    [Senate Hearing 113-388]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 113-388

                      NOMINATIONS OF MICHAEL B. THORNTON,
                       JOSEPH W. NEGA, AND F. SCOTT KIEFF

    =======================================================================

                                    HEARING

                                   before the

                              COMMITTEE ON FINANCE
                              UNITED STATES SENATE

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                     on the

                                 NOMINATIONS OF

      MICHAEL B. THORNTON, TO BE A JUDGE OF THE UNITED STATES TAX COURT;
     JOSEPH W. NEGA, TO BE A JUDGE OF THE UNITED STATES TAX COURT; AND F.
     SCOTT KIEFF, TO BE A MEMBER OF THE UNITED STATES INTERNATIONAL TRADE
                                   COMMISSION

                                   __________

                                 JULY 18, 2013

                                   __________

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                              COMMITTEE ON FINANCE

                         MAX BAUCUS, Montana, Chairman

    JOHN D. ROCKEFELLER IV, West         ORRIN G. HATCH, Utah
    Virginia                             CHUCK GRASSLEY, Iowa
    RON WYDEN, Oregon                    MIKE CRAPO, Idaho
    CHARLES E. SCHUMER, New York         PAT ROBERTS, Kansas
    DEBBIE STABENOW, Michigan            MICHAEL B. ENZI, Wyoming
    MARIA CANTWELL, Washington           JOHN CORNYN, Texas
    BILL NELSON, Florida                 JOHN THUNE, South Dakota
    ROBERT MENENDEZ, New Jersey          RICHARD BURR, North Carolina
    THOMAS R. CARPER, Delaware           JOHNNY ISAKSON, Georgia
    BENJAMIN L. CARDIN, Maryland         ROB PORTMAN, Ohio
    SHERROD BROWN, Ohio                  PATRICK J. TOOMEY, Pennsylvania
    MICHAEL F. BENNET, Colorado
    ROBERT P. CASEY, Jr., Pennsylvania

                          Amber Cottle, Staff Director

                   Chris Campbell, Republican Staff Director

                                      (ii)

                                C O N T E N T S

                                   __________

                               OPENING STATEMENTS

                                                                       Page
    Baucus, Hon. Max, a U.S. Senator from Montana, chairman,
      Committee on Finance...........................................     1
    Hatch, Hon. Orrin G., a U.S. Senator from Utah...................     3

                            ADMINISTRATION NOMINEES

    Thornton, Hon. Michael B., nominated to be a judge of the United
      States Tax Court, Washington, DC...............................     5
    Nega, Joseph W., nominated to be a judge of the United States Tax
      Court, Washington, DC..........................................     6
    Kieff, F. Scott, nominated to be a member of the United States
      International Trade Commission, Washington, DC.................     7

                   ALPHABETICAL LISTING AND APPENDIX MATERIAL

    Baucus, Hon. Max:
        Opening statement............................................     1
        Prepared statement...........................................    15
    Hatch, Hon. Orrin G.:
        Opening statement............................................     3
        Prepared statement...........................................    17
    Kieff, F. Scott:
        Testimony....................................................     7
        Prepared statement...........................................    19
        Biographical information.....................................    21
        Responses to questions from committee members................    50
    Nega, Joseph W.:
        Testimony....................................................     6
        Prepared statement...........................................    61
        Biographical information.....................................    62
    Thornton, Hon. Michael B.:
        Testimony....................................................     5
        Prepared statement...........................................    69
        Biographical information.....................................    70

                                     (iii)

    NOMINATIONS OF MICHAEL B. THORNTON, TO BE A JUDGE OF THE UNITED STATES
                                      TAX

     COURT; JOSEPH W. NEGA, TO BE A JUDGE OF THE UNITED STATES TAX COURT;
                                      AND

                       F. SCOTT KIEFF, TO BE A MEMBER OF
                        THE UNITED STATES INTERNATIONAL

                                TRADE COMMISSION

                                  ----------

                            THURSDAY, JULY 18, 2013

                                           U.S. Senate,
                                          Committee on Finance,
                                                        Washington, DC.
        The hearing was convened, pursuant to notice, at 2:50 p.m.,
    in room SD-215, Dirksen Senate Office Building, Hon. Max Baucus
    (chairman of the committee) presiding.
        Present: Senators Nelson, Hatch, and Thune.
        Also present: Democratic Staff: Mac Campbell, General
    Counsel; Lisa Pearlman, International Trade Counsel; Rory
    Murphy, International Trade Analyst; and Tiffany Smith, Tax
    Counsel. Republican Staff: Everett Eissenstat, Chief
    International Trade Counsel; Shane Warren, International Trade
    Counsel; Nicholas Wyatt, Tax and Nominations Professional Staff
    Member; Rebecca Nasca, Staff Assistant; and Richard Chovanec,
    Detailee.

       OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM
                MONTANA, CHAIRMAN, COMMITTEE ON FINANCE

        The Chairman. The committee will come to order.
        Winston Churchill once said, ``All the great things are
    simple, and many can be expressed in single words: freedom,
    justice, honor, duty, mercy, hope.'' These principles guide our
    democracy, and, while simple in concept, they require vigilance
    to maintain. These principles require experienced citizens
    willing to embrace public service. They require a fair and
    reasonable legal system. They require public confidence in our
    government.
        The nominees before us must be vigilant in honoring these
    principles. Between them, they have decades of experience and,
    if confirmed, they will play an important role in protecting
    the interests of millions of Americans.
        Mr. Scott Kieff, you have been nominated by the President
    to serve as a Commissioner of the U.S. International Trade
    Commission, commonly referred to as the ITC. The ITC enforces
    our Nation's trade laws, including our trade remedy laws and
    section 337.
        If confirmed, we will look to you to fairly and objectively
    enforce those laws. We will also call upon you and the rest of
    the ITC to provide the committee with economic research on
    issues affecting global trade. I can tell you, they are very
    important and mean a lot to us.
        The ITC has provided us thorough reports in the past of the
    barriers U.S. exporters and innovators face in foreign markets.
    For example, Senator Grassley and I requested a ground-breaking
    ITC study on Chinese intellectual property theft. That study
    provided us with an independent, authoritative look at the
    impact of IP theft on U.S. jobs and our economy.
        I can assure you, Mr. Kieff, it will keep you busy. The
    Finance Committee will continue to move forward with an
    ambitious trade agenda. We will look to you for objective
    analysis when shaping our policy.
        As a graduate of MIT and the University of Pennsylvania,
    Mr. Kieff, you have spent your career working on issues related
    to international trade, in both the public and private sector
    and in academia. Over the past 15 years, you have been teaching
    law at some of the Nation's top universities, including George
    Washington, Chicago, Harvard, and my alma mater Stanford, and I
    know my colleagues on the committee will not hold that against
    you.
        Also with us today are Judge Michael Thornton and Joseph
    Nega. You have both been nominated by President Obama to serve
    as judges on the U.S. Tax Court. Judge Thornton, this is a
    return engagement for you. You appeared before this committee
    about 15 years ago after being nominated to the U.S. Tax Court
    by President Clinton.
        You cut your teeth as a tax counsel here on Capitol Hill
    for the Ways and Means Committee, then at the Treasury
    Department, serving under Secretary Rubin. Welcome back. You
    have done a great job at the Tax Court, rising up to become the
    chief judge. I am pleased that the President has re-nominated
    you.
        Finally, we will consider the nomination of Mr. Joseph Nega
    to the U.S. Tax Court. Mr. Nega, you have dedicated your entire
    life, your entire career, to public service. You began as a
    young staffer in the House and served for the past 28 years on
    the Joint Committee on Taxation. You now serve as a senior
    legislative counsel at JCT. I do not know what this committee
    or this Congress would do without a great team at JCT, and that
    is very much an understatement. We very much value your work.
    You cannot believe how much we value your work.
        As you know, Judge Thornton, and as you will soon learn,
    Mr. Nega, you are taking on a great responsibility at the
    United States Tax Court. The Court provides Americans a forum
    to address tax issues. Approximately 30,000 cases are filed in
    the Court annually. If confirmed, you will be the arbiter on
    these cases, and you must ensure that our tax codes are
    administered fairly.
        In the wake of the IRS scandal, public confidence in our
    tax system is low. You must be thorough; you must give our
    citizens a fair day in court. Your work can go a long way
    toward restoring the public's confidence.
        I thank all three of you for your willingness to serve in
    these positions to which you have been nominated. You will have
    the complex task of protecting and maintaining freedom,
    justice, honor, duty, mercy, and hope, the great things of
    which Winston Churchill spoke. Good luck.
        [The prepared statement of Chairman Baucus appears in the
    appendix.]
        The Chairman. Senator Hatch?

               OPENING STATEMENT OF HON. ORRIN G. HATCH,
                        A U.S. SENATOR FROM UTAH

        Senator Hatch. Well, thank you, Mr. Chairman. I welcome the
    opportunity to hear from our witnesses here today, and I am
    pleased to welcome Scott Kieff to the committee today. He is
    nominated to be a member of the U.S. International Trade
    Commission, and that is very important to me.
        His distinguished career includes work as a law professor
    at several prestigious universities. He has also served as a
    law clerk to the Honorable Giles S. Rich of the U.S. Court of
    Appeals for the Federal Circuit and practiced law for 6 years
    in Chicago and New York.
        Mr. Kieff is currently a senior fellow at Stanford's Hoover
    Institution, where he directs a project studying the law,
    economics, and the politics of innovation. I have to say to Mr.
    Kieff, your background is very impressive to me. I believe you
    will be an exceptional addition to the International Trade
    Commission, and I am looking forward to working with you and
    seeing things work a little bit better than they have.
        I am particularly impressed with your extensive background
    in intellectual property issues. That is critical to our
    country and very much ignored by many in the world today.
    Intellectual property is the lifeblood of the U.S. economy, and
    providing adequate protection to intellectual property is
    fundamental to our continued ability to innovate and compete in
    the global economy.
        The ITC plays an important role in administering the laws
    designed to protect U.S. intellectual property rights. For
    example, the ITC's section 337 process is a vital tool for U.S.
    companies that face unfair competition from foreign imports
    that infringe their intellectual property. I have a
    longstanding interest in making sure this process operates as
    effectively as possible.
        Senator Baucus and I recently requested that the Government
    Accountability Office examine the effectiveness of the
    enforcement of ITC's section 337 exclusion orders. The ITC also
    conducts important analytical work related to intellectual
    property. For example, the ITC conducted an important study
    requested by this committee on the effects that intellectual
    property rights infringement and indigenous innovation policies
    in China have on U.S. jobs and, of course, our economy.
        The ITC is also preparing a study requested by this
    committee examining digital trade in the U.S. and global
    economies, including the importance of effective intellectual
    property rights protection. So, although the ITC is not a
    policy-making agency, I believe Mr. Kieff's background and
    expertise on intellectual property issues will bring an
    important perspective to the agency's work, and I intend to
    support you.
        Today we will also hear from two nominees to the U.S. Tax
    Court. As we all know, the Tax Court is very important, as it
    is the only venue in which a taxpayer may challenge the
    government before paying an assessed tax liability. The court
    gives taxpayers a chance to be fully heard in a neutral and
    public forum.
        One of the nominees before us today is Joseph Nega, who
    currently serves as Senior Legislative Counsel at the Joint
    Committee on Taxation. Here on the Finance Committee, we have
    benefitted from Mr. Nega's work for a long time. He will leave
    behind very big shoes to fill at the JCT. So we are proud of
    you and what you have been able to do.
        We will also hear from Judge Michael Thornton, who has
    already served very well a term on the Tax Court. Should he be
    reconfirmed, taxpayers throughout the country will continue to
    benefit from having his knowledge and expertise on the Tax
    Court.
        As is customary for Tax Court judges who are willing to
    continue serving after their terms expire, Chairman Baucus and
    I encouraged President Obama to reappoint Judge Thornton, and I
    am glad that he followed our advice--one of the few times that
    he has, of course. No, he has been pretty good about it.
        In the same letter, we also recommended to the President
    that he reappoint Judge L. Paige Marvel, whose term has also
    expired. I hope that we will be able to consider that
    nomination soon. It is the taxpayers who will pay the price if
    the Tax Court is not kept staffed with qualified judges.
        So, as you can see, we have some important positions to
    fill, and, from the looks of it, we have some very qualified
    nominees. So I want to thank you, Mr. Chairman, and I look
    forward to hearing from these nominees. I look forward to
    supporting all three of them.
        The Chairman. Well, thank you, Senator, very, very much. I
    deeply appreciate working with you.
        [The prepared statement of Senator Hatch appears in the
    appendix.]
        The Chairman. I would now like to introduce the panel, but,
    before doing so, I would like to recognize two in the audience
    who are very important to the Court and very important to this
    committee: Judge John Colvin and Judge Elizabeth Paris from the
    U.S. Tax Court.
        Would you both stand and be recognized, please? We honor
    you both very much for your service. It is good to see good
    people going on and continuing to perform good work in other
    areas as you have in the Tax Court. Thanks for your service.
        The first witness is Judge Michael Thornton, nominated to
    his second term as judge on the U.S. Tax Court. The second
    witness is Joseph Nega, nominated to be a judge on the U.S. Tax
    Court. Finally is Scott Kieff, nominated to be a member of the
    U.S. International Trade Commission.
        Judge Thornton, why don't you begin? You probably know our
    practice here, which is, your statement is automatically
    included in the record, and why don't you summarize for about 5
    minutes? If you want to speak longer and have great wisdom to
    impart, we are ready to learn.
        Judge Thornton. I will be very concise. Chairman Baucus,
    Ranking Member Hatch----
        The Chairman. Actually, before you begin, I would like you
    to introduce your family.
        Judge Thornton. I will be glad to do that. I have with me
    today my wife, Alexandra Deane Thornton----
        The Chairman. Hi.
        Judge Thornton [continuing]. And my daughter, Kaley
    Thornton.
        The Chairman. Could you both stand again and be recognized?
    [Applause.]
        Go ahead.

    STATEMENT OF HON. MICHAEL B. THORNTON, NOMINATED TO BE A JUDGE
             OF THE UNITED STATES TAX COURT, WASHINGTON, DC

        Judge Thornton. So, Chairman Baucus, Ranking Member Hatch,
    distinguished members of the committee, thank you for the
    privilege of appearing before you today. I last appeared before
    this committee a little over 15 years ago, after I was
    nominated for my first term as a Tax Court judge. I am grateful
    to President Obama for nominating me for a second term on the
    Court, and I am grateful to you and the committee's outstanding
    staff for processing my nomination so promptly.
        When she attended my first confirmation hearing, Kaley
    here, who is sitting behind me, was just 3 years old and was
    looking forward to entering preschool. It is a vivid reminder
    of the passage of time that she is now looking forward to
    attending Duke University in the fall. My other daughter,
    Camille, unfortunately cannot be here today because she is
    attending a summer camp out of town.
        I came to the Tax Court after years of tax experience in
    private practice, on the Hill, and in the Treasury Department.
    That was all good preparation for the past 15 highly rewarding
    years on the Tax Court, where I have endeavored to maintain the
    Court's long tradition and high standards of resolving tax
    controversies fairly, impartially, and expeditiously, in
    accordance with congressional intent.
        In addition to trying and deciding hundreds of cases, I
    have worked actively to better the Court administratively in
    ways such as modernizing its rules and bringing the Court more
    up to date with the use of technology for e-filing and
    providing remote electronic access to the Court's records.
        Last year I was honored to have been elected by my
    colleagues for a term as Chief Judge. If confirmed for another
    term on the Court, I would hope to continue to help maintain
    and enhance the public's confidence in the Tax Court as the
    forum of choice for litigating Federal tax controversies.
        Thank you very much. I would be happy to answer any
    questions you might have.
        The Chairman. Thank you, Judge.
        [The prepared statement of Judge Thornton appears in the
    appendix.]
        The Chairman. You are next, Mr. Nega. If you could
    introduce your family, that would be great, too.
        Mr. Nega. My wife Cecily Rock is here, and my sons David
    and Philip.
        The Chairman. Could you all stand, please? All three?
    Great. Thanks. [Applause.]
        Why don't you proceed?

      STATEMENT OF JOSEPH W. NEGA, NOMINATED TO BE A JUDGE OF THE
                UNITED STATES TAX COURT, WASHINGTON, DC

        Mr. Nega. Thank you. Chairman Baucus, Ranking Member Hatch,
    distinguished members of the Finance Committee, it is a
    privilege for me to be here today. Thank you for holding this
    hearing to consider my nomination to be a judge on the U.S. Tax
    Court. I am very grateful to President Obama for nominating me.
        I would also like to thank the Finance Committee staff
    members who have been generous with their time while working
    with me on my nomination. It is with mixed emotions that I
    appear before you here today after 28 years as a member of the
    staff of the Joint Committee on Taxation on Capitol Hill. I
    have truly enjoyed serving members of the House and Senate on
    tax legislative matters, both on tax policy questions and
    technical tax issues.
        When I came to Capitol Hill in 1985 as a young attorney, it
    was at the beginning of the legislative process which
    culminated in the passage of the Tax Reform Act of 1986. Since
    then, as a Joint Tax Committee staffer, I have provided
    assistance to members and their staffs, as well as to committee
    staffs, on tax proposals covering a range of subject areas.
        During the 1980s, I attended Georgetown Law School at night
    and earned a master's degree in tax law. I believe that my
    training and my professional experience in the tax field give
    me the background I will need to serve as a Tax Court judge and
    to fairly and impartially apply the tax law.
        I owe a great debt of thanks to all my colleagues on the
    staff of the Joint Committee on Taxation, especially our chief
    of staff, Tom Barthold. The tax lawyers, accountants, and
    economists of the staff of the Joint Committee on Taxation have
    shown me over and over the value of teamwork among
    knowledgeable professionals with a wide range of expertise.
        The clerks and support staff are among the best on the
    Hill. When I leave Capitol Hill, I will miss the sense of
    shared work and public service with these individuals and all
    the many staffers who assist Congress in their attempts to
    serve the American people. Sorry about this, Senator. This is
    not my usual role. [Laughter.]
        I would like to thank my parents, who instilled in me a
    strong sense of public service. I suspect my mother will be
    tuning in to C-SPAN to watch this hearing in Chicago.
        I would also like to thank my wife of 24 years, Cecily
    Rock, who is here today, and my sons David and Philip for their
    love and support. If confirmed, I will work diligently to
    resolve tax controversies fairly and expeditiously. Thank you
    for the opportunity to testify.
        The Chairman. Thank you, sir, very much.
        [The prepared statement of Mr. Nega appears in the
    appendix.]
        The Chairman. Mr. Kieff, your family?
        Mr. Kieff. If I may, since we have a large group and I will
    briefly introduce them in the remarks, may I just ask my family
    to stand, please, and be recognized?
        The Chairman. Sure.
        Mr. Kieff. I thank them all for coming, many from great
    distances. [Applause.]
        The Chairman. I think you have the record. [Laughter.]
        Mr. Kieff. They are a supportive bunch.

     STATEMENT OF F. SCOTT KIEFF, NOMINATED TO BE A MEMBER OF THE
      UNITED STATES INTERNATIONAL TRADE COMMISSION, WASHINGTON, DC

        Mr. Kieff. Chairman Baucus, Ranking Member Hatch, and
    members of the committee, thank you for inviting me to appear
    before you today to consider my nomination. I am grateful to
    President Obama for nominating me, to Minority Leader McConnell
    for supporting my nomination, and to Chairman Baucus and to
    Ranking Member Hatch for bringing us together for this
    confirmation hearing.
        I also am grateful for the love and support from my family,
    several of whom are with me today: my wife Rebecca, my mom
    Jacqueline, my sister Elizabeth and brother-in-law Tom, their
    children Asher and Estelle, my uncle Nelson, and my parents-in-
    law Terrie and Roy. Although he could not be here today, I give
    special thanks to my 4-month-old son Evan for being such a
    great sounding board during his midnight feedings. [Laughter.]
        And recognizing how hard it can be for the doctor to become
    the patient, I know how much my father Elliott and brother
    David wanted to be here today. I wish my dad a speedy recovery
    and appreciate David covering for mom on dad's care so she
    could travel to be here.
        I am particularly honored and humbled to be here across the
    river from Arlington National Cemetery, where two of my
    grandparents are buried, as we discuss this opportunity for me
    to continue my family's tradition of public service.
        The opportunity to engage each area of the Commission's
    wide-ranging docket would call upon many favored aspects of the
    work I have long enjoyed throughout my career working as a
    practitioner, an academic, mediator, arbitrator, and
    consultant.
        The title 7 antidumping and countervailing duty portion of
    the docket would provide a welcome opportunity to continue my
    work, applying diverse statutory injury factors to the facts
    and circumstances of specific industries and products.
        I would take particular pleasure in the section 337 portion
    of the Commission's docket, as I have throughout my 2 decades
    of devotion to the field of intellectual property. And the
    Commission's research activities on industry and economic
    analysis relating to section 332 and other statutory duties to
    prepare reports and provide trade policy support, offer a
    fascinating range of opportunities to continue my academic
    commitment to exploring and explaining real-world impacts of
    various approaches to trade.
        In all of these areas, I would greatly enjoy working with
    the other members of the Commission and the Commission staff as
    we exchange ideas and learn from each others' diverse wealth of
    experiences and perspectives. Having long enjoyed working as a
    neutral mediator and arbitrator selected by all sides of a
    given dispute, if I were confirmed to this post I would enjoy
    faithfully and impartially working within the legal framework
    applicable to each matter then before the Commission to enforce
    the law based on the particular facts.
        Several areas of the Commission's docket have been the
    focus of increasing attention and policy debates, and I
    understand the many diverse perspectives that have been
    offered. But I take seriously the limited role of a
    Commissioner and recognize that any legal change would be the
    domain of this committee, the Congress, and the President, with
    interpretation when appropriate from courts that review the
    Commission's work.
        Over the past few months, I have enjoyed frank, substantive
    discussions with several of you and your staffs, and I look
    forward to answering any questions you may have. Thank you.
        The Chairman. Thank you, Mr. Kieff.
        [The prepared statement of Mr. Kieff appears in the
    appendix.]
        The Chairman. Judge Thornton, what are your thoughts now
    that you have been on the Court 15 years? Do you have some
    ideas about the tax laws we pass here, which ones maybe make
    sense and which ones do not, which ones are unnecessarily
    complicated?
        As you know, we are working on passing tax reform
    legislation in this Congress. Is there any advice you could
    give us as a judge to minimize litigation or to get more
    clarity, perhaps? I do not know if that is going to minimize
    litigation, but just give us any thoughts that you might have
    in proceeding forward. I would ask the same question of you,
    Mr. Nega. Although you do not have experience as a Tax Court
    judge, you certainly do over at the Joint Committee on
    Taxation.
        Judge Thornton. With all due respect, I would have to defer
    to the Congress and the policies that are enacted into tax law.
    I think as a general principle, simpler is better. Probably
    simpler tax laws, I imagine, contribute to fewer controversies,
    even though there are a lot of factors that would go into
    determining the case load at the Court.
        The experience of the Tax Reform Act of 1986 is probably
    instructional. In the mid-1980s, the Tax Court experienced an
    explosion of case filings. After the Tax Reform Act of 1986,
    there was a diminishing of the cases filed. I think the Tax
    Reform Act of 1986 was partially responsible for that, some of
    the simplification matters and the base-broadening matters--not
    entirely responsible, but partly. That is probably a good
    example.
        Another example: in 1993 when Congress enacted section 197,
    which provided a way of reducing controversy about the
    amortization of intangibles, I think that has been a very
    successful provision, and very few cases that I see come into
    controversy about that. So, just as a general proposition, I
    think measures to simplify the tax code probably result in
    benefits to the Court in terms of fewer controversies.
        The Chairman. In what area do you find most litigation?
    Over what section or area of the code?
        Judge Thornton. You know, that is a hard question to
    answer. Most of our petitioners are pro se, unrepresented
    taxpayers. Most of them have fairly small amounts at issue. So
    most of the types of issues that we see from them are the types
    of issues you might expect: substantiation issues, unreported
    income, that type of thing. So, given the broad base of people,
    the 30,000 cases a year that are filed in our court, most of
    those people tend to have fairly run-of-the-mill type issues
    like that.
        The Chairman. All right.
        Mr. Nega, from your perspective on the Joint Committee, is
    there any advice you have? I mean, you all are going to get
    confirmed, so do not worry about that. [Laughter.]
        So just be candid, knowing you are going to get confirmed.
        Mr. Nega. Well, thank you, Senator. Well, this is my last
    opportunity to discuss tax policy because, as a member of the
    judiciary, it will be my job to take the tax laws as passed by
    Congress and signed by the President and enforce them
    expeditiously.
        So I will take the opportunity to say that I agree with
    Judge Thornton: simpler is better. The experience of the 1986
    act taught us that. I do recognize that there are
    countervailing factors that members of Congress have to take
    into account, whether or not it is social or fiscal policy. As
    a general rule, simpler is better in most things, especially in
    the tax law.
        The Chairman. We all think that. Sometimes it is hard to
    know what simple is. I mean, the statute might be simple, but
    it can be applied in a near-infinite number of circumstances.
    Take the First Amendment of the Constitution, ``Congress shall
    pass no law abridging the freedom of speech.'' Well, what in
    the heck does that mean? I mean, when you say ``simpler,'' you
    mean, what? Base-broadening, fewer provisions? Does that help
    or what?
        Mr. Nega. What they taught me back in my JD and my LLM
    programs was, as a general rule, remember four words: ``base-
    broadening'' and ``lower rates.'' In my role as staff person,
    that is something that I have always taken to heart in trying
    to advise other staff people. I think that there are going to
    be exceptions from that rule. It is a very complicated economy,
    and Congress has to respond to the complicated world we live
    in. But if you will remember broad base, lower rates, you are a
    long way towards improving the tax system.
        The Chairman. Mr. Kieff, we are going to take up trade
    legislation this year, and certainly Trade Promotion Authority.
    It might be an opportunity to also address legislation as it
    affects the ITC. Your thoughts, ideas, recommendations? Again,
    you are going to be confirmed too, so do not worry.
        Mr. Kieff. Well, you are very kind, Chairman Baucus. As my
    colleagues at the table have expressed, I too would be in a
    role that would be, not a policy role, it would be a role in
    which I would be constrained to apply the law to the facts.
        But I hear what you are saying and agree that there are
    important issues, and I really enjoyed writing about and
    working on them for many years. I think that the Commission
    itself has taken some steps in this area to improve the
    efficiency of dispute processing, so electronic dockets, things
    like that, e-discovery--and I understand that the committee is
    considering a number of approaches as well.
        The Chairman. Thank you.
        I have four obligatory questions I have to ask each of the
    three of you before proceeding with Senator Hatch. If you could
    all answer, please. I will ask the same question of all three,
    but I will start with you, Judge Thornton. You have been
    through this drill before.
        Is there anything that you are aware of in your background
    that might present a conflict of interest with the duties of
    the office to which you have been nominated?
        Judge Thornton. No, sir.
        Mr. Nega. No, sir.
        Mr. Kieff. No, sir.
        The Chairman. Thank you. Do you know of any reason,
    personal or otherwise, that would in any way prevent you from
    fully and honorably discharging the responsibilities of the
    office to which you have been nominated?
        Judge Thornton. No, sir.
        Mr. Nega. No, sir.
        Mr. Kieff. No, sir.
        The Chairman. Do you agree, without reservation, to respond
    to any reasonable summons to appear and testify before any duly
    constituted committee of Congress, if confirmed?
        Judge Thornton. Yes, sir, I do.
        Mr. Nega. Yes, sir.
        Mr. Kieff. Yes, sir.
        The Chairman. And finally, do you commit to provide a
    prompt response in writing to any questions addressed to you by
    any Senator of this committee?
        Judge Thornton. Yes, sir, I do.
        Mr. Nega. Yes, sir.
        Mr. Kieff. Yes, sir.
        The Chairman. Thank you.
        Senator Hatch?
        Senator Hatch. Well, thank you.
        Mr. Kieff, as you are no doubt aware, intellectual property
    is an important part of our U.S. economy. In my State of Utah,
    IP is the lifeblood of our industries, from information
    technology to the life sciences. As I mentioned in my opening,
    the ITC provides a vital tool for U.S. companies that face
    unfair competition from foreign imports that infringe their IP.
        Would you be kind enough to share your thoughts on the
    section 337 process and what you would do to make it as
    effective as possible?
        Mr. Kieff. Well, thank you, Senator. Those are really
    important areas, and I have enjoyed working on these issues for
    a long time. Certainly, if confirmed, I would work within the
    law at the time, given the particular facts of each case, to
    apply that law. I take it what you are asking for is a general
    overview, is that right?
        Senator Hatch. Well, really how you make it work better,
    and how you make that particular section as effective as
    possible.
        Mr. Kieff. Yes. The Commission, with assistance from many
    others including the Federal Circuit, the body that reviews the
    Commission's work, has worked to already start the process of
    improving procedures, to have them move faster, to look for
    ways to make them more efficient. And, as someone who has
    really enjoyed working on improving procedural efficiencies in
    different government roles in the past as an advisor, if
    confirmed I would really enjoy working with my colleagues at
    the Commission and with the Commission staff to continue that
    process.
        Senator Hatch. All right.
        In your testimony, you mentioned how important economic
    analysis provided by the ITC is to helping to explain the
    impacts of international trade on the U.S. economy. Can you
    tell us what steps you would take, if confirmed as an
    International Trade Commissioner, to ensure that the ITC
    provides Congress and the public with the best, most reliable
    economic analysis available?
        Mr. Kieff. Yes. I think the short answer is that I would
    engage, sleeves rolled up, pen in hand, reading glasses on,
    working with my colleagues to really dive into the facts of
    those matters, because I think the Commission has a great staff
    that really has a tradition of engaging the serious economic
    issues. It would be fun for me to work with them.
        Senator Hatch. Can you share with us some of your thoughts
    on how the ITC can assist Congress and the administration to
    develop and implement effective trade policy to best benefit
    American manufacturers, farmers, and service providers?
        Mr. Kieff. Yes. The Commission has their tradition of
    working with both the legislative branch and the executive
    branch to provide analysis and factual data to support you in
    your policy role. So I would continue that tradition, if
    confirmed.
        Senator Hatch. All right. To both of you Tax Court folks:
    you know you are going to be trying cases that are worth
    millions of dollars, and some that are worth hundreds; some
    that are for very wealthy people, some for people who are not
    so wealthy.
        As a Tax Court judge, I would like each of you to answer
    this question. Like I say, you are going to preside over many
    cases that involve unsophisticated taxpayers with few resources
    to deploy while making their cases. What lessons do you take
    from your prior professional experiences to ensure that you
    will treat these taxpayers with respect and understanding while
    stopping short of awarding them an advantage that they do not
    deserve? Mr. Thornton?
        Judge Thornton. Senator Hatch, in the last 15 years I have
    been on the Court, I have been particularly impressed with the
    number of unrepresented taxpayers who come before our court.
    The Tax Court has a long tradition of trying to develop rules
    and procedures that are friendly to those taxpayers.
        I think our judges collectively have an attitude of trying
    to do what we can to assist those taxpayers. The Court is
    especially proud of our efforts to make sure that every
    taxpayer has an opportunity for access to justice through
    taxpayer clinics and pro bono programs.
        So I personally am committed to doing everything I can to
    assist taxpayers without becoming an advocate for the taxpayer,
    but at least trying to make sure they understand the procedure.
    Many of the taxpayers who come to the Court are very
    intimidated by the entire judicial process. Maybe they have
    never been to court before.
        I think part of our job is to try to set them at ease, try
    to help them understand what they need to do to comply with the
    Court's rules and procedures but, as you say, without becoming
    their advocate, but making sure they have an opportunity for
    access to justice as they might desire it.
        Senator Hatch. Well, thank you.
        Mr. Nega?
        Mr. Nega. I do not think I can say it better than Judge
    Thornton, but I will say it slightly differently. I realize
    that the Tax Court experience might be the most important
    experience that each taxpayer has with the Federal Government,
    and I think it is important that you treat them with respect,
    but again without crossing over the line and becoming an
    advocate for a pro se taxpayer. So I think you just have to
    start each day trying to apply the laws fairly on each case.
        Senator Hatch. Well, thank you, Mr. Chairman.
        The Chairman. Thank you, Senator.
        Senator Thune?
        Senator Thune. Thank you, Mr. Chairman. Mr. Chairman, I
    think we ought to have these nominees think that their
    confirmation is still in doubt until they answer these
    questions and make sure we get the right answers. [Laughter.]
        I want to direct this question to Mr. Thornton and Mr.
    Nega. I appreciate the fact that it may not be appropriate to
    comment on specific cases before the Tax Court, but I want to
    raise a recent Tax Court decision that caught my attention, and
    it was Morehouse v. IRS. The Court recently ruled that
    Conservation Reserve Program payments are subject to self-
    employment taxes, even where the individual receiving the
    payments is not actively farming the land. In this particular
    case, the individual inherited the land in my State of South
    Dakota, but he lived in Minnesota and was not actively engaged
    in farming.
        Yet, the Tax Court broke with prior decisions in finding
    that the taxpayer had to pay self-employment taxes on the CRP
    payments, whereas prior court decisions had found that a CRP
    participant needed to materially participate in the farming
    operation in order to be liable for any self-employment taxes.
        This decision causes concerns for a lot of reasons because,
    the heavier CRP payments are taxed, the less likely it is that
    owners of environmentally sensitive farmland will want to
    participate in this important conservation program, which will
    increase taxpayer liabilities under crop insurance and disaster
    programs by moving land into crop production as opposed to
    keeping it in CRP.
        So I guess I just would be curious if either of you have
    any views on this issue of whether these types or forms of
    payments, Conservation Reserve or CRP payments, should be
    subject to self-
    employment tax in instances where the owner of the farmland is
    not actively--or is not considered, I should say--actively
    engaged in farming.
        Judge Thornton. Senator Thune, I would address the question
    more generally, I suppose, by explaining the process of the
    Court. All the Court's opinions are reviewed by the entire
    Court. We have 19 active judges when we are fully staffed, and
    we all review all the decisions.
        In making that decision, we try to adhere the best we can
    to other judicial precedents. I believe in that particular case
    there were other appeals court cases that the Court looked to.
    The Tax Court sits in 74 cities throughout the country, and
    cases are appealed in 12 different circuits, so we are bound to
    apply the law of that circuit wherever the case might arise.
        So it is those types of considerations that play into the
    Court's decision, trying to make sure we are in the mainstream
    of the legal system, trying to be consistent with the
    jurisprudence of the appeals circuit in which the case
    originates. But I assure you that every case is decided only
    after very careful consideration by the entire Court of the
    particular facts of the case, the law of the case, and how the
    Court believes Congress intended the law to apply.
        As to the specifics of the outcome of this case, I am not
    in a very good position to comment on that, but that is the
    general process by which we try to decide all our cases.
        Senator Thune. Anything to add, Mr. Nega?
        Mr. Nega. I have to admit that I am not familiar with the
    facts of the case, so I am really not in a position to respond
    at this point.
        Senator Thune. All right. I understand. Like I said, it is
    a pending case. But I just think, in terms of tax principle,
    tax policy, the payroll tax, self-employment tax, is a Federal
    tax and, in the past, has never been applied unless there was
    material participation in a farming operation. This is a pretty
    important precedent for a lot of reasons, like I said, one of
    which is that we are doing everything we can to keep some of
    these environmentally sensitive lands in the CRP program.
        This is yet another disincentive toward that, if those who
    own farmland--perhaps are not materially participating in its
    operation but are benefitting from the CRP payments--are
    assessed self-
    employment taxes. That is obviously a tax consequence that is
    going to affect the decision that they make, the economic
    decision, about whether or not to keep it in the program. So,
    just put it on your radar screen if nothing else.
        Mr. Kieff, the ITC has many important functions. The
    Commission has recently received a good deal of attention
    around these 337 cases which you mentioned, which are cases
    where one party is asking the Commission to issue an order
    stopping the importation of another company's product.
        As you know, these cases often involve high-tech companies
    that find themselves at odds over patent disputes. Given your
    expertise in this area, I would be curious to know if you
    believe the ITC process for considering these cases is
    currently working, or if these cases would not be better suited
    to district court, where monetary damages could be awarded, as
    opposed to these exclusion orders.
        Mr. Kieff. Thank you, Senator. I think you are absolutely
    right that these are important issues and that they do have
    impact. The Commission has a tradition of wrestling with these
    issues pretty well, and, like many things in life, it can be
    improved, and the Commission has taken steps to find ways to
    help resolve disputes quickly that really should not be in the
    dispute process.
        So, there is a faster way to make earlier decisions in the
    matter, when it just seems like there really is no dispute, no
    genuine dispute. That is a tool that district courts have. They
    have rule 12, they have rule 56. The Commission has developed
    its versions of those approaches, and so far those seem to be
    meeting with good results. Other techniques can be tried as
    well, and I would enjoy working with my colleagues to help do
    that, if confirmed. Ultimately though, it is up to this body
    and the Congress and the President to decide whether the
    Commission has this role.
        Senator Thune. Yes. Do you think, though, that these cases
    are better suited to district courts, where you can have actual
    monetary damages awarded as opposed to the outcomes, the
    reliefs, that are allowed for under your jurisdiction?
        The Chairman. Let me just break in here. You can continue
    as long as you want, Senator. I must leave right now. There is
    a vote occurring right now too. But it is up to you. You can
    speak as long as you want, but I just----
        Senator Thune. Do you want me to just gavel us out, or are
    you coming back?
        The Chairman. You can gavel us out. Yes. I am not coming
    back; I cannot.
        Senator Thune. So I should pronounce them confirmed?
    [Laughter.]
        I am sure they might appreciate that.
        The Chairman. You could tell them that we are going to
    schedule a vote on their confirmation as quickly as we possibly
    can.
        Senator Thune. All right. Thank you, Mr. Chairman.
        Judge Thornton. Thank you, Mr. Chairman.
        Mr. Nega. Thank you, Mr. Chairman.
        Mr. Kieff. Thank you, Mr. Chairman.
        Senator Thune, please.
        Senator Thune. Well, yes. I was just going to ask you again
    to give me your thoughts about whether or not these cases are
    better suited for district court.
        Mr. Kieff. Yes. So I think that there is a lot of
    interesting work that has been done to analyze how district
    court proceedings, on their own terms, work, how Commission
    proceedings at the ITC work. There seems to be a pretty good
    consensus that there are a lot of pluses and minuses to both
    venues and to both types of remedies. So the district courts,
    as you point out, have the remedies available, damages and
    injunctions, and the ITC has its remedy available, the
    exclusion order. Those really are different things.
        My understanding, having really enjoyed working on these
    issues for a very long time in each of those settings, is that
    there are pluses and minuses to each of them, which then means
    trade-offs have to be made. Those are ultimately policy
    questions.
        Senator Thune. All right.
        Do you guys have anything?
        [No response.]
        Senator Thune. I guess that is a wrap. Thank you all very
    much.
        This hearing is adjourned. Thanks.
        [Whereupon, at 3:30 p.m., the hearing was concluded.]

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