[Congressional Record Volume 143, Number 89 (Monday, June 23, 1997)]
[House]
[Pages H4141-H4142]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           CHARITABLE DONATION ANTITRUST IMMUNITY ACT OF 1997

  Mr. HYDE. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 1902) to immunize donations made in the form of charitable gift 
annuities and charitable remainder trusts from the antitrust laws and 
State laws similar to the antitrust laws.
  The Clerk read as follows:

                               H.R. 1902

       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 ``Charitable Donation 
     Antitrust Immunity Act of 1997''.

     SEC. 2. IMMUNITY FROM ANTITRUST LAWS.

       The Charitable Gift Annuity Antitrust Relief Act of 1995 
     (15 U.S.C. 37 et seq.) is amended--
       (1) by amending section 2 to read as follows:

     ``SEC. 2. IMMUNITY FROM ANTITRUST LAWS.

       ``(a) Inapplicability of Antitrust Laws.--Except as 
     provided in subsection (d), the antitrust laws, and any State 
     law similar to any of the antitrust laws, shall not apply to 
     charitable gift annuities or charitable remainder trusts.
       ``(b) Immunity.--Except as provided in subsection (d), any 
     person subjected to any legal proceeding for damages, 
     injunction, penalties, or other relief of any kind under the 
     antitrust laws, or any State law similar to any of the 
     antitrust laws, on account of setting or agreeing to rates of 
     return or other terms for, negotiating, issuing, 
     participating in, implementing, or otherwise being involved 
     in the planning, issuance, or payment of charitable gift 
     annuities or charitable remainder trusts shall have immunity 
     from suit under the antitrust laws, including the right not 
     to bear the cost, burden, and risk of discovery and trial, 
     for the conduct set forth in this subsection.
       ``(c) Treatment of Certain Annuities and Trusts.--Any 
     annuity treated as a charitable gift annuity, or any trust 
     treated as a charitable remainder trust, either--
       ``(1) in any filing by the donor with the Internal Revenue 
     Service; or
       ``(2) in any schedule, form, or written document provided 
     by or on behalf of the donee to the donor;

     shall be conclusively presumed for the purposes of this Act 
     to be respectively a charitable gift annuity or a charitable 
     remainder trust, unless there has been a final determination 
     by the Internal Revenue Service that, for fraud or otherwise, 
     the donor's annuity or trust did not qualify respectively as 
     a charitable gift annuity or charitable remainder trust when 
     created.
       ``(d) Limitation.--Subsections (a) and (b) shall not apply 
     with respect to the enforcement of a State law similar to any 
     of the antitrust laws, with respect to charitable gift 
     annuities, or charitable remainder trusts, created after the 
     State enacts a statute, not later than December 8, 1998, that 
     expressly provides that subsections (a) and (b) shall not 
     apply with respect to such charitable gift annuities and such 
     charitable remainder trusts.''; and
       (2) in section 3--
       (A) by striking paragraph (1);
       (B) by redesignating paragraph (2) as paragraph (1);
       (C) by inserting after paragraph (1), as so redesignated, 
     the following:
       ``(2) Charitable remainder trust.--The term `charitable 
     remainder trust' has the meaning given it in section 664(d) 
     of the Internal Revenue Code of 1986 (26 U.S.C. 664(d)).'';
       (D) by redesignating paragraphs (4) and (5) as paragraphs 
     (5) and (6), respectively; and
       (E) by inserting after paragraph (3) the following:
       ``(4) Final determination.--The term `final determination' 
     includes an Internal Revenue Service determination, after 
     exhaustion of donor's and donee's administrative remedies, 
     disallowing the donor's charitable deduction for the year in 
     which the initial contribution was made because of the 
     donee's failure to comply at such time with the requirements 
     of section 501(m)(5) or 664(d), respectively, of the Internal 
     Revenue Code of 1986 (26 U.S.C. 501(m)(5), 664(d)).''.

     SEC. 3. APPLICATION OF ACT.

       This Act, and the amendments made by this Act, shall apply 
     with respect to all conduct occurring before, on, or after 
     the date of the enactment of this Act and shall apply in all 
     administrative and judicial actions pending on or commenced 
     after the date of the enactment of this Act.

     SEC. 4. STUDY AND REPORT.

       (a) Study and Report.--The Attorney General shall carry out 
     a study to determine the effect of this Act on markets for 
     noncharitable annuities, charitable gift annuities, and 
     charitable remainder trusts. The Attorney General shall 
     prepare a report summarizing the results of the study.
       (b) Details of Study and Report.--The report referred to in 
     subsection (a) shall include any information on possible 
     inappropriate activity resulting from this Act and any 
     recommendations for legislative changes, including 
     recommendations for additional enforcement resources.
       (c) Submission of Report.--The Attorney General shall 
     submit the report referred to in subsection (a) to the 
     Chairman and the ranking member of the Committee on the 
     Judiciary of the House of Representatives, and to the 
     Chairman and the ranking member of the Committee on the 
     Judiciary of the Senate, not later than 27 months after the 
     date of the enactment of this Act.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Illinois [Mr. Hyde] and the gentleman from Massachusetts [Mr. Frank] 
each will control 20 minutes.

[[Page H4142]]

  The Chair recognizes the gentleman from Illinois [Mr. Hyde].
  (Mr. HYDE asked and was given permission to revise and extend his 
remarks.)


                             General Leave

  Mr. HYDE. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days to revise and extend their remarks on the bill 
under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Illinois?
  There was no objection.
  Mr. HYDE. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would state that in 1995, Congress learned of an 
assault on charitable giving that was being waged in a class action 
lawsuit underway in the Federal court in Texas. The defendants in the 
case, a collection of charitable organizations which included the 
Lutheran Church, the United Way, and Northwestern University, stood 
accused of violating the antitrust laws by agreeing to use the same 
annuity rate when is offering donors charitable gift annuities.
  Charitable gift annuities are a vehicle for charitable giving. The 
donor gives a charitable organization a sum of money. In return, the 
donor receives a charitable deduction and the agreement of the donee to 
pay back a fixed income for life. Depending on the annuity rate used, 
the value of the life income in relation to the total donation 
fluctuates, as does the amount of the charitable deduction.
  Finding that there were strong public policy reasons to protect 
charitable organizations from antitrust suits in this context, the 
104th Congress enacted the Charitable Gift Annuity Antitrust Relief Act 
of 1995. That act specifies that it is not a violation of the antitrust 
laws for section 501(c)(3) organizations to agree to use the same 
annuity rate when issuing charitable gift annuities. The bill was 
unanimously approved in the House by a vote of 427 to 0; the Senate 
passed the House bill by voice vote. The expectation was that the act 
would lead to the dismissal of the class action suit and an end to the 
Texas case.
  Alas, this has not been the result. When the 1995 act was asserted as 
a defense in the case, the judge denied the motion to dismiss, citing 
new allegations and issues of fact which were allegedly raised under 
the act. The Court's rulings make it clear that in order to achieve the 
goal we originally intended, that is, to protect this kind of 
charitable fundraising from the antitrust laws, we must act again. Two 
issues in particular must be clarified: that all activity related to 
the issuance of a charitable gift annuity is protected, and that the 
Internal Revenue Service, not the district court, is the arbiter of 
whether a particular annuity meets the criteria of a charitable gift 
annuity.

                              {time}  1215

  The bill before us today, the Charitable Donation Antitrust Immunity 
Act of 1997, amends the 1995 act for that purpose. H.R. 1902 provides 
antitrust protection for charitable gift annuities and charitable 
remainder trusts, and grants immunity from antitrust suit to any person 
involved in issuing or selling those annuities or trusts. It 
establishes a conclusive presumption that a particular instrument is a 
charitable gift annuity or charitable remainder trust if the donor has 
treated it as one in filings with the Internal Revenue Service, or if 
the donee has treated it as one in documents provided to the donor. 
However, the conclusive presumption would not be available if the 
Internal Revenue Service has made a final determination that the 
annuity or trust was not qualified under the revenue laws.
  H.R. 1902 is a bipartisan effort to redraft legislation to ensure 
that the courts will interpret the law in a manner consistent with 
congressional intent. The gentleman from Michigan [Mr. Conyers], the 
ranking member, and I have worked closely on this legislation to ensure 
that the exemption is drawn as narrowly as possible while still 
achieving our goal. A companion bill has been introduced in the Senate 
by Senators Coverdell, Dodd, and DeWine, and I anticipate it will 
receive swift consideration in that body. I also should mention the 
Antitrust Division of the Department of Justice has indicated they have 
no objection to the new language.
  Mr. Speaker, in these days of fiscal conservatism we are asking our 
communities to do more and more. With the help of charitable 
organizations, we stretch our government dollars to feed more hungry 
people, build homes for the poor, and care for the less fortunate. 
Every dollar raised by these organizations is needed to help in the 
mission of the charity. By enacting H.R. 1902, we are making sure that 
these scarce resources are not used to pay lawyers to defend a lawsuit 
that Congress has deemed meritless, but instead to contribute to the 
strength of our communities.
  Mr. CONYERS. Mr. Speaker, as the Members of this House well know I am 
a strong supporter of vigorous enforcement of the antitrust laws, and 
as a general matter I do not favor any exemptions or exclusions from 
the antitrust laws or legislation which would impact pending cases.
  However, when it comes to beneficial cooperative activity by 
charities I believe there is no legitimate role for the antitrust laws. 
This is why when I learned last year that a group of plaintiffs had 
brought an unfounded antitrust action against a large number of 
charities who had agreed to use a common formula in offering gift 
annuities, I cosponsored with Chairman Hyde H.R. 2525. That legislation 
granted an antitrust immunity for charities offering gift annuities and 
eventually passed the Congress unanimously and was signed into law by 
the President.
  Unfortunately, subsequent to the law's enaction, the plaintiffs 
amended their complaint to allege that the charities' accountants and 
lawyers had also participated in the antitrust conspiracy and charged 
that the charities' tax exempt status was fraudulent. Despite Congress' 
clear intent, rather than throw these frivolous allegations out, the 
courts have continued to allow the case to proceed, allowing the 
parties to engage in discovery. As a result, the charities continue to 
face the risk of billions of dollars in damages and millions of dollars 
in legal fees.
  This bill would strengthen last year's law to clarify that actions by 
professionals associated with charitable gift annuities are not subject 
to the antitrust laws, and create a conclusive presumption of coverage 
to entities treated as charities by the IRS. This should end the 
wasteful litigation and allow the charities to focus their resources on 
better serving our communities.
  This law is narrowly crafted and specific. It will do no damage to 
the letter or spirit of our antitrust laws. The language has been 
carefully reviewed by the Justice Department and they have voiced no 
objections to the bill. I urge the Members to join me in supporting 
this important legislation.
  Mr. FRANK of Massachusetts. Mr. Speaker, I believe that the 
distinguished chairman has explained this quite adequately.
  Mr. Speaker, I have no requests for time, and I yield back the 
balance of my time.
  Mr. HYDE. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore [Mr. Petri]. The question is on the motion 
offered by the gentleman from Illinois [Mr. Hyde] that the House 
suspend the rules and pass the bill, H.R. 1902.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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