[Congressional Record Volume 141, Number 111 (Tuesday, July 11, 1995)]
[Senate]
[Pages S9717-S9720]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mrs. HUTCHISON:
  S. 1021. A bill to amend the Clean Air Act to extend the primary 
standard attainment date for moderate ozone nonattainment areas, and 
for other purposes; to the Committee on Environment and Public Works.


        the clean air act moderate non-attainment extension act

  Mrs. HUTCHISON. Mr. President, I am committed to improving our air 
quality, but we can't expect cities to meet arbitrary deadlines for air 
quality attainment if the EPA is going to hamper rather than help their 
efforts.
  The EPA required, as part of its enhanced monitoring program, an 
emissions testing system that was expensive, burdensome, and 
ineffective. Even though the Clean Air Act itself does not mandate 
centralized testing, the EPA decided that, to prevent fraud, all cars 
would have to be tested at a State facility. It cost Texas over $100 
million, but has been found to cause little or no additional reduction 
in emissions.
  Tests have found auto emissions virtually unchanged when similar 
centralized programs were initiated in other metropolitan areas. 
Decentralized testing is far less burdensome on drivers; instead of 
centralized testing at State-supervised facilities, private repair 
stations and remote sensing could be used at far less cost without loss 
of effectiveness.
  The fewer than 10 percent of the vehicles that account for more than 
half of all emissions do not emit the same amount of pollutants from 
day to day. They often escape penalties by failing tests on one day, 
and then passing on the next. Testing should focus on identifying and 
repairing these vehicles first, and reducing the burden on everyone 
else.
  Cities with a high portion of their emissions from cars and trucks--
such as Dallas/Fort Worth in Texas--have been unable to reduce their 
emissions because of the EPA's mishandling of the Clean Air Act's 
automobile emissions testing requirements. They deserve adequate notice 
of what will be expected; an effective, low-cost, and efficient plan; 
and sufficient time to comply.
  The choice by the 1990 Clean Air Act Amendments of a 1996 attainment 
date for moderate areas requires attainment before implementation plans 
can be put in place, and air quality improvements shown. Today I am 
introducing a bill to give moderate nonattainment 2 additional years to 
meet the attainment date for air quality.
  An extension of the deadline gives Dallas/Fort Worth, and other 
moderate nonattainment areas throughout the United States, a chance to 
prove themselves without being reclassified as serious non-attainment 
areas. It will give cities time to implement plans next year and still 
have 2 more years to meet the 3-consecutive-year requirement for air 
quality attainment. The 2-year extension also will give the EPA time to 
overhaul its Clean Air Act automobile inspection and maintenance 
program and administer it fairly across the country.
  Dallas/Fort Worth has worked hard to improve its air quality, as I am 
sure other moderate nonattainment cities have, too. With the exception 
of enhanced monitoring, Dallas/Fort Worth has improved air quality; 
almost half of the 145 tons per day emission reduction requirement to 
achieve attainment under the computer model are in place today. Many of 
the largest employers have implemented voluntary employee trip 
reduction programs. In order to provide moderate areas with the 
flexibility necessary for the proper 

[[Page S 9718]]
implementation of the Clean Air Act, and to take into account Federal 
mistakes in administering this program, I urge the Senate to enact this 
change as soon as possible.
                                 ______

      By Mr. FEINGOLD (for himself, Mr. Bradley, and Mr. Wellstone):
  S. 1022. A bill to amend the Internal Revenue Code of 1986 to 
eliminate the percentage depletion allowance for certain minerals, and 
for other purposes; to the Committee on Finance.


           elimination of the percentage depletion allowance

  Mr. FEINGOLD. Mr. President, I am pleased to introduce S. 1022, 
legislation to eliminate percentage depletion allowances for four mined 
substances--asbestos, lead, mercury, and uranium--from the Federal Tax 
Code. This measure is based on language passed as part of the Energy 
Policy Act of 1992 by the other body during the 102d Congress. I am 
joined in introducing this legislation by my colleague from New Jersey, 
Mr. Bradley, and my colleague from Minnesota, Mr. Wellstone.
  Analysis by the Joint Committee on Taxation on the similar 
legislation that passed the House estimated that, under that bill, 
income to the Federal Treasury from the elimination of percentage 
depletion allowances in just these four mined commodities would total 
$83 million over 5 years, $20 million in this year alone. These savings 
are calculated as the excess amount of Federal revenues above what 
would be collected if depletion allowances were limited to sunk costs 
in capital investments. These four allowances are only a few of the 
percentage depletion allowances contained in the Tax Code for extracted 
fuel, minerals, metal, and other mined commodities--with a combined 
value, according to 1994 estimates by the Joint Committee on Taxation, 
of $4.8 billion.
  Mr. President, these percentage depletion allowances were initiated 
by the Corporation Excise Act of 1909. Provisions for a depletion 
allowance based on the value of the mine were made under a 1912 
Treasury Department regulation, but difficulty in applying this 
accounting principle to mineral production led to the initial 
codification of the mineral depletion allowance in the Tariff Act of 
1913. The Revenue Act of 1926 established percentage depletion much in 
its present form for oil and gas. The percentage depletion allowance 
was then extended to metal mines, coal, and other hardrock minerals by 
the Revenue Act of 1932, and has been adjusted several times since.
  Percentage depletion allowances were historically placed in the Tax 
Code to reduce the effective tax rates in the mineral and extraction 
industries far below tax rates on other industries, providing 
incentives to increase investment, exploration, and output. However, 
percentage depletion also makes it possible to recover many times the 
amount of the original investment.
  There are two methods of calculating a deduction to allow a firm to 
recover the costs of their capital investment: cost
 depletion, and percentage depletion. Cost depletion allows for the 
recovery of the actual capital investment--the costs of discovering, 
purchasing, and developing a mineral reserve--over the period which the 
reserve produces income. Using cost depletion, a company would deduct a 
portion of their original capital investment minus any previous 
deductions, in an amount that is equal to the fraction of the remaining 
recoverable reserves. Under this method, the total deductions cannot 
exceed the original capital investment.

  However, under percentage depletion, the deduction for recovery of a 
company's investment is a fixed percentage of gross income--namely, 
sales revenue--from the sale of the mineral. Under this method, total 
deductions typically exceed, let me be clear on that point, Mr. 
President, exceed the capital that the company invested.
  The rates for percentage depletion are quite significant. Section 613 
of the United States Code contains depletion allowances for more than 
70 metals and minerals, at rates ranging from 10 to 22 percent--which 
is the rate used for all uranium and domestic deposits of asbestos, 
lead, and mercury. Lead and mercury produced outside of the United 
States are eligible for a percentage depletion at a rate of 14 percent. 
Asbestos produced in other countries by U.S. companies is eligible for 
a 10-percent allowance.
  Mr. President, in today's budget climate we are faced with the 
question of who should bear the costs of exploration, development, and 
production of natural resources: all taxpayers, or the users and 
producers of the resource? Given that we face significant budget 
deficits, these subsidies are simply a tax expenditure that raise the 
deficit for all citizens or shift a greater tax burden to other 
taxpayers to compensate for the special tax breaks provided to some 
industries.
  Mr. President, the measure I am introducing, despite the fact that 
taxes seem complicated, is fairly straightforward. It eliminates the 
percentage depletion allowance for asbestos, lead, mercury, and uranium 
while continuing to allow companies to recover reasonable cost 
depletion.
  Though at one time there may have been an appropriate role for a 
Government-driven incentives for enhanced mineral production, there is 
now a sufficiently large budget deficit which justifies a more 
reasonable depletion allowance that is consistent with those given to 
other businesses.
  Moreover, Mr. President, these four commodities covered by my bill 
are among some of the most environmentally adverse. The percentage 
depletion allowance makes a mockery of conservation efforts. The 
subsidy effectively encourages mining regardless of the true economic 
value of the resource. The effects of such mines on U.S. lands, both 
public and private, has been significant--with tailings piles, scarred 
earth, toxic byproducts, and disturbed habitats to prove it.
  Ironically, as my earlier description highlights, the more toxic the 
commodity, the greater the percentage depletion received by the 
producer. Mercury, lead, uranium, and asbestos receive the highest
 percentage depletion allowance, while less toxic substances receive 
lower rates.

  Particularly in the case of the four commodities covered by my bill, 
these tax breaks create absurd contradictions in Government policy. The 
bulk of the tax break shared by these four commodities goes to support 
lead production. Federal public health and environmental agencies are 
struggling to come to grips with a vast children's health crisis caused 
by lead poisoning. Nearly 9 percent of U.S. preschoolers, 1.7 million 
children, have levels of lead in their blood higher than the generally 
accepted safety standard. Federal agencies spend millions each year to 
prevent lead poisoning, test young children, and research solutions. At 
the same time, the percentage depletion allowance subsidizes the mining 
of lead with a 22-percent depletion allowance. Lest we think that our 
nearly 15-year-old ban on lead in paint, or the end of the widespread 
use of lead in gasoline has solved our lead problems, exposure problems 
still exist. In 1993, 390 million tons of lead were produced in this 
country, with a value of $275 million, according to the U.S. Bureau of 
Mines. Some 82 percent of the production came from 29 plants with 
annual capacities of more than 6,000 tons. There continue to be major 
uses of lead in the production of storage batteries, gasoline additives 
and other chemicals, ammunition, and solder. Even more ironic, Mr. 
President, though the recovery and recycling of lead from scrap 
batteries was approximately 780 tons--twice the newly mined 
production--the recycling industry received no such tax subsidy.
  To cite another example, hardly any individual in this body has not 
been acutely aware of the public health problem posed by asbestos. 
These compounds were extensively used in building trades and have 
resulted in tens of thousands of cases of lung cancer and fibrous 
disease in asbestos workers. As many as 15 million school children and 
3 million school workers have the potential to be exposed because of 
the installation of asbestos containing materials in public buildings 
between 1945 and 1978. The EPA has already banned the use of asbestos 
in many building and flame retardant products, and will phase out all 
other uses over the next 5 years. Asbestos fibers are released at all 
stages of mining, use, and disposal of asbestos products. The EPA 
estimates that approximately 700 tons per year are released into the 
air during 

[[Page S 9719]]
mining and milling operations. It certainly seems quite peculiar to 
this Senator, that a commodity, the use of which the Federal Government 
will effectively ban before the year 2000, continues to receive a 
hearty tax subsidy.
  Mr. President, the time has come for the Federal Government to get of 
the business of subsidizing business in ways it can no longer afford--
both financially and for the health of its citizens. This legislation 
is one step in that direction.
  Mr. President, in our efforts to reduce the Federal deficit and 
achieve a balanced budget, it is critical that we look at tax 
expenditures that provide special subsidies to particular groups, such 
as those proposed to be eliminated in this legislation. Tax 
expenditures are among the fastest growing parts of the Federal
 budget. According to the General Accounting Office, these tax 
expenditures already account for some $400 billion each year. GAO has 
recommended that Congress begin scrutinizing these areas of the budget 
as closely as we do direct spending programs. Earlier this year, the 
Senator from Minnesota [Mr. Wellstone] and I introduced a sense-of-the-
Senate resolution calling for imposing the same kind of fiscal 
discipline in the area of tax expenditures that we do for other areas 
of the Federal budget, an issue that the Senator from New Jersey [Mr. 
Bradley] has championed for some time as well. I am particularly 
pleased to have the Senator from New Jersey and the Senator from 
Minnesota join me in this effort today. As GAO noted in its report last 
year, ``Tax Policy: Tax Expenditures Deserve More Scrutiny'', many of 
these special tax provisions are never subjected to reauthorization or 
any type of systematic review. Once enacted, they become enshrined in 
the Tax Codes and are difficult to dislodge.

  Of the 124 tax expenditures identified by the Joint Tax Committee in 
1993, about half were enacted before 1950--nearly half a century ago. 
Clearly, in this case, the economic conditions which may have once 
justified a special tax subsidy have dramatically changed. Eliminating 
these kinds of special tax preferences is long overdue.
  Mr. President, in 1992 I developed an 82+point plan to eliminate the 
Federal deficit and have continued to work on implementation of the 
elements of that plan since that time. Elimination of special tax 
preferences for mining companies was part of that 82-plus-point plan. 
Achievement of a balanced budget will require that these kinds of 
special taxpayer subsidies to particular industries must be curtailed, 
just as many direct spending programs are being cut back.
  Finally, Mr. President, in conclusion I want to pay tribute to 
several elected officials from Milwaukee, Mayor John Norquist, State 
Representative Spencer Coggs, and Milwaukee Alderman Michael Murphy, 
who have brought to my attention the incongruity of the Federal 
Government continuing to provide taxpayer subsidies for the production 
of toxic substances like lead while our inner cities are struggling to 
remove lead-based paint from older homes and buildings where children 
may be exposed to this hazardous material. I deeply appreciate their 
support and encouragement for my efforts in this area.
  Mr. President, I ask unanimous consent that a copy of the legislation 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:
                                S. 1022

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. CERTAIN MINERALS NOT ELIGIBLE FOR PERCENTAGE 
                   DEPLETION.

       (A) General Rule.--
       (1) Paragraph (1) of section 613(b) of the Internal Revenue 
     Code of 1986 (relating to percentage depletion rates) is 
     amended--
       (A) by striking ``and uranium'' in subparagraph (A), and
       (B) by striking ``asbestos,'', ``lead,'', and ``mercury,'' 
     in subparagraph (B).
       (2) Subparagraph (A) of section 613(b)(3) of such Code is 
     amended by inserting ``other than lead, mercury, or uranium'' 
     after ``metal mines''.
       (3) Paragraph (4) of section 613(b) of such Code is amended 
     by striking ``asbestos (if paragraph (1)(B) does not 
     apply),''.
       (4) Paragraph (7) of section 613(b) of such Code is amended 
     by striking ``or'' at the end of subparagraph (B), by 
     striking the period at the end of subparagraph (C) and 
     inserting ``, or'', and by inserting after subparagraph (C) 
     the following new subparagraph:
       ``(D) mercury, uranium, lead, and asbestos.''
       (b) Conforming Amendments.--Subparagraph (D) of section 
     613(c)(4) of such Code is amended by striking ``lead,'' and 
     ``uranium,''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

  Mr. WELLSTONE. Mr. President, I am very pleased to be able today to 
speak on behalf of the bill that the distinguished Senator from 
Wisconsin has introduced and that I am co-sponsoring; a bill that I 
believe takes a crucial step toward returning some standard of fairness 
to our Nation's Tax Code.
  Mr. President, I believe I can speak for a large majority of middle-
income families in this country when I say that there are major 
problems with our tax system. When the American people send their 
checks to Washington every April 15, they want to know that their money 
is being used wisely and that everyone in the country is carrying his 
or her share of the load. They want to know that just because they 
don't have their own personal lobbyist up on the Hill and that there is 
a standard of basic economic fairness that is applied in our tax 
system--that the superwealthy can and should pay more than those who 
are struggling.
  But the American people are angry--they are angry at Washington 
because they feel in their hearts that there is no
 standard of fairness being applied in our tax system anymore. And do 
you know what Mr. President? They are right. Over the years our 
national Tax Code has become riddled with corporate tax breaks, 
loopholes, and outright giveaways, costing the Federal Government over 
$400 billion each year; Mr. President--talk about the gift that keeps 
on giving. These are tax dollars that we forego--money that has to be 
made up somewhere, and all too often ends up costing American families 
of modest means even more.

  These tax loopholes and corporate giveaways are like trying to fill 
up a bucket with water, but the bucket has hundreds of holes that let 
the water dribble out from every corner. You can turn on the spigot and 
put more and more and more water into the bucket, but until the holes 
are plugged you'll never keep the water where it belongs.
  That's what this bill does; it begins to plug some of the tax holes. 
This bill removes a special tax break that only a very few businesses 
have in this country--companies that mine lead, mercury, uranium, and 
asbestos. It's called the special percentage depletion allowance, and 
it allows mining companies to deduct 22 percent of their profits from 
their income each and every year for each and every mine they operate. 
Twenty-two percent, Mr. President. Now I know of lots of small business 
operators in Minnesota who would love to have that kind of special 
allowance for their business--but they don't have it. Those who mine 
these minerals have it.
  A twenty-two percent tax break--and for what? So miners can dig 
hazardous heavy metals like lead and mercury out of the ground? Do we 
give tax breaks to companies that take these dangerous metals out of 
our environment and recycle them? Why are we giving a tax break to 
companies that mine asbestos to encourage them to dig more out of the 
ground when in just a few years the use of asbestos will be banned 
altogether? Why give a 22-percent tax credit to a company that mines 
uranium and not to a company that produces ethanol, or solar panels, or 
geothermal power?
  Mr. President, this 22-percent tax deduction is not free--it costs 
the American public. The Joint Committee on Taxation said that 
eliminating this deduction for these minerals would save the Government 
$83 million over the next 5 years. If corporations do not pay their 
fair share of taxes, middle-class people have to pay more; the American 
public is in effect underwriting this tax dodge for these companies. 
That is not right, it is not fair, and it should be stopped.
  This bill takes a bold step, and I applaud its author, my good friend 
the distinguished Senator from Wisconsin for bringing it to the floor. 
And, I would say to the people of this country, and to my colleagues, 
that I see this bill as a beginning. I hope it will be the beginning of 
an all-out effort to reform what I and others have called 

[[Page S 9720]]
corporate entitlements; an effort to cut back on what are spending 
programs by fiat, programs that, unlike regular spending programs, 
never come up for review in Congress or by the public at large. It is 
an effort to return some standard of fairness to our tax system, and 
rebalance the tax scales to ensure that corporations will pay more of 
their fair share--and the American public will no longer be forced to 
underwrite multinational corporations.


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