A bill to repeal title II of the REAL ID Act of 2005, to reinstitute the section 7212 of the Intelligence Reform and Terrorism Prevention Act of 2004, which provides States additional regulatory flexibility and funding authorization to more rapidly produce tamper- and counterfeit-resistant driver's licenses and to protect privacy and civil liberties by providing interested stakeholders on a negotiated rulemaking with guidance to achieve improved 21st century licenses to improve national security.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Identification Security Enhancement 
Act of 2006''.

SEC. 2. REPEAL.

    Title II of the REAL ID Act of 2005 (division B of Public Law 109-
13; 49 U.S.C. 30301 note) is repealed.

SEC. 3. DRIVER'S LICENSES AND PERSONAL IDENTIFICATION CARDS.

    (a) Definitions.--In this section:
            (1) Driver's license.--The term ``driver's license'' means 
        a motor vehicle operator's license (as defined in section 
        30301(5) of title 49, United States Code).
            (2) Personal identification card.--The term ``personal 
        identification card'' means an identification document (as 
        defined in section 1028(d)(3) of title 18, United States Code) 
        issued by a State.
    (b) Standards for Acceptance by Federal Agencies.--
            (1) In general.--
                    (A) Limitation on acceptance.--No Federal agency 
                may accept, for any official purpose, a driver's 
                license or personal identification card newly issued by 
                a State more than 2 years after the promulgation of the 
                minimum standards under paragraph (2) unless the 
                driver's license or personal identification card 
                conforms to such minimum standards.
                    (B) Date for full conformance.--
                            (i) In general.--Except as provided under 
                        clause (ii), beginning on the date that is 5 
                        years after the promulgation of minimum 
                        standards under paragraph (2), no Federal 
                        agency may accept, for any official purpose, a 
                        driver's license or personal identification 
                        card issued by a State unless such driver's 
                        license or personal identification card 
                        conforms to such minimum standards.
                            (ii) Alternative date for full 
                        conformance.--If the Secretary of Homeland 
                        Security determines that it is impracticable 
                        for States to replace all State-issued driver's 
                        licenses and personal identification cards 
                        before the deadline set forth in clause (i), 
                        the Secretary of Homeland Security, in 
                        consultation with the Secretary of 
                        Transportation, may set a later, alternative 
                        deadline to the extent necessary for States to 
                        complete such replacement with reasonable 
                        efforts.
                    (C) State certification.--
                            (i) In general.--Each State shall certify 
                        to the Secretary of Homeland Security that the 
                        State is in compliance with the requirements of 
                        this section.
                            (ii) Frequency.--Certifications under 
                        clause (i) shall be made at such intervals and 
                        in such a manner as the Secretary of Homeland 
                        Security, with the concurrence of the Secretary 
                        of Transportation, may prescribe by regulation.
                            (iii) Audits.--The Secretary of Homeland 
                        Security may conduct periodic audits of each 
                        State's compliance with the requirements of 
                        this section.
            (2) Minimum standards.--Not later than 12 months after the 
        date of enactment of this Act, the Secretary of Homeland 
        Security, in consultation with the Secretary of Transportation, 
        shall by regulation, establish by minimum standards for 
        driver's licenses or personal identification cards issued by a 
        State for use by Federal agencies for identification purposes 
        that shall include--
                    (A) standards for documentation required as proof 
                of identity of an applicant for a driver's license or 
                personal identification card;
                    (B) standards for the verifiability of documents 
                used to obtain a driver's license or personal 
                identification card;
                    (C) standards for the processing of applications 
                for driver's licenses and personal identification cards 
                to prevent fraud;
                    (D) standards for information to be included on 
                each driver's license or personal identification card, 
                including--
                            (i) the person's full legal name;
                            (ii) the person's date of birth;
                            (iii) the person's gender;
                            (iv) the person's driver's license or 
                        personal identification card number;
                            (v) a photograph of the person;
                            (vi) the person's address of principal 
                        residence; and
                            (vii) the person's signature;
                    (E) standards for common machine-readable identity 
                information to be included on each driver's license or 
                personal identification card, including defined minimum 
                data elements;
                    (F) security standards to ensure that driver's 
                licenses and personal identification cards are--
                            (i) resistant to tampering, alteration, or 
                        counterfeiting; and
                            (ii) capable of accommodating and ensuring 
                        the security of a photograph or other unique 
                        identifier; and
                    (G) a requirement that a State confiscate a 
                driver's license or personal identification card if any 
                component or security feature of the license or 
                identification card is compromised.
    (c) Negotiated Rulemaking.--
            (1) In general.--Before publishing the proposed regulations 
        required by subsection (b)(2) to carry out this title, the 
        Secretary of Homeland Security shall establish a negotiated 
        rulemaking process pursuant to subchapter IV of chapter 5 of 
        title 5, United States Code (5 U.S.C. 561 et seq.).
            (2) Time requirement.--The process described in paragraph 
        (1) shall be conducted in a timely manner to ensure that--
                    (A) any recommendation for a proposed rule or 
                report--
                            (i) is provided to the Secretary of 
                        Homeland Security not later than 9 months after 
                        the date of enactment of this Act; and
                            (ii) includes an assessment of the benefits 
                        and costs of the recommendation; and
                    (B) a final rule is promulgated not later than 12 
                months after the date of enactment of this Act.
            (3) Representation on negotiated rulemaking committee.--Any 
        negotiated rulemaking committee established by the Secretary of 
        Homeland Security pursuant to paragraph (1) shall include equal 
        numbers of representatives from--
                    (A) among State offices that issue driver's 
                licenses or personal identification cards;
                    (B) among State elected officials;
                    (C) the Department of Transportation; and
                    (D) among interested parties, including experts in 
                privacy protection, experts in civil liberties and 
                protection of constitutional rights, and experts in 
                immigration law.
            (4) Content of regulations.--The regulations required by 
        subsection (b)(2)--
                    (A) shall facilitate communication between the 
                chief driver licensing official of a State, an 
                appropriate official of a Federal agency and other 
                relevant officials, to verify the authenticity of 
                documents, as appropriate, issued by such Federal 
                agency or entity and presented to prove the identity of 
                an individual;
                    (B) may not infringe on a State's power to set 
                criteria concerning what categories of individuals are 
                eligible to obtain a driver's license or personal 
                identification card from that State;
                    (C) may not require a State to comply with any such 
                regulation that conflicts with or otherwise interferes 
                with the full enforcement of State criteria concerning 
                the categories of individuals that are eligible to 
                obtain a driver's license or personal identification 
                card from that State;
                    (D) may not require a single design to which 
                driver's licenses or personal identification cards 
                issued by all States must conform; and
                    (E) shall include procedures and requirements to 
                protect the privacy rights of individuals who apply for 
                and hold driver's licenses and personal identification 
                cards.
                    (F) shall include procedures and requirements to 
                protect the federal and state constitutional rights and 
                civil liberties of individuals who apply for and hold 
                driver's licenses and personal identification cards;
                    (G) shall not permit the transmission of any 
                personally identifiable information except for in 
                encrypted format;
                    (H) shall provide individuals with procedural and 
                substantive due process, including promulgating rules 
                and rights of appeal, to challenge errors in data 
                records contained within the databases created to 
                implement this Act;
                    (I) shall not permit private entities to scan the 
                information contained on the face of a license, or in 
                the machine readable component of the license, and 
                resell, share or trade that information with any other 
                third parties, nor shall private entities be permitted 
                to store the information collected for any other than 
                fraud prevention purposes;
                    (J) shall not preempt state privacy laws that are 
                more protective of personal privacy than the standards, 
                or regulations promulgated to implement this Act; and
                    (K) shall neither permit nor require verification 
                of birth certificates until a nationwide system is 
                designed to facilitate such verification.
    (d) Grants to States.--
            (1) Assistance in meeting federal standards.--Beginning on 
        the date a final regulation is promulgated under subsection 
        (b)(2), the Secretary of Homeland Security shall award grants 
        to States to assist them in conforming to the minimum standards 
        for driver's licenses and personal identification cards set 
        forth in the regulation.
            (2) Allocation of grants.--The Secretary of Homeland 
        Security shall award grants to States under this subsection 
        based on the proportion that the estimated average annual 
        number of driver's licenses and personal identification cards 
        issued by a State applying for a grant bears to the average 
        annual number of such documents issued by all States.
            (3) Minimum allocation.--Notwithstanding paragraph (2), 
        each State shall receive not less than 0.5 percent of the grant 
        funds made available under this subsection.
            (4) Separate funding.--Funds appropriated for grants under 
        this section may not be commingled with other grant funds 
        administered by the Department of Homeland Security and may not 
        be used for any purpose other than the purpose set forth in 
        paragraph (1).
    (e) Extension of Effective Date.--The Secretary of Homeland 
Security may extend the date specified under subsection (b)(1)(A) for 
up to 2 years for driver's licenses issued by a State if the Secretary 
determines that the State made reasonable efforts to comply with the 
date under such subsection but was unable to do so.

SEC. 4. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to the Secretary of 
Homeland Security $300,000,000 for each of the fiscal years 2007 
through 2013 to carry out this Act.

Summary: Identification Security Enhancement Act of 2006 - Repeals title II of the Real ID Act of 2005.

Directs the Secretary of Homeland Security to: (1) establish by regulation minimum standards for acceptance of state-issued driver's licenses and personal identification cards by federal agencies; (2) establish a negotiated rulemaking process before publishing such standards; and (3) award grants to states to assist them in conforming to such standards.

Prohibits federal agencies from accepting state-issued driver's licenses and personal identification cards after specified deadlines unless such identification conforms to the minimum standards promulgated under this Act.