[Congressional Record Volume 141, Number 120 (Monday, July 24, 1995)]
[Senate]
[Pages S10565-S10569]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. SIMON (for himself and Mr. Jeffords):
  S. 1065. A bill to provide procedures for the contribution of 
volunteer U.S. military personnel to international peace operations; to 
amend title 10, United States Code, to provide for participation of the 
Armed Force in peacekeeping activities, humanitarian activities, and 
refugee assistance, and for other purposes; to the Committee on Foreign 
Relations.


         the international peace operations support act of 1995

  Mr. SIMON. Mr. President, Senator Jeffords and I are introducing 
today a bill entitled ``The International Peace Operations Support Act 
of 1995.'' The bill would enhance the U.S. military's ability to 
contribute to international peace operations, and is similar to 
legislation we introduced in the last Congress.
  The Simon-Jeffords bill requires the President to report to Congress 
on a plan to earmark within the Armed Forces a contingency force that 
could be used for peace and humanitarian operations, and could be 
deployed on 24-hour notice. The force would include up to 3,000 active-
duty personnel from any of the services, who would volunteer to serve 
in international peace operations. The soldiers would receive extra 
compensation for their participation, and would get special training 
for such operations.
  Additionally, the bill augments the mission statements of the Army, 
Navy, and Air Force by affirming that their responsibilities include 
participation in ``international peacekeeping operations, humanitarian 
activities, and refugee assistance activities, when determined by the 
President to be in the national interest.''
  Senator Jeffords and I designed this legislation to help the U.S. 
military meet some of the emerging threats in the post-cold-war era: 
ethnic conflicts and civil wars that cause regional instability, 
humanitarian disasters, and aggressors that threaten our interests 
overseas. Just as the military was used to confront the threat of the 
cold war, it will be called upon to address the threats of today and 
tomorrow. This has been evident in recent years in Bangladesh, Somalia, 
Macedonia, Rwanda, and Haiti, where the United States military has been 
asked to perform missions beyond the scope of traditional war-fighting, 
generally called peace operations.
  Some reject categorically these kinds of roles for our military. I 
believe that is a mistake, and a denial of reality. That point of view 
implies that our military planners should prepare only for the big ones 
like World War II on the gulf war. That notion is not realistic, and 
would not serve our national security interests. Regional conflicts and 
instability are inevitable, and humanitarian disasters are inescapable. 
Peace operations will be needed, and the U.S. military--the most 
capable in the world--will be called upon to respond, so long as our 
Nation rejects isolationism.
  Simon-Jeffords bill would help us respond to emergencies and crises 
by consolidating up to 3,000 soldiers with both the will and the 
training to undertake peace operations, who could react on short, 
perhaps 24-hour, notice. Let me give an example of why this is 
important:
  In May 1994, when the situation in Rwanda was going from worse to 
horrific, Senator Jeffords and I called the Canadian general in charge 
of the small U.N. force there. General Daullaire made it clear that the 
quick infusion of 5,000-8,000 troops could stabilize the situation. 
Unfortunately, the United Nations did not have the troops, nor were 
nations willing to provide them, and we
 subsequently witnessed the deaths of hundreds of thousands. Rapid 
deployment of a contingency force as envisioned in this bill, in 
conjunction with similar forces in other countries, may have been able 
to help General Daullaire prevent some of the tragedy in Rwanda.

  The concept of rapid reaction capability is neither new nor is it 
revolutionary. The first U.N. Secretary General, Trygve Lie, raised the 
idea in 1948, and there is a growing interest among the international 
community in enhanced military responsiveness. In fact, the United 
States is far behind our allies on new thinking in these areas. Canada 
is studying proposals to have nations designate contingency forces for 
peace operations, which would be coordinated by a central headquarters 
in some location. Our bill would fit into that plan very well. Denmark 
and the Netherlands are also formulating plans on quick reaction 
forces.
  The U.S. military realizes that we will have to deal with regional 
crises, and I give credit to the services for incorporating peace and 
humanitarian 

[[Page S10566]]
operations into their mission statements, strategy and planning. The 
National Military Strategy prepared by the Joint Chiefs finds that 
peacetime engagement activities are a primary military task--activities 
such as peacekeeping, humanitarian operations and democratic 
assistance. Senator Jeffords and I believe our bill complements these 
efforts already underway.
  I noted before that the contingency force would be made of 
volunteers, who would be given added compensation. This is all 
volunteers, who would be given added compensation. This is an important 
component. We must recall that despite the difficulties with our 
operations in Somalia and Haiti, our soldiers expressed a sense of 
pride and accomplishment in their missions to help the people in these 
troubled lands. I imagine that it would not be difficult to find 
soldiers who would like to join this force.
  The burden of world leadership is on the United States--we are the 
richest, the most influential, and the most militarily capable nation. 
Our soldiers will inevitably be called on to respond to world crises. 
The Simon-Jeffords bill can improve our response capability by 
providing for a contingency force of specially trained troops for quick 
deployment.
   Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record as follows:
                                S. 1065

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``International Peace 
     Operations Support Act of 1995''.

     SEC. 2. FINDINGS.

       The Congress makes the following findings:
       (1) With the end of the Cold War, the United States is 
     clearly the undisputed world economic and military leader and 
     as such bears major international responsibilities.
       (2) Threats to the long-term security and well-being of the 
     United States no longer derive primarily from the risk of 
     external military aggression against the United States or its 
     closest treaty allies but in large measure derive from 
     instability from a variety of causes: population movements, 
     ethnic and regional conflicts including genocide against 
     ethnic and religious groups, famine, terrorism, narcotics 
     trafficking, and proliferation of weapons of mass 
     destruction.
       (3) To address such threats, the United States has 
     increasingly turned to the United Nations and other 
     international peace operations, which at times offer the best 
     and most cost-effective way to prevent, contain, and resolve 
     such problems.
       (4) In numerous crisis situations, such as the massacres in 
     Rwanda, the United Nations has been unable to respond with 
     peace operations in a swift manner.
       (5) The Secretary-General of the United Nations has asked 
     member states to identify in advance units which are 
     available for contribution to international peace operations 
     under the auspices of the United Nations in order to create a 
     rapid response capability.
       (6) United States participation and leadership in the 
     initiative of the Secretary-General is critical to leveraging 
     contributions from other nations and, in that way, limiting 
     the United States share of the burden and helping the United 
     Nations to achieve success.

     SEC. 3. DEFINITIONS.

       For purposes of this Act--
       (1) the term ``appropriate congressional consultation'' 
     means consultation as described in section 3 of the War 
     Powers Resolution; and
       (2) the term ``international peace operations'' means any 
     such operation carried out under chapter VI or chapter VII of 
     the United Nations Charter or under the auspices of the 
     Organization of American States.

     SEC. 4. REPORT ON PLAN TO ORGANIZE VOLUNTEER UNITS.

       Not later than 180 days after the date of enactment of this 
     Act, the President shall submit a report to the Congress 
     setting forth--
       (1) a plan for--
       (A) organizing into units of the Armed Forces a contingency 
     force of up to 3,000 personnel, comprised of current active-
     duty military personnel, who volunteer additionally and 
     specifically to serve in international peace operations and 
     who receive added compensation for such service;
       (B) recruiting personnel to serve in such units; and
       (C) providing training to such personnel which is 
     appropriate to such operations; and
       (2) proposed procedures to implement such plan.

     SEC. 5. AUTHORIZATION.

       (a) In General.--Upon approval by the United Nations 
     Security Council of an international peace operation, the 
     President, after appropriate congressional consultation, is 
     authorized to make immediately available for such operations 
     those units of the Armed Forces of the United States which 
     are organized under section 4(1)(A).
       (b) Termination of Use of United States Armed Forces.--(1) 
     Subject to paragraph (2), the President may terminate United 
     States participation in international peace operations at any 
     time and take whatever actions he deems necessary to protect 
     United States forces.
       (2) Notwithstanding section 5(b) of the War Powers 
     Resolution, not later than 180 days after a Presidential 
     report is submitted or required to be submitted under section 
     4(a) of the War Powers Resolution in connection with the 
     participation of the Armed Forces of the United States in an 
     international peace operation, the President shall terminate 
     any use of the Armed Forces with respect to which such report 
     was submitted or required to be submitted, unless the 
     Congress has extended by law such 180-day period.

     SEC. 6. AVAILABILITY OF FUNDS.

       Funds available to the Department of Defense are authorized 
     to be available to carry out section 5(a).

     SEC. 7. WAR POWERS RESOLUTION REQUIREMENTS.

       Except as otherwise provided, this Act does not supersede 
     the requirements of the War Powers Resolution.

     SEC. 8. MISSION STATEMENTS FOR ARMED FORCES.

       (a) Army.--Section 3062(a) of title 10, United States Code, 
     is amended--
       (1) by striking out ``and'' at the end of paragraph (3);
       (2) by striking out the period at the end of paragraph (4) 
     and inserting in lieu thereof ``; and''; and
       (3) by adding at the end the following:
       ``(5) participating in international peacekeeping 
     activities, humanitarian activities, and refugee assistance 
     activities when determined by the President to be in the 
     national interests of the United States.''.
       (b) Navy.--Section 5062(a) of such title is amended--
       (1) by inserting ``(1)'' after ``(a)'';
       (2) by striking out the second sentence; and
       (3) by adding at the end the following new paragraph:
       ``(3) The Navy is responsible for the preparation of naval 
     forces necessary for the following activities:
       ``(A) Effective prosecution of war except as otherwise 
     assigned and, in accordance with integrated joint 
     mobilization plans, for the expansion of the peacetime 
     components of the Navy to meet the needs of war.
       ``(B) Participation in international peacekeeping 
     activities, humanitarian activities, and refugee assistance 
     activities when determined by the President to be in the 
     national interests of the United States.''.
       (c) Air Force.--Section 8062(a) of such title is amended--
       (1) by striking out ``and'' at the end of paragraph (3);
       (2) by striking out the period at the end of paragraph (4) 
     and inserting in lieu thereof ``; and''; and
       (3) by adding at the end the following:
       ``(5) participating in international peacekeeping 
     activities, humanitarian activities, and refugee assistance 
     activities when determined by the President to be in the 
     national interests of the United States.''.

  Mr. JEFFORDS. Mr. President, today I join Senator Simon in 
introducing the Simon-Jeffords International Peace Operations Support 
Act of 1995.
  The altogether natural and necessary focus in American politics on 
our domestic problems should not blind us to the monumental 
responsibilities of the United States as a leader of the world 
community. The very real dangers of the post-cold war world, as well as 
the equally real opportunities, are ignored only at our peril.
  When civil strife or naked aggression threaten the stability of 
countries or whole regions and threaten the lives of whole populations, 
it is clearly in the world community's interest to try to do something. 
This response could take many forms, and a U.S. contribution might 
appropriately consist of political support, logistics or intelligence 
assistance, or provision of equipment. But there surely will be times 
when it will be in the U.S. national interest to respond to acute 
peacekeeping and other humanitarian needs with a contribution of 
troops.
  We are severely hamstrung today in our ability to respond to these 
types of problems. With the most capable military establishment in the 
world, we find ourselves often unable to contribute troops to 
international peacekeeping efforts because of unclear political 
guidance to our military as to whether peacekeeping is part of its 
mission and a reluctance to train a designated cadre of troops to 
perform the tasks of peacekeeping, refugee assistance, and other 
humanitarian operations.
  Our legislation addresses this problem. It sharpens one of our tools 
of foreign and security policy by providing 

[[Page S10567]]
clearer guidelines for U.S. troop contributions to United Nations or 
other international peace activities. It specifically makes this 
activity a formal mission of the U.S. military in cases where U.S. 
national interests are served by a peacekeeping deployment. It also 
calls for the identification of a specific unit or units consisting of 
service personnel who have volunteered for such service and who would 
be given specialized training for the unique circumstances of such 
missions.
  The preeminent position of the United States in the world, and our 
far-flung commercial and security interests do not always dictate that 
we contribute troops to address particular problems, but they do 
dictate that we be prepared to do so if necessary. As in other areas of 
international endeavor, U.S. leadership means that our contributions 
leverage contributions by other states that follow our lead. Thus, 
greater U.S. contributions to U.N. peacekeeping might, as the result of 
a multiplier effect, prove to be the most cost-effective method of 
increasing worldwide peacekeeping capabilities.
  We are rightly proud of the dedication, skills, and bravery of our 
Armed Forces. They are the world's most effective fighting force, and 
their skills and dedication have successfully been applied to 
humanitarian activities in, for example, Operations Provide Comfort in 
Iraq and Restore Democracy in Haiti. Not all international crises will 
result in U.S. troop deployments. Indeed, our experience in Somalia has 
brought home quite clearly to us the limits of international action in 
the face of massive civil strife. But when the international community 
decides to act, and when we decide that it is appropriate to offer as 
our contribution the finest, most capable men and women in uniform in 
the world, we must be ready.
                                 ______

      By Mr. BRADLEY (for himself and Mr. Nickles):
  S. 1066. A bill to amend the Internal Revenue Code of 1986 to phase 
out the tax subsidies for alcohol fuels involving alcohol produced from 
feedstocks eligible to receive Federal agricultural subsidies; to the 
Committee on Finance.


                   the clean fuels equity act of 1995

  Mr. BRADLEY. Mr. President, I rise today to introduce legislation 
aimed at restoring some level of financial equity in the marketplace 
for clean automotive fuels. My bill will phase out certain targeted tax 
subsidies given to an industry that has too long received unique and 
favorable treatment under the Tax Code: The domestic ethanol industry. 
In this effort, I am very pleased to be joined in this effort by 
Senator Nickles as an original cosponsor of this legislation.
  The Clean Fuels Equity Act will phase out the ethanol tax subsidy for 
ethanol produced from feedstocks that already receive other subsidies 
through the Department of Agriculture's price and income support 
programs. The phaseout would occur over 3 years to allow the existing 
industry an orderly transition to a less-sheltered marketplace. My 
legislation would continue to allow the tax credits for special energy 
crops, waste products, and other biomass that do not benefit from the 
USDA price supports. These energy crops hold some promise of 
environmental and energy benefits. Furthermore, they still represent a 
technically immature industry, for which additional Federal support 
might be justified.
  As most people know, the bulk of the ethanol produced in the United 
States is derived from corn, and processed and sold in the Midwest; 20 
years ago, there was no fuel ethanol industry. But, born from the 
crisis concerns of the late 1970's, this business grew from nothing, 
built by an array of special and substantial tax privileges. However, 
unlike many of the questionable policies developed during that period 
of energy crisis--from the Synfuels Corp. to the Fuel Use Act and plans 
for gas rationing--the ethanol subsidies continue to survive.
  When the credits were initiated over 15 years ago, they were intended 
to jumpstart an industry that would not otherwise exist. This policy 
has obviously succeeded. The ethanol industry is no longer a small, 
fledgling industry. It now produces in excess of a billion gallons of 
ethanol per year and consumes roughly one-half billion bushels of corn 
yearly. It is an industry that now benefits from special tax credits 
and exemptions worth roughly $700 million per year--a number that is 
growing. These tax subsidies are in addition to the millions of dollars 
in benefits the industry receives each year from the USDA price support 
programs.
  In light of recent ethanol industry efforts to obtain
   regulatory expansions of their subsidies, it seems the ethanol 
industry's attitude can be characterized by the phrase ``never 
enough.'' Why worry what it costs to produce a product when you get a 
targeted tax credit, soon to be worth nearly $1 billion per year? Why 
worry about competition when you receive millions more through price 
supports?

  The cost to taxpayers and the cost to consumers are real. These 
subsidies take money out of Americans' pockets. In the face of billions 
of dollars in cuts in Medicare, Medicaid, and education programs for 
children, I question a continued, substantial tax break to a single, 
well-established industry. By handing out subsidies to ethanol, the 
Government is passing along a bill worth hundreds of millions of 
dollars to taxpayers and consumers.
  Ethanol competes in the marketplace with other chemicals that have no 
special tax break. These alternatives must compete based on price and 
performance. This legislation is not intended to be punitive to 
ethanol. Rather, it is an attempt to allow the markets a better chance 
to work for the benefit of all consumers, taxpayers, and the 
environment. Furthermore, it is acknowledgment that you cannot have it 
both ways. If ethanol already benefits from price supports, there is no 
need for a tax credit to keep an industry afloat. It is that simple.
  I urge my colleagues to consider this legislation carefully. Last 
year the Joint Tax Committee estimated that this bill would raise 
almost $3 billion over a 5-year period; since then, the cost of 
subsidizing the ethanol industry has only gone up. In these times when 
we are struggling to reduce the deficit as well as the tax burden on 
the American middle class it makes sense to reduce unneeded subsidies 
whenever possible.
  Mr. President, I ask unanimous consent that the text of the bill and 
additional material be printed in the Record.
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PHASE-OUT OF TAX SUBSIDIES FOR ALCOHOL FUELS 
                   PRODUCED FROM FEEDSTOCKS ELIGIBLE TO RECEIVE 
                   FEDERAL AGRICULTURAL SUBSIDIES.

       (a) Alcohol Fuels Credit.--Section 40 of the Internal 
     Revenue Code of 1986 (relating to credit for alcohol used as 
     a fuel) is amended by adding at the end the following new 
     subsection:
       ``(i) Phase-Out of Credit for Alcohol Produced From 
     Feedstocks Eligible To Receive Federal Agricultural 
     Subsidies.--
       ``(1) In general.--No credit shall be allowed under this 
     section with respect to any alcohol, or fuel containing 
     alcohol, which is produced from any feedstock which is a 
     subsidized agricultural commodity.
       ``(2) Phase-in of disallowance.--In the case of taxable 
     years beginning in 1996 and 1997, paragraph (1) shall not 
     apply and the credit determined under this section with 
     respect to alcohol or fuels described in paragraph (1) shall 
     be equal to 67 percent (33 percent in the case of taxable 
     years beginning in 1997) of the credit determined without 
     regard to this subsection.
       ``(3) Subsidized agricultural commodity.--For purposes of 
     this subsection, the term `subsidized agricultural commodity' 
     means any agricultural commodity which is supported, or is 
     eligible to be supported, by a price support or production 
     adjustment program carried out by the Secretary of 
     Agriculture.''
       (b) Excise Tax Reduction.--
       (1) Petroleum products.--Section 4081(c) of the Internal 
     Revenue Code of 1986 (relating to taxable fuels mixed with 
     alcohol) is amended by redesignating paragraph (8) as 
     paragraph (9) and by adding after paragraph (7) the following 
     new paragraph:
       ``(8) Phase-out of subsidy for alcohol produced from 
     feedstocks eligible to receive federal agricultural 
     subsidies.--
       ``(A) In general.--This subsection shall not apply to any 
     qualified alcohol mixture containing alcohol which is 
     produced from any feedstock which is a subsidized 
     agricultural commodity.
       ``(B) Phase-in of disallowance.--In the case of calendar 
     years 1996 and 1997, the rate of tax under subsection (a) 
     with respect to any qualified alcohol mixture described in 
     subparagraph (A) shall be equal to the sum of--

[[Page S10568]]

       ``(i) the rate of tax determined under this subsection 
     (without regard to this paragraph), plus
       ``(ii) 33 percent (67 percent in the case of 1997) of the 
     difference between the rate of tax under subsection (a) 
     determined with and without regard to this subsection.
       ``(C) Subsidized agricultural commodity.--For purposes of 
     this paragraph, the term `subsidized agricultural commodity' 
     means any agricultural commodity which is supported, or is 
     eligible to be supported, by a price support or production 
     adjustment program carried out by the Secretary of 
     Agriculture.''
       (2) Special fuels.--Section 4041 (relating to tax on 
     special fuels) is amended by adding at the end the following 
     new subsection:
       ``(n) Phase-Out of Subsidy for Alcohol Produced From 
     Feedstocks Eligible To Receive Federal Agricultural 
     Subsidies.--
       ``(1) In general.--Subsections (b)(2), (k), and (m) shall 
     not apply to any alcohol fuel containing alcohol which is 
     produced from any feedstock which is a subsidized 
     agricultural commodity.
       ``(2) Phase-in of disallowance.--In the case of calendar 
     years 1996 and 1997, the rate of tax determined under 
     subsection (b)(2), (k), or (m) with respect to any alcohol 
     fuel described in paragraph (1) shall be equal to the sum 
     of--
       ``(A) the rate of tax determined under such subsection 
     (without regard to this subsection), plus
       ``(B) 33 percent (67 percent in the case of 1997) of the 
     difference between the rate of tax under this section 
     determined with and without regard to subsection (b)(2), (k), 
     or (m), whichever is applicable.
       ``(3) Subsidized agricultural commodity.--For purposes of 
     this subsection, the term `subsidized agricultural commodity' 
     means any agricultural commodity which is supported, or is 
     eligible to be supported, by a price support or production 
     adjustment program carried out by the Secretary of 
     Agriculture.''
       (3) Aviation fuel.--Section 4091(c) (relating to reduced 
     rate of tax for aviation fuel in alcohol mixture) is amended 
     by redesignating paragraph (5) as paragraph (6) and by 
     inserting after paragraph (4) the following new paragraph:
       ``(5) Phase-out of subsidy for alcohol produced from 
     feedstocks eligible to receive federal agricultural 
     subsidies.--
       ``(A) In general.--This subsection shall not apply to any 
     mixture of aviation fuel containing alcohol which is produced 
     from any feedstock which is a subsidized agricultural 
     commodity.
       ``(B) Phase-in of disallowance.--In the case of calendar 
     years 1996 and 1997, the rate of tax under subsection (a) 
     with respect to any mixture of aviation fuel described in 
     subparagraph (A) shall be equal to the sum of--
       ``(i) the rate of tax determined under this subsection 
     (without regard to this paragraph), plus
       ``(ii) 33 percent (67 percent in the case of 1997) of the 
     difference between the rate of tax under subsection (a) 
     determined with and without regard to this subsection.
       ``(C) Subsidized agricultural commodity.--For purposes of 
     this paragraph, the term `subsidized agricultural commodity' 
     means any agricultural commodity which is supported, or is 
     eligible to be supported, by a price support or production 
     adjustment program carried out by the Secretary of 
     Agriculture.''
       (c) Effective Dates.--
       (1) Credit.--The amendment made by subsection (a) shall 
     apply to taxable years beginning after December 31, 1995.
       (2) Excise taxes.--
       (A) In general.--The amendments made by subsection (b) 
     shall take effect on January 1, 1996.
       (B) Floor stock tax.--
       (i) In general.--In the case of any alcohol fuel in which 
     tax was imposed under section 4041, 4081, or 4091 of the 
     Internal Revenue Code of 1986 before any tax-increase date, 
     and which is held on such date by any person, then there is 
     hereby imposed a floor stock tax on such fuel equal to the 
     difference between the tax imposed under such section on such 
     date and the tax so imposed.
       (ii) Liability for tax and method payment.--A person 
     holding an alcohol fuel on any tax-increase date shall be 
     liable for such tax, shall pay such tax no later than 90 days 
     after such date, and shall pay such tax in such manner as the 
     Secretary may prescribe.
       (iii) Exceptions.--The tax imposed by clause (i) shall not 
     apply--

       (I) to any fuel held in the tank of a motor vehicle or 
     motorboat, or
       (II) to any fuel held by a person if, on the tax-increase 
     date, the aggregate amount of fuel held by such person and 
     any related persons does not exceed 2,000 gallons.

       (iv) Tax-increase date.--For purposes of this subparagraph, 
     the term ``tax-increase date'' means January 1, 1996, January 
     1, 1997, and January 1, 1998.
       (v) Other laws applicable.--All provisions of law, 
     including penalties applicable with respect to the taxes 
     imposed by sections 4041, 4081, and 4091 of such Code shall, 
     insofar as applicable and not inconsistent with the 
     provisions of this subparagraph, apply with respect to the 
     floor stock taxes imposed by clause (i).
                                                                    ____

                   The Clean Fuels Equity Act of 1995

       Senator Bradley's legislation would phase out the existing 
     tax credits for ethanol produced from certain feedstocks. The 
     tax will be phased out for ethanol if it is produced from 
     feedstocks, such as corn, that are eligible for various price 
     and income supports under the programs of the U.S. Department 
     of Agriculture. If the ethanol feedstock is a specialized 
     energy crop, not supported by USDA, or a waste product, the 
     tax credit will still be allowed.
       The phase-out will occur over 3 years. Unless exempt, 
     ethanol would be allowed: the full tax credits for calendar 
     year 1995; 67 percent of the existing credits for 1996; and 
     33 percent of the existing credits for 1997. No special tax 
     subsidies would be allowed for ethanol, unless exempt, after 
     December 31, 1997.
       The principal Federal incentive for ethanol is a 54-cent 
     exemption from the Federal motor fuel excise tax. Each gallon 
     of gasoline blended with at least 10 percent ethanol is 
     eligible for the exemption. Using a blend, each gallon of 
     ethanol can be blended with nine gallons of gasoline to make 
     ten gallons of a blended fuel. All ten gallons are eligible 
     for the exemption, which equates to a total exemption of 54 
     cents on each gallon of ethanol.
       Also, an equivalent 5.4-cent-per-gallon federal blenders' 
     income tax credit or refund is available to fuel distributors 
     that blend ethanol into motor fuels, The tax credit or refund 
     can be taken in lieu of the excise tax exemption described 
     above.
       Because of these tax subsidies, ethanol can be offered at a 
     dramatically lower price than would be the case otherwise. 
     The U.S. ethanol industry produces approximately 1.2 billion 
     gallons of ethanol for blending into fuel each year. This 
     equates to a total subsidy value in excess of $700 million 
     annually. Last year's effort by EPA to mandate a market set-
     aside for ethanol would have added at least another $300 
     million annually to the tax subsidy total.
       Ethanol is produced today almost exclusively from 
     feedstocks that are eligible for USDA support.

  Mr. NICKLES. Mr. President, I am pleased to join my friend from New 
Jersey, Senator Bradley, in the introduction of legislation to phase-
out tax subsidies for the ethanol industry. If enacted, our legislation 
will reduce the Federal budget deficit by nearly $3 billion over the 
next 5 years.
  For 15 years the Federal Government has provided substantial tax 
breaks to subsidize the development and use of ethanol as a clean, 
renewable fuel. Those subsidies have proven very effective, as the U.S. 
ethanol industry will produce over 1 billion gallons of ethanol for 
blending into fuel this year, costing the government over $700 million 
in lost tax revenue.
  However as with most government programs, even though the need for 
ethanol tax subsidies has ended, the subsidies themselves live on. In 
fact, the ethanol industry and their friends in the legislative and 
executive branches are continually seeking to expand those subsidies.
  We believe the time has come to stop subsidizing a healthy industry. 
Other clean fuels offer the same benefits as ethanol, but struggle to 
compete against ethanol's massive tax advantage.
  Our legislation will even the playing-field by phasing-out the excise 
tax exemption and income tax credit over 3 years for ethanol produced 
from crops which are also eligible for U.S. farm program subsidies. 
This prevents the double-subsidization of some farm production, while 
allowing continued ethanol tax breaks for alcohol produced from non-
subsidized crops or waste products.
  Mr. President, as we seek to eliminate our budget deficit, it is 
important that we examine all forms of Federal spending, including 
specialized tax expenditures. We should not allow our tax code to 
subsidize healthy businesses, especially when those subsidies create an 
unfair competitive advantage over others. I am pleased to join Senator 
Bradley in this initiative.
                                 ______

      By Mr. COHEN (for himself and Ms. Snowe):
  S. 1067. A bill to amend the Internal Revenue Code of 1986 to provide 
an excise tax exemption for transportation on certain ferries; to the 
Committee on Finance.


                     TAX ON TRANSPORTATION BY WATER

  Mr. COHEN. Mr. President, I am introducing legislation today to 
clarify an interpretation of a section in the Internal Revenue Code 
that imposes a $3 departure tax on ship passengers aboard vessels that 
travel outside the U.S. The provision was intended to apply to 
passengers on cruise ships and gambling voyages. The language of the 
statute reaches further, however, and the International Revenue Service 
has 

[[Page S10569]]
been interpreting the law to apply to a broader class of passenger ship 
traffic, including ferry services that operate between the United 
States and Canada.
  Section 4471 of the Internal Revenue Code was added to the Internal 
Revenue Code in the Omnibus Reconciliation Act of 1989. The provision 
originated in the Senate Commerce Committee as a means of that 
Committee fulfilling its reconciliation instructions. The tax writing 
committees assumed jurisdiction once it became clear that the provision 
was more in the nature of a tax than a fee. The fee, as envisioned by 
the Commerce Committee, was intended to apply to overnight passenger 
cruises that do not travel between two U.S. ports, and to gambling 
boats providing gambling entertainment to passengers outside the 
territorial waters of the U.S.
  Unfortunately, the statutory language of the 1989 Act was not drafted 
in accordance with the intent of Congress. As a result, the tax appears 
to apply to commercial ferry operations traveling between the United 
States and Canada. Two such ferries operate between Maine and Nova 
Scotia. The Maine ferries carry commercial and passenger vehicles to 
Nova Scotia in the warmer months as a more direct means of 
transportation between Maine and eastern Canada. As such they are an 
extension of the highway system, carrying commercial traffic and 
vacationers. The lengths of the voyages are approximately 11 hours and 
almost all passengers traveling on the outbound voyages do not return 
on the inbound voyages of the two ferries. Because the trips are of 
some length, the ferries provide entertainment for the passengers, 
including some gaming tables that bring in minimal income.
  This is not a voyage for the purpose of gambling and the great 
majority of the passengers, including children, do not gamble. Clearly, 
these ferries are not the kind of overnight passenger cruises or 
gambling boats intended to be covered by the law. However, the IRS has 
been interpreting the statute to apply this tax to ferries.
  The statute establishes a dual test for determining if the tax 
applies. First, the tax applies to voyages of passenger vessels which 
extend over more than one night. As a factual matter, the Maine ferries 
do not travel over more than one night
 but the IRS interprets that they do because it takes into account both 
the outward and inward voyage of the vessel. The IRS considers both 
portions of the trip to be one voyage even though virtually no 
passengers are the same.

  Second, the tax applies to commercial vessels transporting passengers 
engaged in gambling. Although the intent was to apply the tax to 
gambling boats, the wording of the statute applies to all passengers on 
vessels that carry any passengers who engage in gambling, no matter how 
minor that gambling. That interpretation subjects the Maine ferries to 
the tax because they earn a minimal amount of income from providing 
gambling entertainment to some passengers.
  The legislation I am introducing clarifies the statute by exempting 
ferries which are defined as vessels where no more than half of the 
passengers typically return to the port where the voyage began.
  This legislation is not intended to give a special break to a certain 
class of passenger ships. It is instead intended to clarify the statute 
so that it achieves its original intent: To tax passengers on cruise 
ships and gambling voyages, not passengers on ferry boats.
  The imposition of the tax to ferries is particularly unfair. First, 
because Congress did not intend to tax such ferries. Second, because 
the burden of the tax relative to the price of the ticket, is greater 
on ferries. Their ticket prices are much lower than tickets for cruise 
ships so the tax is considerably more burdensome for ferry operations 
and interferes to a greater extent with their operations.
  Similar legislation addressing this issue has been approved by the 
Finance Committee in the past but the underlying bills were not enacted 
into law.
  I ask unanimous consent that a copy of the introduced legislation be 
included in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1067

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

     SECTION 1. EXEMPTION FOR TRANSPORTATION ON CERTAIN FERRIES.

       (a) General Rule.--Subparagraph (B) of section 4472(1) of 
     the Internal Revenue Code of 1986 (relating to exception for 
     certain voyages on passenger vessels) is amended to read as 
     follows:
       ``(B) Exception for certain voyages.--The term `covered 
     voyage' shall not include--
       ``(i) a voyage of a passenger vessel of less than 12 hours 
     between 2 ports in the United States, and
       ``(ii) a voyage of less than 12 hours on a ferry between a 
     port in the United States and a port outside the United 
     States.

     For purposes of the preceding sentence, the term `ferry' 
     means any vessel if normally no more than 50 percent of the 
     passengers on any voyage of such vessel return to the port 
     where such voyage bean on the 1st return of such vessel to 
     such port.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to voyages beginning after December 31, 1989; 
     except that--
       (1) no refund of any tax paid before the date of the 
     enactment of this Act shall be made by reason of such 
     amendment, and
       (2) any tax collected from the passenger before the date of 
     the enactment of this Act shall be remitted to the United 
     States.
                                 ______

      By Mr. LAUTENBERG (for himself and Mr. Simon):
  S. 1068. A bill to amend title 18, United States Code, to permanently 
prohibit the possession of firearms by persons who have been convicted 
of a violent felony, and for other purposes; to the Committee on the 
Judiciary.

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