[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1450 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 1450

 To promote the competitiveness of American businesses by reducing the 
national debt to lower the cost of capital, providing tax incentives to 
further enhance private capital formation, modernizing antitrust law to 
 remove barriers to cooperative enterprise, instituting civil justice 
     reform to reduce litigious burdens, and reviewing new Federal 
   regulations to prevent unintended effects, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 24, 1993

  Mr. Walker (for himself, Mr. Gingrich, Mr. Armey, Mr. McCollum, Mr. 
  DeLay, Mr. Hyde, Mr. Hunter, Mr. Paxon, Mr. Burton of Indiana, Mr. 
    Lewis of Florida, Mr. Sensenbrenner, Mr. Henry, Mr. Fawell, Mr. 
Rohrabacher, Mr. Barton of Texas, Mr. Zimmer, Mr. Sam Johnson of Texas, 
Mr. Calvert, Mr. Hoke, Mr. Smith of Michigan, Mr. Royce, Mr. Grams, Mr. 
Linder, Mr. Blute, Ms. Dunn, Mr. Baker of California, and Mr. Bartlett 
of Maryland) introduced the following bill; which was referred jointly 
    to the Committees on Ways and Means, the Judiciary, Energy and 
  Commerce, Science, Space, and Technology, Education and Labor, and 
                         Government Operations

_______________________________________________________________________

                                 A BILL


 
 To promote the competitiveness of American businesses by reducing the 
national debt to lower the cost of capital, providing tax incentives to 
further enhance private capital formation, modernizing antitrust law to 
 remove barriers to cooperative enterprise, instituting civil justice 
     reform to reduce litigious burdens, and reviewing new Federal 
   regulations to prevent unintended effects, 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 ``Fundamental 
Competitiveness Act of 1993''.
    (b) Table of Contents.--

Sec. 1. Short title.
Sec. 2. Findings.
                     TITLE I--PUBLIC DEBT REDUCTION

Sec. 101. Designation of amounts for reduction of public debt.
Sec. 102. Public debt reduction trust fund.
Sec. 103. Taxpayer-generated sequestration of Federal spending to 
                            reduce the public debt.
                      TITLE II--CAPITAL FORMATION

Sec. 201. Findings.
Sec. 202. Research credit improvement.
Sec. 203. Variable capital gains.
Sec. 204. Capital gains exclusion for startup business stock.
Sec. 205. Indexing of certain capital assets.
Sec. 206. Corporate debt-equity equalization.
Sec. 207. Charitable deduction for corporate contributions of employee 
                            services to educational organizations.
Sec. 208. Investment credit for new manufacturing and other production 
                            equipment.
Sec. 209. Increase in limitation based on amount of tax.
Sec. 210. Special treatment for losses on investment in manufacturing 
                            facilities.
Sec. 211. Exemption of certain interest and dividend income from tax.
Sec. 212. Ordinary-loss treatment for losses on investments in startup 
                            companies.
                   TITLE III--COOPERATIVE ENTERPRISE

Sec. 301. Findings.
Sec. 302. Merger analysis.
Sec. 303. Joint production.
                  TITLE IV--BUSINESS LIABILITY REFORM

                          Subtitle A--Findings

Sec. 401. Findings.
              Subtitle B--Professionals' Liability Reform

Sec. 411. Short title.
Sec. 412. Purpose.
Sec. 413. Scope and preemption.
Sec. 414. Description of professional liability standards.
Sec. 415. Formation of risk management programs.
Sec. 416. Definitions.
                 Subtitle C--Product Liability Fairness

                       Part I--General Provisions

Sec. 421. Short title.
Sec. 422. Definitions.
Sec. 423. Preemption.
Sec. 424. Jurisdiction of Federal courts.
Sec. 425. Effective date.
                    Part II--Out of Court Procedures

Sec. 431. Expedited product liability settlements.
Sec. 432. Alternative dispute resolution procedures.
                       Part III--Court Procedures

Sec. 441. Civil actions.
Sec. 442. Uniform standards of product seller liability.
Sec. 443. Uniform standards for award of punitive damages.
Sec. 444. Uniform time limitations on liability.
Sec. 445. Uniform standards for offset of workers' compensation 
                            benefits.
Sec. 446. Several liability for noneconomic damages.
Sec. 447. Defenses involving intoxicating alcohol or drugs.
                       TITLE V--REGULATORY REVIEW

Sec. 501. Findings.
Sec. 502. Competitiveness risk assessment.
                   TITLE VI--TOTAL QUALITY MANAGEMENT

Sec. 601. Formation and use of quality circles and joint production 
                            teams.
                    TITLE VII--LONG-TERM INVESTMENT

Sec. 701. Short title.
Sec. 702. Findings.
Sec. 703. Elimination of quarterly reports.
 TITLE VIII--AMENDMENTS TO THE STEVENSON-WYDLER TECHNOLOGY INNOVATION 
                              ACT OF 1980

Sec. 801. Amendment to Stevenson-Wydler Technology Innovation Act of 
                            1980.
Sec. 802. Copyright for software.
Sec. 803. Royalty payments to authors.
Sec. 804. Technical and conforming amendments.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) the ability of United States companies to develop, 
        produce, and market new products and services is second to none 
        when on an equal footing with the competition;
            (2) however, United States companies are not on such a 
        footing due in large part to competitive disadvantages imposed 
        by government;
            (3) therefore, the Federal Government should fuel the 
        engine of the United States private sector by freeing it from 
        the tax, regulatory, and other legal burdens imposed on it;
            (4) the Federal Government should focus on long-term 
        competitiveness and job creation by reexamining those 
        provisions of law and regulation which are anticompetitive in 
        nature;
            (5) the Federal Government can best promote United States 
        competitiveness by fostering a healthy business climate and by 
        reducing the Federal budget deficit which will free up capital 
        for private use and reduce its cost;
            (6) targeting large sums of taxpayer money to aid specific 
        United States industries will further erode our competitiveness 
        by increasing our national debt and removing the inherent 
        efficiency of the marketplace; and
            (7) our main economic competitors spend few government 
        resources to aid specific sectors of their economies, but 
        instead remove barriers and disincentives to savings, 
        investment, production, and economic activity.

                     TITLE I--PUBLIC DEBT REDUCTION

SEC. 101. DESIGNATION OF AMOUNTS FOR REDUCTION OF PUBLIC DEBT.

    (a) In General.--Subchapter A of chapter 61 of the Internal Revenue 
Code of 1986 (relating to returns and records) is amended by adding at 
the end the following new part:

          ``PART IX--DESIGNATION FOR REDUCTION OF PUBLIC DEBT.

                              ``Sec. 6097. Designation.

``SEC. 6097. DESIGNATION.

    ``(a) In General.--Every individual with adjusted income tax 
liability for any taxable year may designate that a portion of such 
liability (not to exceed 10 percent thereof) shall be used to reduce 
the public debt.
    ``(b) Manner and Time of Designation.--A designation under 
subsection (a) may be made with respect to any taxable year only at the 
time of filing the return of tax imposed by chapter 1 for the taxable 
year. The designation shall be made on the first page of the return or 
on the page bearing the taxpayer's signature.
    ``(c) Adjusted Income Tax Liability.--For purposes of this section, 
the term `adjusted income tax liability' means income tax liability (as 
defined in section 6096(b)) reduced by any amount designated under 
section 6096 (relating to designation of income tax payments to 
Presidential Election Campaign Fund).''
    (b) Clerical Amendment.--The table of parts for such subchapter A 
is amended by adding at the end the following new item:

                              ``Part IX. Designation for reduction of 
                                        public debt.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 102. PUBLIC DEBT REDUCTION TRUST FUND.

    (a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 (relating to trust fund code) is amended by adding at the 
end the following section:

``SEC. 9512. PUBLIC DEBT REDUCTION TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Public Debt 
Reduction Trust Fund', consisting of any amount appropriated or 
credited to the Trust Fund as provided in this section or section 
9602(b).
    ``(b) Transfers to Trust Fund.--There are hereby appropriated to 
the Public Debt Reduction Trust Fund amounts equivalent to the amounts 
designated under section 6097 (relating to designation for public debt 
reduction).
    ``(c) Expenditures.--Amounts in the Public Debt Reduction Trust 
Fund shall be available only for purposes of paying at maturity, or to 
redeem or buy before maturity, any obligation of the Federal Government 
included in the public debt. Any obligation which is paid, redeemed, or 
bought with amounts from such Trust Fund shall be canceled and retired 
and may not be reissued.''
    (b) Clerical Amendment.--The table of sections for such subchapter 
is amended by adding at the end the following new item:

                              ``Sec. 9512. Public Debt Reduction Trust 
                                        Fund.''
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts received after the date of the enactment of this Act.

SEC. 103. TAXPAYER-GENERATED SEQUESTRATION OF FEDERAL SPENDING TO 
              REDUCE THE PUBLIC DEBT.

    (a) Sequestration To Reduce the Public Debt.--Part C of the 
Balanced Budget and Emergency Deficit Control Act of 1985 is amended by 
adding after section 253 the following new section:

``SEC. 253A. SEQUESTRATION TO REDUCE THE PUBLIC DEBT.

    ``(a) Sequestration.--Notwithstanding sections 255 and 256, within 
15 days after Congress adjourns to end a session, and on the same day 
as sequestration (if any) under sections 251, 252, and 253, but after 
any sequestration required by those sections, there shall be a 
sequestration equivalent to the estimated aggregate amount designated 
under section 6097 of the Internal Revenue Code of 1986 for the last 
taxable year ending before the beginning of that session of Congress, 
as estimated by the Department of the Treasury on May 1 and as modified 
by the total of (1) any amounts by which net discretionary spending is 
reduced by legislation below the discretionary spending limits (or, in 
the absence of such limits, any net deficit change from the baseline 
amount calculated under section 257, except that such baseline for 
fiscal year 1996 and thereafter shall be based upon fiscal year 1995 
enacted appropriations less any 1995 sequesters) and (2) the net 
deficit change that has resulted from direct spending legislation.
    ``(b) Applicability.--
            ``(1) In general.--Except as provided by paragraph (2), 
        each account of the United States shall be reduced by a dollar 
        amount calculated by multiplying the level of budgetary 
        resources in that account at that time by the uniform 
        percentage necessary to carry out subsection (a). All 
        obligational authority reduced under this section shall be done 
        in a manner that makes such reductions permanent.
            ``(2) Exempt accounts.--No order issued under this part 
        may--
                    ``(A) reduce benefits payable the old-age, 
                survivors, and disability insurance program established 
                under title II of the Social Security Act;
                    ``(B) reduce payments for net interest (all of 
                major functional category 900); or
                    ``(C) make any reduction in the following accounts:
                            ``Federal Deposit Insurance Corporation, 
                        Bank Insurance Fund;
                            ``Federal Deposit Insurance Corporation, 
                        FSLIC Resolution Fund;
                            ``Federal Deposit Insurance Corporation, 
                        Savings Association Insurance Fund;
                            ``National Credit Union Administration, 
                        credit union share insurance fund; or
                            ``Resolution Trust Corporation.''.
    (b) Reports.--Section 254 of the Balanced Budget and Emergency 
Deficit Control Act of 1985 is amended--
            (1) in subsection (a), by inserting before the item 
        relating to August 10 the following:
    ``May 1. . . Department of Treasury report to Congress estimating 
amount of income tax designated pursuant to section 6097 of the 
Internal Revenue Code of 1986.'';
            (2) in subsection (d)(1), by inserting ``, and 
        sequestration to reduce the public debt,'';
            (3) in subsection (d), by redesignating paragraph (5) as 
        paragraph (6) and by inserting after paragraph (4) the 
        following new paragraph:
            ``(5) Sequestration to reduce the public debt reports.--The 
        preview reports shall set forth for the budget year estimates 
        for each of the following:
                    ``(A) The aggregate amount designated under section 
                6097 of the Internal Revenue Code of 1986 for the last 
                taxable year ending before the budget year.
                    ``(B) The amount of reductions required under 
                section 253A and the deficit remaining after those 
                reductions have been made.
                    ``(C) The sequestration percentage necessary to 
                achieve the required reduction in accounts under 
                section 253A(b).''; and
            (4) in subsection (g), by redesignating paragraphs (4) and 
        (5) as paragraphs (5) and (6), respectively, and by inserting 
        after paragraph (3) the following new paragraph:
            ``(4) Sequestration to reduce the public debt reports.--The 
        final reports shall contain all of the information contained in 
        the public debt taxation designation report required on May 
        1.''.
    (c) Effective Date.--Notwithstanding section 275(b) of the Balanced 
Budget and Emergency Deficit Control Act of 1985, the expiration date 
set forth in that section shall not apply to the amendments made by 
this section. The amendments made by this section shall cease to have 
any effect after the first fiscal year during which there is no public 
debt.

                      TITLE II--CAPITAL FORMATION

SEC. 201. FINDINGS.

    The Congress finds that--
            (1) competitiveness studies consistently show that the 
        United States business sector needs to have access to greater 
        amounts of capital at low cost;
            (2) capital formation is a goal that should be fostered by 
        the United States Government;
            (3) our main economic competitors encourage capital 
        formation by low rates of taxation on capital gains and savings 
        and investment; and
            (4) lowering tax rates in the United States on capital 
        gains and savings and investment will make our country more 
        competitive internationally.

SEC. 202. RESEARCH CREDIT IMPROVEMENT.

    (a) Alternative Credit Calculation Based on Aggregate Research 
Expenses.--
            (1) In general.--Subsection (a) of section 41 of the 
        Internal Revenue Code of 1986 (relating to general rule) is 
        amended to read as follows:
    ``(a) General Rule.--For purposes of section 38, the research 
credit determined under this section for the taxable year shall be an 
amount equal to 1 of the following amounts (as elected by the taxpayer 
for the taxable year):
            ``(1) 25 percent of increased research expenses.--The sum 
        of--
                    ``(A) 25 percent of the excess (if any) of--
                            ``(i) the qualified research expenses, over
                            ``(ii) the base amount, and
                    ``(B) 25 percent of the basic research payments, 
                determined under subsection (e)(1)(A).
            ``(2) 5 percent of aggregate research expenses.--The sum 
        of--
                    ``(A) 5 percent of the qualified research expenses, 
                determined by substituting `100 percent' for `65 
                percent' in subsection (b)(3)(A), and
                    ``(B) 5 percent of the basic research payments, 
                determined under subsection (e)(2).''
            (2) Conforming amendments.--
                    (A) Paragraph (1) of section 41(e) of such Code 
                (relating to basic research credit) is amended--
                            (i) by striking ``subsection (a)(2)'' and 
                        inserting ``subsection (a)(1)(B)'', and
                            (ii) by striking ``subsection (a)(1)'' and 
                        inserting ``subsection (a)(1)(A)''.
                    (B) Subparagraph (C) of section 41(e)(7) of such 
                Code (relating to definitions and special rules) is 
                amended--
                            (i) by striking ``incremental'' in the 
                        subparagraph caption and inserting ``other'',
                            (ii) by striking ``subsection (a)(1)'' and 
                        inserting ``paragraph (1)(A) or (2)(A) of 
                        subsection (a)'',
                            (iii) by striking ``subsection (a)(2)'' and 
                        inserting ``paragraph (1)(B) or (2)(B) of such 
                        subsection'',
                            (iv) by striking ``subsection (a)(1)(A)'' 
                        and inserting ``paragraph (1)(A)(i) or (2)(A) 
                        of such subsection'', and
                            (v) by striking ``subsection (a)(1)(B)'' 
                        and inserting ``paragraph (1)(A)(ii) of such 
                        subsection''.
                    (C) Subparagraph (A) of section 280C(c)(2) of such 
                Code (relating to disallowance of deduction for 
                expenses for which research credit taken) is amended by 
                striking ``section 41(a)(1)'' and inserting ``paragraph 
                (1)(A) or (2)(A) of section 41(a)''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after the date of the 
        enactment of this Act.
    (b) Permanent Extension of Credit.--
            (1) In general.--Section 41 of such Code is amended by 
        striking subsection (h) (relating to termination).
            (2) Conforming amendment.--Paragraph (1) of section 28(b) 
        of such Code (relating to qualified clinical testing expenses) 
        is amended by striking subparagraph (D).

SEC. 203. VARIABLE CAPITAL GAINS.

    (a) In General.--Part I of subchapter P of chapter 1 of the 
Internal Revenue Code of 1986 (relating to treatment of capital gains) 
is amended by adding at the end thereof the following new section:

``SEC. 1202. VARIABLE CAPITAL GAINS DEDUCTION.

    ``(a) Deduction Allowed.--If for any taxable year a taxpayer other 
than a corporation has a net capital gain, there shall be allowed as a 
deduction from gross income an amount equal to the sum of--
            ``(1) 100 percent of the qualified 10-year net capital 
        gain,
            ``(2) 90 percent of the qualified 9-year net capital gain,
            ``(3) 80 percent of the qualified 8-year net capital gain,
            ``(4) 70 percent of the qualified 7-year net capital gain,
            ``(5) 60 percent of the qualified 6-year net capital gain,
            ``(6) 50 percent of the qualified 5-year net capital gain,
            ``(7) 40 percent of the qualified 4-year net capital gain,
            ``(8) 30 percent of the qualified 3-year net capital gain,
            ``(9) 20 percent of the qualified 2-year net capital gain, 
        plus
            ``(10) 10 percent of the qualified 1-year net capital gain.
    ``(b) Qualified Net Capital Gain.--For purposes of subsection (a)--
            ``(1) Qualified 10-year net capital gain.--The term 
        `qualified 10-year net capital gain' means the amount of net 
        long-term capital gain which would be computed for the taxable 
        year if only capital assets held by the taxpayer for at least 
        10 years at the time of the sale or exchange were taken into 
        account. Such term shall not exceed the amount of the net 
        capital gain for such taxable year.
            ``(2) Qualified 9-year net capital gain.--The term 
        `qualified 9-year net capital gain' means the amount of net 
        long-term capital gain which would be computed for the taxable 
        year if only capital assets held by the taxpayer for at least 9 
        years but less than 10 years at the time of the sale or 
        exchange were taken into account. Such term shall not exceed 
        the amount of the net capital gain for such taxable year 
        reduced by the amount of the qualified 10-year net capital 
        gain.
            ``(3) Other definitions.--The amount of the qualified 8-
        year net capital gain, 7-year net capital gain, 6-year net 
        capital gain, 5-year net capital gain, 4-year net capital gain, 
        3-year net capital gain, qualified 2-year net capital gain, and 
        qualified 1-year net capital gain shall be determined under the 
        principles of paragraphs (1) and (2).
    ``(c) Estate and Trusts.--In the case of an estate or trust, the 
deduction shall be computed by excluding the portion (if any) of the 
gains for the taxable year from sales or exchanges of capital assets 
which, under sections 652 and 662 (relating to inclusions of amounts in 
gross income of beneficiaries of trusts), is includible by the income 
beneficiaries as gain derived from the sale or exchange of capital 
assets.''
    (b) Treatment of Collectibles.--
            (1) In general.--Section 1222 of such Code is amended by 
        inserting after paragraph (11) the following new paragraph:
            ``(12) Special rule for collectibles.--
                    ``(A) In general.--Any gain or loss from the sale 
                or exchange of a collectible shall be treated as a 
                short-term capital gain or loss (as the case may be), 
                without regard to the period such asset was held. The 
                preceding sentence shall apply only to the extent the 
                gain or loss is taken into account in computing taxable 
                income.
                    ``(B) Treatment of certain sales of interest in 
                partnership, etc.--For purposes of subparagraph (A), 
                any gain from the sale or exchange of an interest in a 
                partnership, S corporation, or trust which is 
                attributable to unrealized appreciation in the value of 
                collectibles held by such entity shall be treated as 
                gain from the sale or exchange of a collectible. Rules 
                similar to the rules of section 751(f) shall apply for 
                purposes of the preceding sentence.
                    ``(C) Collectible.--For purposes of this paragraph, 
                the term `collectible' means any capital asset which is 
                a collectible (as defined in section 408(m) without 
                regard to paragraph (3) thereof).''
            (2) Charitable deduction not affected.--
                    (A) Paragraph (1) of section 170(e) of such Code is 
                amended by adding at the end thereof the following new 
                sentence: ``For purposes of this paragraph, section 
                1222 shall be applied without regard to paragraph (12) 
                thereof (relating to special rule for collectibles).''
                    (B) Clause (iv) of section 170(b)(1)(C) of such 
                Code is amended by inserting before the period at the 
                end thereof the following: ``and section 1222 shall be 
                applied without regard to paragraph (12) thereof 
                (relating to special rule for collectibles)''.
    (c) Conforming Amendments.--
            (1) Section 1 of such Code is amended by striking 
        subsection (h).
            (2) Subsection (a) of section 62 of such Code is amended by 
        inserting after paragraph (13) the following new paragraph:
            ``(14) Long-term capital gains.--In the case of a taxpayer 
        other than a corporation, the deduction allowed by section 
        1202.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 204. CAPITAL GAINS EXCLUSION FOR STARTUP BUSINESS STOCK.

    (a) Taxpayers Other Than Corporations.--Part I of subchapter P of 
chapter 1 of the Internal Revenue Code of 1986 (relating to treatment 
of capital gains) is amended by adding at the end the following new 
section:

``SEC. 1203. DEDUCTION FOR CAPITAL GAINS ON CERTAIN BUSINESS STOCK HELD 
              FOR MORE THAN 2 YEARS.

    ``(a) General Rule.--If for any taxable year a taxpayer other than 
a corporation has a qualified business net capital gain, there shall be 
allowed as a deduction from gross income an amount equal to 50 percent 
of the qualified business net capital gain.
    ``(b) Qualified Business Net Capital Gain.--For purposes of this 
section--
            ``(1) In general.--The term `qualified business net capital 
        gain' means the lesser of--
                    ``(A) the net capital gain for the taxable year, or
                    ``(B) the net capital gain for the taxable year 
                determined by taking into account only gain or loss 
                from qualified business stock with a holding period of 
                at least 2 years at the time of the disposition.
            ``(2) Qualified business stock.--
                    ``(A) In general.--The term `qualified business 
                stock' means stock which--
                            ``(i) is first acquired (whether directly 
                        or through an underwriter) from the issuer by 
                        the taxpayer, and
                            ``(ii) is not issued in redemption of (or 
                        otherwise exchanged for) stock.
                    ``(B) Exception for personal service 
                corporations.--The term `qualified business stock' does 
                not include stock issued by a personal service 
                corporation (within the meaning of section 269A(b)(1)).
    ``(c) Estates and Trusts.--In the case of an estate or trust, the 
deduction under subsection (a) shall be computed by excluding the 
portion (if any) of the gains for the taxable year from sales or 
exchanges of capital assets which, under sections 652 and 662 (relating 
to inclusions of amounts in gross income of beneficiaries of trusts), 
is includible by the income beneficiaries as gain derived from the sale 
or exchange of capital assets.''
    (b) Corporations.--Section 1201 of such Code (relating to 
alternative tax for corporations) is amended by redesignating 
subsection (b) as subsection (c) and by inserting after subsection (a) 
the following new subsection:
    ``(b) Deduction for Gain on Qualified Business Stock.--
            ``(1) In general.--If for any taxable year a corporation 
        has a qualified business net capital gain, there shall be 
        allowed as a deduction from gross income an amount equal to 50 
        percent of the qualified business net capital gain.
            ``(2) Qualified business net capital gain.--For purposes of 
        this subsection, the term `qualified business net capital gain' 
        has the meaning given such term in section 1203(b).''
    (c) Conforming Amendments.--
            (1) Subsection (a) of section 1201 of such Code is amended 
        by inserting after ``net capital gain'' each place it appears 
        the following: ``(other than qualified business net capital 
        gain (within the meaning of section 1203(b))''.
            (2) Subsection (a) of section 62 of such Code is amended by 
        adding at the end the following new paragraph:
            ``(15) Qualified business stock capital gains.--The 
        deduction allowed by section 1203.''
            (3)(A) The heading for section 1201 of such Code is amended 
        to read as follows:

``SEC. 1201. ALTERNATIVE TAX FOR CORPORATIONS; DEDUCTION FOR GAIN ON 
              QUALIFIED BUSINESS STOCK.''

            (B) The item relating to section 1201 in the table of 
        sections for part I of subchapter P of chapter 1 of such Code 
        is amended to read as follows:

                              ``Sec. 1201. Alternative tax for 
                                        corporations; deduction for 
                                        gain on qualified business 
                                        stock.''
            (4) The table of sections for part I of subchapter P of 
        chapter 1 of such Code is amended by adding at the end the 
        following new item:

                              ``Sec. 1203. Deduction for capital gains 
                                        on certain business stock held 
                                        for more than 2 years.''
    (d) Effective Date.--The amendments made by this section shall 
apply to stock issued after the date of the enactment of this Act.

SEC. 205. INDEXING OF CERTAIN CAPITAL ASSETS.

    (a) In General.--Part II of subchapter O of chapter 1 of the 
Internal Revenue Code of 1986 (relating to basis rules of general 
application) is amended by inserting after section 1021 the following 
new section:

``SEC. 1022. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING 
              GAIN OR LOSS.

    ``(a) General Rule.--
            ``(1) Indexed basis substituted for adjusted basis.--Except 
        as provided in paragraph (2), if an indexed asset which has 
        been held for more than 1 year is sold or otherwise disposed 
        of, for purposes of this title the indexed basis of the asset 
        shall be substituted for its adjusted basis.
            ``(2) Exception for depreciation, etc.--The deduction for 
        depreciation, depletion, and amortization shall be determined 
        without regard to the application of paragraph (1) to the 
        taxpayer or any other person.
    ``(b) Indexed Asset.--
            ``(1) In general.--For purposes of this section, the term 
        `indexed asset' means--
                    ``(A) stock in a corporation, and
                    ``(B) tangible property (or any interest therein), 
                which is a capital asset or property used in the trade 
                or business (as defined in section 1231(b)).
            ``(2) Certain property excluded.--For purposes of this 
        section, the term `indexed asset' does not include stock in a 
        foreign corporation.
    ``(c) Indexed Basis.--For purposes of this section--
            ``(1) Indexed basis.--The indexed basis for any asset is--
                    ``(A) the adjusted basis of the asset, multiplied 
                by
                    ``(B) the applicable inflation ratio.
            ``(2) Applicable inflation ratio.--The applicable inflation 
        ratio for any asset is the percentage arrived at by dividing--
                    ``(A) the gross national product deflator the 
                calendar quarter in which the disposition takes place, 
                by
                    ``(B) the gross national product deflator for the 
                calendar quarter in which the asset was acquired by the 
                taxpayer (or, if later, the calendar quarter ending 
                December 31, 1991).
        The applicable inflation ratio shall not be taken into account 
        unless it is greater than 1. The applicable inflation ratio for 
        any asset shall be rounded to the nearest one-tenth of 1 
        percent.
            ``(3) Gross national product deflator.--The gross national 
        product deflator for any calendar quarter is the implicit price 
        deflator for the gross national product for such quarter (as 
        shown in the first revision thereof).
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Treatment as separate asset.--In the case of any 
        asset, the following shall be treated as a separate asset:
                    ``(A) a substantial improvement to property,
                    ``(B) in the case of stock of a corporation, a 
                substantial contribution to capital, and
                    ``(C) any other portion of an asset to the extent 
                that separate treatment of such portion is appropriate 
                to carry out the purposes of this section.
            ``(2) Assets which are not indexed assets throughout 
        holding period.--
                    ``(A) In general.--The applicable inflation ratio 
                shall be appropriately reduced for calendar months at 
                any time during which the asset was not an indexed 
                asset.
                    ``(B) Certain short sales.--For purposes of 
                applying subparagraph (A), an asset shall be treated as 
                not an indexed asset for any short sale period during 
                which the taxpayer or the taxpayer's spouse sells short 
                property substantially identical to the asset. For 
                purposes of the preceding sentence, the short sale 
                period begins on the day after the substantially 
                identical property is sold and ends on the closing date 
                for the sale.
            ``(3) Acquisition date where there has been prior 
        application of subsection (a)(1) with respect to the 
        taxpayer.--If there has been a prior application of subsection 
        (a)(1) to an asset while such asset was held by the taxpayer, 
        the date of acquisition of such asset by the taxpayer shall be 
        treated as not earlier than the date of the most recent such 
        prior application.
    ``(e) Certain Conduit Entities.--
            ``(1) Regulated investment companies; real estate 
        investment trusts; common trust funds.--
                    ``(A) In general.--Stock in a qualified investment 
                entity shall be an indexed asset for any calendar month 
                in the same ratio as the fair market value of the 
                assets held by such entity at the close of such month 
                which are indexed assets bears to the fair market value 
                of all assets of such entity at the close of such 
                month.
                    ``(B) Ratio of 90 percent or more.--If the ratio 
                for any calendar month determined under subparagraph 
                (A) would (but for this subparagraph) be 90 percent or 
                more, such ratio for such month shall be 100 percent.
                    ``(C) Ratio of 10 percent or less.--If the ratio 
                for any calendar month determined under subparagraph 
                (A) would (but for this subparagraph) be 10 percent or 
                less, such ratio for such month shall be zero.
                    ``(D) Valuation of assets in case of real estate 
                investment trusts.--Nothing in this paragraph shall 
                require a real estate investment trust to value its 
                assets more frequently than once each 36 months (except 
                where such trust ceases to exist). The ratio under 
                subparagraph (A) for any calendar month for which there 
                is no valuation shall be the trustee's good faith 
                judgment as to such valuation.
                    ``(E) Qualified investment entity.--For purposes of 
                this paragraph, the term `qualified investment entity' 
                means--
                            ``(i) a regulated investment company 
                        (within the meaning of section 851),
                            ``(ii) a real estate investment trust 
                        (within the meaning of section 856), and
                            ``(iii) a common trust fund (within the 
                        meaning of section 584).
            ``(2) Partnerships.--In the case of a partnership, the 
        adjustment made under subsection (a) at the partnership level 
        shall be passed through to the partners.
    ``(f) Dispositions Between Related Persons.--
            ``(1) In general.--This section shall not apply to any sale 
        or other disposition of property between related persons except 
        to the extent that the basis of such property in the hands of 
        the transferee is a substituted basis.
            ``(2) Related persons defined.--For purposes of this 
        section, the term `related persons' means--
                    ``(A) persons bearing a relationship set forth in 
                section 267(b), and
                    ``(B) persons treated as single employer under 
                subsection (b) or (c) of section 414.
    ``(g) Transfers To Increase Indexing Adjustment.--If any person 
transfers cash, debt, or any other property to another person and the 
principal purpose of such transfer is to secure or increase an 
adjustment under subsection (a), the Secretary may disallow part or all 
of such adjustment or increase.
    ``(h) Definition of Stock.--For purposes of this section, the term 
`stock in a corporation' includes any interest in a common trust fund 
(as defined in section 584(a)).
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section.''
    (b) Conforming Amendments.--
            (1) Subsection (f) of section 312 of such Code is amended 
        by adding at the end the following new paragraph:
            ``(3) Effect on earnings and profits of indexed basis.--

                                For substitution of indexed basis for 
adjusted basis in the case of the disposition of certain assets, see 
section 1022(a)(1).''
            (2) The table of sections for part II of subchapter O of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 1021 the following new item:

                              ``Sec. 1022. Indexing of certain assets 
                                        for purposes of determining 
                                        gain or loss.''
    (c) Effective Date.--The amendments made by this section shall 
apply to dispositions after the date of the enactment of this Act.

SEC. 206. CORPORATE DEBT-EQUITY EQUALIZATION.

    (a) In General.--Section 243 of the Internal Revenue Code of 1986 
(relating to dividends received by corporations) is amended to read as 
follows:

``SEC. 243. DIVIDENDS PAID BY DOMESTIC CORPORATIONS.

    ``(a) General Rule.--In the case of a domestic corporation which is 
subject to taxation under this chapter, there shall be allowed as a 
deduction for the taxable year an amount equal to the dividends paid by 
such corporation during the taxable year.
    ``(b) Dividends.--For purposes of this section, the term `dividend' 
means any dividend (as defined in section 316) to which section 301 
applies.
    ``(c) Certain Corporations Not Eligible.--No deduction shall be 
allowed under this section with respect to dividends paid by any 
corporation which is--
            ``(1) an S corporation (as defined in section 1361(a)(1)),
            ``(2) a regulated investment company (as defined in section 
        851(a)),
            ``(3) a real estate investment trust (as defined in section 
        856(a)), or
            ``(4) a personal holding company (as defined in section 
        542).
    ``(d) Special Rules for Certain Distributions of Mutual Savings 
Banks, Etc.--For purposes of this section, any amount allowed as a 
deduction under section 591 (relating to deduction for dividends paid 
by mutual savings banks, etc.) shall not be treated as a dividend.''
    (b) Repeal of Certain Deductions for Dividends Received.--Sections 
244 (relating to dividends received on certain preferred stock) and 247 
(relating to dividends paid on certain preferred stock of public 
utilities) of such Code are hereby repealed.
    (c) Conforming Amendments.--
            (1) Paragraph (5) of section 172(d) of such Code is amended 
        to read as follows:
            ``(5) Computation of deduction for dividends received from 
        certain foreign corporations.--The deduction allowed by section 
        245 (relating to dividends received from certain foreign 
        corporations) shall be computed without regard to section 
        246(b) (relating to limitation on aggregate amount of 
        deductions).''
            (2) The table of sections for part VIII of subchapter B of 
        chapter 1 of such Code is amended by striking the items 
        relating to sections 243, 244, and 247 and inserting after the 
        item relating to section 241 the following:

                              ``Sec. 243. Dividends paid by domestic 
                                        corporations.''
            (3) Paragraph (1) of section 245(a) of such Code (relating 
        generally to dividends received from 10-percent owned foreign 
        corporations) is amended by striking ``the percent (specified 
        in section 243 for the taxable year)'' and inserting ``85 
        percent (100 percent in the case of a small business investment 
        company operating under the Small Business Investment Act of 
        1958 (15 U.S.C. 661 et seq.))''.
            (4)(A) Subsection (a) of section 246 of such Code (relating 
        to disallowance of deduction for dividends from certain 
        corporations) is amended--
                    (i) in paragraph (1), by striking ``sections 243, 
                244, and 245'' and inserting ``section 245'', and
                    (ii) by striking paragraph (2).
            (B) Subsection (b) of section 246 of such Code (relating to 
        limitation on aggregate amount of deductions) is amended to 
        read as follows:
    ``(b) Limitation on Aggregate Amount of Deduction.--
            ``(1) In general.--Except as provided by paragraph (2), the 
        aggregate amount of the deductions allowed by subsections (a) 
        and (b) of section 245 shall not exceed 80 percent of the 
        taxable income computed without regard to--
                    ``(A) the deductions allowed by section 172,
                    ``(B) any adjustment under section 1059, and
                    ``(C) any capital loss carryback to the taxable 
                year under section 1212(a)(1).
            ``(2) Effect of net operating loss.--Paragraph (1) shall 
        not apply for any taxable year for which there is a net 
        operating loss (as determined under section 172).''
            (C) Paragraph (1) of section 246(c) of such Code (relating 
        to exclusion of certain dividends) is amended by striking 
        ``243, 244, or''.
            (D) Section 246 of such Code (relating to rules applying to 
        deductions for dividends received) is amended by striking 
        subsections (d) and (e).
            (5)(A) Subsection (a) of section 246A of such Code 
        (relating to general rule) is amended--
                            (i) in the matter preceding paragraph (1), 
                        by striking ``243, 244, or'', and
                            (ii) in paragraph (1), by striking ``(80 
                        percent in the case of any dividend from a 20-
                        percent owned corporation as defined in section 
                        243(c)(2)''.
            (B) Subsection (b) of section 246A of such Code (relating 
        to inapplicability to dividends for which 100 percent dividends 
        received deduction allowable) is amended to read as follows:
    ``(b) Section Not to Apply to Dividends for Which 100 Percent 
Dividends Received Deduction Allowable.--Subsection (a) shall not apply 
to dividends received by a small business investment company operating 
under the Small Business Investment Act of 1958.''
            (C) Subsection (e) of section 246A of such Code (relating 
        to reduction in dividends received deduction not to exceed 
        allowable interest) is amended by striking ``243, 244, or''.
            (6) Section 596 of such Code (relating to limitation on 
        dividends received deduction) is amended by striking ``sections 
        243, 244, and 245'' and inserting ``section 245''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions made after the date of the enactment of this 
Act.

SEC. 207. CHARITABLE DEDUCTION FOR CORPORATE CONTRIBUTIONS OF EMPLOYEE 
              SERVICES TO EDUCATIONAL ORGANIZATIONS.

    (a) In General.--Section 170 of the Internal Revenue Code of 1986 
(relating to deduction for charitable contributions) is amended by 
redesignating subsection (m) as subsection (n) and by inserting after 
subsection (l) the following new subsection:
    ``(m) Corporate Contributions of Employee Services to Educational 
Organizations.--
            ``(1) In general.--There shall be allowed as a deduction 
        under this section any charitable contribution by a corporation 
        of employee volunteer services to an educational organization 
        (within the meaning of subsection (b)(1)(A)(ii)).
            ``(2) Valuation.--The value of a contribution under 
        paragraph (1) shall be 50 percent of the amount paid or 
        incurred by the corporation for salary, wages, and benefits for 
        the employee for the time during which the employee provides 
        employee volunteer services.
            ``(3) Employee volunteer services.--For purposes of this 
        subsection, the term `employee volunteer services' means 
        teaching, tutoring, or other assistance provided without charge 
        or reimbursement by an employee during the regular working 
        hours of the employer.
            ``(4) Coordination with deduction for business expenses.--A 
        deduction allowed under this subsection for any expense shall 
        be in addition to any deduction allowed for the same expense 
        under section 162.''
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after the date of the enactment of this Act.

SEC. 208. INVESTMENT CREDIT FOR NEW MANUFACTURING AND OTHER PRODUCTION 
              EQUIPMENT.

    (a) Allowance of Credit.--Section 46 of the Internal Revenue Code 
of 1986 (relating to amount of investment credit) is amended by 
striking ``and'' at the end of paragraph (2), by striking the period at 
the end of paragraph (3) and inserting ``, and'', and by adding at the 
end thereof the following new paragraph:
            ``(4) the manufacturing and other productive equipment 
        credit.''
    (b) Amount of Credit.--Section 48 of such Code is amended by adding 
at the end thereof the following new subsection:
    ``(c) Manufacturing and Other Productive Equipment Credit.--
            ``(1) In general.--For purposes of section 46, the 
        manufacturing and other productive equipment credit for any 
        taxable year is the applicable percentage of the basis of each 
        qualified manufacturing and productive equipment property 
        placed in service during such taxable year.
            ``(2) Qualified manufacturing and productive equipment 
        property.--For purposes of this subsection--
                    ``(A) In general.--The term `qualified 
                manufacturing and productive equipment property' means 
                any property--
                            ``(i) which is used as an integral part of 
                        the manufacture or production of tangible 
                        personal property,
                            ``(ii) which is tangible property to which 
                        section 168 applies,
                            ``(iii) which is section 1245 property (as 
                        defined in section 1245(a)(3)), and
                            ``(iv)(I) the construction, reconstruction, 
                        or erection of which is completed by the 
                        taxpayer, or
                            ``(II) which is acquired by the taxpayer if 
                        the original use of such property commences 
                        with the taxpayer.
                    ``(B) Treatment of certain software.--In the case 
                of any computer software which is used to control or 
                monitor a manufacturing or production process and with 
                respect to which depreciation (or amortization in lieu 
                of depreciation) is allowable--
                            ``(i) such software shall be treated as 
                        qualified manufacturing and productive 
                        equipment property, and
                            ``(ii) paragraph (3)(C) shall not apply.
            ``(3) Applicable percentage.--For purposes of this 
        subsection--
                    ``(A) In general.--In the case of qualified 
                manufacturing and productive equipment property, the 
                applicable percentage is the sum of--
                            ``(i) 10 percent, plus
                            ``(ii) 1/10th of the efficiency improvement 
                        percentage (if any) determined with respect to 
                        such property.
                In no event shall the applicable percentage exceed 20 
                percent.
                    ``(B) Efficiency improvement percentage.--For 
                purposes of subparagraph (A), the term `efficiency 
                improvement percentage' means, with respect to any 
                property, the percentage efficiency increase 
                established by the taxpayer as resulting from the use 
                of such property. For purposes of the preceding 
                sentence, percentage efficiency increase shall be 
                determined on the basis of the relationship of the 
                amount of goods manufactured or produced to the cost of 
                manufacture or production.
                    ``(C) Special rule for 3-year property.--In the 
                case of any qualified manufacturing and productive 
                equipment property which is 3-year property (within the 
                meaning of section 168(e)), the applicable percentage 
                shall be 60 percent of the amount otherwise determined 
                under this paragraph.
            ``(4) Coordination with other credits.--This subsection 
        shall not apply to any property to which the energy credit or 
        rehabilitation credit would apply unless the taxpayer elects to 
        waive the application of such credits to such property.
            ``(5) Certain progress expenditure rules made applicable.--
        Rules similar to rules of subsection (c)(4) and (d) of section 
        46 (as in effect on the day before the date of the enactment of 
        the Revenue Reconciliation Act of 1990) shall apply for 
        purposes of this subsection.''
    (c) Technical Amendments.--
            (1) Clause (ii) of section 49(a)(1)(C) of such Code is 
        amended by inserting ``or qualified manufacturing and 
        productive equipment property'' after ``energy property''.
            (2) Subparagraph (E) of section 50(a)(2) of such Code is 
        amended by inserting ``or 48(c)(5)'' before the period at the 
        end thereof.
            (3) Paragraph (5) of section 50(a) of such Code is amended 
        by adding at the end thereof the following new subparagraph:
                    ``(D) Special rules for certain property.--In the 
                case of any qualified manufacturing and productive 
                equipment property which is 3-year property (within the 
                meaning of section 168(e))--
                            ``(i) the percentage set forth in clause 
                        (ii) of the table contained in paragraph (1)(B) 
                        shall be 66 percent,
                            ``(ii) the percentage set forth in clause 
                        (iii) of such table shall be 33 percent, and
                            ``(iii) clauses (iv) and (v) of such table 
                        shall not apply.''
            (4)(A) The section heading for section 48 of such Code is 
        amended to read as follows:

``SEC. 48. OTHER CREDITS.''

            (B) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the item relating to section 45 and inserting the following:

                              ``Sec. 45. Other credits.''
    (d) Effective Date.--The amendments made by this section shall 
apply to--
            (1) property acquired by the taxpayer after the date of the 
        enactment of this Act, and
            (2) property the construction, reconstruction, or erection 
        of which is completed by the taxpayer after the date of the 
        enactment of this Act, but to the extent of the basis thereof 
        attributable to construction, reconstruction, or erection after 
        such date.

SEC. 209. INCREASE IN LIMITATION BASED ON AMOUNT OF TAX.

    (a) In General.--Subparagraph (B) of section 38(c)(1) of the 
Internal Revenue Code of 1986 is amended by striking ``$25,000'' and 
inserting ``$50,000''.
    (b) Conforming Amendments.--Paragraph (2) of section 38(c) of such 
Code is amended--
            (1) by striking ``$25,000'' each place it appears and 
        inserting ``$50,000'', and
            (2) by inserting ``$12,500'' in subparagraph (A) and 
        inserting ``$25,000''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 210. SPECIAL TREATMENT FOR LOSSES ON INVESTMENT IN MANUFACTURING 
              FACILITIES.

    (a) In General.--Subsection (a) of section 1244 of the Internal 
Revenue Code of 1986 is amended to read as follows:
    ``(a) General Rule.--In the case of an individual, any loss on--
            ``(1) section 1244 stock issued to such individual or to a 
        partnership, or
            ``(2) qualified manufacturing stock,
which would (but for this section) be treated as a loss from the sale 
or exchange of a capital asset shall, to the extent provided in this 
section, be treated as an ordinary loss.''
    (b) Qualified Manufacturing Stock.--Subsection (c) of section 1244 
of such Code is amended by adding at the end thereof the following new 
paragraph:
            ``(4) Qualified manufacturing stock.--For purposes of this 
        section, the term `qualified manufacturing stock' means stock 
        in any domestic corporation if, as of the time such stock was 
        acquired by the taxpayer, substantially all of the activities 
        of such corporation involved the manufacture of tangible 
        personal property in the United States. For purposes of this 
        paragraph, the term `manufacture' shall not include 
        importation. Rules similar to the rules of paragraphs (1) and 
        (2) of subsection (d) shall apply to qualified manufacturing 
        stock.''
    (c) Clerical Amendments.--
            (1) The section heading for section 1244 of such Code is 
        amended by inserting before the period at the end thereof the 
        following: ``or stock in manufacturing companies''.
            (2) The table of sections for part IV of subchapter P of 
        chapter 1 of such Code is amended by inserting before the 
        period at the end of the item relating to section 1244 the 
        following: ``or stock in manufacturing companies''.
    (d) Effective Date.--The amendments made by this section shall 
apply to stock acquired after the date of the enactment of this Act.

SEC. 211. EXEMPTION OF CERTAIN INTEREST AND DIVIDEND INCOME FROM TAX.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to amounts specifically 
excluded from gross income) is amended by inserting after section 115 
the following new section:

``SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS AND INTEREST RECEIVED BY 
              INDIVIDUALS.

    ``(a) Exclusion From Gross Income.--Gross income does not include 
the sum of the amounts received during the taxable year by an 
individual as--
            ``(1) dividends from domestic corporations, or
            ``(2) interest.
    ``(b) Limitations.--
            ``(1) Maximum amount.--The aggregate amount excluded under 
        subsection (a) for any taxable year shall not exceed $2,500 
        ($5,000 in the case of a joint return under section 6013).
            ``(2) Certain dividends excluded.--Subsection (a)(1) shall 
        not apply to any dividend from a corporation which, for the 
        taxable year of the corporation in which the distribution is 
        made, or for the next preceding taxable year of the 
        corporation, is a corporation exempt from tax under section 501 
        (relating to certain charitable, etc., organizations) or 
        section 521 (relating to farmers' cooperative associations).
    ``(c) Special Rules.--For purposes of this section--
            ``(1) Distributions from regulated investment companies and 
        real estate investment trusts.--Subsection (a) shall apply with 
        respect to distributions by--
                    ``(A) regulated investment companies to the extent 
                provided in section 854(c), and
                    ``(B) real estate investment trusts to the extent 
                provided in section 857(c).
            ``(2) Distributions by a trust.--For purposes of subsection 
        (a), the amount of dividends and interest properly allocable to 
        a beneficiary under section 652 or 662 shall be deemed to have 
        been received by the beneficiary ratably on the same date that 
        the dividends and interest were received by the estate or 
        trust.
            ``(3) Certain nonresident aliens ineligible for 
        exclusion.--In the case of a nonresident alien individual, 
        subsection (a) shall apply only--
                    ``(A) in determining the tax imposed for the 
                taxable year pursuant to section 871(b)(1) and only in 
                respect of dividends and interest which are effectively 
                connected with the conduct of a trade or business 
                within the United States, or
                    ``(B) in determining the tax imposed for the 
                taxable year pursuant to section 877(b).''
    (b) Clerical and Conforming Amendments.--
            (1) The table of sections for part III of subchapter B of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 115 the following new item:

                              ``Sec. 116. Partial exclusion of 
                                        dividends and interest received 
                                        by individuals.''
            (2) The first sentence of paragraph (2) of section 265(a) 
        of such Code is amended by inserting before the period at the 
        end thereof the following: ``, or to purchase or carry 
        obligations or shares, or to make deposits, to the extent the 
        interest thereon is excludable from gross income under section 
        116''.
            (3) Subsection (c) of section 584 of such Code is amended 
        by adding at the end thereof the following new sentence:
``The proportionate share of each participant in the amount of 
dividends or interest received by the common trust fund and to which 
section 116 applies shall be considered for purposes of such section as 
having been received by such participant.''
            (4) Subsection (a) of section 643(a) of such Code is 
        amended by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) Dividends or interest.--There shall be included the 
        amount of any dividends or interest excluded from gross income 
        pursuant to section 116.''
            (5) Section 854 of such Code is amended by adding at the 
        end thereof the following new subsection:
    ``(c) Treatment Under Section 116.--
            ``(1) In general.--For purposes of section 116, in the case 
        of any dividend (other than a dividend described in subsection 
        (a)) received from a regulated investment company which meets 
        the requirements of section 852 for the taxable year in which 
        it paid the dividend--
                    ``(A) the entire amount of such dividend shall be 
                treated as a dividend if the aggregate dividends and 
                interest received by such company during the taxable 
                year equal or exceed 75 percent of its gross income, or
                    ``(B) if subparagraph (A) does not apply, a portion 
                of such dividend shall be treated as a dividend (and a 
                portion of such dividend shall be treated as interest) 
                based on the portion of the company's gross income 
                which consists of aggregate dividends or aggregate 
                interest, as the case may be.
        For purposes of the preceding sentence, gross income and 
        aggregate interest received shall each be reduced by so much of 
        the deduction allowable by section 163 for the taxable year as 
        does not exceed aggregate interest received for the taxable 
        year.
            ``(2) Notice to shareholders.--The amount of any 
        distribution by a regulated investment company which may be 
        taken into account as a dividend for purposes of the exclusion 
        under section 116 shall not exceed the amount so designated by 
        the company in a written notice to its shareholders mailed not 
        later than 45 days after the close of its taxable year.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) The term `gross income' does not include gain 
                from the sale or other disposition of stock or 
                securities.
                    ``(B) The term `aggregate dividends received' 
                includes only dividends received from domestic 
                corporations other than dividends described in section 
                116(b)(2). In determining the amount of any dividend 
                for purposes of this subparagraph, the rules provided 
                in section 116(c)(1) (relating to certain 
                distributions) shall apply.''
            (6) Subsection (c) of section 857 of such Code is amended 
        to read as follows:
    ``(c) Limitations Applicable to Dividends Received From Real Estate 
Investment Trusts.--
            ``(1) In general.--For purposes of section 116 (relating to 
        an exclusion for dividends and interest received by 
        individuals) and section 243 (relating to deductions for 
        dividends received by corporations), a dividend received from a 
        real estate investment trust which meets the requirements of 
        this part shall not be considered as a dividend.
            ``(2) Treatment as interest.--In the case of a dividend 
        (other than a capital gain dividend, as defined in subsection 
        (b)(3)(C)) received from a real estate investment trust which 
        meets the requirements of this part for the taxable year in 
        which it paid the dividend--
                    ``(A) such dividend shall be treated as interest if 
                the aggregate interest received by the real estate 
                investment trust for the taxable year equals or exceeds 
                75 percent of its gross income, or
                    ``(B) if subparagraph (A) does not apply, the 
                portion of such dividend which bears the same ratio to 
                the amount of such dividend as the aggregate interest 
                received bears to gross income shall be treated as 
                interest.
            ``(3) Adjustments to gross income and aggregate interest 
        received.--For purposes of paragraph (2)--
                    ``(A) gross income does not include the net capital 
                gain,
                    ``(B) gross income and aggregate interest received 
                shall each be reduced by so much of the deduction 
                allowable by section 163 for the taxable year (other 
                than for interest on mortgages on real property owned 
                by the real estate investment trust) as does not exceed 
                aggregate interest received by the taxable year, and
                    ``(C) gross income shall be reduced by the sum of 
                the taxes imposed by paragraphs (4), (5), and (6) of 
                section 857(b).
            ``(4) Notice to shareholders.--The amount of any 
        distribution by a real estate investment trust which may be 
        taken into account as interest for purposes of the exclusion 
        under section 116 shall not exceed the amount so designated by 
        the trust in a written notice to its shareholders mailed not 
        later than 45 days after the close of its taxable year.''
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to taxable years beginning after the date of the 
enactment of this Act.

SEC. 212. ORDINARY-LOSS TREATMENT FOR LOSSES ON INVESTMENTS IN STARTUP 
              COMPANIES.

    (a) In General.--Subparagraph (A) of section 1244(c)(1) of the 
Internal Revenue Code of 1986 (defining section 1244 stock) is amended 
by inserting before the comma at the end the following: ``or was a 
qualified startup company''.
    (b) Qualified Startup Company.--Subsection (c) of section 1244 of 
such Code is amended by adding at the end the following new paragraph:
            ``(4) Qualified startup company.--
                    ``(A) In general.--For purposes of this section, 
                the term `qualified startup company' means any domestic 
                corporation if--
                            ``(i) as of the time of the issuance of the 
                        stock involved, substantially all of the 
                        activities of the corporation involved the 
                        manufacture of tangible personal property in 
                        the United States,
                            ``(ii) as of the time of the issuance of 
                        the stock involved, no substantial part of the 
                        business activities of the corporation involved 
                        a business acquired from another person, and
                            ``(iii) the corporation had not been in 
                        existence for more than 1 taxable year as of 
                        the time of the issuance of the stock involved.
                    ``(B) Importation excluded.--For purposes of 
                subparagraph (A), the term `manufacture' does not 
                include importation.''
    (c) Conforming Amendment.--The last sentence of section 1244(d)(2) 
of such Code is amended by striking ``paragraphs (1)(C) and (3)(A)'' 
and inserting ``paragraphs (1)(C), (3)(A), and (4)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to stock issued after the date of the enactment of this Act.

                   TITLE III--COOPERATIVE ENTERPRISE

SEC. 301. FINDINGS.

    The Congress finds that--
            (1) the globalization of the economy makes antitrust law 
        much less relevant today, and even counterproductive, than when 
        it was developed;
            (2) rapid technological change makes the creation of 
        monopolies unlikely as the pace of product and process 
        innovation accelerates;
            (3) cooperative efforts in today's world are predominantly 
        pro-competitive rather than anticompetitive; and
            (4) changing the United States antitrust laws to mirror the 
        realities of the way in which other countries enforce 
        anticompetitive statutes would make United States industries 
        more competitive internationally.

SEC. 302. MERGER ANALYSIS.

    Section 7 of the Clayton Act (15 U.S.C. 18) is amended--
            (1) in the first paragraph by striking ``the effect of such 
        acquisition may be substantially to lessen competition, or to 
        tend to create a monopoly'' and inserting in lieu thereof 
        ``there is a significant probability that such acquisition will 
        substantially increase the ability to exercise market power'';
            (2) in the second paragraph--
                    (A) by striking ``the effect of'' and inserting in 
                lieu thereof ``there is a significant probability 
                that''; and
                    (B) by striking ``may be substantially to lessen 
                competition, or to tend to create a monopoly'' and 
                inserting in lieu thereof ``will substantially increase 
                the ability to exercise market power'';
            (3) in the third paragraph--
                    (A) by striking ``the substantial lessening of 
                competition'' in the first sentence and inserting in 
                lieu thereof ``a substantial increase in the ability to 
                exercise market power''; and
                    (B) by striking ``lessen competition'' in the 
                second sentence and inserting in lieu thereof 
                ``increase the ability to exercise market power''; and
            (4) by inserting after the third paragraph the following 
        new paragraph:
    ``For purposes of this section, the ability to exercise market 
power is defined as the ability of one or more firms profitably to 
maintain prices above competitive levels for a significant period of 
time. In determining whether there is a significant probability that 
any acquisition will substantially increase the ability to exercise 
market power, the court shall duly consider all economic factors 
relevant to the effect of the acquisition in the affected markets, 
including (i) the number and size distribution of firms and the effect 
of the acquisition thereon; (ii) ease or difficulty of entry by foreign 
or domestic firms; (iii) the ability of smaller firms in the market to 
increase production in response to an attempt to exercise market power; 
(iv) the nature of the product and terms of sale; (v) conduct of firms 
in the market; (vi) efficiencies deriving from the acquisition; and 
(vii) any other evidence indicating whether the acquisition will or 
will not substantially increase the ability, unilaterally or 
collectively, to exercise market power.''.

SEC. 303. JOINT PRODUCTION.

    The National Cooperative Research Act of 1984 (15 U.S.C. 4301 et 
seq.) is amended--
            (1) in section 1, by striking ``National Cooperative 
        Research Act of 1984'' and inserting in lieu thereof ``National 
        Cooperative Research, Development, and Production Act'';
            (2) by striking ``joint research and development venture'' 
        each place it appears and inserting in lieu thereof ``joint 
        research, development, or production venture'';
            (3) in section 2(a)(6)--
                    (A) by striking ``or'' in subparagraph (D);
                    (B) by striking subparagraph (E) and inserting in 
                lieu thereof the following:
                    ``(E) the production of any product, process, or 
                service, or
                    ``(F) any combination of the purposes specified in 
                subparagraphs (A), (B), (C), (D), and (E),''; and
                    (C) by inserting ``development, or production,'' 
                after ``the conducting of research,'';
            (4) in section 2(b)(1), by striking ``conduct the research 
        and development that is'' and inserting in lieu thereof ``carry 
        out'';
            (5) by striking sections 2(b)(2) and 2(b)(3) and inserting 
        in lieu thereof the following:
            ``(2) entering into any agreement or engaging in any other 
        conduct restricting, requiring, or otherwise involving the 
        marketing by such venture or by any person who is a party to 
        such venture of any product, process, or service developed 
        through or produced by such venture, other than--
                    ``(A) the marketing by such venture of any product, 
                process, or service to any person who is a party to 
                such venture; or
                    ``(B) the marketing of proprietary information, 
                such as patents, rights in mask works protected under 
                title 17 of the United States Code, know-how, and trade 
                secrets; and
            ``(3) entering into any agreement or engaging in any other 
        conduct--
                    ``(A) to restrict or require the sale, licensing, 
                or sharing by any person who is a party to such venture 
                of inventions, developments, products, processes, or 
                services not developed through or produced by such 
                venture; or
                    ``(B) to restrict or require participation by such 
                a party in other unilateral or joint research, 
                development, or production activities,
        that is not reasonably required to prevent misappropriation of 
        proprietary information contributed by any person who is a 
        party to such venture or of the results of such venture.'';
            (6) in section 3, by striking ``research and development 
        markets'' and inserting in lieu thereof ``research, 
        development, product, process, or service markets'';
            (7) in the heading to section 6, by striking ``Joint 
        research and development venture'' and inserting in lieu 
        thereof ``Joint research, development, or production venture''; 
        and
            (8) in section 6(a) by inserting ``(or, with respect to a 
        venture involving the production of any product, process, or 
        service, not later than 90 days after the effective date of the 
        Fundamental Competitiveness Act of 1993)'' after ``enactment of 
        this Act''.

                  TITLE IV--BUSINESS LIABILITY REFORM

                          Subtitle A--Findings

SEC. 401. FINDINGS.

    The Congress finds that--
            (1) the increasing amount of litigation in our society 
        causes the wasteful use of time, money, and energy which could 
        be better allocated to research, development, production, 
        economic growth, and competitiveness;
            (2) the multitude of professional and product liability 
        suits has undermined the incentive and ability of businesses to 
        bring new products to the market and has led professionals to 
        be overly cautious in providing services to the community;
            (3) the excessive number of law suits and the plethora of 
        legal standards in the areas of professional and product 
        liability for each State has led to exorbitant compliance costs 
        for manufacturers and service providers;
            (4) encouraging alternative dispute mechanisms to resolve 
        both professional and product liability suits would reduce 
        inordinate litigation cost and free capital for more productive 
        enterprises; and
            (5) providing uniform legal standards for both professional 
        and product liability would eliminate costly litigation, 
        promote professional and product innovation, reduce regulatory 
        compliance costs, and make the United States more competitive 
        internationally.

              Subtitle B--Professionals' Liability Reform

SEC. 411. SHORT TITLE.

    This subtitle may be cited as ``Professionals' Liability Reform Act 
of 1993''.

SEC. 412. PURPOSE.

    The purpose of this subtitle is to establish uniform standards of 
liability for professionals who provide professional service--
            (1) to promote greater uniformity and predictability with 
        respect to liability arising out of such services;
            (2) to facilitate the provision of such services through 
        interstate commerce;
            (3) to foster innovation by reducing the uncertainty of 
        risk to professionals who provide professional services; and
            (4) to encourage the States to support alternative methods 
        for resolving professional liability disputes in order to 
        reduce the costs of such disputes to professionals and their 
        clients.

SEC. 413. SCOPE AND PREEMPTION.

    (a) In General.--(1) This subtitle governs any professional 
liability action brought in any Federal or State court against a 
professional.
    (2) This subtitle shall preempt and supersede any State law to the 
extent that such law is inconsistent with this subtitle. This subtitle 
shall not preempt or supersede any State law that provides to 
professionals limitations of liability or defenses which are additional 
to limitations or defenses contained in this subtitle.
    (b) Harm Required.--A claimant is not entitled to recover damages 
in a professional liability action except for damages which constitute 
harm as defined in section 416(4).
    (c) Construction of Provisions.--Nothing in this subtitle shall be 
construed--
            (1) to waive or affect any defense of sovereign immunity 
        asserted by any State under any law;
            (2) to waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) to affect the applicability of the Foreign Services 
        Immunities Act of 1976 (28 U.S.C. 1602 et seq.);
            (4) to preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) to affect the right of any court to transfer venue or 
        to apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum.
    (d) Alternative Procedures, Standards, and Systems.--Nothing in 
this subtitle shall prohibit States from developing or implementing 
alternative procedures, standards, or systems, which are not 
inconsistent with this subtitle, for--
            (1) expediting the adjudication of professional liability 
        claims,
            (2) resolving professional liability disputes, and
            (3) compensating harm caused by professional services.
    (e) Limitation of Actions.--No professional liability action shall 
be maintained unless commenced within 3 years after the claimant 
discovered, or in the exercise of reasonable diligence should have 
discovered, that such claimant had suffered harm from professional 
services.

SEC. 414. DESCRIPTION OF PROFESSIONAL LIABILITY STANDARDS.

    (a) Liability in General.--A professional shall not be liable for 
damages in any professional liability action unless the claimant 
establishes in addition to any other necessary elements of proof 
required by law--
            (1) except as provided in subsection (b), that such 
        professional negligently rendered professional services and 
        such negligence was the proximate cause of harm to the 
        claimant; or
            (2) in the case of a claim for economic injury, that such 
        professional negligently rendered professional services to or 
        for the direct and intended benefit of the claimant, and such 
        services were the proximate cause of the harm to the claimant.
    (b) Existence of Certain Scientific, Medical, Legal, or Technical 
Information.--A professional shall not be liable in a professional 
liability action for harm caused by professional services rendered by 
such professional unless the claimant establishes that, at the time 
such services were rendered, knowledge of the circumstances that caused 
the harm and a practical means to eliminate such circumstances were 
reasonably available in light of scientific, medical, legal, or 
technical information existing at the time the professional services 
were rendered.
    (c) Additional Limitations on Liability.--(1) A professional shall 
not be liable in a professional liability action in which--
            (A) the professional's services were rendered to an agency 
        of the Federal Government or of any State;
            (B) the Federal Government or the State established or 
        approved reasonably precise contract specifications material to 
        the claim made against the professional; and
            (C) the services rendered by the professional conformed to 
        such specifications in all respects material to the claim.
    (2) A determination by an agency of the Federal Government or the 
State that the services rendered by the professional are in compliance 
with contract specifications shall serve as conclusive evidence of such 
conformity.
    (d) Periodic Payments.--(1) In any professional liability action in 
which the award of future damages exceeds $100,000, no person may be 
required to pay for future loss in a single payment, but such person 
shall be permitted to make such payments periodically based on a 
projection of when damages are likely to occur.
    (2) The court may require such person to purchase an annuity making 
such periodic payments, if the court finds a reasonable basis for 
concluding that the person may not make the periodic payments.
    (3) The judgment of the court awarding such periodic payments may 
not be reopened at any time to contest, amend, or modify the schedule 
or amount of the payments in the absence of fraud.
    (4) This subsection shall not be construed to preclude a settlement 
providing for a single payment.
    (f) Collateral Source Benefits.--(1) Any award of damages to a 
claimant in a professional liability action shall be reduced by any 
other past or future payment or benefit covered by this subsection 
which the person has received or for which the person is eligible on 
account of the harm for which damages are awarded.
    (2) As used in this subsection, the term ``payment or benefit 
covered by this subsection'' means--
            (A) any payment or benefit by or paid, in whole or in part, 
        by any agency or instrumentality of the United States, a State, 
        or local government; and
            (B) any payment or benefit by a worker's compensation 
        system, a health insurance program, or income replacement 
        program.
    (3) This subsection shall not preempt or supersede any State law 
which provides that damage awards may be reduced by payments or 
benefits other than those covered by this section.
    (4) This subsection shall not apply to any payments or benefits 
received before judgment if the application of this subsection would 
reduce the amount of income that would otherwise be considered under 
section 402(a)(17) of the Social Security Act.
    (5) The amount by which an award of damages to an individual for an 
injury shall be reduced under paragraph (1) shall be an amount equal to 
the difference between--
            (A) the total amount of the payments (other than such 
        award) which have been made or which will be made to such 
        individual to compensate such individual for such injury, minus
            (B) the amount paid by such individual (or by the spouse or 
        parent of such individual) to secure the payments described in 
        subparagraphs (A) and (B) of paragraph (2).
    (g) Limitation on Attorneys' Fees.--(1) Except as provided in 
paragraph (2), in any professional liability action in which claimant 
receives settlement proceeds or an award of damages, the amount of 
payments to such individual's attorney shall not exceed--
            (A) 33\1/3\ percent of the first $250,000 recovered,
            (B) 25 percent of the next $250,000 recovered, and
            (C) 20 percent of any amount recovered in excess of 
        $500,000.
    (2) In any civil action to which paragraph (1) applies, the court 
may, after receiving a petition from the attorney representing the 
individual who receives settlement proceeds or an award of damages, 
permit such attorney to be paid an amount of fees in excess of the 
amount specified by such paragraph if the court determines that the 
petition has adduced evidence justifying such additional fees.
    (h) Liability of Codefendants.--(1) Except as provided in paragraph 
(2), in a professional liability action, the trier of fact shall 
determine, with respect to each person responsible for the harm, the 
percentage of that person's responsibility for the harm for which the 
action was brought. If damages are awarded to the claimant in such 
action, a professional shall be liable, if otherwise liable to the 
claimant for damages, only for the percentage of the damages which 
equals the percentage of that professional's responsibility for the 
harm for which the action was brought.
    (2) Paragraph (1) shall not apply with respect to persons engaged 
in concerted action which proximately caused the harm complained of by 
the claimant. For purposes of this subsection, the term ``concerted 
action'' means the participation in joint conduct by 2 or more persons 
who consciously and deliberately agreed to jointly participate in such 
conduct with actual knowledge of the wrongfulness of the conduct.
    (i) Punitive Damages.--(1) Punitive damages may, if otherwise 
permitted by applicable law, be awarded to any claimant who 
establishes, by clear and convincing evidence, that the harm suffered 
was the result of conduct--
            (A) manifesting a professional's malicious and reckless 
        disregard of those persons who might be harmed as a result of 
        the performance of professional service; and
            (B) constituting an extreme departure from accepted 
        standard of conduct.
    (2) A failure to exercise reasonable care in choosing among 
alternative types of services, designs, formulations, instructions, or 
warnings does not, in and of itself, constitute the conduct described 
in paragraph (1).
    (3) Punitive damages may not be awarded in the absence of a 
compensatory award.
    (4) Punitive damages may not be awarded for the negligent provision 
of professional services.
    (5) In determining whether punitive damages are to be awarded, the 
trier of fact shall consider--
            (A) the likelihood at the relevant time that serious harm 
        would arise from the professional's conduct described in 
        paragraph (1),
            (B) the degree of the professional's awareness of that 
        likelihood,
            (C) the duration of the conduct and any concealment of it 
        by the professional,
            (D) the attitude and action of the professional upon 
        discovery of the conduct and whether the conduct has been 
        terminated, and
            (E) whether the harm suffered by the claimant was also the 
        result of the claimant's--
                    (i) disregard for personal safety;
                    (ii) failure to provide the professional with all 
                material information or other matters relevant to the 
                rendering of professional services; or
                    (iii) disregard for the consequences of any action 
                taken by the claimant in reliance on professional 
                services.
    (6) At the request of the professional, the trier of fact shall 
consider in a separate proceeding whether punitive damages are to be 
awarded. If a separate proceeding is requested, evidence relevant only 
to the claim of punitive damages, as determined by applicable State 
law, shall be inadmissible in any proceeding to determine whether 
compensatory damages are to be awarded.
    (7) If the trier of fact determines that a professional has engaged 
in conduct described under paragraph (1), the court may award punitive 
damages. In determining the amount of such damages, the court shall 
consider--
            (A) the factors described in paragraph (4),
            (B) the profitability to the professional of the conduct 
        for which punitive damages are to be awarded,
            (C) the total effect of other punishment imposed or likely 
        to be imposed upon the professional as a result of the conduct, 
        including punitive damage awards to persons similarly situated 
        to the claimant and the severity of civil or criminal penalties 
        to which the professional has been or may be subjected.
    (8)(A) A claimant's actual recovery of punitive damages awarded 
under paragraph (5) may not exceed 3 times the amount of compensatory 
damages awarded to such claimant.
    (B) Any punitive damages awarded by the court in excess of the 
amount referred to in subparagraph (A) shall be paid--
            (i) to the State in which the case is litigated, if the 
        case is litigated in State court; or
            (ii) to the Federal Government, if the case is litigated in 
        Federal court.
    (C) Notwithstanding subparagraph (B), the court may award 
attorneys' fees from such damages to the claimant's attorney as 
compensation for work attributable to obtaining an award of such 
damages.
    (j) Counsel's Liability for Frivolous Suits.--If the court finds in 
any professional liability action that such action was commenced--
            (1) without a good faith belief by the attorney 
        representing the claimant that there was a reasonable basis in 
        law and in fact for recovery of the relief requested, or
            (2) by such attorney merely for purposes of achieving a 
        monetary settlement where there was no reasonable prospect for 
        an award of damages,
the attorney shall be liable for costs, fees, and expenses, including 
attorney fees, reasonably incurred by the defendant.

SEC. 415. FORMATION OF RISK MANAGEMENT PROGRAMS.

    (a) In General.--Each State should encourage professional 
organizations, whose membership includes professionals who practice 
within the State, to put into effect risk management programs including 
peer review of professional office policies and practices, 
organization, and quality of performance.
    (b) Records Inadmissible as Evidence.--Records of the 
implementation of and conclusions reached by such risk management 
programs, including peer review of professional office policies and 
practices, organization, and quality of performance, shall not be 
admissible in evidence against any professional who is the subject of 
such records.

SEC. 416. DEFINITIONS.

    For purposes of this subtitle--
            (1) the term ``professional'' means--
                    (A) any person engaged in work (i) predominantly 
                intellectual and varied in character as opposed to 
                routine mental, manual, mechanical, or physical work; 
                (ii) involving the consistent exercise of discretion 
                and judgment in its performance; (iii) of such a 
                character that the output produced or the result 
                accomplished cannot be standardized in relation to a 
                given period of time; and (iv) requiring knowledge of 
                an advanced type in a field of science or learning 
                customarily acquired by a prolonged course of 
                specialized intellectual instruction and study in an 
                institution of higher learning or a hospital, as 
                distinguished from a general academic education or from 
                an apprenticeship or from training in the performance 
                of routine mental, manual, or physical processes; or
                    (B) any person, who (i) has completed the courses 
                of specialized intellectual instruction and study 
                described in clause (iv) of subparagraph (A), and (ii) 
                is performing related work under the supervision of a 
                professional to qualify himself or herself to become a 
                professional as defined in subparagraph (A);
            (2) the term ``State'' means any State of the United 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Commonwealth of the Northern Mariana Islands, the 
        Virgin Islands, Guam, American Samoa, and any other territory 
        or possession of the United States, or any political 
        subdivision thereof;
            (3) the term ``claimant'' means any person--
                    (A) who has suffered harm from the provision of 
                professional services and who brings a professional 
                liability action, or
                    (B) who brings such an action on behalf of any 
                person who has suffered harm from the provision of 
                professional services or who brings such an action 
                because a person suffered harm from such services;
            (4) the term ``harm'' means--
                    (A) illness, bodily injury, or the death of the 
                claimant,
                    (B) mental anguish of, or emotional harm to, the 
                claimant caused by the claimant's illness or bodily 
                injury,
                    (C) physical damage to property, or
                    (D) economic injury; and
            (5) the term ``professional liability action'' means a 
        civil action brought against a professional for personal 
        injury, property damage, or harm suffered by the claimant 
        because of the provision of professional services.

                 Subtitle C--Product Liability Fairness

                       PART I--GENERAL PROVISIONS

SEC. 421. SHORT TITLE.

    This subtitle may be cited as the ``Product Liability Fairness 
Act''.

SEC. 422. DEFINITIONS.

    As used in this subtitle, the term--
            (1) ``claimant'' means any person who brings a civil action 
        pursuant to this subtitle, and any person on whose behalf such 
        an action is brought; if such an action is brought through or 
        on behalf of an estate, the term includes the claimant's 
        decedent, or if it is brought through or on behalf of a minor 
        or incompetent, the term includes the claimant's parent or 
        guardian;
            (2) ``clear and convincing evidence'' is that measure or 
        degree of proof that will produce in the mind of the trier of 
        fact a firm belief or conviction as to the truth of the 
        allegations sought to be established; the level of proof 
        required to satisfy such standard is more than that required 
        under preponderance of the evidence, but less than that 
        required for proof beyond a reasonable doubt;
            (3) ``collateral benefits'' means all benefits and 
        advantages received or entitled to be received (regardless of 
        any right any other person has or is entitled to assert for 
        recoupment through subrogation, trust agreement, lien, or 
        otherwise) by any claimant harmed by a product or by any other 
        person as reimbursement of loss because of harm to person or 
        property payable or required to be paid to the claimant, 
        under--
                    (A) any Federal law or the laws of any State (other 
                than through a claim for breach of an obligation or 
                duty); or
                    (B) any life, health, or accident insurance or 
                plan, wage or salary continuation plan, or disability 
                income or replacement service insurance, or any benefit 
                received or to be received as a result of participation 
                in any pre-paid medical plan or health maintenance 
                organization;
            (4) ``commerce'' means trade, traffic, commerce, or 
        transportation (A) between a place in a State and any place 
        outside of that State; or (B) which affects trade, traffic, 
        commerce, or transportation described in clause (A);
            (5) ``commercial loss'' means economic injury, whether 
        direct, incidental, or consequential, including property damage 
        and damage to the product itself;
            (6) ``economic loss'' means any pecuniary loss resulting 
        from harm which is allowed under State law;
            (7) ``exercise of reasonable care'' means conduct of a 
        person of ordinary prudence and intelligence using the 
        attention, precaution, and judgment that society expects of its 
        members for the protection of their own interests and the 
        interests of others;
            (8) ``harm'' means any harm recognized under the law of the 
        State in which the civil action is maintained, other than--
                    (A) loss or damage caused to a product itself; and
                    (B) commercial loss;
            (9) ``manufacturer'' means (A) any person who is engaged in 
        a business to produce, create, make, or construct any product 
        (or component part of a product) and who designs or formulates 
        the product (or component part of the product) or has engaged 
        another person to design or formulate the product (or component 
        part of the product); (B) a product seller with respect to all 
        aspects of a product (or component part of a product) which are 
        created or affected when, before placing the product in the 
        stream of commerce, the product seller produces, creates, 
        makes, or constructs and designs or formulates, or has engaged 
        another person to design or formulate, an aspect of a product 
        (or component part of a product) made by another; or (C) any 
        product seller not described in clause (B) which holds itself 
        out as a manufacturer to the user of a product;
            (10) ``noneconomic loss'' means loss caused by a product 
        other than economic loss or commercial loss;
            (11) ``person'' means any individual, corporation, company, 
        association, firm, partnership, society, joint stock company, 
        or any other entity (including any governmental entity);
            (12) ``preponderance of the evidence'' is that measure or 
        degree of proof which, by the weight, credit, and value of the 
        aggregate evidence on either side, establishes that it is more 
        probable than not that a fact occurred or did not occur;
            (13) ``product'' means any object, substance, mixture, or 
        raw material in a gaseous, liquid, or solid state (A) which is 
        capable of delivery itself or as an assembled whole, in a mixed 
        or combined state, or as a component part or ingredient; (B) 
        which is produced for introduction into trade or commerce; (C) 
        which has intrinsic economic value; and (D) which is intended 
        for sale or lease to persons for commercial or personal use; 
        the term does not include human tissue, blood and blood 
        products, or organs unless specifically recognized as a product 
        pursuant to State law;
            (14) ``product seller'' means a person who, in the course 
        of a business conducted for that purpose, sells, distributes, 
        leases, prepares, blends, packages, labels, or otherwise is 
        involved in placing a product in the stream of commerce, or who 
        installs, repairs, or maintains the harm-causing aspect of a 
        product; the term does not include--
                    (A) a seller or lessor of real property;
                    (B) a provider of professional services in any case 
                in which the sale or use of a product is incidental to 
                the transaction and the essence of the transaction is 
                the furnishing of judgment, skill, or services; or
                    (C) any person who--
                            (i) acts in only a financial capacity with 
                        respect to the sale of a product; and
                            (ii) leases a product under a lease 
                        arrangement in which the selection, possession, 
                        maintenance, and operation of the product are 
                        controlled by a person other than the lessor; 
                        and
            (15) ``State'' means any State of the United States, the 
        District of Columbia, the Commonwealth of Puerto Rico, the 
        Commonwealth of the Northern Mariana Islands, the Virgin 
        Islands, Guam, American Samoa, and any other territory or 
        possession of the United States, or any political subdivision 
        thereof.

SEC. 423. PREEMPTION.

    (a) This subtitle governs any civil action brought against a 
manufacturer or product seller, on any theory, for harm caused by a 
product. A civil action brought against a manufacturer or product 
seller for loss or damage to a product itself or for commercial loss is 
not subject to this subtitle.
    (b) This subtitle supersedes any State law regarding recovery for 
harm caused by a product only to the extent that this subtitle 
establishes a rule of law applicable to any such recovery. Any issue 
arising under this subtitle that is not governed by any such rule of 
law shall be governed by applicable State or Federal law.
    (c) Nothing in this subtitle act shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) supersede any Federal law, except the Federal Employees 
        Compensation Act and the Longshoremen's and Harbor Workers' 
        Compensation Act;
            (3) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (4) affect the applicability of any provision of chapter 97 
        of title 28, United States Code;
            (5) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation;
            (6) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum; or
            (7) supersede any statutory or common law, including an 
        action to abate a nuisance, that authorizes a State or person 
        to institute an action for civil damages or civil penalties, 
        cleanup costs, injunctions, restitution, cost recovery, 
        punitive damages, or any other form of relief resulting from 
        contamination or pollution of the environment, or the threat of 
        such contamination or pollution.
    (d) As used in this section, the term ``environment'' has the 
meaning given to such term in section 101(8) of the Comprehensive 
Environmental Response, Compensation, and Liability Act of 1980 (42 
U.S.C. 9601(8)).
    (e) This subtitle shall be construed and applied after 
consideration of its legislative history to promote uniformity of law 
in the various jurisdictions.

SEC. 424. JURISDICTION OF FEDERAL COURTS.

    The district courts of the United States shall not have 
jurisdiction over any civil action pursuant to this subtitle, based on 
section 1331 or 1337 of title 28, United States Code.

SEC. 425. EFFECTIVE DATE.

    (a) This subtitle shall take effect on the date of its enactment 
and shall apply to all civil actions pursuant to this subtitle 
commenced on or after such date, including any action in which the harm 
or the conduct which caused the harm occurred before the effective date 
of this subtitle.
    (b) If any provision of this subtitle would shorten the period 
during which a manufacturer or product seller would otherwise be 
exposed to liability, the claimant may, notwithstanding the otherwise 
applicable time period, bring any civil action pursuant to this 
subtitle within one year after the effective date of this subtitle.

                    PART II--OUT OF COURT PROCEDURES

SEC. 431. EXPEDITED PRODUCT LIABILITY SETTLEMENTS.

    (a) Any claimant may bring a civil action for damages against a 
person for harm caused by a product pursuant to applicable State law, 
except to the extent such law is superseded by this part.
    (b) Any claimant may, in addition to any claim for relief made in 
accordance with State law, include in such claimant's complaint an 
offer of settlement for a specific dollar amount.
    (c) The defendant may make an offer of settlement for a specific 
dollar amount within sixty days after service of the claimant's 
complaint or within the time permitted pursuant to State law for a 
responsive pleading, whichever is longer, except that if such pleading 
includes a motion to dismiss in accordance with applicable law, the 
defendant may tender such relief to the claimant within ten days after 
the court's determination regarding such motion.
    (d) In any case in which an offer of settlement is made pursuant to 
subsection (b) or (c) of this section, the court may, upon motion made 
prior to the expiration of the applicable period for response, enter an 
order extending such period. Any such order shall contain a schedule 
for discovery of evidence material to the issue of the appropriate 
amount of relief, and shall not extend such period for more than sixty 
days. Any such motion shall be accompanied by a supporting affidavit of 
the moving party setting forth the reasons why such extension is 
necessary to promote the interests of justice and stating that the 
information likely to be discovered is material, and is not, after 
reasonable inquiry, otherwise available to the moving party.
    (e) If the defendant, as offeree, does not accept the offer of 
settlement made by a claimant in accordance with subsection (b) of this 
section within the time permitted pursuant to State law for a 
responsive pleading or, if such pleading includes a motion to dismiss 
in accordance with applicable law, within thirty days after the court's 
determination regarding such motion, and a verdict is entered in such 
action equal to or greater than the specific dollar amount of such 
offer of settlement, the court shall enter judgment against the 
defendant and shall include in such judgment an amount for the 
claimant's reasonable attorney's fees and costs. Such fees shall be 
offset against any fees owed by the claimant to the claimant's attorney 
by reason of the verdict.
    (f) If the claimant, as offeree, does not accept the offer of 
settlement made by a defendant in accordance with subsection (c) of 
this section within thirty days after the date on which such offer is 
made and a verdict is entered in such action equal to or less than the 
specific dollar amount of such offer of settlement, the court shall 
reduce the amount of the verdict in such action by an amount equal to 
the reasonable attorney's fees and costs owed by the defendant to the 
defendant's attorney by reason of the verdict, except that the amount 
of such reduction shall not exceed that portion of the verdict which is 
allocable to noneconomic loss and economic loss for which the claimant 
has received or will receive collateral benefits.
    (g) For purposes of this section, attorney's fees shall be 
calculated on the basis of an hourly rate which should not exceed that 
which is considered acceptable in the community in which the attorney 
practices, considering the attorney's qualifications and experience and 
the complexity of the case.

SEC. 432. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.

    (a) In lieu of or in addition to making an offer of settlement 
under section 431 of this part, a claimant or defendant may, within the 
time permitted for the making of such an offer under section 431 of 
this part, offer to proceed pursuant to any voluntary alternative 
dispute resolution procedure established or recognized under the law of 
the State in which the civil action for damages for harm caused by a 
product is brought or under the rules of the court in which such action 
is maintained.
    (b) If the offeree refuses to proceed pursuant to such alternative 
dispute resolution procedure and the court determines that such refusal 
was unreasonable or not in good faith, the court shall assess 
reasonable attorney's fees and costs against the offeree.
    (c) For the purposes of this section, there shall be created a 
rebuttable presumption that a refusal by an offeree to proceed pursuant 
to such alternative dispute resolution procedure was unreasonable or 
not in good faith, if a verdict is rendered in favor of the offeror.

                       PART III--COURT PROCEDURES

SEC. 441. CIVIL ACTIONS.

    A person seeking to recover for harm caused by a product may bring 
a civil action against the product's manufacturer or product seller 
pursuant to applicable State or Federal law, except to the extent such 
law is superseded by this subtitle.

SEC. 442. UNIFORM STANDARDS OF PRODUCT SELLER LIABILITY.

    (a) Notwithstanding the provisions of section 441 of this part, in 
any civil action for harm caused by a product, a product seller other 
than a manufacturer is liable to a claimant, only if the claimant 
establishes by a preponderance of the evidence that--
            (1)(A) the individual product unit which allegedly caused 
        the harm complained of was sold by the defendant;
            (B) the product seller failed to exercise reasonable care 
        with respect to the product; and
            (C) such failure to exercise reasonable care was a 
        proximate cause of the claimant's harm; or
            (2)(A) the product seller made an express warranty, 
        independent of any express warranty made by a manufacturer as 
        to the same product;
            (B) the product failed to conform to the warranty; and
            (C) the failure of the product to conform to the warranty 
        caused the claimant's harm.
    (b)(1) In determining whether a product seller is subject to 
liability under subsection (a)(1) of this section, the trier of fact 
may consider the effect of the conduct of the product seller with 
respect to the construction, inspection, or condition of the product, 
and any failure of the product seller to pass on adequate warnings or 
instructions from the product's manufacturer about the dangers and 
proper use of the product.
    (2) A product seller shall not be liable in a civil action subject 
to this part based upon an alleged failure to provide warnings or 
instructions unless the claimant establishes that, when the product 
left the possession and control of the product seller, the product 
seller failed--
            (A) to provide to the person to whom the product seller 
        relinquished possession and control of the product any 
        pamphlets, booklets, labels, inserts, or other written warnings 
        or instructions received while the product was in the product 
        seller's possession and control; or
            (B) to make reasonable efforts to provide users with those 
        warnings and instructions which it received after the product 
        left its possession and control.
    (3) A product seller shall not be liable in a civil action subject 
to this part except for breach of express warranty where there was no 
reasonable opportunity to inspect the product in a manner which would 
or should, in the exercise of reasonable care, have revealed the aspect 
of the product which allegedly caused the claimant's harm.
    (c) Notwithstanding subsection (b), a product seller shall be 
treated as the manufacturer of a product and shall be liable for harm 
to the claimant caused by a product as if it were the manufacturer of 
the product if--
            (1) the manufacturer is not subject to service of process 
        under the laws of any State in which the action might have been 
        brought; or
            (2) the court determines that the claimant would be unable 
        to enforce a judgment against the manufacturer.

SEC. 443. UNIFORM STANDARDS FOR AWARD OF PUNITIVE DAMAGES.

    (a) Punitive damages may, if otherwise permitted by applicable law, 
be awarded in any civil action subject to this part to any claimant who 
establishes by clear and convincing evidence that the harm suffered was 
the result of conduct manifesting a manufacturer's or product seller's 
conscious, flagrant indifference to the safety of those persons who 
might be harmed by a product. A failure to exercise reasonable care in 
choosing among alternative product designs, formulations, instructions, 
or warnings is not of itself such conduct. Except as provided in 
subsection (b) of this section, punitive damages may not be awarded in 
the absence of a compensatory award.
    (b) In any civil action in which the alleged harm to the claimant 
is death and the applicable State law provides, or has been construed 
to provide, for damages only punitive in nature, a defendant may be 
liable for any such damages regardless of whether a claim is asserted 
under this section. The recovery of any such damages shall not bar a 
claim under this section.
    (c)(1) Punitive damages shall not be awarded pursuant to this 
section against a manufacturer or product seller of a drug (as defined 
in section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 321(g)(1)) or medical device (as defined under section 201(h) of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)) which 
caused the claimant's harm where--
            (A) such drug or device was subject to pre-market approval 
        by the Food and Drug Administration with respect to the safety 
        of the formulation or performance of the aspect of such drug or 
        device which caused the claimant's harm or the adequacy of the 
        packaging or labeling of such drug or device, and such drug was 
        approved by the Food and Drug Administration; or
            (B) the drug is generally recognized as safe and effective 
        pursuant to conditions established by the Food and Drug 
        Administration and applicable regulations, including packaging 
        and labeling regulations. The provisions of this paragraph 
        shall not apply (i) in any case in which the defendant withheld 
        from or misrepresented to the Food and Drug Administration or 
        any other agency or official of the Federal Government 
        information that is material and relevant to the performance of 
        such drug or device, or (ii) in any case in which the defendant 
        made an illegal payment to an official of the Food and Drug 
        Administration for the purpose of securing approval of such 
        drug or device.
    (2) Punitive damages shall not be awarded pursuant to this section 
against a manufacturer of an aircraft which caused the claimant's harm 
where--
            (A) such aircraft was subject to pare-market certification 
        by the Federal Aviation Administration with respect to the 
        safety of the design or performance of the aspect of such 
        aircraft which caused the claimant's harm or the adequacy of 
        the warnings regarding the operation or maintenance of such 
        aircraft;
            (B) the aircraft was certified by the Federal Aviation 
        Administration under the Federal Aviation Act of 1958 (49 App. 
        U.S.C. 1301 et seq.); and
            (C) the manufacturer of the aircraft complied, after 
        delivery of the aircraft to a user, with Federal Aviation 
        Administration requirements and obligations with respect to 
        continuing airworthiness, including the requirement to provide 
        maintenance and service information related to airworthiness 
        whether or not such information is used by the Federal Aviation 
        Administration in the preparation of mandatory maintenance, 
        inspection, or repair directives.
The provisions of this paragraph shall not apply in any case in which 
the defendant withheld from or misrepresented to the Federal Aviation 
Administration information that is material and relevant to the 
performance or the maintenance or operation of such aircraft.
    (d) At the request of the manufacturer or product seller, the trier 
of fact shall consider in a separate proceeding (1) whether punitive 
damages are to be awarded and the amount of such award, or (2) the 
amount of punitive damages following a determination of punitive 
liability. If a separate proceeding is requested, evidence relevant 
only to the claim of punitive damages, as determined by applicable 
State law, shall be inadmissible in any proceeding to determine whether 
compensatory damages are to be awarded.
    (e) In determining the amount of punitive damages, the trier of 
fact shall consider all relevant evidence, including--
            (1) the financial condition of the manufacturer or product 
        seller;
            (2) the severity of the harm caused by the conduct of the 
        manufacturer or product seller;
            (3) the duration of the conduct or any concealment of it by 
        manufacturer or product seller;
            (4) the profitability of the conduct to the manufacturer or 
        product seller;
            (5) the number of products sold by the manufacturer or 
        product seller of the kind causing the harm complained of by 
        the claimant;
            (6) awards of punitive of exemplary damages to persons 
        similarly situated to the claimant;
            (7) prospective awards of compensatory damages to persons 
        similarly situated to the claimant;
            (8) any criminal penalties imposed on the manufacturer or 
        product seller as a result of the conduct complained of by the 
        claimant; and
            (9) the amount of any civil fines assessed against the 
        defendant as a result of the conduct complained of by the 
        claimant.

SEC. 444. UNIFORM TIME LIMITATIONS ON LIABILITY.

    (a) Any civil action subject to this part shall be barred unless 
the complaint is filed within two years of the time the claimant 
discovered or, in the exercise of reasonable care, should have 
discovered the harm and its cause, except that any such action of a 
person under legal disability may be filed within two years after the 
disability ceases. If the commencement of such an action is stayed or 
enjoined, the running of the statute of limitations under this section 
shall be suspended for the period of the stay or injunction.
    (b)(1) Any civil action subject to this part shall be barred if a 
product which is a capital good is alleged to have caused harm which is 
not a toxic harm unless the complaint is served and filed within 
twenty-five years after the time of delivery of the product. This 
subsection shall apply only if the court determines that the claimant 
has received or would be eligible to receive compensation under any 
State or Federal workers' compensation law for harm caused by the 
product.
    (2) A motor vehicle, vessel, aircraft, or railroad used primarily 
to transport passengers for hire shall not be subject to the provisions 
of this subsection.
    (3) As used in this section, the term--
            (A) ``time of delivery'' means the time when a product is 
        delivered to its first purchaser or lessee who was not involved 
        in the business of manufacturing or selling such product or 
        using it as a component part of another product to be sold;
            (B) ``capital good'' means any product, or any component of 
        any such product, which is of a character subject to allowance 
        for depreciation under the Internal Revenue Code of 1986, and 
        which was--
                    (i) used in a trade or business;
                    (ii) held for the production of income; or
                    (iii) sold or donated to a governmental or private 
                entity for the production of goods, for training, for 
                demonstration, or for other similar purposes; and
            (C) ``toxic harm'' means harm which is functional 
        impairment, illness, or death of a human being resulting from 
        exposure to an object, substance, mixture, raw material, or 
        physical agent of particular chemical composition.
    (c) Nothing in this section shall affect the right of any person 
who is subject to liability for harm under this subtitle to seek and 
obtain contribution or indemnity from any other person who is 
responsible for such harm.

SEC. 445. UNIFORM STANDARDS FOR OFFSET OF WORKERS' COMPENSATION 
              BENEFITS.

    (a) In any civil action subject to this part in which damages are 
sought for harm for which the person injured is or would have been 
entitled to receive compensation under any State or Federal workers' 
compensation law, any damages awarded shall be reduced by the sum of 
the amount paid as workers' compensation benefits for such harm and the 
present value of all workers' compensation benefits to which the 
employee is or would be entitled for such harm. The determination of 
workers' compensation benefits by the trier of fact in a civil action 
subject to this part shall have no binding effect on and shall not be 
used as evidence in any other proceeding.
    (b) A claimant in a civil action subject to this part who is or may 
be eligible to receive compensation under any State or Federal workers' 
compensation law must provide written notice of the filing of the civil 
action to the claimant's employer within 30 days of the filing. The 
written notice shall include information regarding the date and court 
in which the civil action was filed, the names and addresses of all 
plaintiffs and defendants appearing on the complaint, the court docket 
number if available, and a copy of the complaint which was filed in the 
civil action. A copy of such written notice shall be filed with the 
court and served upon all parties to the action. A claimant's failure 
to comply with the requirements of this subsection shall suspend the 
deadlines for filing responsive pleadings and commencing discovery in 
the civil action, until the claimant complies with the requirements of 
this subsection.
    (c) In any civil action subject to this part in which damages are 
sought for harm for which the person injured is entitled to receive 
compensation under any State or Federal workers' compensation law, the 
action shall, on application of the claimant made at claimant's sole 
discretion, be stayed until such time as the full amount payable as 
workers' compensation benefits has been finally determined under such 
workers' compensation law.
    (d)(1) Except as provided in paragraph (2) of this subsection, 
unless the manufacturer or product seller has expressly agreed to 
indemnify or hold an employer harmless for harm to an employee caused 
by a product, neither the employer nor the workers' compensation 
insurance carrier of the employer shall have a right of subrogation, 
contribution or implied indemnity against the manufacturer or product 
seller or a lien against the claimant's recovery from the manufacturer 
or product seller if the harm is one for which a civil action for harm 
caused by a product may be brought pursuant to this subtitle.
    (2) Paragraph (1) of this subsection shall not apply if the 
employer or the workers' compensation insurer of the employer 
establishes, and the trier of fact determines, that the claimant's harm 
was not in any way caused by the fault of the claimant's employer or 
coemployees. In order to establish this fact an employer or the 
workers' compensation insurer of the employer may intervene in a civil 
action filed by an employee at any time after the filing of a 
complaint. In the event that the civil action is resolved prior to 
obtaining a verdict by the trier of fact, any resolution of the action 
by settlement or other means shall afford the employer or the workers' 
compensation insurer of the employer an opportunity to participate and 
to assert a right of subrogation, contribution, or implied indemnity if 
the claimant's harm was not in any way caused by the fault of the 
claimant's employer or coemployees.
    (e)(1) Except as provided in subsection (f), in any civil action 
subject to this part in which damages are sought for harm for which the 
person injured is or would have been entitled to receive compensation 
under any State or Federal workers' compensation law, no third-party 
tortfeasor may maintain any action for implied indemnity or 
contribution against the employer, any coemployee, or the exclusive 
representative of the person who was injured.
    (2) Nothing in this subtitle shall be construed to affect any 
provision of a State or Federal workers' compensation law which 
prohibits a person who is or would have been entitled to receive 
compensation under any such law, or any other person whose claim is or 
would have been derivative from such a claim, from recovering for harm 
caused by a product in any action other than a workers' compensation 
claim against a present or former employer or workers' compensation 
insurer of the employer, any coemployee, or the exclusive 
representative of the person who was injured. Any action other than 
such a workers' compensation claim shall be prohibited, except that 
nothing in this subtitle shall be construed to affect any State or 
Federal workers' compensation law which permits recovery based on a 
claim of an intentional tort by the employer or coemployee, where the 
claimant's harm was caused by such an intentional tort.
    (f) Subsection (e) shall not apply and applicable State law shall 
control if the employer or the workers' compensation insurer of the 
employer, in a civil action subject to this part, asserts or attempts 
to assert, because of subsection (d), a right of subrogation, 
contribution, or implied indemnity against the manufacturer or product 
seller or a lien against the claimant's recovery from the manufacturer 
or product seller.

SEC. 446. SEVERAL LIABILITY FOR NONECONOMIC DAMAGES.

    (a) In any product liability action, the liability of each 
defendant for noneconomic damages shall be several only and shall not 
be joint. Each defendant shall be liable only for the amount of 
noneconomic damages allocated to such defendant in direct proportion to 
such defendant's percentage of responsibility as determined under 
subsection (b) of this section. A separate judgment shall be rendered 
against such defendant for that amount.
    (b) For purposes of this section, the trier of fact shall determine 
the proportion of responsibility of each party for the claimant's harm.
    (c) As used in this section, the term--
            (1) ``noneconomic damages'' means subjective, nonmonetary 
        losses including, but not limited to, pain, suffering, 
        inconvenience, mental suffering, emotional distress, loss of 
        society and companionship, loss of consortium, injury to 
        reputation and humiliation; the term does not include 
        objectively verifiable monetary losses including, but not 
        limited to, medical expenses, loss of earnings, burial costs, 
        loss of use of property, costs of repair or replacement, costs 
        of obtaining substitute domestic services, rehabilitation and 
        training expenses, loss of employment, or loss of business or 
        employment opportunities; and
            (2) ``product liability action'' includes any action 
        involving a claim, third-party claim, cross-claim, 
        counterclaim, or contribution claim in a civil action in which 
        a manufacturer or product seller is found liable for harm 
        caused by a product.

SEC. 447. DEFENSES INVOLVING INTOXICATING ALCOHOL OR DRUGS.

    (a) In any civil action subject to this subtitle in which all 
defendants are manufacturers or product sellers, it shall be a complete 
defense to such action that the claimant was intoxicated or was under 
the influence of intoxicating alcohol or any drug and that as a result 
of such intoxication or the influence of the alcohol or drug the 
claimant was more than 50 percent responsible for the accident or event 
which resulted in such claimant's harm.
    (b) In any civil action subject to this subtitle in which not all 
defendants are manufacturers or product sellers and the trier of fact 
determines that no liability exists against those defendants who are 
not manufacturers or product sellers, the court shall enter a judgment 
notwithstanding the verdict in favor of any defendant which is a 
manufacturer or product seller if it is proved that the claimant was 
intoxicated or was under the influence of intoxicating alcohol or any 
drug and that as a result of such intoxication or the influence of the 
alcohol or drug the claimant was more than 50 percent responsible for 
the accident or event which resulted in such claimant's harm.
    (c)(1) For purposes of this section, the determination of whether a 
person was intoxicated or was under the influence of intoxicating 
alcohol or any drug shall be made pursuant to applicable State law.
    (2) As used in this section, the term ``drug'' means any non-over-
the-counter drug which has not been prescribed by a physician for use 
by the claimant.

                       TITLE V--REGULATORY REVIEW

SEC. 501. FINDINGS.

    The Congress finds that--
            (1) administrative action is too frequently propelled by a 
        concern with politically visible results, at the expense of 
        less apparent impacts;
            (2) traditional regulatory cost-benefit analysis frequently 
        fails to examine the effect of restrictive regulations on 
        overall human welfare in terms of reduced health and safety, 
        reduced consumer choice, substitution effects, and impeded 
        technological advancement;
            (3) in promulgating regulations, agencies often fail to 
        examine the risk that their suppositions are erroneous, or to 
        compare the risks of acting on faulty suppositions with the 
        risks of inaction; and
            (4) in analyzing new and existing regulations, there is a 
        need for agencies to move beyond traditional cost-benefit 
        analysis to risk-risk analysis which examines the factors 
        described in paragraph (2).

SEC. 502. COMPETITIVENESS RISK ASSESSMENT.

    No agency shall propose or promulgate a regulation without first 
analyzing its effects on the health and safety of consumers and 
workers, both directly and indirectly, including effects due to wage 
and job losses, price increases, product restrictions, technological 
delays, and substitution effects. In any such analysis, health and 
safety effects shall be expressed both in monetary terms and in terms 
of lives lost and injuries occurred. Such analysis shall also examine 
related distributional effects, describing any economic and social 
groups who will be disproportionately affected.

                   TITLE VI--TOTAL QUALITY MANAGEMENT

SEC. 601. FORMATION AND USE OF QUALITY CIRCLES AND JOINT PRODUCTION 
              TEAMS.

    (a) In General.--Section 8(a)(2) of the National Labor Relations 
Act (29 U.S.C. 158(a)(2)) is amended by inserting before the semicolon 
at the end the following: ``: Provided further, That nothing in this 
paragraph shall prohibit the formation or operation of quality circles 
or joint production teams composed of labor and management, with or 
without the participation of representatives of labor organizations''.
    (b) Effective Date.--The amendment made by this section shall apply 
to the formation or operation of quality circles or joint production 
teams after the date of the enactment of this Act.

                    TITLE VII--LONG-TERM INVESTMENT

SEC. 701. SHORT TITLE.

    This title may be cited as the ``Long-Term Investment Promotion Act 
of 1993''.

SEC. 702. FINDINGS.

    The Congress finds that--
            (1) there is an urgent need to extend the time horizons of 
        industry in the United States and there is too much pressure to 
        maximize short-term profits and shareholder value, often at the 
        expense of long-term competitive viability;
            (2) a fundamental cause of United States industry's 
        preoccupation with short-term performance is the Securities and 
        Exchange Commission's requirement for publicly-held 
        corporations to report their financial status on a quarterly 
        basis;
            (3) a large and growing share of the capital of United 
        States firms is owned by mutual funds and pension funds, and 
        the managers of these funds are under constant pressure to 
        maximize the current value of their portfolios since this is 
        the principal criteria by which their performance is judged;
            (4) because portfolio managers and stockholders evaluate a 
        company's performance on the basis of quarterly financial 
        reports, managers tend to emphasize short-term profits even 
        when it raises possible conflicts with longer term investment;
            (5) short-term business horizons can lead to 
        underinvestment in technology development, human resources, 
        total quality, and capital assets;
            (6) a preoccupation with short-term business horizons 
        worked before when America dominated the world economy but such 
        an antiinvestment and antimodernization approach seems ill-
        suited to a world characterized by rapid technological change, 
        global competition based on quality and a constant need for 
        bringing innovation into the marketplace;
            (7) achievement of continuously improved technology and 
        quality requires long-term investment in research, development, 
        commercialization, and acquisition of new capital equipment; 
        and
            (8) in contrast to the short-term preoccupation in the 
        United States, in Japan and Germany firms report their 
        financial results on an annual rather than quarterly basis and 
        this factor contributes to significantly longer time horizons, 
        in some instances spanning many decades, for business 
        decisions.

SEC. 703. ELIMINATION OF QUARTERLY REPORTS.

    Section 13(a)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 
78m(a)(2)) is amended by striking ``, and such quarterly reports (and 
such copies thereof),''.

 TITLE VIII--AMENDMENTS TO THE STEVENSON-WYDLER TECHNOLOGY INNOVATION 
                              ACT OF 1980

SEC. 801. AMENDMENT TO THE STEVENSON-WYDLER TECHNOLOGY INNOVATION ACT 
              OF 1980.

    Section 12(a) of the Stevenson-Wydler Technology Innovation Act of 
1980 (15 U.S.C. 3710a(a)) is amended by striking ``may permit'' and 
inserting in lieu thereof ``shall permit, under authority of this or 
any other appropriate Act,''.

SEC. 802. COPYRIGHT FOR SOFTWARE.

    (a) Section 12 of the Stevenson-Wydler Technology Innovation Act of 
1980 (15 U.S.C. 3710a) is amended by adding at the end the following 
new subsection:
    ``(h) Copyright of Computer Software.--Each Federal agency may 
secure copyright on behalf of the United States as author or proprietor 
in any computer software prepared in whole or in part by employees of 
the United States Government in the course of work under a cooperative 
research and development agreement entered into under the authority of 
subsection (a)(1) of this section, or under any other equivalent 
authority, notwithstanding the limitations contained in section 105 of 
title 17, United States Code; and may grant or agree to grant in 
advance to a collaborating party, licenses or assignments for such 
copyrights, or options thereto, retaining a nonexclusive, 
nontransferable, irrevocable, paid-up license to reproduce, adapt, 
translate, distribute, and publicly perform or display the computer 
software throughout the world by or on behalf of the Government and 
such other rights as the Federal agency deems appropriate.''.
    (b) Section 4 of the Stevenson-Wydler Technology Innovation Act of 
1980 (15 U.S.C. 3703) is amended by adding at the end the following new 
paragraph:
            ``(14) `Computer software' means a computer program, as 
        defined in section 101 of title 17, United States Code, and any 
        associated documentation, supporting materials, or user 
        instructions.''.

SEC. 803. ROYALTY PAYMENTS TO AUTHORS.

    Sec. 3. (a) Section 14(a) (1)(A), (2), and (3) of the Stevenson-
Wydler Technology Innovation Act of 1980 (15 U.S.C. 3710c(a) (1)(A), 
(2), and (3)) is amended--
            (1) by inserting ``or computer software'' after 
        ``inventions'' each place it appears;
            (2) by inserting ``or computer software'' after 
        ``invention'' each place it appears;
            (3) by inserting ``or author'' after ``inventor'' each 
        place it appears;
            (4) by inserting ``or co-author'' after ``co-inventor'' 
        each place it appears;
            (5) by inserting ``or authors'' after ``inventors'' each 
        place it appears;
            (6) by inserting ``or co-authors'' after ``co-inventors'' 
        each place it appears; and
            (7) by inserting ``or author's'' after ``inventor's'' each 
        place it appears.
    (b) Section 14(a)(1)(B) of the Stevenson-Wydler Technology 
Innovation Act of 1980 (15 U.S.C. 3710c(a)(1)(B)) is amended--
            (1) by inserting ``or computer software'' after ``income 
        from any invention'';
            (2) by inserting ``or computer software was developed'' 
        after ``the invention occurred'';
            (3) by inserting ``or computer software'' after ``licensing 
        of inventions'' in clause (i);
            (4) by inserting ``or computer software which was 
        developed'' after ``with respect to inventions'' in clause (i); 
        and
            (5) by inserting ``or computer software'' after 
        ``organizations for invention'' in clause (i).
    (c) Section 14(c) of the Stevenson-Wydler Technology Innovation Act 
of 1980 (15 U.S.C. 3710c(c)) is amended by inserting ``or author'' 
after ``including inventor''.

SEC. 804. TECHNICAL AND CONFORMING AMENDMENTS.

    Section 12(c) of the Stevenson-Wydler Technology Innovation Act of 
1980 (15 U.S.C. 3710a(c)), is amended by inserting ``or computer 
software'' after ``inventions'' each place it appears.

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