or dealer that is registered as a futures
commission merchant or introducing broker pursuant to
paragraph (2), or that is a floor broker or floor trader
exempt from registration pursuant to paragraph (3), shall be
exempt from the following provisions of this Act and the
rules thereunder:
``(i) Subsections (b), (d), (e), and (g) of section 4c.
``(ii) Sections 4d, 4e, and 4h.
``(iii) Subsections (b) and (c) of this section.
``(iv) Section 4j.
``(v) Section 4k(1).
``(vi) Section 4p.
``(vii) Section 6d.
``(viii) Subsections (d) and (g) of section 8.
``(ix) Section 16.
``(B)(i) Except as provided in clause (ii) of this
subparagraph, but notwithstanding any other provision of this
Act, the Commission, by rule, regulation, or order, may
conditionally or unconditionally exempt any broker or dealer
subject to the registration requirement of paragraph (2), or
any broker or dealer exempt from registration pursuant to
paragraph (3), from any provision of this Act or of any rule
or regulation thereunder, to the extent the exemption is
necessary or appropriate in the public interest and is
consistent with the protection of investors.
``(ii) The Commission shall, by rule or regulation,
determine the procedures under which an exemptive order under
this section shall be granted and may, in its sole
discretion, decline to entertain any application for an order
of exemption under this section.
``(C)(i) A broker or dealer that is registered as a futures
commission merchant or introducing broker pursuant to
paragraph (2) or an associated person thereof, or that is a
floor broker or floor trader exempt from registration
pursuant to paragraph (3), shall not be required to become a
member of any futures association registered under section
17.
``(ii) No futures association registered under section 17
shall limit its members from carrying an account, accepting
an order, or transacting business with a broker or dealer
that is registered as a futures commission merchant or
introducing broker pursuant to paragraph (2) or an
associated person thereof, or that is a floor broker or
floor trader exempt from registration pursuant to
paragraph (3).''.
(d) Exemptions for Associated Persons of Securities Broker-
Dealers.--Section 4k of the Commodity Exchange Act (7 U.S.C.
6k), is amended by inserting after paragraph (4), as added by
subsection (c) of this section, the following:
[[Page H12342]]
``(5) Any associated person of a broker or dealer that is
registered with the Securities and Exchange Commission, and
who limits its solicitation of orders, acceptance of orders,
or execution of orders, or placing of orders on behalf of
others involving any contracts of sale of any commodity for
future delivery or any option on such a contract, on or
subject to the rules of any contract market or registered
derivatives transaction execution facility to security
futures products, shall be exempt from the following
provisions of this Act and the rules thereunder:
``(A) Subsections (b), (d), (e), and (g) of section 4c.
``(B) Sections 4d, 4e, and 4h.
``(C) Subsections (b) and (c) of section 4f.
``(D) Section 4j.
``(E) Paragraph (1) of this section.
``(F) Section 4p.
``(G) Section 6d.
``(H) Subsections (d) and (g) of section 8.
``(I) Section 16.''.
SEC. 253. NOTIFICATION OF INVESTIGATIONS AND ENFORCEMENT
ACTIONS.
(a) Section 8(a) of the Commodity Exchange Act (7 U.S.C.
12(a)) is amended by adding at the end the following:
``(3) The Commission shall provide the Securities and
Exchange Commission with notice of the commencement of any
proceeding and a copy of any order entered by the Commission
against any futures commission merchant or introducing broker
registered pursuant to section 4f(a)(2), any floor broker or
floor trader exempt from registration pursuant to section
4f(a)(3), any associated person exempt from registration
pursuant to section 4k(6), or any board of trade designated
as a contract market pursuant to section 5f.''.
(b) Section 6 of the Commodity Exchange Act (7 U.S.C. 8, 9,
9a, 9b, 13b, 15) is amended by adding at the end the
following:
``(g) The Commission shall provide the Securities and
Exchange Commission with notice of the commencement of any
proceeding and a copy of any order entered by the Commission
pursuant to subsections (c) and (d) of this section against
any futures commission merchant or introducing broker
registered pursuant to section 4f(a)(2), any floor broker or
floor trader exempt from registration pursuant to section
4f(a)(3), any associated person exempt from registration
pursuant to section 4k(6), or any board of trade designated
as a contract market pursuant to section 5f.''.
(c) Section 6c of the Commodity Exchange Act (7 U.S.C. 13a-
1) is amended by adding at the end the following:
``(h) The Commission shall provide the Securities and
Exchange Commission with notice of the commencement of any
proceeding and a copy of any order entered by the Commission
against any futures commission merchant or introducing broker
registered pursuant to section 4f(a)(2), any floor broker or
floor trader exempt from registration pursuant to section
4f(a)(3), any associated person exempt from registration
pursuant to section 4k(6), or any board of trade designated
as a contract market pursuant to section 5f.''.
TITLE III--LEGAL CERTAINTY FOR SWAP AGREEMENTS
SEC. 301. SWAP AGREEMENT.
(a) Amendment.--Title II of the Gramm-Leach-Bliley Act
(Public Law 106-102) is amended by inserting after section
206 the following new sections:
``SEC. 206A. SWAP AGREEMENT.
``(a) In General.--Except as provided in subsection (b), as
used in this section, the term `swap agreement' means any
agreement, contract, or transaction between eligible contract
participants (as defined in section 1a(12) of the Commodity
Exchange Act as in effect on the date of enactment of this
section), other than a person that is an eligible contract
participant under section 1a(12)(C) of the Commodity Exchange
Act, the material terms of which (other than price and
quantity) are subject to individual negotiation, and that--
``(1) is a put, call, cap, floor, collar, or similar option
of any kind for the purchase or sale of, or based on the
value of, one or more interest or other rates, currencies,
commodities, indices, quantitative measures, or other
financial or economic interests or property of any kind;
``(2) provides for any purchase, sale, payment or delivery
(other than a dividend on an equity security) that is
dependent on the occurrence, non-occurrence, or the extent
of the occurrence of an event or contingency associated
with a potential financial, economic, or commercial
consequence;
``(3) provides on an executory basis for the exchange, on a
fixed or contingent basis, of one or more payments based on
the value or level of one or more interest or other rates,
currencies, commodities, securities, instruments of
indebtedness, indices, quantitative measures, or other
financial or economic interests or property of any kind, or
any interest therein or based on the value thereof, and that
transfers, as between the parties to the transaction, in
whole or in part, the financial risk associated with a future
change in any such value or level without also conveying a
current or future direct or indirect ownership interest in an
asset (including any enterprise or investment pool) or
liability that incorporates the financial risk so
transferred, including any such agreement, contract, or
transaction commonly known as an interest rate swap,
including a rate floor, rate cap, rate collar, cross-currency
rate swap, basis swap, currency swap, equity index swap,
equity swap, debt index swap, debt swap, credit spread,
credit default swap, credit swap, weather swap, or commodity
swap;
``(4) provides for the purchase or sale, on a fixed or
contingent basis, of any commodity, currency, instrument,
interest, right, service, good, article, or property of any
kind; or
``(5) is any combination or permutation of, or option on,
any agreement, contract, or transaction described in any of
paragraphs (1) through (4).
``(b) Exclusions.--The term `swap agreement' does not
include--
``(1) any put, call, straddle, option, or privilege on any
security, certificate of deposit, or group or index of
securities, including any interest therein or based on the
value thereof;
``(2) any put, call, straddle, option, or privilege entered
into on a national securities exchange registered pursuant to
section 6(a) of the Securities Exchange Act of 1934 relating
to foreign currency;
``(3) any agreement, contract, or transaction providing for
the purchase or sale of one or more securities on a fixed
basis;
``(4) any agreement, contract, or transaction providing for
the purchase or sale of one or more securities on a
contingent basis, unless such agreement, contract, or
transaction predicates such purchase or sale on the
occurrence of a bona fide contingency that might reasonably
be expected to affect or be affected by the creditworthiness
of a party other than a party to the agreement, contract, or
transaction;
``(5) any note, bond, or evidence of indebtedness that is a
security as defined in section 2(a)(1) of the Securities
Exchange Act of 1933 or section 3(a)(10) of the Securities
Exchange Act of 1934; or
``(6) any agreement, contract, or transaction that is--
``(A) based on a security; and
``(B) entered into directly or through an underwriter (as
defined in section 2(a) of the Securities Act of 1933) by the
issuer of such security for the purposes of raising capital,
unless such agreement, contract, or transaction is entered
into to manage a risk associated with capital raising.
``(c) Rule of Construction Regarding Master Agreements.--As
used in this section, the term `swap agreement' shall be
construed to include a master agreement that provides for an
agreement, contract, or transaction that is a swap agreement
pursuant to subsections (a) and (b), together with all
supplements to any such master agreement, without regard to
whether the master agreement contains an agreement, contract,
or transaction that is not a swap agreement pursuant to
subsections (a) and (b), except that the master agreement
shall be considered to be a swap agreement only with respect
to each agreement, contract, or transaction under the master
agreement that is a swap agreement pursuant to subsections
(a) and (b).
``SEC. 206B. SECURITY-BASED SWAP AGREEMENT.
``As used in this section, the term `security-based swap
agreement' means a swap agreement (as defined in section
206A) of which a material term is based on the price, yield,
value, or volatility of any security or any group or index of
securities, or any interest therein.
``SEC. 206C. NON-SECURITY-BASED SWAP AGREEMENT.
``As used in this section, the term `non-security-based
swap agreement' means any swap agreement (as defined in
section 206A) that is not a security-based swap agreement (as
defined in section 206B).''.
(b) Security Definition.--As used in the amendment made by
subsection (a), the term ``security'' has the same meaning as
in section 2(a)(1) of the Securities Act of 1933 or section
3(a)(10) of the Securities Exchange Act of 1934.
SEC. 302. AMENDMENTS TO THE SECURITIES ACT OF 1933.
(a) Enforcement Focus.--The Securities Act of 1933 is
amended by inserting after section 2 (15 U.S.C.77b) the
following new section:
``SEC. 2A. SWAP AGREEMENTS.
``(a) Non-Security-Based Swap Agreements.--The definition
of `security' in section 2(a)(1) of this title does not
include any non-security-based swap agreement (as defined in
section 206C of the Gramm-Leach-Bliley Act).
``(b) Security-Based Swap Agreements.--
``(1) The definition of `security' in section 2(a)(1) of
this title does not include any security-based swap agreement
(as defined in section 206B of the Gramm-Leach-Bliley Act).
``(2) The Commission is prohibited from registering, or
requiring, recommending, or suggesting, the registration
under this title of any security-based swap agreement (as
defined in section 206B of the Gramm-Leach-Bliley Act). If
the Commission becomes aware that a registrant has filed a
registration statement with respect to such a swap agreement,
the Commission shall promptly so notify the registrant. Any
such registration statement with respect to such a swap
agreement shall be void and of no force or effect.
``(3) The Commission is prohibited from--
``(A) promulgating, interpreting, or enforcing rules; or
``(B) issuing orders of general applicability;
under this title in a manner that imposes or specifies
reporting or recordkeeping requirements, procedures, or
standards as prophylactic measures against fraud,
manipulation, or insider trading with respect to any
security-based swap agreement (as defined in section 206B of
the Gramm-Leach-Bliley Act).
``(4) References in this title to the `purchase' or `sale'
of a security-based swap agreement shall be deemed to mean
the execution, termination (prior to its scheduled maturity
date), assignment, exchange, or similar transfer or
conveyance of, or extinguishing of rights or obligations
under, a security-based swap agreement (as defined in section
206B of the Gramm-Leach-Bliley Act), as the context may
require.''.
(b) Anti-Fraud and Anti-Manipulation Enforcement
Authority.--Section 17(a) of the Securities Act of 1933 (15
U.S.C. 77q(a)) is amended to read as follows:
``(a) It shall be unlawful for any person in the offer or
sale of any securities or any security-
[[Page H12343]]
based swap agreement (as defined in section 206B of the
Gramm-Leach-Bliley Act) by the use of any means or
instruments of transportation or communication in interstate
commerce or by use of the mails, directly or indirectly--
``(1) to employ any device, scheme, or artifice to defraud,
or
``(2) to obtain money or property by means of any untrue
statement of a material fact or any omission to state a
material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not
misleading; or
``(3) to engage in any transaction, practice, or course of
business which operates or would operate as a fraud or deceit
upon the purchaser.''.
(c) Limitation.--Section 17 of the Securities Act of 1933
is amended by adding at the end the following new subsection:
``(d) The authority of the Commission under this section
with respect to security-based swap agreements (as defined in
section 206B of the Gramm-Leach-Bliley Act) shall be subject
to the restrictions and limitations of section 2A(b) of this
title.''.
SEC. 303. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.
(a) Enforcement Focus.--The Securities Exchange Act of 1934
is amended by inserting after section 3 (15 U.S.C. 78c) the
following new section:
``SEC. 3A. SWAP AGREEMENTS.
``(a) Non-Security-Based Swap Agreements.--The definition
of `security' in section 3(a)(10) of this title does not
include any non-security-based swap agreement (as defined in
section 206C of the Gramm-Leach-Bliley Act).
``(b) Security-Based Swap Agreements.--
``(1) The definition of `security' in section 3(a)(10) of
this title does not include any security-based swap agreement
(as defined in section 206B of the Gramm-Leach-Bliley Act).
``(2) The Commission is prohibited from registering, or
requiring, recommending, or suggesting, the registration
under this title of any security-based swap agreement (as
defined in section 206B of the Gramm-Leach-Bliley Act). If
the Commission becomes aware that a registrant has filed a
registration application with respect to such a swap
agreement, the Commission shall promptly so notify the
registrant. Any such registration with respect to such a swap
agreement shall be void and of no force or effect.
``(3) Except as provided in section 16(a) with respect to
reporting requirements, the Commission is prohibited from--
``(A) promulgating, interpreting, or enforcing rules; or
``(B) issuing orders of general applicability;
under this title in a manner that imposes or specifies
reporting or recordkeeping requirements, procedures, or
standards as prophylactic measures against fraud,
manipulation, or insider trading with respect to any
security-based swap agreement (as defined in section 206B of
the Gramm-Leach-Bliley Act).
``(4) References in this title to the `purchase' or `sale'
of a security-based swap agreement (as defined in section
206B of the Gramm-Leach-Bliley Act) shall be deemed to mean
the execution, termination (prior to its scheduled maturity
date), assignment, exchange, or similar transfer or
conveyance of, or extinguishing of rights or obligations
under, a security-based swap agreement, as the context may
require.''.
(b) Anti-Fraud, Anti-Manipulation Enforcement Authority.--
Paragraphs (2) through (5) of section 9(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78i(a)(2)-(5)) are amended to
read as follows:
``(2) To effect, alone or with one or more other persons, a
series of transactions in any security registered on a
national securities exchange or in connection with any
security-based swap agreement (as defined in section 206B of
the Gramm-Leach-Bliley Act) with respect to such security
creating actual or apparent active trading in such security,
or raising or depressing the price of such security, for the
purpose of inducing the purchase or sale of such security by
others.
``(3) If a dealer or broker, or other person selling or
offering for sale or purchasing or offering to purchase the
security or a security-based swap agreement (as defined in
section 206B of the Gramm-Leach-Bliley Act) with respect to
such security, to induce the purchase or sale of any security
registered on a national securities exchange or any security-
based swap agreement (as defined in section 206B of the
Gramm-Leach-Bliley Act) with respect to such security by the
circulation or dissemination in the ordinary course of
business of information to the effect that the price of any
such security will or is likely to rise or fall because of
market operations of any one or more persons conducted for
the purpose of raising or depressing the price of such
security.
``(4) If a dealer or broker, or the person selling or
offering for sale or purchasing or offering to purchase the
security or a security-based swap agreement (as defined in
section 206B of the Gramm-Leach-Bliley Act) with respect to
such security, to make, regarding any security registered on
a national securities exchange or any security-based swap
agreement (as defined in section 206B of the Gramm-Leach-
Bliley Act) with respect to such security, for the purpose of
inducing the purchase or sale of such security or such
security-based swap agreement, any statement which was at the
time and in the light of the circumstances under which it was
made, false or misleading with respect to any material fact,
and which he knew or had reasonable ground to believe was so
false or misleading.
``(5) For a consideration, received directly or indirectly
from a dealer or broker, or other person selling or offering
for sale or purchasing or offering to purchase the security
or a security-based swap agreement (as defined in section
206B of the Gramm-Leach-Bliley Act) with respect to such
security, to induce the purchase of any security registered
on a national securities exchange or any security-based swap
agreement (as defined in section 206B of the Gramm-Leach-
Bliley Act) with respect to such security by the circulation
or dissemination of information to the effect that the price
of any such security will or is likely to rise or fall
because of the market operations of any one or more persons
conducted for the purpose of raising or depressing the price
of such security.''.
(c) Limitation.--Section 9 of the Securities Exchange Act
of 1934 is amended by adding at the end the following new
subsection:
``(i) The authority of the Commission under this section
with respect to security-based swap agreements shall be
subject to the restrictions and limitations of section 3A(b)
of this title.''.
(d) Regulations on the Use of Manipulative and Deceptive
Devices.--Section 10 of the Securities Exchange Act of 1934
(15 U.S.C. 78j) is amended--
(1) in subsection (b), by inserting ``or any securities-
based swap agreement (as defined in section 206B of the
Gramm-Leach-Bliley Act),'' before ``any manipulative or
deceptive device''; and
(2) by adding at the end the following:
``Rules promulgated under subsection (b) that prohibit fraud,
manipulation, or insider trading (but not rules imposing or
specifying reporting or recordkeeping requirements,
procedures, or standards as prophylactic measures against
fraud, manipulation, or insider trading), and judicial
precedents decided under subsection (b) and rules promulgated
thereunder that prohibit fraud, manipulation, or insider
trading, shall apply to security-based swap agreements (as
defined in section 206B of the Gramm-Leach-Bliley Act) to the
same extent as they apply to securities. Judicial precedents
decided under section 17(a) of the Securities Act of 1933 and
sections 9, 15, 16, 20, and 21A of this title, and judicial
precedents decided under applicable rules promulgated under
such sections, shall apply to security-based swap agreements
(as defined in section 206B of the Gramm-Leach-Bliley Act) to
the same extent as they apply to securities.''.
(e) Broker, Dealer Anti-Fraud, Anti-Manipulation
Enforcement Authority.--Section 15(c)(1) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(c)(1)) is amended to read
as follows:
``(c)(1)(A) No broker or dealer shall make use of the mails
or any means or instrumentality of interstate commerce to
effect any transaction in, or to induce or attempt to induce
the purchase or sale of, any security (other than commercial
paper, bankers' acceptances, or commercial bills) otherwise
than on a national securities exchange of which it is a
member, or any security-based swap agreement (as defined in
section 206B of the Gramm-Leach-Bliley Act), by means of any
manipulative, deceptive, or other fraudulent device or
contrivance.
``(B) No municipal securities dealer shall make use of the
mails or any means or instrumentality of interstate commerce
to effect any transaction in, or to induce or attempt to
induce the purchase or sale of, any municipal security or any
security-based swap agreement (as defined in section 206B of
the Gramm-Leach-Bliley Act) involving a municipal security by
means of any manipulative, deceptive, or other fraudulent
device or contrivance.
``(C) No government securities broker or government
securities dealer shall make use of the mails or any means or
instrumentality of interstate commerce to effect any
transaction in, or to induce or to attempt to induce the
purchase or sale of, any government security or any security-
based swap agreement (as defined in section 206B of the
Gramm-Leach-Bliley Act) involving a government security by
means of any manipulative, deceptive, or other fraudulent
device or contrivance.''.
(f) Limitation.--Section 15 of the Securities Exchange Act
of 1934 (15 U.S.C. 78o) is amended by adding at the end the
following new subsection:
``(i) The authority of the Commission under this section
with respect to security-based swap agreements (as defined in
section 206B of the Gramm-Leach-Bliley Act) shall be subject
to the restrictions and limitations of section 3A(b) of this
title.''.
(g) Anti-Insider Trading Enforcement Authority.--
Subsections (a) and (b) of section 16 (15 U.S.C. 78p(a), (b))
of the Securities Exchange of 1934 are amended to read as
follows:
``(a) Every person who is directly or indirectly the
beneficial owner of more than 10 per centum of any class of
any equity security (other than an exempted security) which
is registered pursuant to section 12 of this title, or who is
a director or an officer of the issuer of such security,
shall file, at the time of the registration of such security
on a national securities exchange or by the effective date of
a registration statement filed pursuant to section 12 (g) of
this title, or within ten days after he becomes such
beneficial owner, director, or officer, a statement with the
Commission (and, if such security is registered on a national
securities exchange, also with the exchange) of the amount of
all equity securities of such issuer of which he is the
beneficial owner, and within ten days after the close of each
calendar month thereafter, if there has been a change in such
ownership or if such person shall have purchased or sold a
security-based swap agreement (as defined in section 206B of
the Gramm-Leach-Bliley Act) involving such equity security
during such month, shall file with the Commission (and if
such security is registered on a national securities
exchange, shall also file with the exchange), a statement
indicating his ownership at the close of the calendar month
and such changes in his ownership and such purchases and
sales of such security-based swap agreements as have occurred
during such calendar month.
[[Page H12344]]
``(b) For the purpose of preventing the unfair use of
information which may have been obtained by such beneficial
owner, director, or officer by reason of his relationship to
the issuer, any profit realized by him from any purchase and
sale, or any sale and purchase, of any equity security of
such issuer (other than an exempted security) or a security-
based swap agreement (as defined in section 206B of the
Gramm-Leach-Bliley Act) involving any such equity security
within any period of less than six months, unless such
security or security-based swap agreement was acquired in
good faith in connection with a debt previously contracted,
shall inure to and be recoverable by the issuer, irrespective
of any intention on the part of such beneficial owner,
director, or officer in entering into such transaction of
holding the security or security-based swap agreement
purchased or of not repurchasing the security or security-
based swap agreement sold for a period exceeding six months.
Suit to recover such profit may be instituted at law or in
equity in any court of competent jurisdiction by the issuer,
or by the owner of any security of the issuer in the name and
in behalf of the issuer if the issuer shall fail or refuse to
bring such suit within sixty days after request or shall fail
diligently to prosecute the same thereafter; but no such suit
shall be brought more than two years after the date such
profit was realized. This subsection shall not be construed
to cover any transaction where such beneficial owner was not
such both at the time of the purchase and sale, or the sale
and purchase, of the security or security-based swap
agreement (as defined in section 206B of the Gramm-Leach-
Bliley Act) involved, or any transaction or transactions
which the Commission by rules and regulations may exempt as
not comprehended within the purpose of this subsection.''.
(h) Limitation.--Section 16 of the Securities Exchange Act
of 1934 (15 U.S.C. 78p) is amended by adding at the end the
following new subsection:
``(g) The authority of the Commission under this section
with respect to security-based swap agreements (as defined in
section 206B of the Gramm-Leach-Bliley Act) shall be subject
to the restrictions and limitations of section 3A(b) of this
title.''.
(i) Material Nonpublic Information.--Section 20(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78t(d)) is amended
to read as follows:
``(d) Wherever communicating, or purchasing or selling a
security while in possession of, material nonpublic
information would violate, or result in liability to any
purchaser or seller of the security under any provisions of
this title, or any rule or regulation thereunder, such
conduct in connection with a purchase or sale of a put, call,
straddle, option, privilege or security-based swap agreement
(as defined in section 206B of the Gramm-Leach-Bliley Act)
with respect to such security or with respect to a group or
index of securities including such security, shall also
violate and result in comparable liability to any purchaser
or seller of that security under such provision, rule, or
regulation.''.
(j) Limitation.--Section 20 of the Securities Exchange Act
of 1934 (15 U.S.C. 78t) is amended by adding at the end the
following new subsection:
``(f) The authority of the Commission under this section
with respect to security-based swap agreements (as defined in
section 206B of the Gramm-Leach-Bliley Act) shall be subject
to the restrictions and limitations of section 3A(b) of this
title.''.
(k) Civil Penalties.--Section 21A(a)(1) of the Securities
Exchange Act of 1934 (15 U.S.C. 78u-1)a)(1)) is amended by
inserting after ``purchasing or selling a security'' the
following: ``or security-based swap agreement (as defined in
section 206B of the Gramm-Leach-Bliley Act)''.
(l) Limitation.--Section 21A of the Securities Exchange Act
of 1934 (15 U.S.C. 78u-1) is amended by adding at the end the
following new subsection:
``(g) The authority of the Commission under this section
with respect to security-based swap agreements (as defined in
section 206B of the Gramm-Leach-Bliley Act) shall be subject
to the restrictions and limitations of section 3A(b) of this
title.''.
SEC. 304. SAVINGS PROVISIONS.
Nothing in this Act or the amendments made by this Act
shall be construed as finding or implying that any swap
agreement is or is not a security for any purpose under the
securities laws. Nothing in this Act or the amendments made
by this Act shall be construed as finding or implying that
any swap agreement is or is not a futures contract or
commodity option for any purpose under the Commodity Exchange
Act.
TITLE IV--REGULATORY RESPONSIBILITY FOR BANK PRODUCTS
SEC. 401. SHORT TITLE.
This title may be cited as the ``Legal Certainty for Bank
Products Act of 2000''.
SEC. 402. DEFINITIONS.
(a) Bank.--In this title, the term ``bank'' means--
(1) any depository institution (as defined in section 3(c)
of the Federal Deposit Insurance Act);
(2) any foreign bank or branch or agency of a foreign bank
(each as defined in section 1(b) of the International Banking
Act of 1978);
(3) any Federal or State credit union (as defined in
section 101 of the Federal Credit Union Act);
(4) any corporation organized under section 25A of the
Federal Reserve Act;
(5) any corporation operating under section 25 of the
Federal Reserve Act;
(6) any trust company; or
(7) any subsidiary of any entity described in paragraph (1)
through (6) of this subsection, if the subsidiary is
regulated as if the subsidiary were part of the entity and is
not a broker or dealer (as such terms are defined in section
3 of the Securities Exchange Act of 1934) or a futures
commission merchant (as defined in section 1a(20) of the
Commodity Exchange Act).
(b) Identified Banking Product.--In this title, the term
``identified banking product'' shall have the same meaning as
in paragraphs (1) through (5) of section 206(a) of the Gramm-
Leach-Bliley Act, except that in applying such section for
purposes of this title--
(1) the term ``bank'' shall have the meaning given in
subsection (a) of this section; and
(2) the term ``qualified investor'' means eligible contract
participant (as defined in section 1a(12) of the Commodity
Exchange Act, as in effect on the date of enactment of the
Commodity Futures Modernization Act of 2000).
(c) Hybrid Instrument.--In this title, the term ``hybrid
instrument'' means an identified banking product not excluded
by section 403 of this Act, offered by a bank, having 1 or
more payments indexed to the value, level, or rate of, or
providing for the delivery of, 1 or more commodities (as
defined in section 1a(4) of the Commodity Exchange Act).
(d) Covered Swap Agreement.--In this title, the term
``covered swap agreement'' means a swap agreement (as defined
in section 206(b) of the Gramm-Leach-Bliley Act), including a
credit or equity swap, based on a commodity other than an
agricultural commodity enumerated in section 1a(4) of the
Commodity Exchange Act if--
(1) the swap agreement--
(A) is entered into only between persons that are eligible
contract participants (as defined in section 1a(12) of the
Commodity Exchange Act, as in effect on the date of
enactment of the Commodity Futures Modernization Act of
2000) at the time the persons enter into the swap
agreement; and
(B) is not entered into or executed on a trading facility
(as defined in section 1a(33) of the Commodity Exchange Act);
or
(2) the swap agreement--
(A) is entered into or executed on an electronic trading
facility (as defined in section 1a(10) of the Commodity
Exchange Act);
(B) is entered into on a pr |
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