[Congressional Record Volume 144, Number 142 (Saturday, October 10, 1998)]
[Senate]
[Pages S12309-S12343]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. CHAFEE (for himself, Mr. Mack, and Mr. Lieberman):
S. 2617. A bill to amend the Clean Air Act to authorize the President
to enter into agreements to provide regulatory credit for voluntary
early action to mitigate greenhouse gas emissions; to the Committee on
Environment and Public Works.
credit for early action act of 1998
Mr. CHAFEE. Mr. President, I am proud to join with Senators Mack and
Lieberman today to introduce the Credit for Early Action Act of 1998.
This bipartisan legislation is designed to encourage voluntary,
meaningful, and early efforts by industry to reduce their emissions of
greenhouse gases. This is a bill to address the threat of global
climate change.
Before I get into the details of this legislative proposal, let me
spend a few moments discussing the science of climate change.
Human influence on the global climate in an extraordinarily complex
matter that has undergone more than a century of research. Indeed, in
an 1896 lecture delivered to the Stockholm Physics Society by the Nobel
Prize-winning chemist, Svante Arrhenius, it was predicted that large
increases in carbon dioxide (CO2) would result in a
corresponding warming of the globe.
Professor Arrhenius was the first to predict that large increases in
CO2 would result in a warming of the globe. What have the
world's scientists told
[[Page S12310]]
us at different intervals over the last one hundred years, since Mr.
Arrhenius identified the warming effects of CO2?
In 1924, a U.S. physicist speculated that industrial activity would
double atmospheric CO2 in five hundred years, around the
year 2424. Current projections, however, call for a doubling sometime
before 2050--some four hundred years earlier than predicted just
seventy years ago!
In 1957, scientists from the Scripps Institute of Oceanography
reported for the first time that much of the CO2 emitted
into the atmosphere is not absorbed by the oceans as some had argued,
leaving significant amounts in the atmosphere. They are said to have
called carbon dioxide emissions ``a large-scale geophysical
experiment'' with the Earth's climate.
In 1967, the first reliable computer simulation calculated that
global average temperatures may increase by more than four degrees
Fahrenheit when atmospheric CO2 levels are double that of
preindustrial times. In 1985, a conference sponsored by the United
Nations Environment Program (UNEP), the World Meteorological
Organization (WMO), and the International Council of Scientific Unions
forged a consensus of the international scientific community on the
issue of climate change. The conference report warned that some future
warming appears inevitable due to past emissions, regardless of future
actions, and recommended consideration of a global treaty to address
climate change.
In 1987, an ice core from Antarctica, analyzed by French and Russian
scientists, revealed an extremely close correlation between
CO2 and temperature going back more than one hundred
thousand years. In 1990, an appeal signed by forty-nine Novel prize
winners and seven hundred members of the National Academy of Science
stated, ``There is broad agreement within the scientific community that
amplification of the Earth's natural greenhouse effect by the buildup
of various gases introduced by human activity has the potential to
produce dramatic changes in climate . . . only by taking action now can
be ensure that future generations will not be put at risk.''
Also in 1990, seven hundred and forty-seven participants from one
hundred sixteen countries took part in the Second world Climate
Conference. The conference statement reported that, ``. . . if the
increase of greenhouse gas concentrations is not limited, the predicted
climate change would place stresses on natural and social systems
unprecedented in the past ten thousand years.''
Finally, Mr. President, in 1995, the Intergovernmental Panel on
Climate Change, representing the consensus of climate scientists
worldwide, concluded that ``. . . the balance of evidence suggests that
there is a discernible human influence on global climate.''
This last development is significant, because the overwhelming
majority of climate scientists concluded, for the first time, that man
is influencing the global climate system. That conclusion, while
controversial in some quarters, was endorsed unanimously by the
governments of the ninety-six countries involved in the panel's
efforts.
Are these forecasted outcomes a certainty? They are not. The
predictions of climate change are indeed based on numerous variables.
Although scientists are improving the state of their knowledge at a
rapid pace, we still have a lot to learn about the role of the sun,
clouds and oceans, for example.
The question is, will we ever have absolute certainty? Will we ever
be able to eliminate all of the variables? The overwhelming majority of
independent, peer-reviewed scientific studies indicate that we do not
have such a luxury. By the time we finally attain absolute certainty,
it would likely take centuries to reverse atmospheric damage and
oceanic warming.
Mr. President, I am not alone in this thinking. There are an
increasing number of business leaders in our country who have arrived
at the same conclusion that we need to act swiftly.
In a ``dear colleague'' letter sent out this week under my signature,
I repeated a remarkable statement issued by an impressive group of
companies that have joined with the newly established Pew Center on
Climate Change. American Electric Power, Boeing, BP America, Enron,
Lockheed Martin, 3M, Sun, United Technologies, Toyota, Weyerhaeuser,
and several others said that, ``we accept the views of most scientists
that enough is known about the science and environmental impacts of
climate change for us to take actions to address its consequences.''
The legislation to be introduced today by Senator Mack, Senator
Lieberman and I proposes an exciting framework that would appropriately
recognize real and immediate action to combat climate change. While the
climate debate will indeed continue over the next few years, we
strongly believe that there is a voluntary, incentive-based approach
which can be implemented now. Congressional approval of this approach,
which the three of us and others will work for early next year, will
provide the certainty necessary to encourage companies to move forward
with practical, near-term emission reductions.
Specifically, this legislation would provide a mechanism by which the
President can enter into binding greenhouse gas reduction agreements
with entities operating in the United States. Once executed, these
agreements will provide credits for voluntary greenhouse gas reductions
effected by those entities before 2008, or whenever we might have an
imposition of any domestic or international emission reduction
requirements.
Importantly, this program is designed to work within the framework of
whatever greenhouse gas control requirement may eventually become
applicable within the United States. The credits would be usable
beginning in the first five-year budget period (2008-2012) under the
Kyoto Protocol, if the Kyoto Protocol is ratified. If the Protocol is
not ratified, and we end up with a domestic program to regulate or
otherwise control greenhouse gas emissions, the credits would be usable
in that program.
This sort of approach makes sense for a wide variety of reasons.
Encouraging early reductions can begin to slow the rate of buildup of
greenhouse gases in the atmosphere, helping to minimize the
potential environmental risks of continued warming. Given the longevity
of many climate gases, which continue to trap heat in the atmosphere
for a century or more, it just makes sense to encourage practical
actions now.
By guaranteeing companies credit for voluntary early reductions, the
bill would allow companies to protect themselves against the potential
for steep reduction requirements or excessive costs in the future. For
companies that want to reduce their greenhouse gas emissions, providing
credit for action now adds years to any potential compliance schedule,
allowing companies to spread costs over broader time periods. A focus
on early reductions can help stimulate the American search for
strategies an technologies that are needed worldwide. Development of
such strategies and technologies can improve American competitiveness
in the $300 billion dollar global environmental marketplace.
This ``credit'' program may also make the greenhouse gas reductions
achieved before regulations are in place financially valuable to the
companies who make such reductions. Given the likely inclusion of
market based approaches to any eventual domestic regulatory
requirements, similar to the successful acid rain program of the 1990
Clean Air Act, credit earned could be traded or sold to help other
companies manage their own reduction efforts.
Under a ``no credit'' approach, the status quo, it is more likely
that early reduction companies will be penalized if greenhouse gas
reductions are ultimately required, because their competitors who wait
to reduce will get credit for later reductions. Such a ``no credit''
approach could even create perverse incentives to delay investments
until emissions reductions would be credited.
In anticipation of a potential global emissions market, decisions re
being made now by entrepreneurial companies and countries. For example,
Russia and Japan have already concluded a trade of greenhouse gas
emission credits. Private companies such as Niagara-Mohawk and Canada-
based Suncor are moving forward with cross-boundary trades. Aggressive
global energy companies, such as British Petroleum, AEP, and PacifiCorp
are already implementing agreements in Central and
[[Page S12311]]
South America--sequestering carbon and developing credits against
emissions--by protecting rain forests.
Mr. President, America can and should reward companies that take such
positive steps to position themselves, and the US, for the
environmental and economic future.
On the international side, passage by the U.S. Congress of a program
to help stimulate early action will be clear example of American
leadership and responsibility. Developing countries currently argue
that nations such as the United States, with huge advantages in quality
of life and dramatically higher per capita emissions of green house
gases, should take a leadership role in the reduction of greenhouse gas
emissions. And they argue that developing countries should not be asked
to take steps until the U.S. begins to move forward. This bill can work
directly to change that situation, therefore removing a barrier to
essential developing country progress.
There it is, Mr. President. We are here today because we believe that
climate change presents a serious threat. We believe it makes sense to
get started now. And, as many leading American companies do, we believe
that there are sensible, fair and voluntary methods to get on the right
track.
We encourage our colleagues to use the time between now and next
January to review this legislation carefully. We are open to
suggestions. Most importantly, we are looking for others to join us in
this effort.
Ms. MACK. Mr. President, as an original cosponsor of the
Credit for Early Action Act, I rise to congratulate Senator Chafee on
its introduction, as well as the other original cosponsor, Senator
Lieberman, and to make several points about the bill.
The purpose of the act is simple. It is to encourage and reward
voluntary actions which businesses may take to reduce emissions of
``greenhouse gases'' such as carbon dioxide. It would not require
actions, but it would provide encouragement in the form of credit,
credit that could be used by companies to manage future regulatory
requirements, or in a market-based approach, traded or sold to other
companies as they worked to meet their own obligations.
Given the uncertainty that surrounds the discussion of greenhouse
gases and global warming, I can understand why some may question the
need for such a bill. As one who is not convinced that we understand
this issue well enough, I can understand that question. In fact, it is
precisely because of the uncertainty that I think such a bill makes
sense.
Of course there is a great deal of uncertainty surrounding such
possible results, and frankly, as I said, I am not convinced that we
know enough yet. The complexities and uncertainties associated with
trying to understand the vast interactions of our climate, our
atmosphere and our human impact on both, are enormous. And the
consequences of actions targeted at changing our patterns of energy use
can be dramatic.
But uncertainty cuts two ways, and the possibility always exists that
some of these projections about impacts could be more right than wrong.
Perhaps then it makes sense to provide some appropriate encouragement,
so that those who want to invest in improved efficiency, those who want
to find ways to make cars and factories and power production cleaner,
those companies can receive some encouragement, not based on government
fiat or handout, but based on getting credit for their own initiative
and actions. The environmental result will likely be some lessening of
the potential problems associated with possible global warming, and
that just makes sense.
There is, of course, another uncertainty that gives me pause as well,
and that serves as another strong reason for my interest in this bill.
It is clear to me today that there is no desire on the part of this
Congress to legislate requirements on carbon dioxide or any of the
other ``greenhouse gases.'' I think that is the correct position.
But we cannot know today what some future Congress, perhaps a decade
away, might decide to do. Perhaps the science will become more
compelling. Perhaps the majority will shift back to a more regulatory
minded party. Perhaps a future Senate will decide to ratify the Kyoto
Protocol. Perhaps a future administration and a future majority will
combine to put a regulatory structure in place that will require
substantial reductions of these gases. And while we may oppose such
action today, we cannot know the outcome of this future debate.
Given this regulatory uncertainty, I think a compelling argument can
be made to provide protection for companies today, so that they are
protected against the possibility of future requirements. What this
bill will do is just that. By allowing companies to earn credit for
actions that they take over the next few years, the bill will make sure
that if a regulator comes to see them in the future, they can say, ``I
already did my part.'' Companies can make decisions based on their own
best interest, they can work to improve efficiency and reduce waste.
And if this bill becomes law, they can get credit for those actions
against any future regulatory controls on greenhouse gases. That seems
like a good idea to me.
In closing Mr. President, I again want to congratulate Senator
Chafee, along with our other original co-sponsor Senator Lieberman, for
this thoughtful, balanced approach to the uncertainty presented by the
climate change issue. I am proud to be an original cosponsor of this
bill, and I want to urge my colleagues to take a good look at this
approach so that we can begin to move forward in earnest in the next
Congress.
Mr. LIEBERMAN. Mr. President, I am delighted to join today
with my colleagues Senator Chafee, the chairman of the Environment and
Public Works Committee, and Senator Mack in introducing this
legislation. It will provide credit, under any future greenhouse gas
reduction systems we may adopt, to companies who act now to reduce
their emissions of greenhouse gases. This is a voluntary, market-based
approach which is a win-win situation for both American businesses and
the environment. Enactment of this legislation will provide the
certainty necessary to encourage companies to move forward with
emission reductions now. I'm particularly pleased that the legislation
grows out of principles developed in a dialog between the Environmental
Defense Fund and a number of major industries.
The point of this legislation is simple. Many companies want to move
forward now to reduce their greenhouse gas emissions. They don't want
to wait until legislation requires them to make these reductions. For
some companies reducing greenhouse gases makes good economic sense
because adopting cost-effective solutions can actually save them money
by improving the efficiency of their operations. Companies recognize if
they reduce their greenhouse gas emissions now they will be able to add
years to any potential compliance schedule, allowing companies to
spread their costs over broader time periods. Acting now can help U.S.
companies protect themselves against the potential for significant
reductions that may be required in the future. This bill ensures they
will be credited in future reduction proposals for action now.
Early action by U.S. companies will also have an enormous benefit for
the environment. Early reductions can begin to slow the rate of buildup
of greenhouse gases in the atmosphere, helping to minimize the
environmental risks of continued global warming. Given that once
emitted, many climate change gases continue to trap head for a century
or more in the atmosphere, it just makes sense to encourage practical
action now.
Climate change is neither an abstraction nor the object of a science
fiction writer's imagination. It is real and affects us all. More than
2,500 of the world's best scientific and technical experts have linked
the increase of greenhouse gases to at least some of the increase in
sea level, temperature and rainfall experienced worldwide in this
century. Last year was the warmest year on record, and 9 of the last 11
years were among the warmest ever recorded.
The point of this legislation is to provide an incentive for
companies that want to make voluntary early reduction in emissions of
greenhouse gases by guaranteeing that these companies will receive
credit, once binding requirements begin, for voluntary reductions they
have made before 2008. These
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credits will enable US companies to add years to any potential
compliance schedule for reductions, allowing them to spread costs over
broader time periods. These credits may also be financially valuable to
companies who make the reductions. Credits earned likely could be
traded or sold to help other companies manage their own reduction
requirements. A focus on early reductions can also help stimulate the
search for and use of new, innovative strategies and technologies that
are needed to help companies both in this country and worldwide meet
their reduction requirements in a cost-effective manner. Development of
such strategies and technologies can improve American competitiveness
in the more than $300 billion global environmental marketplace.
I'm pleased that this legislation builds on section 1605(b) of the
Energy Policy Act which allowed companies to voluntarily record their
emissions in greenhouse gas emissions, which I worked hard to include
in the Energy Policy Act.
Mr. President, the debate about climate change is too often vested--
and I believe wrongly so--in false choices between scientific findings,
common sense, business investments and environmental awareness. The
approach of this bill again demonstrates that these are not mutually
exclusive choices, but highly compatible goals.
______
By Mr. McCain.
S. 2618. a bill to require certain multilateral development banks and
other leading institutions to implement independent third party
procurement monitoring, and for other purposes; to the Committee on
Foreign Relations.
THE FAIR COMPETITION IN FOREIGN COMMERCE ACT OF 1998
Mr. McCAIN. Mr. President, I am proud to introduce the Fair
Competition in Foreign Commerce Act of 1998, to address the serious
problem of waste, fraud and abuse, resulting from bribery and
corruption in international development projects. This legislation will
set conditions for U.S. funding through multilateral development banks.
These conditions will require the country receiving aid to adopt
substantive procurement reforms, and independent third-party
procurement monitoring of their international development projects.
During the cold war, banks and governments often looked the other way
as pro-western leaders in developing countries treated national
treasuries as their personal treasure troves. Information technologies
and the resulting global economy have transformed the world in which we
live into a smaller and smaller community. For example, economic
turmoil in Indonesia hits home on Wall Street. Allegations of
misconduct in the White House negatively impact Wall Street, which
causes capital flight to other nation's stock exchanges. In today's
increasingly interdependent global economy, nations are ill-advised to
ignore corruption and wrongdoing in neighboring countries.
The U.S. is a vital part of the global economy. We cannot afford to
look the other way when we see bribery and corruption running rampant
in other countries. Bribery and corruption abroad undermine the U.S.
goals of promoting democracy and accountability, fostering economic
development and trade liberalization, and achieving a level playing
field throughout the world for American businesses. Developing nations
desperately need foreign economic assistance to break the devastating
cycle of poverty and dependence.
The United States is increasingly called upon to lead multilateral
assistance efforts through its participation in various lending
institutions. However, it is critical that we take steps to ensure that
the American taxpayer dollars are being used appropriately. The Fair
Competition in Foreign Commerce Act of 1998 is designed to decrease the
stifling effects of bribery and corruption in international development
contracts. The Act will achieve this objective by mandating that
multilateral lending institutions require that nations receiving U.S.
economic assistance subject their international development projects to
independent third-party procurement monitoring, and other substantive
procurement reforms.
By decreasing bribery and corruption in international development
procurements, this legislation will (1) enable U.S. businesses to
become more competitive when bidding against foreign firms which secure
government contracts through bribery and corruption; (2) encourage
additional direct investment to developing nations, thus increasing
their economic growth, and (3) increase opportunities for U.S.
businesses to export to these nations as their economies expand and
mature.
Multilateral lending efforts are only effective in spurring economic
development if the funds are used to further the intended development
projects. The American taxpayers make substantial contributions to the
International Bank for Reconstruction and Development, the
International Development Association, the International Finance
Corporation, the Inter-American Development Bank, the International
Monetary Fund, the Asian Development Bank, the Inter-American
Investment Corporation, the North American Development Bank, and the
African Development Fund. These contributions provide significant
funding for major international development projects. Unfortunately,
these international development projects are often plagued by fraud and
corruption, waste and inefficiency, and other misuse of funding.
This inefficient use of valuable taxpayer dollars is bad for the U.S.
and the nation receiving the economic assistance. When used for its
intended purpose, foreign economic aid yields short and long term
benefits to U.S. businesses. Direct foreign aid assists developing
nations to develop their infrastructure. A developed infrastructure is
vital to creating and sustaining a modern dynamic economy. Robust new
economies create new markets for U.S. businesses to export their goods
and services. Exports are key to the U.S. role in the constantly
expanding and increasingly competitive global economy. Emerging
economies of today become our trading partners of tomorrow. However,
foreign economic assistance will only promote economic development if
it is used for its intended purpose, and not to line the pockets of
foreign bureaucrats and their well-connected political allies.
The current laws and procedures designed to detect and deter
corruption after the fact are inadequate and meaningless. This bill
seeks to ensure that U.S. taxpayers' hard-earned dollars contributed to
international projects are used appropriately, by detecting and
eliminating bribery and corruption before they can taint the integrity
of these vital international projects. Past experience illustrates that
it is ineffective to attempt to reverse waste, fraud, and abuse in
large scale foreign infrastructure projects, once the abuse has already
begun. Therefore, it is vital to detect the abuses before they occur.
The Fair Competition in Foreign Commerce Act of 1998 requires the
United States Government, through its participation in the multilateral
lending institutions and in its disbursement of non-humanitarian
foreign assistance funds, to: (1) require the recipient international
financial institution to adopt an anti-corruption plan that requires
the aid recipient to use independent third-party procurement monitoring
services, at each stage of the procurement process, to ensure openness
and transparency in government procurements, and (2) to require the
recipient nation to institute specific strategies for minimizing
corruption and maximizing transparency in procurements at each stage of
the procurement process.
If these criteria are not met, the legislation directs the Secretary
of the Treasury to instruct the United States Executive Directors of
the various International Development Banks to use the voice and vote
of the United States to oppose the lending institution from providing
the funds to the nations requesting economic aid which do not satisfy
the procurement reforms criteria. This Act has two important
exceptions. First, it does not apply to assistance to meet urgent
humanitarian needs such as providing food, medicine, disaster, and
refugee relief. Second, it also permits the President to waive the
funding restrictions with respect to a particular country if making
such funds available is important to the national security interest of
the United States.
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Independent third-party procurement monitoring is a system where an
independent third-party conducts a program to eliminate bias, to
promote transparency and open competition, and to minimize fraud and
corruption, waste and inefficiency and other misuse of funds in
international procurements. The system does this through an independent
evaluation of the technical, financial, economic and legal aspects of
each stage of a procurement, from the development and issuance of
technical specifications, bidding documents, evaluation reports and
contract preparation, to the delivery of goods and services. This
monitoring will take place throughout the entire term of the
international development project.
Mr. President, this system has worked for other governments.
Procurement reforms and third-party procurement monitoring resulted in
the governments of Kenya, Uganda, Colombia, and Guatemala experiencing
significant cost savings in recent procurements. For instance, the
Government of Guatemala experienced an overall savings of 48% when it
adopted a third-party procurement monitoring system, and other
procurement reform measures, in a recent procurement of
pharmaceuticals.
Independent third-party procurement monitoring is effective because
it monitors each stage of the procurement process during and prior to
each stage's completion, as opposed to following completion of a
particular stage of the procurement process. Independent third-party
procurement monitoring also improves transparency and openness in the
procurement process. Increased transparency helps to minimize fraud and
corruption, waste and inefficiency, and other misuse of funding, and
promotes competition, thereby strengthening international trade and
foreign commerce.
Mr. President, bribery and corruption have many victims. Bribery and
corruption hamper vital U.S. interests. Both harm consumers, taxpayers,
and honest traders who lose contracts, production, and profits because
they refuse to offer bribes to secure foreign contracts. Bribery and
corruption have become a serious problem. A World Bank survey of 3,600
firms in 69 countries showed 40% of businesses paying bribes. More
startling is that Germany still permits its companies to take a tax
deduction for bribes. A recent comment by Commerce Secretary Daley sums
up the serious impact of bribery and corruption upon American
businesses ability to compete for foreign contracts:
Since mid-1994, foreign firms have used bribery to win
approximately 180 commercial contracts valued at nearly $80
billion. We estimate that over the past year, American
companies have lost at least 50 of these contracts, valued at
$15 billion. And since many of these contracts were for
groundbreaking projects--the kind that produces exports for
years to come--the ultimate cost could be much higher.''
Exports will continue to play an increasing role in our continued
economic expansion. We can ill afford to allow any artificial
impediments to our ability to export. Bribery and corruption,
significantly hinder American businesses' ability to compete for
lucrative overseas government contracts. American businesses are simply
not competitive when bidding against foreign firms that have bribed
government officials to secure overseas government contracts. Greater
openness and fairness in government procurement will greatly enhance
opportunities to compete in the rapidly expanding global economy.
Exports equate to jobs. Jobs equate to more money in hard-working
Americans' pockets. More money in Americans' pockets means more money
for Americans to save and invest in their futures.
Bribery and corruption also harm the country receiving the aid
because bribery and corruption often inflate the cost of international
development projects. For example, state sponsorship of massive
infrastructure projects that are deliberately beyond the required
specification needed to meet the objective is a common example of
waste, fraud, and abuse inherent in corrupt procurement practices.
Here, the cost of corruption is not the amount of the bribe itself, but
the inefficient use of resources the bribes encourage.
Bribery and corruption have short and long term negative effects upon
the nation receiving aid. The short term effect is that bribery and
corruption drive up the cost of the infrastructure project. Companies
are forced to increase prices to cover the cost of bribes they are
forced to pay. A 2% bribe on a contract is said to raise costs by 15%.
The aggregate or long term effect of this type of corruption is that,
over time, tax revenues will have to be raised or diverted from other
more deserving projects to fund the excesses in these projects. Higher
taxes and the inefficient use of resources both hinder growth.
The World Bank and the IMF both recognize the link between bribery
and corruption, and decreased economic growth. Recent studies also
indicate that high levels of corruption are associated with low levels
of investment and growth. These studies illustrate that corruption
discourages direct investment, which results in decreased economic
growth. Furthermore, corruption lessens the effectiveness of industrial
policies and encourages businesses to operate in the unofficial sector
in violation of tax and regulatory laws. Most important, corruption
begins a cycle where corruption breeds more corruption and discourages
legitimate investment. In short, bribery and corruption create ``lose
lose'' situation for the U.S. and developing nations.
The U.S. recognizes the damaging effects bribery and corruption have
at home and abroad. The U.S. continues to combat foreign corruption,
waste, and abuse on many fronts: from prohibiting U.S. firms from
bribing foreign officials, to leading the anti-corruption efforts in
the United Nations, the Organization of American States, and the
Organization for Economic Cooperation and Development (``OECD''). The
U.S. was the first country to enact legislation (the Foreign Corrupt
Practices Act) to prohibit its nationals and corporations from bribing
foreign public officials in international and business transactions.
However, we must do more. Our current efforts must expand. The FCPA
prevents U.S. nationals and corporations from bribing foreign
officials. It does nothing to prevent foreign nationals and
corporations from bribing foreign officials to obtain foreign
contracts. Valuable taxpayer resources are often diverted or squandered
because of corrupt officials or the use of non-transparent
specifications, contract requirements and the like in international
procurements for goods and services. Such corrupt practices also
minimize competition and prevent the recipient nation or agency from
receiving the full value of the goods and services for which it
bargained. In addition, despite the importance of international markets
to U.S. goods and services providers, many U.S. companies refuse to
participate in international procurements that may be corrupt.
This legislation is designed to provide a mechanism to ensure, to the
extent possible, the integrity of the U.S. contribution to the
multilateral lending institutions and other non-humanitarian U.S.
foreign aid. Corrupt international procurements, often funded by these
multilateral banks, weaken democratic institutions and undermine the
very opportunities that multilateral lending institutions were founded
to promote. This bill will encourage and support the development of
transparent government procurement capacity, which is vital for
emerging democracies constructing a government procurement
infrastructure that can sustain market economies in the developing
world.
Mr. President, I am committed to combating the waste, fraud and abuse
resulting from bribery and corruption in international development
projects. Procurement reforms and independent procurement monitoring
are key to policing complicated international procurements, which are
often plagued by corruption, inefficiency and other problems. These
problems thwart the economic development purpose of multilateral
assistance and make it more difficult for U.S. companies to compete for
valuable large-scale international development projects.
Mr. President, on behalf of the millions of Americans who will
benefit from increased opportunities for U.S. businesses to participate
in the global economy, and the billions of people in developing nations
throughout the world who are desperate for economic assistance, I urge
my colleagues to support this legislation and demonstrate their
continued commitment to the orderly evolution of the global economy
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and the efficient use of American economic assistance.
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. 2618
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 ``Fair Competition in Foreign
Commerce Act''.
SEC. 2. FINDINGS AND STATEMENT OF PURPOSE.
(a) Findings.--Congress finds that--
(1) The United States makes substantial contributions and
provides significant funding for major international
development projects through the International Bank for
Reconstruction and Development, the International Development
Association, the International Finance Corporation, the
Inter-American Development Bank, the International Monetary
Fund, the Asian Development Bank, the Inter-American
Investment Corporation, the North American Development Bank,
the African Development Fund, and other multilateral lending
institutions.
(2) These international development projects are often
plagued with fraud, corruption, waste, inefficiency, and
misuse of funding.
(3) Fraud, corruption, waste, inefficiency, misuse, and
abuse are major impediments to competition in foreign
commerce throughout the world.
(4) Identifying these impediments after they occur is
inadequate and meaningless.
(5) Detection of impediments before they occur helps to
ensure that valuable United States resources contributed to
important international development projects are used
appropriately.
(6) Independent third-party procurement monitoring is an
important tool for detecting and preventing such impediments.
(7) Third-party procurement monitoring includes evaluations
of each stage of the procurement process and assures the
openness and transparency of the process.
(8) Improving transparency and openness in the procurement
process helps to minimize fraud, corruption, waste,
inefficiency, and other misuse of funding, and promotes
competition, thereby strengthening international trade and
foreign commerce.
(b) Purpose.--The purpose of this Act is to build on the
excellent progress associated with the Organization on
Economic Development and Cooperation Agreement on Bribery and
Corruption, by requiring the use of independent third-party
procurement monitoring as part of the United States
participation in multilateral development banks and other
lending institutions and in the disbursement of
nonhumanitarian foreign assistance funds.
SEC. 3. DEFINITIONS.
(a) Definitions.--In this Act:
(1) Appropriate committees.--The term ``appropriate
committees'' means the Committee on Commerce, Science, and
Technology of the Senate and the Committee on Commerce of the
House of Representatives.
(2) Independent third-party procurement monitoring.--The
term ``independent third-party procurement monitoring'' means
a program to--
(A) eliminate bias,
(B) promote transparency and open competition, and
(C) minimize fraud, corruption, waste, inefficiency, and
other misuse of funds,
in international procurement through independent evaluation
of the technical, financial, economic, and legal aspects of
the procurement process.
(3) Independent.--The term ``independent'' means that the
person monitoring the procurement process does not render any
paid services to private industry and is neither owned or
controlled by any government or government agency.
(4) Each stage of procurement.--The term ``each stage of
procurement'' means the development and issuance of technical
specifications, bidding documents, evaluation reports,
contract preparation, and the delivery of goods and services.
(5) Multilateral development banks and other lending
institutions.--The term ``multilateral development banks and
other lending institutions'' means the International Bank for
Reconstruction and Development, the International Development
Association, the International Finance Corporation, the
Inter-American Development Bank, the International Monetary
Fund, the Asian Development Bank, the Inter-American
Investment Corporation, the North American Development Bank,
and the African Development Fund.
SEC. 4. REQUIREMENTS FOR FAIR COMPETITION IN FOREIGN
COMMERCE.
(a) In General.--Not later than 180 days after the date of
enactment of this Act, the Secretary of the Treasury shall
transmit to the President and to appropriate committees of
Congress a strategic plan for requiring the use of
independent third-party procurement monitoring and other
international procurement reforms relating to the United
States participation in multilateral development banks and
other lending institutions.
(b) Strategic Plan.--The strategic plan shall include an
instruction by the Secretary of the Treasury to the United
States Executive Director of each multilateral development
bank and lending institution to use the voice and vote of the
United States to oppose the use of funds appropriated or made
available by the United States for any non-humanitarian
assistance, until--
(1) the recipient international financial institution has
adopted an anticorruption plan that requires the use of
independent third-party procurement monitoring services and
ensures openness and transparency in government procurement;
and
(2) the recipient country institutes specific strategies
for minimizing corruption and maximizing transparency in each
stage of the procurement process.
(c) Annual Reports.--Not later than June 29th of each year,
the Secretary of the Treasury shall report to Congress on the
progress in implementing procurement reforms made by each
multilateral development bank and lending institution and
each country that received assistance from a multilateral
development bank or lending institution during the preceding
year.
(d) Restrictions on Assistance.--Notwithstanding any other
provision of law, no funds appropriated or made available for
nonhumanitarian foreign assistance programs, including the
activities of the Agency for International Development, may
be expended for those programs unless the recipient country,
multilateral development bank or lending institution has
demonstrated that--
(1) procurement practices are open, transparent, and free
of corruption, fraud, inefficiency, and other misuse, and
(2) independent third-party procurement monitoring has been
adopted and is being used by the recipient.
SEC. 5. EXCEPTIONS.
(a) National Security Interest.--Section 4 shall not apply
with respect to a country if the President determines with
such respect to such country that making funds available is
important to the national security interest of the United
States. Any such determination shall cease to be effective 6
months after being made unless the President determines that
its continuation is important to the national security
interest of the United States.
(b) Other Exceptions.--Section 4 shall not apply with
respect to assistance to--
(1) meet urgent humanitarian needs (including providing
food, medicine, disaster, and refugee relief);
(2) facilitate democratic political reform and rule of law
activities;
(3) create private sector and nongovernmental organizations
that are independent of government control; and
(4) facilitate development of a free market economic
system.
______
By Mr. DASCHLE:
S. 2619. A bill to amend title 38, United States Code, to improve
access of veterans to emergency medical care in non-Department of
Veterans Affairs medical facilities; to the Committee on Veterans'
Affairs.
The Veterans' Access to Emergency Health Care Act of 1998
Mr. DASCHLE. Mr. President, as we near the end of the 105th Congress,
I would again like to voice my frustration about the fact that the
United States Senate failed to consider and pass important legislation
this year that could have greatly benefited the American people.
Unfortunately, the highway leading to adjournment is littered with
legislation that should have been considered, passed and enacted long
ago, including efforts to prevent teen smoking, modernize our public
schools, and increase the minimum wage.
I am particularly disappointed that my colleagues on the other side
of the aisle prevented the United States Senate from considering
managed care reform legislation. Yesterday, Senate Republicans even
prevented us from proceeding to their own HMO reform bill. Time and
again, the American people have said they want a comprehensive,
enforceable Patients' Bill of Rights. Toward that goal, several of my
Democratic colleagues and I introduced the Patients' Bill of Rights Act
of 1998. That legislation addressed a growing concern among the
American people about the quality of care delivered by health
maintenance organizations. Despite enormous public support for HMO
reform, Democratic efforts to consider the Patients' Bill of Rights
were stymied at every turn.
For months, it has been my intention to offer an amendment to the HMO
reform legislation regarding a serious deficiency in veterans' access
to emergency health care. I was prepared to do so yesterday. Since the
Senate was again precluded from debating managed care reform, however,
I would like to call attention to this matter before the 105th Congress
adjourns by introducing the Veterans' Access to Emergency Health Care
Act of 1998 as a separate bill. I hope my colleagues will
[[Page S12315]]
support this legislation when I introduce it again in the 106th
Congress, when I am confident the United States Senate will finally
have the opportunity to consider meaningful HMO reform legislation.
The problem addressed in this bill stems from the fact that veterans
who rely on the Department of Veterans Affairs (VA) for health care
often do not receive reimbursement for emergency medical care they
receive at non-VA facilities. According to the VA, veterans may only be
reimbursed by the VA for emergency care at a non-VA facility that was
not pre-authorized if all of the following criteria are met:
First, care must have been rendered for a medical emergency of such
nature that any delay would have been life-threatening; second, the VA
or other federal facilities must not have been feasibly available; and,
third, the treatment must have been rendered for a service-connected
disability, a condition associated with a service-connected disability,
or for any disability of a veteran who has a 100-percent service-
connected disability.
Many veterans who receive emergency health care at non-VA facilities
are able to meet the first two criteria. Unless they are 100-percent
disabled, however, they generally fail to meet the third criterion
because they have suffered heart attacks or other medical emergencies
that were unrelated to their service-connected disabilities.
Considering the enormous costs associated with emergency health care,
current law has been financially and emotionally devastating to
countless veterans with limited income and no other health insurance.
The bottom line is that veterans are forced to pay for emergency care
out of their own pockets until they can be stabilized and transferred
to VA facilities.
During medical emergencies, veterans often do not have a say about
whether they should be taken to a VA or non-VA medical center. Even
when they specifically ask to be taken to a VA facility, emergency
medical personnel often transport them to a nearby hospital instead
because it is the closest facility. In many emergencies, that is the
only sound medical decision to make. It is simply unfair to penalize
veterans for receiving emergency medical care at non-VA facilities.
Veterans were asked to make enormous sacrifices for this county, and we
should not turn our backs on them during their time of need.
There should be no misunderstanding. This is a widespread problem
that affects countless veterans in South Dakota and throughout the
country. I would like to cite just three examples of veterans being
denied reimbursement for emergency care at non-VA facilities in western
South Dakota.
The first involves Edward Sanders, who is a World War II veteran from
Custer, South Dakota. On March 6, 1994, Edward was taken to the
hospital in Custer because he was suffering chest pains. He was
monitored for several hours before a doctor at the hospital called the
VA Medical Center in Hot Springs and indicated that Edward was in need
of emergency services. Although Edward asked repeatedly to be taken to
a VA facility, he was transported by ambulance to Rapid City Regional
Hospital, where he underwent a cardiac catheterization and coronary
artery bypass grafting. Because the emergency did not meet the criteria
I mentioned previously, the VA did not reimburse Edward for the care he
received at Rapid City Regional. His medical bills totaled more than
$50,000.
On May 17, 1997, John Lind suffered a heart attack while he was at
work. John is a Vietnam veteran exposed to Agent Orange who served his
country for 14 years until he was discharged in 1981. John lives in
Rapid City, South Dakota, and he points out that he would have asked to
be taken to the VA Medical Center in Fort Meade for care, but he was
semi-unconscious, and emergency medical personnel transported him to
Rapid City Regional. After 4 days in the non-VA facility, John incurred
nearly $20,000 in medical bills. Although he filed a claim with the VA
for reimbursement, he was turned down because the emergency was not
related to his service-connected disability.
Just over one month later, Delmer Paulson, a veteran from Quinn,
South Dakota, suffered a heart attack on June 26, 1997. Since he had no
other health care insurance, he asked to be taken to the VA Medical
Center in Fort Meade. Again, despite his request, the emergency medical
personnel transported him to Rapid City Regional. Even though Delmer
was there for just over a day before being transferred to Fort Meade,
he was charged with almost a $20,000 medical bill. Again, the VA
refused to reimburse Delmer for the unauthorized medical care because
the emergency did not meet VA criteria.
The Veterans' Access to Emergency Health Care Act of 1998, which I am
introducing today, would address this serious problem. It would
authorize the VA to reimburse veterans enrolled in the VA health care
system for the cost of emergency care or services received in non-VA
facilities when there is ``a serious threat to the life or health of a
veteran.'' Rep. Lane Evans has introduced identical legislation in
House of Representatives.
Although I am extremely disappointed that the United States Senate
did not debate meaningful managed care reform legislation this year, I
am hopeful the American people will continue to urge their elected
representatives to pass a comprehensive, enforceable Patients' Bill of
Rights early next year. I am equally hopeful that any meaningful HMO
reform legislation will address this serious deficiency in veterans'
access to emergency health care. I look forward to continuing to work
with my colleagues on both sides of the aisle to ensure that veterans
receive the health care they deserve.
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. 2619
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 ``Veterans' Access to
Emergency Care Act of 1998''.
SEC. 2. DEPARTMENT OF VETERANS AFFAIRS ENROLLMENT SYSTEM
DECLARED TO BE A HEALTH CARE PLAN.
Section 1705 of title 38, United States Code, is amended by
adding at the end the following new subsection:
``(d) The enrollment system under subsection (a) is a
health care plan, and the veterans enrolled in that system
are enrollees and participants in a health care plan.''.
SEC. 3. EMERGENCY HEALTH CARE IN NON-DEPARTMENT OF VETERANS
AFFAIRS FACILITIES FOR ENROLLED VETERANS.
(a) Contract Care.--Section 1703(a)(3) of title 38, United
States Code, is amended by inserting ``who is enrolled under
section 1705 of this title or who is'' after ``health of a
veteran''.
(b) Definition of Medical Services.--Section 1701(6) of
such title is amended--
(1) by striking out ``and'' at the end of subparagraph (A);
(2) by striking out the period at the end of subparagraph
(B) and inserting in lieu thereof ``; and''; and
(3) by inserting after subparagraph (B) the following new
subparagraph:
``(C) emergency care, or reimbursement for such care, as
described in sections 1703(a)(3) and 1728(a)(2)(E) of this
title.''.
(c) Reimbursement of Expenses for Emergency Care.--Section
1728(a)(2) of such title is amended--
(1) by striking out ``or'' before ``(D)''; and
(2) by inserting before the semicolon at the end the
following: ``, or (E) for any medical emergency which poses a
serious threat to the life or health of a veteran enrolled
under section 1705 of this title''.
(d) Payment Priority.--Section 1705 of such title, as
amended by section 2, is further amended by adding at the end
the following new subsection:
``(e) The Secretary shall require in a contract under
section 1703(a)(3) of this title, and as a condition of
payment under section 1728(a)(2) of this title, that payment
by the Secretary for treatment under such contract, or under
such section, of a veteran enrolled under this section shall
be made only after any payment that may be made with respect
to such treatment under part A or part B of the Medicare
program and after any payment that may be made with respect
to such treatment by a third-party insurance provider.''.
(e) Effective Date.--The amendments made by this section
shall apply with respect to care or services provided on or
after the date of the enactment of this Act.
______
By Mr. ROBB:
S. 2620. A bill to amend the Federal Water Pollution Control Act to
establish a National Clean Water Trust Fund and to authorize the
Administrator of the Environmental Protection Agency to use amounts in
the Fund to carry out projects to promote the recovery of waters of the
United States
[[Page S12316]]
from damage resulting from violations of that act, and for other
purposes; to the Committee on Environment and Public Works.
National Clean Water Trust Fund Act of 1998
Mr. ROBB. Mr. President, today I introduce a bill that will
help clean up and restore our nation's waters. This bill, the National
Clean Water Trust Fund Act of 1998, creates a trust fund from fines,
penalties and other monies collected through enforcement of the Clean
Water Act. The money deposited into the National Clean Water Trust Fund
would be used to address the pollution problems that initiated those
enforcement actions.
Last year, a highly publicized case in Virginia illustrated the need
for this legislation. On August 8, 1997, U.S. District Court Judge
Rebecca Smith issued a $12.6 million judgement, the largest fine ever
levied for violations of the Clean Water Act, against Smithfield Foods,
Isle of Wright County, Virginia, for polluting the James River. The
Judge wrote in her opinion that the civil penalty imposed on Smithfield
should be directed toward the restoration of the Pagan and James
Rivers, tributaries of the Chesapeake Bay. Unfortunately, due to
current federal budget laws, the court had no discretion over the
damages, and the fine was deposited into the Treasury's general fund,
defeating the very spirit of the Clean Water Act.
Today, there is no guarantee that fines or other money levied against
parties who violate provisions in the Clean Water Act will be used to
correct water problems. Instead, some, if not all, of the money is
directed into the general fund of the U.S. Treasury with no provision
that it be used to improve the quality of our water. While the
Environmental Protection Agency's enforcement activities are extracting
large sums of money from industry and others through enforcement of the
Clean Water Act, we ignore the fundamental issue of how to pay for
clean up and restoration of pollution problems for which the penalties
were levied. To ensure the successful implementation of the Clean Water
Act, we should put these enforcement funds to work and actually clean
up our nation's waters.
This legislation will establish a National Clean Water Trust Fund
within the U.S. Treasury to earmark fines, penalties, and other funds,
including consent decrees, obtained through enforcement of the Clean
Water Act that would otherwise be placed into the Treasury's general
fund. Within the provisions of the bill, the EPA Administrator would be
authorized, with direct consultation from the states, to prioritize and
carry out projects to restore and recover waters of the United States
using the funds collected from violations of the Clean Water Act. This
legislation, however, would not preempt citizen suits or in any way
preclude EPA's authority to undertake and complete supplemental
environmental projects as part of settlements related to violations of
the Clean Water Act and/or other legislation. The bill also provides
court discretion over civil penalties from Clean Water Act violations
to be used to carry out mitigation and restoration projects. With this
legislation, we can avoid another predicament like the one faced in
Virginia.
Mr. President, it only makes sense that fines occurring from
violations of the Clean Water Act be used to clean up and restore the
waters that were damaged. This bill provides a real opportunity to
improve the quality of our nation's waters.
I recognize that no action can be taken on this legislation this
session. I introduce it today in order to give my colleagues, the
Administration and others an opportunity to examine the ideas contained
in the legislation. I will introduce this legislation early in the next
Congress and hope we can include it in the reauthorization of the Clean
Water Act when it is taken up next year.
Mr. President, I ask unanimous consent that the full 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. 2620
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 ``National Clean Water Trust
Fund Act of 1998''.
SEC. 2. NATIONAL CLEAN WATER TRUST FUND.
Section 309 of the Federal Water Pollution Control Act (33
U.S.C. 1319) is amended by adding at the end the following:
``(h) National Clean Water Trust Fund.--
``(1) Establishment.--There is established in the Treasury
a National Clean Water Trust Fund (referred to in this
subsection as the `Fund') consisting of amounts transferred
to the Fund under paragraph (2) and amounts credited to the
Fund under paragraph (3).
``(2) Transfer of amounts.--For fiscal year 1998, and each
fiscal year thereafter, the Secretary of the Treasury shall
transfer to the Fund an amount determined by the Secretary to
be equal to the total amount deposited in the general fund of
the Treasury in the preceding fiscal year from fines,
penalties, and other funds obtained through enforcement
actions conducted pursuant to this section and section
505(a)(1), including any amounts obtained under consent
decrees and excluding any amounts ordered to be used to carry
out mitigation projects under this section or section 505(a).
``(3) Investment of amounts.--
``(A) In general.--The Secretary of the Treasury shall
invest in interest-bearing obligations of the United States
such portion of the Fund as is not, in the Secretary's
judgment, required to meet current withdrawals.
``(B) Administration.--The obligations shall be acquired
and sold and interest on, and the proceeds from the sale or
redemption of, the obligations shall be credited to the Fund
in accordance with section 9602 of the Internal Revenue Code
of 1986.
``(4) Use of amounts for remedial projects.--Amounts in the
Fund shall be available, as provided in appropriations Acts,
to the Administrator to carry out projects to restore and
recover waters of the United States from damage resulting
from violations of this Act that are subject to enforcement
actions under this section and similar damage resulting from
the discharge of pollutants into the waters of the United
States.
``(5) Selection of projects.--
``(A) Priority.--In selecting projects to carry out under
this subsection, the Administrator shall give priority to a
project to promote the recovery of waters of the United
States from damage described in paragraph (4), if an
enforcement action conducted pursuant to this section or
section 505(a)(1) with respect to the violation, or another
violation of this Act in the same administrative region of
the Environmental Protection Agency as the violation,
resulted in amounts being deposited in the general fund of
the Treasury.
``(B) Consultation with states.--In selecting projects to
carry out under this section, the Administrator shall consult
with States in which the Administrator is considering
carrying out a project.
``(C) Allocation of amounts.--In determining an amount to
allocate to carry out a project to restore and recover waters
of the United States from damage described in paragraph (4),
the Administrator shall, in the case of a priority project
described in subparagraph (A), take into account the total
amount deposited in the general fund of the Treasury as a
result of enforcement actions conducted with respect to the
violation pursuant to this section or section 505(a)(1).
``(6) Implementation.--The Administrator may carry out a
project under this subsection directly or by making grants
to, or entering into contracts with, another Federal agency,
a State agency, a political subdivision of a State, or any
other public or private entity.
``(7) Report to congress.--Not later than 1 year after the
date of the enactment of this subsection, and every 2 years
thereafter, the Administrator shall submit to Congress a
report on implementation of this subsection.''.
SEC. 3. USE OF CIVIL PENALTIES FOR MITIGATION PROJECTS.
(a) In General.--Section 309(d) of the Federal Water
Pollution Control Act (33 U.S.C. 1319(d)) is amended by
inserting after the second sentence the following: ``The
court may order that a civil penalty be used for carrying out
mitigation, restoration, or other projects that are
consistent with the purposes of this Act and that enhance
public health or the environment.''.
(b) Conforming Amendment.--Section 505(a) of the Federal
Water Pollution Control Act (33 U.S.C. 1365(a)) is amended in
the last sentence by inserting before the period at the end
of the following: ``, including ordering the use of a civil
penalty for carrying out mitigation, restoration, or other
projects in accordance with section 309(d)''.
______
By Mr. DOMENICI (for himself and Mr. Bingaman):
S. 2621. A bill to authorize the acquisition of the Valles Caldera
currently managed by the Baca Land and Cattle Company, to provide for
an effective land and wildlife management program for this resource
within the Department of Agriculture through the private sector, and
for purposes; to the Committee on Energy and Natural Resources.
the valles caldera preservation act
Mr. DOMENICI. Mr. President, the Valles Caldera in Northern New
Mexico
[[Page S12317]]
is a place you visit for a day, and long to return to for a life time.
It is nature at its most extraordinary--an almost perfectly round bowl
formed by a collapsed volcano. It is a place with rolling meadows,
crystal-clear streams, roaming elk, Ponderosa pines and quaking Aspen
trees, and Golden eagles. This legislation guarantees that this very
special place will be there for future generations to visit and
remember.
I am very proud to be introducing legislation that will authorize the
Secretary of the Interior to acquire a truly unique 95,000 acre
``working ranch'' in New Mexico, known alternatively as the Baca Ranch,
the Valle Grande, and the Valles Caldera. Independently, but as
importantly, this legislation also addresses longstanding problems
encountered by Federal land managers in disposing of surplus federal
property and the acquisition of private inholdings within federal
management areas.
The former provides a unique solution to the management of a unique
property, while the latter builds on existing laws and provides
resources dedicated to the consolidation of federal agency land
holdings.
In north-central New Mexico there is a truly unique working ranch on
an historic Mexican land grant known as Baca Location No. 1. The Ranch
is currently owned and managed by the Baca Land and Cattle Company, and
it comprises most of a collapsed, extinct volcano known as the Valles
Caldera. This ranch also contains innumerable significant cultural,
historic, recreational, ecological, and productive resources.
The bill I introduce today is the result of months of negotiation
with the Administration, Senator Bingaman, and Congressman Redmond. We
have incorporated ideas from groups interested in the acquisition of
the truly unique Baca Ranch. Many Americans, especially New Mexicans
have expressed a desire for the federal government to purchase the
Ranch. After months of research and consideration, I met with President
Clinton on Air Force One while we were both returning to Washington
from New Mexico to discuss the possibility of this land acquisition.
Because the nature of the property requires a unique operational
program for appropriate development and preservation, I approached him
with an innovative trust structure for the management of the Baca
Ranch. This trust would manage the ranch with appropriate public input
and governmental oversight. I indicated that I was not interested in
having the ranch managed under current federal agency practices. The
President expressed enthusiasm for making this concept a reality, and
we agreed on a Statement of Principles to govern the acquisition of the
Baca Ranch at the end of July.
This unique working ranch has been well maintained and preserved by
the current owners. In fact, if ever there was an example of sterling
stewardship of a piece of property, this is it.
The legislation introduced today certainly cannot pass this year:
unfortunately, time has run out for the 105th Congress, but many
concerns and ideas about federal purchase of the property will be
discussed at hearings upon reintroduction in the 106th Congress. While
there is consenus that this property should be acquired, we do not yet
know the cost of the property. The Baca Ranch is estimated to be worth
approximately $100 to $125 million, but the appraisal has not yet been
given to the Forest Service or made public. Therefore, the exact cost
of acquisition has yet to be determined.
This is the largest purchase of public land by the Forest Service in
at least 25 years, therefore, it is imperative that careful
consideration is given to not only the purchase, but to the management
of the property as well.
In past years, federal land management agencies have been criticized
for their stewardship of public lands. I find it ironic that many of
the groups who wish to bring this ranch into government ownership are
the same groups who, in recent years, have initiated relentless
litigation against the Forest Service and BLM alleging poor management
of federal lands. However, diverse interests have come together to
reach agreement on the trust management of the Ranch, and Congressman
Redmond and I have worked hard in both Houses of Congress to obtain
funding for purchase. Any funding at this point should be viewed as
earnest money, and will be subject to this authorization and agreement
on the fair market value for the property.
The parties have really worked hard in framing this legislation, and
there are still a few issues we would like to work out. Not the least
of which includes the interest expressed by the Santa Clara Pueblo in
purchasing land outside the Caldera, but contains the headwaters of the
Santa Clara Creek. Negotiations between the Pueblo, the Administration,
the current owners of the property, and the congressional delegation on
how to resolve this issue was not completed prior to today's
introduction. However, all parties are interested in continuing
discussion regarding a potential Santa Clara purchase of property
adjacent to their pueblo. I also note that Congressman Redmond has
expressed specific interest in addressing other Native American issues
regarding the Ranch acquisition.
I have visited the Baca Ranch, and I can tell you that it is one
beautiful piece of property. The Valles Caldera is one of the world's
largest resurgent lava domes with potential geothermal activity. The
depression from a hugh volcanic eruption over a million years ago is
more than a half-mile deep and fifteen miles across at its widest
point. The land was originally granted to the heirs of Don Luis Maria
Cabeza de Vaca under a settlement enacted by Congress in 1860. Since
that time, the property has remained virtually intact as a single,
large, tract of land.
Historical evidence in the form of old logging camps and other
artifacts, and a review of the history of territorial New Mexico
clearly show the importance of this land over many generations for the
rearing of domesticated livestock, and as a timber supply for local
inhabitants. Several film sets have been left standing on the property,
representing a significant part of the history of the American film
industry and its depiction of the American West.
The careful husbandry of the Ranch by the Dunigan family, the current
owners, including selective harvesting of timber, limited grazing and
hunting, and the use of proscribed fire, have preserved a mix of
healthy range and timber land with significant species diversity
providing a model for sustainable land development and use. The Ranch's
natural beauty and abundant resources, and its proximity to large
municipal populations could provide numerous recreational opportunities
for hiking, fishing, camping, cross-country skiing, and hunting.
Mr. President, the Baca Location is a unique working ranch. It is not
a wilderness area, as in the words of the Wilderness Act, ``untrammeled
by man, where man is a visitor who does not remain.'' Man has been
there for many generations, and will remain for many to come.
Similarly, it is not a resource that could be run well as a national
park. This ranch can best be protected for future generations by
continuing its operation as a working asset through a unique management
structure. This legislation provides unique management under a trust
that may allow for its eventual operation to become financially self-
sustaining.
Mr. President, recent indication by the current owners of the Baca
Location that they wish to sell the ranch has created an opportunity
for us to acquire it into public ownership and allow for appropriate
public access and enjoyment of these lands for the first time since
1860. Because of the ranch's unique character, however, I am not
interested in having it managed under the usual federal authorities, as
is typical of the Forest Service, Bureau of Land Management, or the
National Park Service. Under the current state of affairs on our public
lands, Forest Service and BLM management is constantly hounded by
litigation initiated by some of the same groups that wish to bring this
ranch into government ownership. I do not want to take this property,
put it in that situation, and then claim we have done a great thing.
This legislation represents an opportunity to experiment with a
different kind of public land management scheme. Burdensome
regulations, and litigation resulting therefrom, have brought federal
land management practices rapidly towards gridlock. The Valles Caldera
National Preserve will
[[Page S12318]]
serve as a model to explore alternative means of federal management and
will provide the American people with opportunities to enjoy the Valles
Caldera and its many resources for generations to come.
This trust idea, based on similar legislation for federal management
of the Presidio in San Francisco, sets in motion a truly unique
management scheme befitting this truly unique place. I am willing to
take a chance on an innovative approach because I believe that the
current quagmire of federal land management simply does not do justice
to this very special place. The unique nature of the Valles Caldera,
and its resources, requires a unique management program, dedicated to
appropriate development and preservation under the principle of the
highest and best use of the ranch in the interest of the public.
Mr. President, title I of this legislation provides the framework
necessary to fulfil that objective. It authorizes the acquisition of
the Baca ranch by the appropriate Federal agency. At the same time, it
establishes a government-owned corporation, called the Valles Caldera
Trust, whose sole responsibility is to ensure that the ranch is managed
in a manner that will preserve its current unique character, and
provide enumerable opportunities for the American people to enjoy its
splendor. Most importantly to me, however, the legislation will allow
for the ranch's continued operation as a working asset for the people
of north-central New Mexico, without further drawing on the thinly-
stretched resources of the Federal land management agencies.
I am looking forward to hearings on this legislation next year, and
know that the legislative process shall enlighten us further as to the
complex nature of the Ranch. I, personally, am greatly looking forward
to seeing an value estimate of the land prior to authorization. While
valued between $37 and $55 million in 1980, I have heard that the Baca
ranch is currently estimated to be worth approximately $100 to $125
million. I do not know how such inflation will affect the likelihood of
the location's federal acquisition. I do know that we have waited
patiently for many months for a promised appraisal from the current
owners, but an appraisal has not yet been complete nor have any other
offers to purchase the land been made. Therefore, the exact cost of
acquisition has yet to be determined. Before we commit large sums of
federal taxpayer dollars to purchase new property, it seems prudent to
provide a solution for the orderly disposal of surplus federal property
and to meet our current obligations to those who hold lands within
federal properties.
I would like to emphasize that while both portions of this bill are
important to federal land management, both in New Mexico and
nationwide, my intention is not to tie federal acquisition of the Baca
upon disposition of surplus federal land. Instead, I feel this
legislation independently addresses the acquisition of this unique
property for public use and enjoyment, while solving current land
management problems.
Currently, New Mexico has approximately one-third of its land in
public ownership or management. I agree that these public lands are an
important natural resource that require our most thoughtful management.
In order to conserve our existing National treasures for future use
and enjoyment, we must devise, with the concurrence of other members of
Congress and the President, a definite plan and timetable to dispose of
surplus land through sale or exchange into private ownership.
Title II of this legislation addresses the orderly disposition of
surplus federal property on a state by state basis. It also addresses
the problem of what is known as ``inholdings'' within federally managed
areas. There are currently more than 45 million acres of privately
owned lands trapped within the boundaries of Federal land management
units, including national parks, national forests, national monuments,
national wildlife refuges, and wilderness areas. The location of these
tracts, referred to as inholdings, makes the exercise of private
property rights difficult for the land owner. In addition, management
of the public lands is made more cumbersome for the federal land
managers.
In many cases, inholders have been waiting generations for the
federal government to set aside funding and prioritize the acquisition
of their property. With rapidly growing public demand for the use of
public lands, it is increasingly difficult for federal managers to
address problems created by the existence of inholdings in many areas.
This legislation directs the Department of the Interior and the
Department of Agriculture to survey inholdings existing within Federal
land management units, and to establish a priority for their
acquisition, on a willing seller basis, in the order of those which
have existed as inholdings for the longest time to those most recently
being incorporated into the Federal unit.
Closely related to the problem created by inholdings within Federal
land management units, is the abundance of public domain land which the
Bureau of Land Management (BLM) has determined it no longer needs to
fulfil its mission. Under the Federal Land Policy and Management Act of
1976 (FLPMA), the BLM has identified an estimated four to six million
acres of public domain lands for disposal, and the agency anticipates
that additional public land will be similarly identified, with public
input and consultation with State and local governments as required by
law.
Mr. President, let me simply clarify that point--the BLM already has
authority under an existing law, FLPMA, to exchange or sell lands out
of Federal ownership. Through its public process for land use planning,
when the agency has determined that certain lands would be more useful
to the public under private or local governmental control, it is
already authorized to dispose of these lands, either by sale or
exchange.
The sale or exchange of this land which I have often referred to as
``surplus,'' would be beneficial to local communities, adjoining land
owners, and BLM land mangers, alike. First, it would allow for the
reconfiguration of land ownership patterns to better facilitate
resource management. Second, it would contribute to administrative
efficiency within federal land management units, by allowing for better
allocation of fiscal and human resources within the agency. Finally, in
certain locations, the sale of public land which has been identified
for disposal is the best way for the public to realize a fair value for
this land.
The problem, Mr. President, is that an orderly process for the
efficient disposition of lands identified for disposal does not
currently exist. This legislation addresses that problem by directing
the BLM to fulfil all legal requirements for the transfer of these
lands out of Federal ownership, and providing a dedicated source of
funding generated from the sale of these lands to continue this
process.
Additionally, this legislation authorizes the use of the proceeds
generated from these lands to purchase inholdings from willing sellers.
This will enhance the ability of the Federal land management agencies
to work cooperatively with private land owners, and with State and
local governments, to consolidate the ownership of public and private
land in a manner that would allow for better overall resource
management.
Mr. President, I want to make it clear that this program will in no
way detract from other programs with similar purposes. The bill clearly
states that proceeds generated from the disposal of public land, and
dedicated to the acquisition of inholdings, will supplement, and not
replace, funds appropriated for that purpose through the Land and Water
Conservation Fund. In addition, the bill states that the Bureau of Land
Management should rely on non-Federal entities to conduct appraisals
and other research required for the sale or exchange of these lands,
allowing for the least disruption of existing land and resource
management programs.
Mr. President, this bill has been a long time in the making. For over
a year, now, I have been working with and talking to knowledgeable
people, both inside and outside of the current administration, to
develop many of the ideas embodied in this bill. In recent weeks, my
staff and I have worked closely with the administration on this
legislation. I feel comfortable in stating that by working together, we
have
[[Page S12319]]
reached agreement in principle on the best way to proceed with these
very important issues involving the management of public land
resources, namely; the acquisition and unique management plan for the
Baca ranch in New Mexico, and just as importantly, the disposition of
surplus public lands in combination with a program to address problems
associated with inholdings within our Federal land management units.
Mr. President, I have committed to the administration to continue to
work with them on three or four areas of this bill, where concerns
remain. I have full confidence, however, that we can address these
issues through the legislative process in the next Congress. For
example, the need for additional roads, parking, visitor facilities,
and water and mineral rights are also important issues that must be
resolved. However, we are very luck to have the pleasure of a
bipartisan, administration approved, legislative concept from which to
work.
The Senate Energy and Natural Resources Committee will schedule
hearings to address the many issues regarding Federal purchase of the
Baca Ranch early in the 106th Congress. Hopefully, by that time, an
appraisal will be available for review. Congress has tried to resolve
the difficult challenges in acquiring this property before, and failed;
cooperation among the parties may bring success this time around. I
believe that in the end, we will be able to stand together and tell the
American people that we truly have accomplished two great and
innovative things with this legislation.
Mr. President, I ask unanimous consent that the text of the bill and
Statement of Principles be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 2621
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
TITLE I--VALLES CALDERA NATIONAL PRESERVE AND TRUST
SECTION 101. SHORT TITLE.
This title may be cited as the ``Valles Caldera
Preservation Act''.
SEC. 102. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds that--
(1) the Baca ranch, owned and managed by the Baca Land and
Cattle Company, comprises most of the Valles Caldera in
central New Mexico, and constitutes a unique land mass, with
significant scientific, cultural, historic, recreational,
ecological, wildlife, fisheries, and productive values;
(2) the Valles Caldera is a large resurgent lava dome with
potential geothermal activity;
(3) the land comprising the Baca ranch was originally
granted to the heirs of Don Luis Maria Cabeza de Vaca in
1860;
(4) historical evidence in the form of old logging camps,
and other artifacts, and the history of territorial New
Mexico indicate the importance of this land over many
generations for domesticated livestock production and timber
supply;
(5) the careful husbandry of the Baca ranch by the Dunigan
family, the current owners, including selective timbering,
limited grazing and hunting, and the use of prescribed fire,
have preserved a mix of healthy range and timber land with
significant species diversity, thereby serving as a model for
sustainable land development and use;
(6) the Baca ranch's natural beauty and abundant resources,
and its proximity to large municipal populations, could
provide numerous recreational opportunities for hiking,
fishing, camping, cross-country skiing, and hunting;
(7) the Forest Service documented the scenic and natural
values of the Baca ranch in its 1993 study entitled ``Report
on the Study of the Baca Location No. 1, Santa Fe National
Forest, New Mexico,'' as directed by Public Law 101-556;
(8) the Baca ranch can be protected for current and future
generations by continued operation as a working ranch under a
unique management regime which would protect the land and
resource values of the property and surrounding ecosystem
while allowing and providing for the ranch to eventually
become financially self-sustaining;
(9) the current owners have indicated that they wish to
sell the Baca ranch, creating an opportunity for federal
acquisition and public access and enjoyment of these lands;
(10) certain features on the Baca ranch have historical and
religious significance to Native Americans which can be
preserved and protected through federal acquisition of the
property;
(11) the unique nature of the Valles Caldera and the
potential uses of its resources with different resulting
impacts warrants a management regime uniquely capable of
developing an operational program for appropriate
preservation and development of the land and resources of the
Baca ranch in the interest of the public;
(12) an experimental management regime should be provided
by the establishment of a Trust capable of using new methods
of public land management that may prove to be cost-effective
and environmentally sensitive; and
(13) the Secretary may promote more efficient management of
the Valles Caldera and the watershed of the Santa Clara Creek
through the assignment of purchase rights of such watershed
to the Pueblo of Santa Clara.
(b) Purposes.--The purposes of this title are--
(1) to authorize Federal acquisition of the Baca ranch;
(2) to protect and preserve for future generations the
scenic and natural values of the Baca ranch, associated
rivers and ecosystems, and archaeological and cultural
resources;
(3) to provide opportunities for public recreation;
(4) to establish a demonstration area for an experimental
management regime adapted to this unique property which
incorporates elements of public and private administration in
order to promote long term financial sustainability
consistent with the other purposes enumerated in this
subsection; and
(5) to provide for sustained yield management of Baca ranch
for timber production and domesticated livestock grazing
insofar as is consistent with the other purposes stated
herein.
SEC. 103. DEFINITIONS.
In this title:
(1) Baca ranch.--The term ``Baca ranch'' means the lands
and facilities described in section 104(a).
(2) Board of trustees.--The terms ``Board of Trustees'' and
``Board'' mean the Board of Trustees as described in section
107.
(3) Committees of congress.--The term ``Committees of
Congress'' means the Committee on Energy and Natural
Resources of the United States Senate and the Committee on
Resources of the House of Representatives.
(4) Financially self-sustaining.--The term ``financially
self-sustaining'' means management and operating expenditures
equal to or less than proceeds derived from fees and other
receipts for resource use and development and interest on
invested funds. Management and operating expenditures shall
include Trustee expenses, salaries and benefits of staff,
administrative and operating expenses, improvements to and
maintenance of lands and facilities of the Preserve, and
other similar expenses. Funds appropriated to the Trust by
Congress, either directly or through the Secretary, for the
purposes of this title shall not be considered.
(5) Preserve.--The term ``Preserve'' means the Valles
Caldera National Preserve established under section 105.
(6) Secretary.--Except where otherwise provided, the term
``Secretary'' means the Secretary of Agriculture.
(7) Trust.--The term ``Trust'' means the Valles Caldera
Trust established under section 106(a).
SEC. 104. ACQUISITION OF LANDS.
(a) Acquisition of Baca Ranch.--
(1) In general.--In accordance with the Act of June 15,
1926 (16 U.S.C. 471a), the Secretary is authorized to acquire
all or part of the rights, title and interests in and to
approximately 94,812 acres of the Baca ranch, comprising the
lands, facilities, and structures referred to as the Baca
Location No. 1, and generally depicted on a plat entitled
``Independent Resurvey of the Baca Location No. 1,'' made by
L.A. Osterhoudt, W.V. Hall and Charles W. Devendorf, U.S.
Cadastral Engineers, June 30, 1920--August 24, 1921, under
special instructions for Group No. 107 dated February 12,
1920, in New Mexico.
(2) Source of Funds.--The acquisition pursuant to paragraph
(1) may be made by purchase through appropriated or donated
funds, by exchange, by contribution, or by donation of land.
Funds appropriated to the Secretary and the Secretary of the
Interior from the Land and Water Conservation Fund shall be
available for this purpose.
(3) Basis of sale.--The acquisition pursuant to paragraph
(1) shall be based on appraisal done in conformity with the
Uniform Appraisal Standards for Federal Land Acquisitions
and--
(A) in the case of purchase, such purchase shall be on a
willing seller basis for no more than the fair market value
of the land or interests therein acquired; and
(B) in the case of exchange, such exchange shall be for
lands, or interests therein, of equal value, in conformity
with the existing exchange authorities of the Secretary.
(4) Deed.--The conveyance of the offered lands to the
United States under this subsection shall be by general
warranty or other deed acceptable to the Secretary and in
conformity with applicable title standards of the Attorney
General.
(b) Addition of Land to Bandelier National Monument.--
(1) In general.--Upon acquisition of the Baca ranch
pursuant to subsection (a), the Secretary of the Interior
shall assume administrative jurisdiction over the
approximately 845 acres of the land acquired within the Upper
Alamo watershed as depicted on the Forest Service map
entitled ``Proposed Boundary Expansion Map Bandelier National
Monument'' dated October, 1998.
(2) Management.--Upon assumption of administrative
jurisdiction pursuant to paragraph (1), the Secretary of the
Interior shall manage the added land as a part of Bandelier
National Monument, the boundaries of which
[[Page S12320]]
are hereby adjusted to encompass such addition. The Secretary
of the Interior is authorized to utilize funds appropriated
for the National Park Service to acquire on a willing seller
basis, the Elk Meadows subdivision within such boundary
adjustment.
(c) Plat and Maps.--
(1) Plat and maps prevails.--In case of any conflict
between the plat referred to in subsection (a)(1) and the map
referred to in subsection (b)(1) and the acreages provided in
such subsections, the plat or map shall prevail.
(2) Minor corrections.--The Secretary and the Secretary of
the Interior may make minor corrections in the boundaries of
the Upper Alamo watershed as depicted on the map referred
to in subsection (b)(1).
(3) Boundary modification.--Upon the conveyance of any
lands to any entity other than the Secretary, the boundary of
the Preserve shall be modified to exclude such lands.
(4) Final maps.--Within 180 days of the date of acquisition
of the Baca ranch pursuant to subsection (a), the Secretary
and the Secretary of the Interior shall prepare and submit to
the Committees of Congress a final map to the Valles Caldera
National Preserve and a final map of Bandelier National
Monument, respectively.
(5) Public availability.--The plat and maps referred to in
the subsection shall be kept and made available for public
inspection in the offices of the Chief, Forest Service, and
Director, National Park Service, in Washington, D.C., and
Supervisor, Santa Fe National Forest, and Superintendent,
Bandelier National Monument, in the State of New Mexico.
(d) Watershed Management Study.--The Secretary, acting
through the Forest Service, in cooperation with the Secretary
of the Interior, acting through the National Park Service,
shall--
(1) develop a study of management alternatives which may--
(A) provide more coordinated land management within the
area known as the Lower Alamo watershed;
(B) allow for improved management of elk and other wildlife
populations ranging between the Santa Fe National Forest and
the Bandelier National Monument; and
(C) include a proposed boundary adjustment between the
Santa Fe National Forest and the Bandelier National Monument
to facilitate the objectives under subparagraphs (A) and (B);
and
(2) submit the study to the Committees of Congress within
120 days of the boundary adjustment pursuant to subsection
(b)(2).
(e) Outstanding Mineral Interests.--The acquisition of the
Baca ranch by the Secretary shall be subject to all
outstanding valid existing mineral interests. The Secretary
is authorized and directed to negotiate with the owners of
any fractional interest in the subsurface estate for the
acquisition of such fractional interest on a willing seller
basis for their appraised fair market value. Any such
interests acquired within the boundaries of the Upper Alamo
watershed, as referred to in subsection (b)(1), shall be
administered by the Secretary of the Interior as part of
Bandelier National Monument.
(f) Boundaries of the Baca Ranch.--For purposes of section
7 of the Land and Water Conservation Fund Act of 1965 (16
U.S.C. 4601-9), the boundaries of the Baca ranch shall be
treated as if they were National Forest boundaries existing
as of January 1, 1965.
SEC. 105. THE VALLES CALDERA NATIONAL PRESERVE.
(a) Establishment.--Upon the date of acquisition of the
Baca ranch pursuant to section 104(a) there is hereby
established the Valles Caldera National Preserve as a unit of
the National Forest System which shall include all Federal
lands and interest in land acquired pursuant to subsection
104(a), except those lands and interests in land administered
by the Secretary of the Interior pursuant to section
104(b)(1), and shall be managed in accordance with the
purposes and requirements of this title.
(b) Purposes.--The purposes for which the Preserve is
established are to protect and preserve the scenic, geologic,
watershed, fish, wildlife, historic, cultural, and
recreational values of the Preserve, and to provide for
multiple use and sustained yield of renewable resources
within the Preserve, consistent with this title.
(c) Management Authority.--Except for the powers of the
Secretary enumerated in this title, the Preserve shall be
managed by the Valles Caldera Trust established by section
106.
(d) Eligibility for Payment in Lieu of Taxes.--Lands
acquired by the United States pursuant to section 104(a)
shall constitute entitlement lands for purposes of the
Payment in Lieu of Taxes Act (31 U.S.C. 6901-6904).
(e) Withdrawals.--
(1) In general.--Upon acquisition of all interests in
minerals within the boundaries of the Baca ranch pursuant to
section 104(e), subject to valid existing rights, the lands
comprising the Preserve shall be withdrawn from disposition
under all laws pertaining to mineral leasing, including
geothermal leasing.
(2) Materials for roads and facilities.--Nothing in this
title shall preclude the Secretary, prior to assumption of
management authority by the Trust, and the Trust thereafter,
from allowing the utilization of common varieties of mineral
materials such as sand, stone and gravel as necessary for
construction and maintenance of roads and facilities within
the Preserve.
(f) Fish and Game.--Nothing in this title shall be
construed as affecting the responsibilities of the State of
New Mexico with respect to fish and wildlife, including the
regulation of hunting, fishing and trapping within the
Preserve, except that the Trust may, in consultation with the
Secretary and the State of New Mexico, designate zones where,
and establish periods when no hunting, fishing or trapping
shall be permitted for reasons of public safety,
administration, the protection of nongame species and their
habitats, or public use and enjoyment.
SEC. 106. THE VALLES CALDERA TRUST.
(a) Establishment.--There is hereby established a wholly
owned government corporation known as the Valles Caldera
Trust which is empowered to conduct business in the State of
New Mexico and elsewhere in the United States in furtherance
of its corporate purposes.
(b) Corporate Purposes.--The purposes of the Trust are--
(1) to provide management and administrative services for
the Preserve;
(2) to establish and implement management policies which
will best achieve the purposes and requirements of this
title;
(3) to receive and collect funds from private and public
sources and to make dispositions in support of the management
and administration of the Preserve; and
(4) to cooperate with Federal, State, and local
governmental units, and with Indian tribes and Pueblos, to
further the purposes for which the Preserve was established.
(c) Necessary Powers.--The Trust shall have all necessary
and proper powers for the exercise of the authorities vested
in it.
(d) Staff.--
(1) In general.--The Trust is authorized to appoint and fix
the compensation and duties of an executive director and such
other officers and employees as it deems necessary without
regard to the provisions of title 5, United States Code,
governing appointments in the competitive service, and may
pay them without regard to the provisions of chapter 51, and
subchapter III of chapter 53, title 5, United States Code,
relating to classification and General Schedule pay rates. No
employee of the Trust shall be paid at a rate in excess of
that paid the Supervisor of the Santa Fe National Forest or
the Superintendent of the Bandelier National Monument,
whichever is greater.
(2) Federal employees.--
(A) In general.--Except as provided in this title,
employees of the Trust shall be Federal employees as defined
by title 5, United States Code, and shall be subject to all
rights and obligations applicable thereto.
(B) Use of forest service employees upon establishment of
the trust.--For the two year period from the date of the
establishment of the Trust, and upon the request of the
Trust, the Secretary may provide, on a nonreimbursable basis,
Forest Service personnel and technical expertise as necessary
or desirable to assist in the implementation of this title.
Thereafter, Forest Service employees may be provided to the
Trust as provided in paragraph (C).
(C) Use of other federal employees.--At the request of the
Trust, the employees of any Federal agency may be provided
for implementation of this title. Such employees detailed to
the Trust for more than 30 days shall be provided on a
reimbursable basis.
(e) Government Corporation.--
(1) In general.--The Trust shall be a Government
Corporation subject to chapter 91 of title 31, United States
Code (commonly referred to as the Government Corporation
Control Act). Financial statements of the Trust shall be
audited annually in accordance with section 9105 of title 31
of the United States Code.
(2) Reports.--The Trust shall submit, but not later than
January 15 of each year, to the Secretary and the Committees
of Congress a comprehensive and detailed report of its
operations, activities, and accomplishments for the prior
year. The report shall also include a section that describes
the Trust's goals for the current year.
(f) Taxes.--The Trust and all properties administered by
the Trust shall be exempt from all taxes and special
assessments of every kind by the State of New Mexico, and its
political subdivisions including the Counties of Sandoval and
Rio Arriba.
(g) Donations.--The Trust may solicit and accept donations
of funds, property, supplies, or services from individuals,
foundations, corporations and other private or public
entities for the purposes of carrying out its duties. The
Secretary, prior to assumption of management authority by
the Trust, and the Trust thereafter, may accept donations
from such entities notwithstanding that such donors may
conduct business with the Department of Agriculture or any
other Department or agency of the United States.
(h) Proceeds.--
(1) In general.--Notwithstanding section 1341 of title 31
of the United States Code, all monies received by the Trust
shall be retained by the Trust, and such monies shall be
available, without further appropriation, for the
administration, preservation, restoration, operation and
maintenance, improvement, repair and related expenses
incurred with respect to properties under its management
jurisdiction.
(2) Fund.--There is hereby established in the Treasury of
the United States a special interest bearing fund entitled
``Valles Caldera Fund'' which shall be available, without
further appropriation, to the Trust
[[Page S12321]]
for any purpose consistent with the purposes of this title.
At the option of the Trust, the Secretary of the Treasury
shall invest excess monies of the Trust in such account,
which shall bear interest at rates determined by the
Secretary of the Treasury taking into consideration the
current average market yield on outstanding marketable
obligations of the United States of comparable maturity.
(i) Suits.--The Trust may sue and be sued in its own name
to the same extent as the Federal Government. For purposes of
such suits, the residence of the Trust shall be the State of
New Mexico. The Trust shall be represented by the Attorney
General in any litigation arising out of the activities of
the Trust, except that the Trust may retain private attorneys
to provide advice and counsel.
(j) Bylaws.--The Trust shall adopt necessary bylaws to
govern its activities.
(k) Insurance and Bond.--The Trust shall require that all
holders of leases from, or parties in contract with, the
Trust that are authorized to occupy, use, or develop
properties under the management jurisdiction of the Trust
procure proper insurance against any loss in connection with
such properties, or activities authorized in such lease or
contract, as is reasonable and customary.
SEC. 107. BOARD OF TRUSTEES.
(a) In General.--The Trust shall be governed by a 7 member
Board of trustees consisting of the following:
(1) Voting trustees.--The voting Trustees shall be--
(A) the Supervisor of the Santa Fe National Forest, United
States Forest Service;
(B) the Superintendent of the Bandelier National Monument,
National Park Service; and
(C) 7 individuals, appointed by the President, in
consultation with the Congressional delegation from the State
of New Mexico. The 7 individuals shall have specific
expertise or represent an organization or government entity
as follows--
(i) one trustee shall have expertise in all aspects of
domesticated livestock management, production and marketing,
including range management and livestock business
management;
(ii) one trustee shall have expertise in the management of
game and non-game wildlife and fish populations, including
hunting, fishing and other recreational activities;
(iii) one trustee shall have expertise in the sustainable
management of forest lands for commodity and non-commodity
purposes;
(iv) one trustee shall be active in a non-profit
conservation organization concerned with the activities of
the Forest Service;
(v) one trustee shall have expertise in financial
management, budgeting and programing;
(vi) one trustee shall have expertise in the cultural and
natural history of the region; and
(vii) one trustee shall be active in State or local
government in New Mexico, with expertise in the customs of
the local area.
(2) Qualifications.--Of the trustees appointed by the
President--
(A) none shall be employees of the Federal Government; and
(B) at least five shall be residents of the State of New
Mexico.
(b) Initial Appointments.--The President shall make the
initial appointments to the Board of Trustees within 90 days
after acquisition of the Baca ranch pursuant to section
104(a).
(c) Terms.--
(1) In general.--Appointed trustees shall each serve a term
of 4 years, except that of the trustees first appointed, 4
shall serve for a term of 4 years, and 3 shall serve for a
term of 2 years.
(2) Vacancies.--Any vacancy among the appointed trustees
shall be filled in the same manner in which the original
appointment was made, and any trustee appointed to fill a
vacancy shall serve for the remainder of that term for which
his or her predecessor was appointed.
(3) Limitations.--No appointed trustee may serve more than
8 years in consecutive terms.
(d) Quorum.--A majority of trustees shall constitute a
quorum of the Board for the conduct of business.
(e) Organization and Compensation.--
(1) In general.--The Board shall organize itself in such a
manner as it deems most appropriate to effectively carry out
the activities of the Trust.
(2) Compensation of trustees.--Trustees shall serve without
pay, but may be reimbursed from the funds of the Trust for
the actual and necessary travel and subsistence expenses
incurred by them in the performance of their duties.
(3) Chair.--Trustees shall select a chair from the
membership of the Board.
(f) Liability of Trustees.--Appointed trustees shall not be
considered Federal employees by virtue of their membership on
the Board, except for purposes of the Federal Tort Claims
Act, the Ethics in Government Act, and the provisions of
Chapter 11 of title 18, United States Code.
(g) Meetings.--
(1) Location and timing of meetings.--The Board shall meet
in sessions open to the public at least three times per year
in New Mexico. Upon a majority vote made in open session, and
a public statement of the reasons therefore, the Board may
close any other meetings to the public: Provided, That any
final decision of the Board to adopt or amend the
comprehensive management program pursuant to section 108(d)
or to approve any activity related to the management of the
land or resources of the Preserve shall be made in open
public session.
(2) Public information--In addition to other requirements
of applicable law, the Board shall establish procedures for
providing appropriate public information and opportunities
for public comment regarding the management of the Preserve.
SEC. 108. RESOURCE MANAGEMENT.
(a) Assumption of Management.--The Trust shall assume all
authority provided by the title to manage the Preserve upon a
determination by the Secretary, which to the maximum extent
practicable shall be made within 60 days after the
appointment of the Board, that--
(1) the Board is duly appointed, and able to conduct
business; and
(2) provision has been made for essential management
services.
(b) Management Responsibilities.--Upon assumption of
management of the Preserve pursuant to subsection (a), the
Trust shall manage the land and resources of the Preserve and
the use thereof including, but not limited to such activities
as--
(1) administration of the operations of the Preserve;
(2) preservation and development of the land and resources
of the Preserve;
(3) interpretation of the Preserve and its history for the
public;
(4) management of public use and occupancy of the Preserve;
and
(5) maintenance, rehabilitation, repair and improvement of
property within the Preserve.
(c) Authorities.--
(1) In general.--The Trust shall develop programs and
activities at the Preserve, and shall have the authority to
negotiate directly and enter into such agreements, leases,
contracts and other arrangements with any person, firm,
association, organization, corporation on governmental
entity, including without limitation, entities of Federal,
State and local governments, and consultation with Indian
tribes and pueblos, as are necessary and appropriate to carry
out its authorized activities or fulfill the purposes of this
title. Any such agreements may be entered into without regard
to section 321 of the Act of June 30, 1932 (40 U.S.C. 303b).
(2) Procedures.--The trust shall establish procedures for
entering into lease agreements and other agreements for the
use and occupancy of facilities of the Preserve. The
procedures shall ensure reasonable competition, and set
guidelines for determining reasonable fees, terms, and
conditions for such agreements.
(3) Limitations.--The Trust may not dispose of to any real
property in, or convey any water rights appurtenant to the
Preserve. The Trust may not convey any easement, or enter
into any contract, lease or other agreement related to use
and occupancy of property within the Preserve for a period
greater than 10 years. Any such easement, contract, or
lease or other agreement shall provide that, upon
termination of the Trust, such easement, contract, lease
or agreement is terminate.
(4) Application of procurement laws.--
(A) In general.--Notwithstanding any other provision of
law, Federal laws and regulations governing procurement by
Federal agencies shall not apply to the Trust, with the
exception of laws and regulations relate to Federal
government contracts governing health and safety
requirements, wage rates, and civil rights.
(B) Procedures.--The Trust, in consultation with the
Administrator of Federal Procurement Policy, Office of
Management and Budget, shall establish and adopt procedures
applicable to the Trust's procurement of goods and services,
including the award of contracts on the basis of contractor
qualifications, price, commercially reasonable buying
practices, and reasonable competition.
(d) Management Program.--Within two years after assumption
of management responsibilities for the Preserve, the Trust
shall develop a comprehensive program for the management of
lands, resources, and facilities within the Preserve. Such
program shall provide for--
(1) operation of the Preserve as a working ranch,
consistent with paragraphs (2) through (4);
(2) the protection and preservation of the scenic,
geologic, watershed, fish, wildlife, historic, cultural and
recreational values of the Preserve;
(3) multiple use and sustained yield, as defined under the
Multiple-Use Sustained Yield Act of 1960 (16 U.S.C. 531), of
renewable resources within the Preserve;
(4) public use of and access to the Preserve for
recreation;
(5) preparation of an annual budget with the goal of
achieving a financially self-sustaining operation within 15
full fiscal years after the date of acquisition of the Baca
ranch pursuant to section 104(a); and
(6) optimizing the generation of income based on existing
market conditions, but without unreasonably diminishing the
long-term scenic and natural values of the area, or
diminishing the multiple use, sustained yield capability of
the land.
(e) Public Use and Recreation.--
(1) In general.--The Trust shall give thorough
consideration to the provision of provide appropriate
opportunities for public use and recreation that are
consistent with the other purposes under section 105(b). The
[[Page S12322]]
Trust is expressly authorized to construct and upgrade roads
and bridges, and provide other facilities for activities
including, but not limited to camping and picnicking, hiking,
cross country skiing, and snowmobiling. Roads, trails,
bridges, and recreational facilities constructed within the
Preserve shall meet public safety standards applicable to
units of the National Forest System and the State of New
Mexico.
(2) Fees.--Notwithstanding any other provision of law, the
Trust is authorized to assess reasonable fees for admission
to, and the use and occupancy of, the Preserve: Provided,
That admission fees and any fees assessed for recreational
activities shall be implemented only after public notice and
a period of not less than 60 days for public comment.
(3) Public access.--Upon the acquisition of the Baca ranch
pursuant to section 104(a), and after an interim planning
period of no more than two years, the public shall have
reasonable access to the Preserve for recreation purposes.
The Secretary, prior to assumption of management of the
Preserve by the Trust, and the Trust thereafter, may
reasonably limit the number and types of recreational
admissions to the Preserve, or any part thereof, based on the
capability of the land, resources, and facilities. The use of
reservation or lottery systems is expressly authorized to
implement this paragraph.
(f) Applicable Laws.--
(1) In General.--The Trust shall administer the Preserve in
conformity with this title and all laws pertaining to the
National Forest System, except the Forest and Rangeland
Renewable Resources Planning Act of 1974, as amended (16
U.S.C. 1600 et seq.).
(2) Environmental laws.--The Trust shall be deemed a
federal agency for the purposes of compliance with federal
environmental laws.
(3) Criminal laws.--All criminal laws relating to Federal
property shall apply to the same extent as on adjacent units
of the National Forest System.
(4) Reports on applicable rules and regulations.--The Trust
may submit to the Secretary and the Committees of Congress a
compilation of applicable rules and regulations which in the
view of the Trust are inappropriate, incompatible with this
title, or unduly burdensome.
(5) Consultation with tribes and pueblos.--The Trust is
authorized and directed to cooperate and consult with Indian
tribes and pueblos on management policies and practices for
the Preserve which may affect them. The Trust is authorized
to make lands available within the Preserve for religious and
cultural uses by Native Americans and, in so doing, may set
aside places and times of exclusive use consistent with the
American Indian Religious Freedom Act (42 U.S.C. 1996 (note))
and other applicable statutes.
(6) No administrative appeal.--The administrative appeals
regulations of the Secretary shall not apply to activities of
the Trust and decisions of the Board.
(g) Law Enforcement and Fire Suppression.--The Secretary
shall provide law enforcement services under a cooperative
agreement with the Trust to the extent generally authorized
in other units of the National Forest System. At the request
of the Trust, the Secretary may provide fire suppression
services: Provided, That the Trust shall reimburse the
Secretary for salaries and expenses of fire suppression
personnel, commensurate with services provided.
SEC. 109. AUTHORITIES OF THE SECRETARY.
(a) In General.--Notwithstanding the assumption by the
Trust of management authority, the Secretary is authorized
to--
(1) issue any rights-of-way, as defined in the Federal Land
Policy and Management Act of 1976, of over 5-10 years
duration, in cooperation with the Trust, including, but not
limited to, road and utility rights-of-way, and communication
sites;
(2) issue orders pursuant to and enforce prohibitions
generally applicable on other units of the National Forest
System, in cooperation with the Trust;
(3) exercise the authorities of the Secretary under the
Wild and Scenic Rivers Act (16 U.S.C. 1278, et seq.) and the
Federal Power Act (16 U..S.C. 797, et seq.), in cooperation
with the Trust;
(4) acquire the mineral rights referred to in section
104(e);
(5) provide law enforcement and fire suppression services
pursuant to section 108(h);
(6) at the request of the Trust, exchange or otherwise
dispose of land or interests in land within the Preserve;
(7) in consultation with the Trust, refer civil and
criminal cases pertaining to the Preserve to the Department
of Justice for prosecution;
(8) retain title to and control over fossils and
archaeological artifacts found with the Preserve;
(9) at the request of the Trust, construct and operate a
visitors' center in or near the Preserve, subject to the
availability of appropriated funds;
(10) conduct the assessment of the Trust's performance,
and, if the Secretary determines it necessary, recommend to
Congress the termination of the Trust, pursuant to section
110(b)(2); and
(11) conduct such other activities for which express
authorization is provided to the Secretary by this title.
(b) Secretarial Authority.--the Secretary retains the
authority to suspend any decision of the Board with respect
to the management of the Preserve if he finds that the
decision is clearly inconsistent with this title. Such
authority shall only be exercised personally by the
Secretary, and may not be delegated. Any exercise of this
authority shall be in writing to the Board, and notification
of the decision shall be given to the Committees of Congress.
Any suspended decision shall be referred back to the Board
for reconsideration.
(c) Access.--The Secretary shall at all times have access
to the Preserve for administrative purposes.
SEC. 110. TERMINATION OF THE TRUST.
(a) In General.--The Valles Caldera Trust shall terminate
at the end of the twentieth full fiscal year following
acquisition of the Baca ranch pursuant to section 104(a).
(b) Recommendations.--
(1) Board.--
(A) If after the fourteenth full fiscal years from the date
of acquisition of the Baca ranch pursuant to section 104(a),
the Board believes the Trust has met the goals and objectives
of the comprehensive management program under section 108(d),
but has not become financially self-sufficent, the Board may
submit to the Committees of Congress, a recommendation for
authorization of appropriations beyond that provided under
this title.
(B) During the eighteenth full fiscal year from the date of
acquisition of the Baca ranch pursuant to section 104(a), the
Board shall submit to the Secretary its recommendation that
the Trust be either extended or terminated including the
reasons for such recommendation.
(2) Secretary.--Within 120 days after receipt of the
recommendation of the Board under paragraph (1)(B), the
Secretary shall submit to the Committees of Congress the
Board's recommendation on extension or termination along with
the recommendation of the Secretary with respect to the same
and stating the reasons for such recommendation.
(c) Effect of Termination.--In the event of termination of
the Trust, the Secretary shall assume all management and
administrative functions over the Preserve, and it shall
thereafter be managed as a part of the Santa Fe National
Forest, subject to all laws applicable to the National Forest
System.
(d) Assets.--In the event of termination of the Trust, all
assets of the Trust shall be used to satisfy any outstanding
liabilities, and any funds remaining shall be transferred to
the Secretary for use, without further appropriation, for the
management of the Preserve.
(e) Valles Caldera Fund.--In the event of termination, the
Secretary shall assume the powers of the Trust over funds
pursuant to section 106(h), and the Valles Caldera Fund shall
not terminate. Any balances remaining in the fund shall be
available to the Secretary, without further appropriation,
for any purpose consistent with the purposes of this title.
SEC. 111. LIMITATIONS ON FUNDING.
(a) Authorzation of Appropriations.--There is hereby
authorized to be appropriated to the Secretary and the Trust
such funds as are necessary for them to carry out the
purposes of this title for each of the 15 full fiscal years
after the date of acquisition of the Baca ranch pursuant to
section 104(a).
(b) Schedule of Appropriations.--Within two years after the
first meeting of the Board, the Trust shall submit to
Congress a plan which includes a schedule of annual
decreasing federally appropriated funds that will achieve, at
a minimum, the financially self-sustained operation of the
Trust within 15 full fiscal years after the date of
acquisition of the Baca ranch pursuant to section 104(a).
(c) Annual Budget Request.--The Secretary shall provide
necessary assistance, including detailees as necessary, to
the Trust in the formulation and submission of the annual
budget request for the administration, operation, and
maintenance of the Preserve.
SEC. 112. GENERAL ACCOUNTING OFFICE STUDY.
(a) Initial Study.--Three years after the assumption of
management by the Trust, the General Accounting Office shall
conduct an interim study of the activities of the Trust and
shall report the results of the study to the Committees of
Congress. The study shall include, but shall not be limited
to, details of programs and activities operated by the Trust
and whether it met its obligations under this title.
(b) Second Study.--Seven years after the assumption of
management by the Trust, the General Accounting Office shall
conduct a study of the activities of the Trust and shall
report the results of the study to the Committees of
Congress. The study shall provide an assessment of any
failure to meet obligations that may be identified under
subsection (a), and further evaluation on the ability of the
Trust to meet its obligations under this title.
TITLE II--ACQUISITION OF INHOLDINGS AND DISPOSAL OF SURPLUS LAND
SEC. 201. SHORT TITLE.
This title may be cited as the ``Acquisition of Inholdings
and Disposal of Surplus Lands Facilitation Act''.
SEC. 202. FINDINGS.
Congress finds that--
(1) many private individuals own land within the boundaries
of Federal land management units and wish to sell this land
to the Federal government;
(2) these lands lie within national parks, national
forests, national monuments, Bureau of Land Management
special areas, and national wildlife refuges;
[[Page S12323]]
(3) in many cases, inholders on these lands and the Federal
government would mutually benefit by acquiring on a priority
basis these lands;
(4) Federal land management agencies are facing increased
workloads from rapidly growing public demand for the use of
public lands, making it difficult for federal managers to
address problems created by the existence of inholdings in
many areas;
(5) through land use planning under the Federal Land Policy
and Management Act of 1976 the Bureau of Land Management has
identified certain public lands for disposal;
(6) the Bureau of Land Management has authority under the
Federal Land Policy and Management Act of 1976 to exchange or
sell lands identified for disposal under its land use
planning;
(7) a more expeditious process for disposition of public
lands identified for disposal would benefit the public
interest;
(8) the sale or exchange of land identified for disposal
would--
(A) allow for the reconfiguration of land ownership
patterns to better facilitate resource management;
(B) contribute to administrative efficiency within the
federal land management unit; and
(C) allow for increased effectiveness of the allocation of
fiscal and human resources within the agency;
(9) in certain locations, the sale of public land which has
been identified for disposal is the best way for the public
to receive a fair market value for the land;
(10) using proceeds generated from the disposal of public
land to purchase inholdings from willing sellers would
enhance the ability of the Federal land management agencies
to work cooperatively with private land owners, and State and
local governments and promote consolidation of the ownership
of public and private land in a manner that would allow
for better overall resource management;
(11) proceeds generated from the disposal of public land
may be properly dedicated to the acquisition of inholdings;
and
(12) to allow for the least disruption of existing land and
resource management programs, the Bureau of Land Management
may use non-Federal entities to prepare appraisal documents
for agency review and approval in accordance with the
applicable appraisal standards.
SEC. 203. DEFINITIONS.
In this title:
(1) Federally designated areas.--The term ``Federally
designated areas'' means land in Alaska and the eleven
contiguous Western States as defined in section 103(o) of the
Federal Land Policy and Management Act (43 U.S.C. 1702(o))
that on the date of enactment of this title was within the
boundary of--
(A) a unit of the National Park System;
(B) National Monuments, Areas of Critical Environmental
Concern, National Conservation Areas, National Riparian
Conservation Areas, Research Natural Areas, Outstanding
Natural Areas, and National Natural Landmarks managed by the
Bureau of Land Management.
(C) National Recreation Areas, National Scenic Areas,
National Monuments, National Volcanic Areas, and other areas
within the National Forest System designated for special
management by an Act of Congress;
(D) a unit of the National Wildlife Refuge System; and
(E) a wilderness area designated under the Wilderness Act
of 1964, as amended (16 U.S.C. 1131 et seq.); an area
designated under the Wild and Scenic Rivers Act, as amended
(16 U.S.C. 1271 et seq.); and an area designated under the
National Trails System Act, as amended (16 U.S.C. 1241 et
seq.).
(2) Inholding.--The term ``inholding'' means any right,
title, or interest, held by a non-Federal entity, in or to a
tract of land which lies within the boundary of a Federally
designated area; the term ``inholding'' does not include
lands or interests in lands for which clear title has not
been established (except where waved by the Federal
government), rights-of-way (including railroad rights-of-
way), and existing easements; and
(3) Public land.--The term ``public land'' means public
lands as defined in section 103 of the Federal Land Policy
and Management Act of 1976 (43 U.S.C. 1702).
SEC. 204. IDENTIFICATION OF INHOLDINGS WITHIN FEDERALLY
DESIGNATED AREAS.
(a) Multi-agency Evaluation Team.--
(1) In general.--Jointly, the Secretary of the Interior and
the Secretary of Agriculture (the Secretaries) shall
establish a multi-agency evaluation team composed of agency
personnel to conduct a program to identify, by state,
inholdings within Federally designated areas and establish
the dates upon which the lands or interests therein
became inholdings. Inholdings shall be identified using
the means set forth under subsection (d). Inholdings shall
be deemed established as of the latter of--
(A) the date the Federal land was withdrawn from the public
domain, or established or designated for special management,
whichever is earlier; or
(B) the date on which the inholding was acquired by the
current owner.
(2) Public notice.--The Secretaries shall provide notice to
the public in the Federal Register (and through other such
means as the Secretaries may determine to be appropriate) of
a program of identification of inholdings within Federally
designated areas by which any owner who wants to sell such an
inholding to the United States shall provide to the
Secretaries such information regarding that inholding as is
required by the notice.
(b) Composition of the Evaluation Team.--The team shall be
composed of employees of the National Park Service, the Fish
and Wildlife Service, the Bureau of Land Management, the
Department of Agriculture, Forest Service, and other agencies
as appropriate.
(c) Timing.--The Secretaries shall establish the Evaluation
Team within 90 days after the enactment of this title.
(d) Duties of the Evaluation Team.--The team shall be
charged with the identification of inholdings within
Federally designated areas, by state, and by the date upon
which the lands or interests therein became inholdings.
Inholdings will be identified using--
(1) the list of inholdings identified by owners pursuant to
subsection (a)(2); and
(2) tracts of land identified through existing agency
planning processes.
(e) Report.--The Secretaries shall submit a report to the
Committee on Energy and Natural Resources and the Committee
on Appropriations of the Senate, and the Committee on
Resources and the Committee on Appropriations of the House of
Representatives on the status of their evaluations within one
year after the enactment of this title, and at the end of
each 180 days increment thereafter until such time as
reasonable efforts to identify inholdings have been made or
the program established in section 205 terminates.
(f) Funding.--Funding to carry out this section shall be
taken from operating funds of the agencies involved and shall
be reimbursed from the account established under section 206.
SEC. 205. DISPOSAL OF SURPLUS PUBLIC LAND.
(a) In General.--The Secretary of the Interior (in this
section, the ``Secretary'') shall establish a program,
utilizing funds available under section 207, to complete
appraisals and other legal requirements for the sale or
exchange of land identified for disposal under approved land
use plans maintained under section 202 of the Federal Land
Policy and Management Act of 1976 (43 U.S.C. 1712) and in
effect on the date of enactment of this title.
(b) Sale of Public Land.--The sale of public land so
identified shall be conducted in accordance with section 203
and section 209 of the Federal Land Policy and Management Act
of 1976 (43 U.S.C. 1713, 1719). It is the intent of Congress
that the exceptions to competitive bidding requirements
under section 203(f) of the Federal Land Policy and
Management Act of 1976 (43 U.S.C. 1713(f) apply under this
title, where the Secretary of the Interior determines it
necessary and proper.
(c) Report in Public Land Statistics.--The Secretary shall
provide in the annual publication of Public Land Statistics,
a report of activities related to the program established
under this section.
(d) Termination of Program.--The program established by
this section shall terminate ten years from the date of
enactment of this title.
SEC. 206. DISTRIBUTION OF RECEIPTS.
Notwithstanding any other Act, except that specifically
providing for a proportion of the proceeds to be distributed
to any trust funds of any States, gross proceeds generated by
the sale or exchange of public land under this title shall be
deposited in a separate account in the Treasury of the United
States to be known as the ``Federal Land Disposal Account'',
for use as provided under section 207.
SEC. 207. FEDERAL LAND DISPOSAL ACCOUNT.
(a) In General.--Amounts in the Federal Land Disposal
Account shall be available to the Secretary of the Interior
and the Secretary of Agriculture, without further act of
appropriation, to carry out this title.
(b) Use of the Federal Land Disposal Account.--Funds
deposited in the Federal Land Disposal Account may be
expended as follows--
(1) except as authorized under paragraph (7), proceeds from
the disposal of lands under this title shall be used to
purchase inholdings contained within Federal designated
areas;
(2) acquisition priority shall be given to those lands
which have existed as inholdings for the longest period of
time, except that the Secretaries may develop criteria for
priority of acquisition considering the following additional
factors--
(A) limits in size or cost in order to maximize the
utilization of funds among eligible inholdings; and
(B) other relevant factors including, but not limited to,
the condition of title and the existence of hazardous
substances;
(3) acquisition of any inholding under this section shall
be on a willing seller basis contingent upon the conveyance
of title acceptable to the appropriate Secretary utilizing
title standards of the Attorney General;
(4) all proceeds, including interest, from the disposal of
lands under section 205 shall be expended within the state in
which they were generated until a reasonable effort has been
made to acquire all inholdings identified by the evaluation
team pursuant to section 204 within that state;
(5) upon the acquisition of all inholdings under paragraph
(4), proceeds may be expended in other states, and a priority
shall be established in order of those states having the
greatest inventory of unacquired inholdings as of the
beginning of the fiscal year in which the excess proceeds
become available;
[[Page S12324]]
(6) the acquisition of inholdings under this section shall
be at fair market value;
(7) an amount not to exceed 20 percent of the funds in the
Federal Land Disposal Account shall be used for
administrative and other expenses necessary to carry out
the land disposal program under section 205;
(c) Contaminated Sites and Sites Difficult and Uneconomic
To Manage.--Funds in the account established by section 206
shall not be used to purchase or lands or interests in lands
which, as determined by the agency, contain hazardous
substances or are otherwise contaminated, or which, because
of their location or other characteristics, would be
difficult or uneconomic to manage as Federal land.
(d) Investment of Principal.--Funds deposited as principal
in the Federal Land Disposal Account shall earn interest in
the amount determined by the Secretary of the Treasury based
on the current average market yield on outstanding marketable
obligations of the United States of comparable maturities.
(e) Land and Water Conservation Fund Act.--Funds made
available under this section shall be supplemental to any
funds appropriated under the Land and Water Conservation Fund
Act (16 U.S.C. 460l-4 through 460l-6a, 460l-7 through 460l-
10, 460l-10a-d, 460l-11).
(f) Termination.--On termination of the program under
section 205--
(1) the Federal Land Disposal Account shall be terminated;
and
(2) any remaining balance in such account shall become
available for appropriation under section 3 of the Land and
Water Conservation Fund Act (16 U.S.C. 460l-6).
SEC. 208. SPECIAL PROVISIONS.
(a) In General.--Nothing in this title shall be construed
as an exemption from any existing limitation on the
acquisition of lands of interests therein under any Federal
law.
(b) Santini-Burton Act.--The provisions of this title shall
not apply to lands eligible for sale pursuant to the Santini-
Burton Act (94 Stat. 3381).
(c) Exchanges.--Nothing in this title shall be construed as
precluding, pre-empting, or limiting the authority to
exchange lands under the Federal Land Policy and Management
Act of 1976 (43 U.S.C. 1701 et seq.), or the Federal Land
Exchange Facilitation Act of 1988 (site).
(d) Right or Benefit.--This title is intended to provide
direction regarding Federal land management. Nothing herein
is intended to, or shall create a right or benefit,
substantive or procedural, enforceable at law or in equity by
a party against the United States, its agencies, its
officers, or any other person.
____
Statement of Principles
i. baca ranch
The Baca ranch in New Mexico is a unique land area, with
significant scientific, cultural, historic, recreational,
ecological, and production values. Management of this working
ranch by the current owners has included limited grazing,
hunting, and timber harvesting, and it depicts a model for
sustainable land development and use. It is our intention to
continue to follow this model. The unique nature of the Baca
ranch requires a unique program for appropriate preservation,
operation and maintenance of the ranch.
Legislation to authorize the Federal acquisition and
establish a unique management framework will:
(1) Provide for federal acquisition of the Baca Ranch
property by the U.S. Forest Service, assuming agreement with
the current owners on a fair price based on an objective
appraisal;
(2) Provide for innovative management by a Trust, being a
wholly owned government corporation comprised of individuals,
(appointed by the President with New Mexican input), with
appropriate and varied expertise relevant to the unique
management issues. These individuals will administer the
operation, maintenance, management, and use of the ranch,
based on appropriate public input and with governmental
oversight;
(3) Provide management principles including protection of
the unique values of the property in all of the areas listed
above, and demonstration of sustainable land use including
recreational opportunities, selective timbering, limited
grazing and hunting, and the use of appropriate range and
silvicultural management with significant species diversity.
Management shall be in furtherance of these goals and provide
for the eventual financial self-sufficiency of the operation
without violating other management goals;
(4) Provide an opportunity for the Trust, should it not
achieve financial self-sufficiency by its ninth year of
operation, to continue operating upon agreement between
Congress and the President, after showing rationale for not
attaining a financially self-sufficient operation; and
(5) Provide for an initial appropriation in an amount
necessary for management of the property.
The parties further agree to work together to make
available the $20 million appropriated in the 1998 Land and
Water Conservation Fund, the $20 million in FY99 requested by
the President for use to purchase the Baca ranch, and
additional funds necessary to complete the purchase following
an acceptable and reasonable appraisal and agreement on price
between buyer and seller.
ii. inholder relief and surplus land disposal
Millions of acres of private land lie within the boundaries
of Federal land management units. BLM currently has authority
to exchange or sell lands identified for disposal in its
planning process. Using proceeds generated from the disposal
of these public lands to purchase inholdings in federally
designated areas from willing sellers would supplement funds
appropriated under the Land and Water Conservation Fund.
Legislation to address these interrelated land management
problems will--
(1) Establish a program to conduct appraisals and other
legal requirements for the disposal of public land identified
in existing BLM management plans as surplus;
(2) Establish a special account for the receipts generated
from the disposal of these lands, available to the
Secretaries to acquire inholdings without further
appropriation, provided--
The acquisition will be from willing sellers, with priority
given to lands existing as inholdings for the longest time;
Proceeds from the sale of surplus lands must be spent
within the state in which they were generated until all
available inholdings are purchased;
The proceeds in the special account are to supplement, not
supplant, appropriations to the Land and Water Conservation
Fund; and
An appropriate amount of the proceeds will be used to
conduct appraisal and other administrative steps necessary to
complete the sale of surplus lands; and
(3) Terminates the land disposal program and account after
ten years.
By Mr. ROTH (for himself, Mr. Moynihan, Mr. Chafee, Mr. Baucus,
Mr. Grassley, Mr. Rockefeller, Mr. Hatch, Mr. Breaux, Mr.
D'Amato, Mr. Conrad, Mr. Murkowski, Mr. Graham, Mr. Jeffords,
Ms. Moseley-Braun, Mr. Mack, Mr. Bryan, and Mr. Kerrey):
S. 2622. A bill to amend the Internal Revenue Code of 1986 to extend
certain expiring provisions, and for other purposes; to the Committee
on Finance.
the tax relief extension act of 1998
Mr. ROTH. Mr. President, I rise to introduce the ``Tax Relief
Extension Act of 1998''. I am pleased to have as my principal cosponsor
my distinguished friend and Ranking Member of the Finance Committee,
Daniel Patrick Moynihan. Fifteen Finance Committee Members have joined
Senator Moynihan and myself on this bill.
Before I discuss the Finance Committee bill, I'd like to comment on
the House bill.
Chairman Archer and I attempted to negotiate a bill that would
address expiring tax and trade provisions.
Chairman Archer and I had many discussions and made a lot of progress
in trying to resolve differences on extenders, but we were unable to
reach agreement. Let me say the House bill has many worthwhile
proposals that we in the Senate should support.
Mr. President, we find ourselves in a difficult situation. Although
the House bill has many good proposals, it is unlikely the House bill
will move by unanimous consent in the Senate in its present form. We
will not be able to obtain unanimous consent because the House resisted
negotiations on expiring provisions important to Members of the Senate.
I remain hopeful that the House and Senate can reach agreement on an
extenders bill. I believe the Finance Committee is taking a step today
that can lead us to that agreement.
Mr. President, this bill is the product of a Finance Committee
meeting yesterday. At that meeting, a bi-partisan majority of the
committee agreed on a package to address expiring tax and trade
provisions--the so-called extenders. This bill is meant to be offered
as a substitute to H.R. 4738, the House extender bill.
We expect to consider the House bill together with the Finance
Committee bill shortly.
This Finance Committee bill follows three principles:
All non-controversial expiring provisions are covered;
No policy changes are made to the extenders--only date
changes; and
The package is fully offset.
The purpose of this bill is to leave tax policy on the expiring
provisions settled until the next Congress. At that time, hopefully, we
will be considering a major tax cut bill. When we are considering that
tax cut bill next year, we will be able to address the policy and long-
term period of the various provisions.
This bill is necessarily narrow. There are no Member provisions in
this bill, including some I am interested in. In order to expedite this
bill, the Finance Committee Members on this bill agreed to forego
Member issues.
[[Page S12325]]
This bill extends several important provisions in the tax and trade
areas, including:
The research and development tax credit;
The work opportunity tax credit;
The welfare to work tax credit;
The full deductibility of contributions of appreciated
stock to private foundations;
The active financing exception to Subpart F for financial
services operations overseas;
The tax information reporting access for the Department of
Education for the Federal student aid programs;
The Generalized System of Preferences (``GSP''); and
The trade adjustment assistance (``TAA'') program.
In addition to extenders, the Finance Committee bill speeds up the
full deductibility of health insurance deduction for self-employed
persons. This bill also addresses time sensitive farm-related issues.
The final provision in this bill would correct an upcoming problem
for millions of middle income taxpayers. The Taxpayer Relief Act of
1997 included tax relief for America's working families in the form of
the $500 per child tax credit and the Hope Scholarship tax credit, and
other benefits. Taxpayers will expect to see these benefits when they
file their returns on April 15th.
What some of these families will find is that the tax relief they
expected will not materialize because of the alternative minimum tax
(``AMT''). That is, these tax credits do not count against the
alternative minimum tax. The final provision in the Finance Committee
bill would provide that benefits such as the $500 per child tax credit
would count against the alternative minimum tax.
This point deserves emphasis. We can correct this problem for
millions of taxpayers in this bill. As Chairman of the Finance
Committee, I consider it my responsibility to simplify the tax code
whenever possible. This last provision provides us with that
opportunity. I am pleased the Members of the Finance Committee back me
in this effort.
Finally, I'd like return to the Senate's procedures, schedule, and
the prospects for extender legislation.
It is important to recognize that the House and Senate are very
different bodies governed by starkly different rules and traditions.
Unlike the House, the Senate Rules and schedule do not allow us to move
this bill at this point in any other way than by unanimous consent. If
we are to address these tax and trade provisions, we will need the
cooperation of every Senator.
If we can get every Senator's cooperation, and resolve our
differences with the House, I believe we can deliver an extenders bill
the President will sign.
I urge my colleagues to support this Finance Committee bill.
Mr. President, I ask unanimous consent that the text of the bill, a
section-by-section analysis, and revenue table of the legislation, be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 2622
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``Tax Relief
Extension Act of 1998''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--
Sec. 1. Short title; amendment of 1986 Code; table of contents.
TITLE I--EXTENSION OF EXPIRING PROVISIONS
Subtitle A--Tax Provisions
Sec. 101. Research credit.
Sec. 102. Work opportunity credit.
Sec. 103. Welfare-to-work credit.
Sec. 104. Contributions of stock to private foundations.
Sec. 105. Subpart F exemption for active financing income.
Sec. 106. Credit for producing fuel from a nonconventional source.
Sec. 107. Disclosure of return information on income contingent student
loans.
Subtitle B--Trade Provisions
Sec. 111. Extension of duty-free treatment under General System of
Preferences.
Sec. 112. Trade adjustment assistance.
TITLE II--OTHER TAX PROVISIONS
Sec. 201. 100-percent deduction for health insurance costs of self-
employed individuals.
Sec. 202. Production flexibility contract payments.
Sec. 203. Income averaging for farmers made permanent.
Sec. 204. Nonrefundable personal credits fully allowed against regular
tax liability during 1998.
TITLE III--REVENUE OFFSET
Sec. 301. Treatment of certain deductible liquidating distributions of
regulated investment companies and real estate investment
trusts.
TITLE IV--TECHNICAL CORRECTIONS
Sec. 401. Definitions; coordination with other titles.
Sec. 402. Amendments related to Internal Revenue Service Restructuring
and Reform Act of 1998.
Sec. 403. Amendments related to Taxpayer Relief Act of 1997.
Sec. 404. Amendments related to Tax Reform Act of 1984.
Sec. 405. Other amendments.
Sec. 406. Amendments related to Uruguay Round Agreements Act.
TITLE I--EXTENSION OF EXPIRING PROVISIONS
Subtitle A--Tax Provisions
SEC. 101. RESEARCH CREDIT.
(a) Temporary Extension.--
(1) In general.--Paragraph (1) of section 41(h) (relating
to termination) is amended--
(A) by striking ``June 30, 1998'' and inserting ``June 30,
1999'',
(B) by striking ``24-month'' and inserting ``36-month'',
and
(C) by striking ``24 months'' and inserting ``36 months''.
(2) Technical amendment.--Subparagraph (D) of section
45C(b)(1) is amended by striking ``June 30, 1998'' and
inserting ``June 30, 1999''.
(b) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred after June 30, 1998.
SEC. 102. WORK OPPORTUNITY CREDIT.
(a) Temporary Extension.--Subparagraph (B) of section
51(c)(4) (relating to termination) is amended by striking
``June 30, 1998'' and inserting ``June 30, 1999''.
(b) Effective Date.--The amendment made by this section
shall apply to individuals who begin work for the employer
after June 30, 1998.
SEC. 103. WELFARE-TO-WORK CREDIT.
Subsection (f) of section 51A (relating to termination) is
amended by striking ``April 30, 1999'' and inserting ``June
30, 1999''.
SEC. 104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDATIONS.
(a) In General.--Subparagraph (D)(ii) of section 170(e)(5)
is amended by striking ``June 30, 1998'' and inserting ``June
30, 1999''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made after June 30, 1998.
SEC. 105. SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.
(a) In General.--Paragraph (9) of section 954(h) (relating
to application) is amended to read as follows:
``(9) Application.--This subsection shall apply to--
``(A)(i) the first full taxable year of a foreign
corporation beginning after December 31, 1997, and before
January 1, 1999, and the taxable year of such corporation
immediately following such taxable year, or
``(ii) if a foreign corporation has no such first full
taxable year, the first taxable year of such corporation
beginning after December 31, 1998, and before January 1,
2000, and
``(B) taxable years of United States shareholders of a
foreign corporation with or within which the corporation's
taxable years described in subparagraph (A) end.''
(b) Conforming Amendment.--Section 1175(c) of the Taxpayer
Relief Act of 1997 is repealed.
SEC. 106. CREDIT FOR PRODUCING FUEL FROM A NONCONVENTIONAL
SOURCE.
(a) In General.--Section 29(g)(1)(A) is amended by striking
``July 1, 1998'' and inserting ``July 1, 1999''.
(b) Effective Date.--The amendment made by this section
shall apply to facilities placed in service after June 30,
1998.
SEC. 107. DISCLOSURE OF RETURN INFORMATION ON INCOME
CONTINGENT STUDENT LOANS.
Subparagraph (D) of section 6103(l)(13) (relating to
disclosure of return information to carry out income
contingent repayment of student loans) is amended by striking
``September 30, 1998'' and inserting ``September 30, 2004''.
Subtitle B--Extension of Expired Trade Provisions
SEC. 111. EXTENSION OF DUTY-FREE TREATMENT UNDER GENERAL
SYSTEM OF PREFERENCES.
(a) In General.--Section 505 of the Trade Act of 1974 (19
U.S.C. 2465) is amended by striking ``June 30, 1998'' and
inserting ``December 31, 1999''.
(b) Effective Date.--
(1) In general.--The amendments made by this section apply
to articles entered on or after October 1, 1998.
(2) Retroactive application for certain liquidations and
reliquidations.--
(A) General rule.--Notwithstanding section 514 of the
Tariff Act of 1930 or any other
[[Page S12326]]
provision of law and subject to paragraph (3), any article
that was entered--
(i) after June 30, 1998, and
(ii) before October 1, 1998, and
to which duty-free treatment under title V of the Trade Act
of 1974 would have applied if the entry had been made on June
30, 1998, shall be liquidated or reliquidated as free of
duty, and the Secretary of the Treasury shall refund any duty
paid with respect to such entry.
(B) Limitations on refunds.--No refund shall be made
pursuant to this paragraph before October 1, 1998.
(C) Entry.--As used in this paragraph, the term ``entry''
includes a withdrawal from warehouse for consumption.
(3) Requests.--Liquidation or reliquidation may be made
under paragraph (2) with respect to an entry only if a
request therefor is filed with the Customs Service, within
180 days after the date of enactment of this Act, that
contains sufficient information to enable the Customs
Service--
(A) to locate the entry; or
(B) to reconstruct the entry if it cannot be located.
SEC. 112. TRADE ADJUSTMENT ASSISTANCE.
(a) Authorization of Appropriations.--
(1) In general.--Section 245 of the Trade Act of 1974 (19
U.S.C. 2317) is amended--
(A) in subsection (a), by striking ``1993, 1994, 1995,
1996, 1997, and 1998,'' and inserting ``1998 and 1999,''; and
(B) in subsection (b), by striking ``1994, 1995, 1996,
1997, and 1998,'' and inserting ``1998 and 1999,''.
(2) Assistance for firms.--Section 256(b) of the Trade Act
of 1974 (19 U.S.C. 2346(b)) is amended by striking ``1993,
1994, 1995, 1996, 1997, and'' and inserting ``, and 1999,''
after ``1998''.
(b) Termination.--Section 285(c) of the Trade Act of 1974
(19 U.S.C. 2271 note preceding) is amended--
(1) in paragraph (1), by striking ``September 30, 1998''
and inserting ``June 30, 1999''; and
(2) in paragraph (2)(A), by striking ``the day that is''
and all that follows through ``effective'' and inserting
``June 30, 1999''.
TITLE II--OTHER TAX PROVISIONS
SEC. 201. 100-PERCENT DEDUCTION FOR HEALTH INSURANCE COSTS OF
SELF-EMPLOYED INDIVIDUALS.
(a) In General.--Subparagraph (B) of section 162(l)(1)
(relating to special rules for health insurance costs of
self-employed individuals) is amended to read as follows:
``(B) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage shall be--
``(i) 45 percent for taxable years beginning in 1999 and
2000,
``(ii) 70 percent for taxable years beginning in 2001, and
``(iii) 100 percent for taxable years beginning after
December 31, 2001.''
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1998.
SEC. 202. PRODUCTION FLEXIBILITY CONTRACT PAYMENTS.
(a) In General.--The options under paragraphs (2) and (3)
of section 112(d) of the Federal Agriculture Improvement and
Reform Act of 1996 (7 U.S.C. 7212(d) (2) and (3)), as in
effect on the date of the enactment of this Act, shall be
disregarded in determining the taxable year for which any
payment under a production flexibility contract under
subtitle B of title I of such Act (as so in effect) is
properly includible in gross income for purposes of the
Internal Revenue Code of 1986.
(b) Effective Date.--Subsection (a) shall apply to taxable
years ending after December 31, 1995.
SEC. 203. INCOME AVERAGING FOR FARMERS MADE PERMANENT.
Subsection (c) of section 933 of the Taxpayer Relief Act of
1997 is amended by striking ``, and before January 1, 2001''.
SEC. 204. NONREFUNDABLE PERSONAL CREDITS FULLY ALLOWED
AGAINST REGULAR TAX LIABILITY DURING 1998.
(a) In General.--Subsection (a) of section 26 is amended by
adding at the end the following flush sentence:
``For purposes of paragraph (2), the taxpayer's tentative
minimum tax for any taxable year beginning during 1998 shall
be treated as being zero.''
(b) Conforming Amendment.--Section 24(d)(2) is amended by
striking ``The credit'' and ``For taxable years beginning
after December 31, 1998, the credit''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1997.
TITLE III--REVENUE OFFSET
SEC. 301. TREATMENT OF CERTAIN DEDUCTIBLE LIQUIDATING
DISTRIBUTIONS OF REGULATED INVESTMENT COMPANIES
AND REAL ESTATE INVESTMENT TRUSTS.
(a) In General.--Section 332 (relating to complete
liquidations of subsidiaries) is amended by adding at the end
the following new subsection:
``(c) Deductible Liquidating Distributions of Regulated
Investment Companies and Real Estate Investment Trusts.--If a
corporation receives a distribution from a regulated
investment company or a real estate investment trust which is
considered under subsection (b) as being in complete
liquidation of such company or trust, then, notwithstanding
any other provision of this chapter, such corporation shall
recognize and treat as a dividend from such company or trust
an amount equal to the deduction for dividends paid allowable
to such company or trust by reason of such distribution.''
(b) Conforming Amendments.--
(1) The material preceding paragraph (1) of section 332(b)
is amended by striking ``subsection (a)'' and inserting
``this section''.
(2) Paragraph (1) of section 334(b) is amended by striking
``section 332(a)'' and inserting ``section 332''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions after May 21, 1998.
TITLE IV--TECHNICAL CORRECTIONS
SEC. 401. DEFINITIONS; COORDINATION WITH OTHER TITLES.
(a) Definitions.--For purposes of this title--
(1) 1986 code.--The term ``1986 Code'' means the Internal
Revenue Code of 1986.
(2) 1998 act.--The term ``1998 Act'' means the Internal
Revenue Service Restructuring and Reform Act of 1998 (Public
Law 105-206).
(3) 1997 act.--The term ``1997 Act'' means the Taxpayer
Relief Act of 1997 (Public Law 105-34).
(b) Coordination With Other Titles.--For purposes of
applying the amendments made by any title of this Act other
than this title, the provisions of this title shall be
treated as having been enacted immediately before the
provisions of such other titles.
SEC. 402. AMENDMENTS RELATED TO INTERNAL REVENUE SERVICE
RESTRUCTURING AND REFORM ACT OF 1998.
(a) Amendment Related to Section 1101 of 1998 Act.--
Paragraph (5) of section 6103(h) of the 1986 Code, as added
by section 1101(b) of the 1998 Act, is redesignated as
paragraph (6).
(b) Amendment Related to Section 3001 of 1998 Act.--
Paragraph (2) of section 7491(a) of the 1986 Code is amended
by adding at the end the following flush sentence:
``Subparagraph (C) shall not apply to any qualified revocable
trust (as defined in section 645(b)(1)) with respect to
liability for tax for any taxable year ending after the date
of the decedent's death and before the applicable date (as
defined in section 645(b)(2)).''.
(c) Amendments Related to Section 3201 of 1998 Act.--
(1) Section 7421(a) of the 1986 Code is amended by striking
``6015(d)'' and inserting ``6015(e)''.
(2) Subparagraph (A) of section 6015(e)(3) is amended by
striking ``of this section'' and inserting ``of subsection
(b) or (f)''.
(d) Amendment Related to Section 3301 of 1998 Act.--
Paragraph (2) of section 3301(c) of the 1998 Act is amended
by striking ``The amendments'' and inserting ``Subject to any
applicable statute of limitation not having expired with
regard to either a tax underpayment or a tax overpayment, the
amendments''.
(e) Amendment Related to Section 3401 of 1998 Act.--Section
3401(c) of the 1998 Act is amended--
(1) in paragraph (1), by striking ``7443(b)'' and inserting
``7443A(b)''; and
(2) in paragraph (2), by striking ``7443(c)'' and inserting
``7443A(c)''.
(f) Amendment Related to Section 3433 of 1998 Act.--Section
7421(a) of the 1986 Code is amended by inserting ``6331(i),''
after ``6246(b),''.
(g) Amendment Related to Section 3467 of 1998 Act.--The
subsection (d) of section 6159 of the 1986 Code relating to
cross reference is redesignated as subsection (e).
(h) Amendment Related to Section 3708 of 1998 Act.--
Subparagraph (A) of section 6103(p)(3) of the 1986 Code is
amended by inserting ``(f)(5),'' after ``(c), (e),''.
(i) Amendments Related to Section 5001 of 1998 Act.--
(1) Subparagraph (B) of section 1(h)(13) of the 1986 Code
is amended by striking ``paragraph (7)(A)'' and inserting
``paragraph (7)(A)(i)''.
(2)(A) Subparagraphs (A)(i)(II), (A)(ii)(II), and (B)(ii)
of section 1(h)(13) of the 1986 Code shall not apply to any
distribution after December 31, 1997, by a regulated
investment company or a real estate investment trust with
respect to--
(i) gains and losses recognized directly by such company or
trust, and
(ii) amounts properly taken into account by such company or
trust by reason of holding (directly or indirectly) an
interest in another such company or trust to the extent that
such subparagraphs did not apply to such other company or
trust with respect to such amounts.
(B) Subparagraph (A) shall not apply to any distribution
which is treated under section 852(b)(7) or 857(b)(8) of the
1986 Code as received on December 31, 1997.
(C) For purposes of subparagraph (A), any amount which is
includible in gross income of its shareholders under section
852(b)(3)(D) or 857(b)(3)(D) of the 1986 Code after December
31, 1997, shall be treated as distributed after such date.
(D)(i) For purposes of subparagraph (A), in the case of a
qualified partnership with respect to which a regulated
investment company meets the holding requirement of clause
(iii)--
(I) the subparagraphs referred to in subparagraph (A) shall
not apply to gains and losses recognized directly by such
partnership for purposes of determining such company's
distributive share of such gains and losses, and
(II) such company's distributive share of such gains and
losses (as so determined) shall be treated as recognized
directly by such company.
[[Page S12327]]
The preceding sentence shall apply only if the qualified
partnership provides the company with written documentation
of such distributive share as so determined.
(ii) For purposes of clause (i), the term ``qualified
partnership'' means, with respect to a regulated investment
company, any partnership if--
(I) the partnership is an investment company registered
under the Investment Company Act of 1940,
(II) the regulated investment company is permitted to
invest in such partnership by reason of section 12(d)(1)(E)
of such Act or an exemptive order of the Securities and
Exchange Commission under such section, and
(III) the regulated investment company and the partnership
have the same taxable year.
(iii) A regulated investment company meets the holding
requirement of this clause with respect to a qualified
partnership if (as of January 1, 1998)--
(I) the value of the interests of the regulated investment
company in such partnership is 35 percent or more of the
value of such company's total assets, or
(II) the value of the interests of the regulated investment
company in such partnership and all other qualified
partnerships is 90 percent or more of the value of such
company's total assets.
(3) Paragraph (13) of section 1(h) of the 1986 Code is
amended by adding at the end the following new subparagraph:
``(D) Charitable remainder trusts.--Subparagraphs (A) and
(B)(ii) shall not apply to any capital gain distribution made
by a trust described in section 664.''
(j) Amendment Related to Section 7004 of 1998 Act.--Clause
(i) of section 408A(c)(3)(C) of the 1986 Code, as amended by
section 7004 of the 1998 Act, is amended by striking the
period at the end of subclause (II) and inserting ``, and''.
(k) Effective Date.--The amendments made by this section
shall take effect as if included in the provisions of the
1998 Act to which they relate.
SEC. 403. AMENDMENTS RELATED TO TAXPAYER RELIEF ACT OF 1997.
(a) Amendments Related to Section 202 of 1997 Act.--
(1) Paragraph (2) of section 163(h) of the 1986 Code is
amended by striking ``and'' at the end of subparagraph (D),
by striking the period at the end of subparagraph (E) and
inserting ``, and'', and by adding at the end the following
new subparagraph:
``(F) any interest allowable as a deduction under section
221 (relating to interest on educational loans).''
(2)(A) Subparagraph (C) of section 221(b)(2) of the 1986
Code is amended--
(i) by striking ``135, 137,'' in clause (i),
(ii) by inserting ``135, 137,'' after ``sections 86,'' in
clause (ii), and
(iii) by striking the last sentence.
(B) Sections 86(b)(2)(A), 135(c)(4)(A), and
219(g)(3)(A)(ii) of the 1986 Code are each amended by
inserting ``221,'' after ``137,''.
(C) Subparagraph (A) of section 137(b)(3) of the 1986 Code
is amended by inserting ``221,'' before ``911,''.
(D) Clause (iii) of section 469(i)(3)(E) of the 1986 Code
is amended to read as follows:
``(iii) the amounts allowable as a deduction under sections
219 and 221, and''.
(3) The last sentence of section 221(e)(1) of the 1986 Code
is amended by inserting before the period ``or to any person
by reason of a loan under any qualified employer plan (as
defined in section 72(p)(4)) or under any contract referred
to in section 72(p)(5)''.
(b) Provision Related to Section 311 of 1997 Act.--In the
case of any capital gain distribution made after 1997 by a
trust to which section 664 of the 1986 Code applies with
respect to amounts properly taken into account by such trust
during 1997, paragraphs (5)(A)(i)(I), (5)(A)(ii)(I), and
(13)(A) of section 1(h) of the 1986 Code (as in effect for
taxable years ending on December 31, 1997) shall not apply.
(c) Amendment Related to Section 506 of 1997 Act.--Section
2001(f)(2) of the 1986 Code is amended by adding at the end
the following:
``For purposes of subparagraph (A), the value of an item
shall be treated as shown on a return if the item is
disclosed in the return, or in a statement attached to the
return, in a manner adequate to apprise the Secretary of the
nature of such item.''.
(d) Amendments Related to Section 904 of 1997 Act.--
(1) Paragraph (1) of section 9510(c) of the 1986 Code is
amended to read as follows:
``(1) In general.--Amounts in the Vaccine Injury
Compensation Trust Fund shall be available, as provided in
appropriation Acts, only for--
``(A) the payment of compensation under subtitle 2 of title
XXI of the Public Health Service Act (as in effect on August
5, 1997) for vaccine-related injury or death with respect to
any vaccine--
``(i) which is administered after September 30, 1988, and
``(ii) which is a taxable vaccine (as defined in section
4132(a)(1)) at the time compensation is paid under such
subtitle 2, or
``(B) the payment of all expenses of administration (but
not in excess of $9,500,000 for any fiscal year) incurred by
the Federal Government in administering such subtitle.''.
(2) Section 9510(b) of the 1986 Code is amended by adding
at the end the following new paragraph:
``(3) Limitation on transfers to vaccine injury
compensation trust fund.--No amount may be appropriated to
the Vaccine Injury Compensation Trust Fund on and after the
date of any expenditure from the Trust Fund which is not
permitted by this section. The determination of whether an
expenditure is so permitted shall be made without regard to--
``(A) any provision of law which is not contained or
referenced in this title or in a revenue Act, and
``(B) whether such provision of law is a subsequently
enacted provision or directly or indirectly seeks to waive
the application of this paragraph.''.
(e) Amendments Related to Section 915 of 1997 Act.--
(1) Section 915 of the 1997 Act is amended--
(A) in subsection (b), by inserting ``or 1998'' after
``1997'', and
(B) by amending subsection (d) to read as follows:
``(d) Effective Date.--This section shall apply to taxable
years ending with or within calendar year 1997.''.
(2) Paragraph (2) of section 6404(h) of the 1986 Code is
amended by inserting ``Robert T. Stafford'' before
``Disaster''.
(f) Amendments Related to Section 1012 of 1997 Act.--
(1) Paragraph (2) of section 351(c) of the 1986 Code, as
amended by section 6010(c) of the 1998 Act, is amended by
inserting ``, or the fact that the corporation whose stock
was distributed issues additional stock,'' after ``dispose of
part or all of the distributed stock''.
(2) Clause (ii) of section 368(a)(2)(H) of the 1986 Code,
as amended by section 6010(c) of the 1998 Act, is amended by
inserting ``, or the fact that the corporation whose stock
was distributed issues additional stock,'' after ``dispose of
part or all of the distributed stock''.
(g) Provision Related to Section 1042 of 1997 Act.--Rules
similar to the rules of section 1.1502-75(d)(5) of the
Treasury Regulations shall apply with respect to any
organization described in section 1042(b) of the 1997 Act.
(h) Amendment Related to Section 1082 of 1997 Act.--
Subparagraph (F) of section 172(b)(1) of the 1986 Code is
amended by adding at the end the following new clause:
``(iv) Coordination with paragraph (2).--For purposes of
applying paragraph (2), an eligible loss for any taxable year
shall be treated in a manner similar to the manner in which a
specified liability loss is treated.''
(i) Amendment Related to Section 1084 of 1997 Act.--
Paragraph (3) of section 264(f) of the 1986 Code is amended
by adding at the end the following flush sentence:
``If the amount described in subparagraph (A) with respect to
any policy or contract does not reasonably approximate its
actual value, the amount taken into account under
subparagraph (A) shall be the greater of the amount of the
insurance company liability or the insurance company reserve
with respect to such policy or contract (as determined for
purposes of the annual statement approved by the National
Association of Insurance Commissioners) or shall be such
other amount as is determined by the Secretary.''
(j) Amendment Related to Section 1175 of 1997 Act.--
Subparagraph (C) of section 954(e)(2) of the 1986 Code is
amended by striking ``subsection (h)(8)'' and inserting
``subsection (h)(9)''.
(k) Amendment Related to Section 1205 of 1997 Act.--
Paragraph (2) of section 6311(d) of the 1986 Code is amended
by striking ``under such contracts'' in the last sentence and
inserting ``under any such contract for the use of credit,
debit, or charge cards for the payment of taxes imposed by
subtitle A''.
(l) Effective Date.--The amendments made by this section
shall take effect as if included in the provisions of the
1997 Act to which they relate.
SEC. 404. AMENDMENTS RELATED TO TAX REFORM ACT OF 1984.
(a) In General.--Subparagraph (C) of section 172(d)(4) of
the 1986 Code is amended to read as follows:
``(C) any deduction for casualty or theft losses allowable
under paragraph (2) or (3) of section 165(c) shall be treated
as attributable to the trade or business; and''.
(b) Conforming Amendments.--
(1) Paragraph (3) of section 67(b) of the 1986 Code is
amended by striking ``for losses described in subsection
(c)(3) or (d) of section 165'' and inserting ``for casualty
or theft losses described in paragraph (2) or (3) of section
165(c) or for losses described in section 165(d)''.
(2) Paragraph (3) of section 68(c) of the 1986 Code is
amended by striking ``for losses described in subsection
(c)(3) or (d) of section 165'' and inserting ``for casualty
or theft losses described in paragraph (2) or (3) of section
165(c) or for losses described in section 165(d)''.
(3) Paragraph (1) of section 873(b) is amended to read as
follows:
``(1) Losses.--The deduction allowed by section 165 for
casualty or theft losses described in paragraph (2) or (3) of
section 165(c), but only if the loss is of property located
within the United States.''
(c) Effective Dates.--
(1) The amendments made by subsections (a) and (b)(3) shall
apply to taxable years beginning after December 31, 1983.
(2) The amendment made by subsection (b)(1) shall apply to
taxable years beginning after December 31, 1986.
(3) The amendment made by subsection (b)(2) shall apply to
taxable years beginning after December 31, 1990.
[[Page S12328]]
SEC. 405. OTHER AMENDMENTS.
(a) Amendments Related to Section 6103 of 1986 Code.--
(1) Subsection (j) of section 6103 of the 1986 Code is
amended by adding at the end the following new paragraph:
``(5) Department of agriculture.--Upon request in writing
by the Secretary of Agriculture, the Secretary shall furnish
such returns, or return information reflected thereon, as the
Secretary may prescribe by regulation to officers and
employees of the Department of Agriculture whose official
duties require access to such returns or information for the
purpose of, but only to the extent necessary in, structuring,
preparing, and conducting the census of agriculture pursuant
to the Census of Agriculture Act of 1997 (Public Law 105-
113).''.
(2) Paragraph (4) of section 6103(p) of the 1986 Code is
amended by striking ``(j)(1) or (2)'' in the material
preceding subparagraph (A) and in subparagraph (F) and
inserting ``(j)(1), (2), or (5)''.
(3) The amendments made by this subsection shall apply to
requests made on or after the date of the enactment of this
Act.
(b) Amendment Related to Section 9004 of Transportation
Equity Act for the 21st Century.--
(1) Paragraph (2) of section 9503(f) of the 1986 Code is
amended to read as follows:
``(2) notwithstanding section 9602(b), obligations held by
such Fund after September 30, 1998, shall be obligations of
the United States which are not interest-bearing.''
(2) The amendment made by paragraph (1) shall take effect
on October 1, 1998.
(c) Amendment Related to Treasury and General Government
Appropriations Act, 1999.--
(1) The Treasury and General Government Appropriations Act,
1999 is amended by striking section 804 (relating to
technical and clarifying amendments relating to judicial
retirement program).
(2) The amendment made by paragraph (1) shall take effect
as if such section 804 had never been enacted.
(d) Clerical Amendments.--
(1) Clause (i) of section 51(d)(6)(B) of the 1986 Code is
amended by striking ``rehabilitation plan'' and inserting
``plan for employment''. The reference to ``plan for
employment'' in such clause shall be treated as including a
reference to the rehabilitation plan referred to in such
clause as in effect before the amendment made by the
preceding sentence.
(2) Paragraph (3) of section 56(a) of the 1986 Code is
amended by striking ``section 460(b)(2)'' and inserting
``section 460(b)(1)'' and by striking ``section 460(b)(4)''
and inserting ``section 460(b)(3)''.
(3) Paragraph (10) of section 2031(c) of the 1986 Code is
amended by striking ``section 2033A(e)(3)'' and inserting
``section 2057(e)(3)''.
(4) Subparagraphs (C) and (D) of section 6693(a)(2) of the
1986 Code are each amended by striking ``Section'' and
inserting ``section''.
SEC. 406. AMENDMENTS RELATED TO URUGUAY ROUND AGREEMENTS ACT.
(a) Inapplicability of Assignment Prohibition.--Section 207
of the Social Security Act (42 U.S.C. 407) is amended by
adding at the end the following new subsection:
``(c) Nothing in this section shall be construed to
prohibit withholding taxes from any benefit under this title,
if such withholding is done pursuant to a request made in
accordance with section 3402(p)(1) of the Internal Revenue
Code of 1986 by the person entitled to such benefit or such
person's representative payee.''.
(b) Proper Allocation of Costs of Withholding Between the
Trust Funds and the General Fund.--Section 201(g) of such Act
(42 U.S.C. 401(g)) is amended--
(1) by inserting before the period in paragraph (1)(A)(ii)
the following: ``and the functions of the Social Security
Administration in connection with the withholding of taxes
from benefits, as described in section 207(c), pursuant to
requests by persons entitled to such benefits or such
persons' representative payee'';
(2) by inserting before the period at the end of paragraph
(1)(A) the following: ``and the functions of the Social
Security Administration in connection with the withholding of
taxes from benefits, as described in section 207(c), pursuant
to requests by persons entitled to such benefits or such
persons' representative payee'';
(3) in paragraph (1)(B)(i)(I), by striking ``subparagraph
(A)),'' and inserting ``subparagraph (A)) and the functions
of the Social Security Administration in connection with the
withholding of taxes from benefits, as described in section
207(c), pursuant to requests by persons entitled to such
benefits or such persons' representative payee,'';
(4) in paragraph (1)(C)(iii), by inserting before the
period the following: ``and the functions of the Social
Security Administration in connection with the withholding of
taxes from benefits, as described in section 207(c), pursuant
to requests by persons entitled to such benefits or such
persons' representative payee'';
(5) in paragraph (1)(D), by inserting after ``section 232''
the following: ``and the functions of the Social Security
Administration in connection with the withholding of taxes
from benefits as described in section 207(c)''; and
(6) in paragraph (4), by inserting after the first sentence
the following: ``The Board of Trustees of such Trust Funds
shall prescribe the method of determining the costs which
should be borne by the general fund in the Treasury of
carrying out the functions of the Social Security
Administration in connection with the withholding of taxes
from benefits, as described in section 207(c), pursuant to
requests by persons entitled to such benefits or such
persons' representative payee.''.
(c) Effective Date.--The amendments made by subsection (b)
shall apply to benefits paid on or after the first day of the
second month beginning after the month in which this Act is
enacted.
____
DESCRIPTION OF PROVISIONS IN S. 2622, THE TAX RELIEF EXTENSION ACT OF
1998
(Prepared by the Staff of the Joint Committee on Taxation)
Introduction
S. 2622, the Tax (Relief) Extension Act of 1998 (``the Tax
Extension Act''), was introduced by Senator William V. Roth,
Jr., Senator Daniel Patrick Moynihan, and others on October
10, 1998.
This document, \1\ prepared by the staff of the Joint
Committee on Taxation, describes the proposals contained in
the Tax Extension Act. Part I of this document contains the
expiring provision proposals, Part II contains other
proposals, Part III contains a revenue offset proposal, and
Part IV contains tax technical corrections.
---------------------------------------------------------------------------
\1\ Footnotes at end of article.
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Title I. Extension of Expiring Provisions
Subtitle A--Tax Provisions
A. Extension of Research Tax Credit (sec. 101 of the bill and sec. 41
of the Code)
Present Law
General rule
Section 41 provides for a research tax credit equal to 20
percent of the amount by which a taxpayer's qualified
research expenditures for a taxable year exceeded its base
amount for that year. The research tax credit expired and
generally does not apply to amounts paid or incurred after
June 30, 1998.
A 20-percent research tax credit also applied to the excess
of (1) 100 percent of corporate cash expenditures (including
grants or contributions) paid for basic research conducted by
universities (and certain nonprofit scientific research
organizations) over (2) the sum of (a) the greater of two
minimum basic research floors plus (b) an amount reflecting
any decrease in nonresearch giving to universities by the
corporation as compared to such giving during a fixed-base
period, as adjusted for inflation. This separate credit
computations is commonly referred to as the ``university
basic research credit'' (see sec. 41(e)).
Computation of allowable credit
Except for certain university basic research payments made
by corporations, the research tax credit applies only to the
extent that the taxpayer's qualifed research expenditures for
current taxable year exceed its base amount. The base amount
for the current year generally is computed by multiplying the
taxpayer's ``fixed-base percentage'' by the average amount of
the taxpayer's gross receipts for the four preceding years.
If a taxpayer both incurred qualified research expenditures
and had gross receipts during each of at least three years
from 1984 through 1988, then its ``fixed-base percentage'' is
the ratio that its total qualified research expenditures for
the 1984-1988 period bears to its total gross receipts for
that period (subject to a maximum ratio of .16). All other
taxpayers (so-called ``start-up firms'') are assigned a
fixed-base percentage of 3 percent. \2\
In computing the credit, a taxpayer's base amount may not
be less than 50 percent of its current-year qualified
research expenditures.
Alternative incremental research credit regime
Taxpayers are allowed to elect an alternative incremental
research credit regime. If a taxpayer elects to be subject to
this alternative regime, the taxpayer is assigned a three-
tiered fixed-base percentage (that is lower than the fixed-
base percentage otherwise applicable under present law) and
the credit rate likewise is reduced. Under the alternative
credit regime, a credit rate of 1.65 percent applies to the
extent that a taxpayer's current-year research expenses
exceed a base amount computed by using a fixed-base
percentage of 1 percent (i.e, the base amount equals 1
percent of the taxpayer's average gross receipts for the four
preceding years) but do not exceed a base amount computed by
using a fixed-base percentage of 1.5 percent. A credit rate
of 2.2 percent applies to the extent that a taxpayer's
current-year research expenses exceed a base amount computed
by using a fixed-base percentage of 1.5 percent but do not
exceed a base amount computed by using a fixed-base
percentage of 2 percent. A credit rate of 2.75 percent
applies to the extent that a taxpayer's current-year research
expenses exceed a base amount computed by using a fixed-base
percentage of 2 percent. An election to be subject to this
alternative incremental credit regime may be made for any
taxable year beginning after June 30, 1996, and such an
election applies to that taxable year and all subsequent
years (in the event that the credit subsequently is extended
by Congress) unless revoked with the consent of the Secretary
of the Treasury.
Eligible expenditures
Qualified research expenditures eligible for the research
tax credit consist of: (1) ``in-
[[Page S12329]]
house'' expenses of the taxpayer for wages and supplies
attributable to qualified research; (2) certain time-sharing
costs for computer use in qualified research; and (3) 65
percent of amounts paid by the taxpayer for qualified
conducted on the taxpayer's behalf (so-called ``contract
research expenses''). \3\
To be eligible for the credit, the research must not only
satisfy the requirements of present-law section 174 but must
be undertaken for the purpose of discovering information that
is technological in nature, the application of which is
intended to be useful in the development of a new or improved
business component of the taxpayer, and must involve a
process of experimentation related to functional aspects,
performance, reliability, or quality of a business component.
Expenditures attributable to research that is conducted
outside the United States do not enter into the credit
computation. In addition, the credit is not available for
research in the social sciences, arts, or humanities, nor is
it available for research to the extent funded by any grant,
contract, or otherwise by another person (or governmental
entity).
Relation to deduction
Deductions allowed to a taxpayer under section 174 (or any
other section) are reduced by an amount equal to 100 percent
of the taxpayer's research tax credit determined for the
taxable year. Taxpayers may alternatively elect to claim a
reduced research tax credit amount under section 41 in lieu
of reducing deductions otherwise allowed (sec. 280C(c)(3)).
Description of Proposal
The bill extends the research tax credit for 12 months--
i.e., generally, for the period July 1, 1998, through June
30, 1999.
In extending the credit, the scope of the term ``qualified
research'' is reaffirmed. Section 41 targets the credit to
research which is undertaken for the purpose of discovering
information which is technological in nature and the
application of which is intended to be useful in the
development of a new or improved business component of the
taxpayer. However, eligibility for the credit does not
require that the research be successful--i.e., the research
need not achieve its desired result. Moreover, evolutionary
research activities intended to improve functionality,
performance, reliability, or quality are eligible for the
credit, as are research activities intended to achieve a
result that has already been achieved by other persons but is
not yet within the common knowledge (e.g., freely available
to the general public) of the field (provided that the
research otherwise meets the requirements of section 41,
including not being excluded by subsection (d)(4)).
Activities constitute a process of experimentation, as
required for credit eligibility, if they involve evaluation
of more than one alternative to achieve a result where the
means of achieving the result are uncertain at the outset,
even if the taxpayer knows at the outset that it may
be technically possible to achieve the result. Thus, even
though a researcher may know of a particular method of
achieving an outcome, the use of the process of
experimentation to effect a new or better method of
achieving that outcome may be eligible for the credit
(provided that the research otherwise meets the
requirements of section 41, including not being excluded
by subsection (d)(4)).
Lastly, the lack of clarity in the interpretation of the
distinction between internal-use software, the costs of which
may be eligible for the credit if additional tests are met,
and other software has been observed. The application of the
definition of internal-use software should fully reflect
Congressional intent.
Effective Date
The extension of the research credit is effective for
qualified research expenditures paid or incurred during the
period July 1, 1998, through June 30, 1999.
b. extension of the work opportunity tax credit (sec. 102 of the bill
and sec. 51 of the Code)
Present Law
In general
The work opportunity tax credit (``WOTC''), which expired
on June 30, 1998, was available on an elective basis for
employers hiring individuals from one or more of eight
targeted groups. The credit equals 40 percent (25 percent for
employment of 400 hours or less) of qualified wages.
Qualified wages are wages attributable to service rendered by
a member of a targeted group during the one-year period
beginning with the day the individual began work for the
employer. For a vocational rehabilitation referral, however,
the period begins on the day the individual began work for
the employer on or after the beginning of the individual's
vocational rehabilitation plan.
The maximum credit per employee if $2,400 (40% of the first
$6,000 of qualified first-year wages). With respect to
qualified summer youth employees, the maximum credit is
$1,200 (40% of the first $3,000 of qualified first-year
wages).
The employer's deduction for wages is reduced by the amount
of the credit
Targeted groups eligible for the credit.
The eight targeted groups are: (1) families eligible to
receive benefits under the Temporary Assistance for Needy
Families (TANF) Program; (2) high-risk youth; (3) qualified
ex-felons; (4) vocational rehabilitation referrals; (5)
qualified summer youth employees; (6) qualified veterans; (7)
families receiving food stamps; and (8) persons receiving
certain Supplemental Security Income (SSI) benefits.
Minimum employment period
No credit is allowed for wages paid to employees who work
less than 120 hours in the first year of employment.
Expiration date
The credit is effective for wages paid or incurred to a
qualified individual who began work for an employer before
July 1, 1998.
Description of Proposal
The proposal extends the work opportunity tax credit, for
12 months, through June 30, 1999.
Effective Date
The proposal is effective for wages paid or incurred to a
qualified individual who begins work for any employer on or
after July 1, 1998, and before July 1, 1999.
C. Extension of the Welfare-To-Work Tax Credit (sec. 103 of the bill
and sec. 51A of the Code)
Present Law
The Code provides to employers a tax credit on the first
$20,000 of eligible wages paid to qualified long-term family
assistance (AFDC) or its successor program) recipients during
the first two years of employment. The credit is 35 percent
of the first $10,000 of eligible wages in the first year of
employment and 50 percent of the first $10,000 of eligible
wages in the second year of employment. The maximum credit is
$8,500 per qualified employee.
Qualified long-term family assistance recipients are: (1)
members of a family that has received family assistance for
at least 18 consecutive months ending on the hiring date; (2)
members of a family that has received family assistance for a
total of at least 18 months (whether or not consecutive)
after the date of enactment of this credit if they are hired
within 2 years after the date that the 18-month total is
reached; and (3) members of a family who are no longer
eligible for family assistance because of either Federal or
State time limits, if they are hired within 2 years after the
Federal or State time limits made the family ineligible for
family assistance.
Eligible wages include cash wages paid to an employee plus
amounts paid by the employer for the following: (1)
educational assistance excludable under a section 127 program
(or that would be excludable but for the expiration of sec.
127); (2) health plan coverage for the employee, but not more
than the applicable premium defined under section
4980B(f)(4); and (3) dependent care assistance excludable
under section 129.
The welfare to work credit is effective for wages paid or
incurred to a qualified individual who begins work for an
employer on or after January 1, 1998, and before May 1, 1999.
Description of Proposal
The proposal extends the welfare-to-work credit effective
for wages paid or incurred to a qualified individual who
begins work for an employer on or after May 1, 1999, and
before July 1, 1999.
Effective Date
The proposal is effective for wages paid or incurred to a
qualified individual who begins work for an employer on or
after May 1, 1999, and before July 1, 1999.
D. Extend the Deduction Provided for Contributions of Appreciated Stock
to Private Foundations (sec. 104 of the bill and sec. 170(e)(5) of the
Code)
Present Law
In computing taxable income, a taxpayer who itemizes
deductions generally is allowed to deduct the fair market
value of property contributed to a charitable
organization.\4\ However, in the case of a charitable
contribution of short-term gain, inventory, or other ordinary
income property, the amount of the deduction generally is
limited to the taxpayer's basis in the property. In the case
of a charitable contribution of tangible personal property,
the deduction is limited to the taxpayer's basis in such
property if the use by the recipient charitable organization
is unrelated to the organization's tax-exempt purpose.
In cases involving contributions to a private foundation
(other than certain private operating foundations), the
amount of the deduction is limited to the taxpayer's basis in
the property. However, under a special rule contained in
section 170(e)(5), taxpayers are allowed a deduction equal to
the fair market value of ``qualified appreciated stock''
contributed to a private foundation prior to July 1, 1998.
Qualified appreciated stock is defined as publicly traded
stock which is capital gain property. The fair-market-value
deduction for qualified appreciated stock donations applies
only to the extent that total donations made by the donor to
private foundations of stock in a particular corporation did
not exceed 10 percent of the outstanding stock of that
corporation. For this purpose, an individual is treated as
making all contributions that were made by any member of the
individual's family.
Description of Proposal
The proposal extends the special rule contained in section
170(e)(5) for one year--for contributions of qualified
appreciated stock made to private foundations during the
period July 1, 1998, through June 30, 1999.
Effective Date
The proposal is effective for contributions of qualified
appreciated stock to private
[[Page S12330]]
foundations made during the period July 1, 1998, through June
30, 1999.
e. exceptions under subpart f for certain active financing income (sec.
105 of the bill and secs. 953 and 954 of the code)
Present Law
In general
Under the subpart F rules, certain U.S. shareholders of a
controlled foreign corporation (``CFC'') are subject to U.S.
tax currently on certain income earned by the CFC, whether or
not such income is distributed to the shareholders. The
income subject to current inclusion under the subpart F rules
includes, among other things, ``foreign personal holding
company income'' and insurance income. The U.S. 10-percent
shareholders of a CFC also are subject to current inclusion
with respect to their shares of the CFC's foreign base
company services income (i.e., income derived from services
performed for a related person outside the country in which
the CFC is organized).
Foreign personal holding company income generally consists
of the following: (1) dividends, interest, royalties, rents
and annuities; (2) net gains from the sale or exchange of (a)
property that gives rise to the preceding types of income,
(b) property that does not give rise to income, and (c)
interests in trusts, partnerships, and REMICs; (3) net gains
from commodities transactions; (4) net gains from foreign
currency transactions; (5) income that is equivalent to
interest; (6) income from notional principal contracts; and
(7) payments in lieu of dividends.
Insurance income subject to current inclusion under the
subpart F rules includes any income of a CFC attributable to
the issuing or reinsuring of any insurance or annuity
contract in connection with risks located in a country other
than the CFC's country of organization. Subpart F insurance
income also includes income attributable to an insurance
contract in connection with risks located within the CFC's
country of organization, as the result of an arrangement
under which another corporation receives a substantially
equal amount of consideration for insurance of other-country
risks. Investment income of a CFC that is allocable to any
insurance or annuity contract related to risks located
outside the CFC's country of organization is taxable as
subpart F insurance income (Prop. Treas. Reg. sec. 1.953-
1(a)).
Temporary exceptions from foreign personal holding company
income and foreign base company services income apply for
subpart F purposes for certain income that is derived in the
active conduct of a banking, financing, insurance, or similar
business.\5\ These exceptions (described below) are
applicable only for taxable years beginning in 1998.
Income from the active conduct of a banking, financing, or
similar business
A temporary exception from foreign personal holding company
income applies to income that is derived in the active
conduct of a banking, financing, or similar business by a CFC
that is predominantly engaged in the active conduct of such
business. For this purpose, income derived in the active
conduct of a banking, financing, or similar business
generally is determined under the principles applicable in
determining financial services income for foreign tax credit
limitation purposes. However, in the case of a corporation
that is engaged in the active conduct of a banking or
securities business, the income that is eligible for this
exception is determined under the principles applicable in
determining the income which is treated as nonpassive income
for purposes of the passive foreign investment company
provisions. In this regard, the income of a corporation
engaged in the active conduct of banking or securities
business that is eligible for this exception is the income
that is treated as nonpassive under the regulations proposed
under section 1296(b) (as in effect prior to the enactment of
the Taxpayer Relief Act of 1997). See Prop. Treas. Reg. secs.
1.1296-4 and 1.1296-6. The Secretary of the Treasury is
directed to prescribe regulations applying look-through
treatment in characterizing for this purpose dividends,
interest, income equivalent to interest, rents and royalties
from related persons.
For purposes of the temporary exception, a corporation is
considered to be predominantly engaged in the active conduct
of banking, financing, or similar business if it is engaged
in the active conduct of a banking or securities business or
is a qualified bank affiliate or qualified securities
affiliate. In this regard, a corporation is considered to be
engaged in the active conduct of a banking or securities
business if the corporation would be treated as so engaged
under the regulations proposed under prior law section
1296(b) (as in effect prior to the enactment of the Taxpayer
Relief Act of 1997); qualified bank affiliates and qualified
securities affiliates are as determined under such proposed
regulations. See Prop. Treas. Reg. secs. 1.1296-4 and 1.1296-
6.
Alternatively, a corporation is considered to be engaged in
the active conduct of a banking, financing, or similar
business if more than 70 percent of its gross income is
derived from such business from transactions with unrelated
persons located within the country under the laws of which
the corporation is created or organized. For this purpose,
income derived by a qualified business unit (``QBU'') of a
corporation from transactions with unrelated persons located
in the country in which the QBU maintains its principal
office and conducts substantial business activity is treated
as derived by the corporation from transactions with
unrelated persons located within the country in which the
corporation is created or organized. A person other than a
natural person is considered to be located within the country
in which it maintains an office through which it engages in a
trade or business and by which the transaction is effected. A
natural person is treated as located within the country in
which such person is physically located when such person
enters into the transaction.
Income from the active conduct of an insurance business
A temporary exception from foreign personal holding company
income applies for certain investment income of a qualifying
insurance company with respect to risks located within the
CFC's country of creation or organization. These rules differ
from the rules of section 953 of the Code, which determines
the subpart F inclusions of a U.S. shareholder relating to
insurance income of a CFC. Such insurance income under
section 953 generally is computed in accordance with the
rules of subchapter L of the Code.
A temporary exception applies for income (received from a
person other than a related person) from investments made by
a qualifying insurance company of its reserves or 80 percent
of its unearned premiums. For this purpose, in the case of
contracts regulated in the country in which sold as property,
casualty or health insurance contracts, unearned premiums and
reserves are defined as unearned premiums and reserves for
losses incurred determined using the methods and interest
rates that would be used if the qualifying insurance company
were subject to tax under subchapter L of the Code. Thus, for
this purposed, unearned premiums are determined in accordance
with section 832(b)(4), and reserves for losses incurred are
determined in accordance with section 832(b)(5) and 846 of
the Code (as well as any other rules applicable to a U.S.
property and casualty insurance company with respect to such
amounts).
In the case of a contract regulated in the country in which
sold as a life insurance or annuity contract, the following
three alternative rules for determining reserves apply. Any
one of the three rules can be elected with respect to a
particular line of business.
First, reserves for such contracts can be determined
generally under the rules applicable to domestic life
insurance companies under subchapter L of the Code, using the
methods there specified, but substituting for the interest
rates in Code section 807(d)(2)(B) an interest rate
determined for the country in which the qualifying insurance
company was created or organized, calculated in the same
manner as the mid-term applicable Federal interest rate
(``AFR``) (within the meaning of section 1274(d)).
Second, the reserves for such contracts can be determined
using a preliminary term foreign reserve method, except that
the interest rate to be used is the interest rate determined
for the country in which the qualifying insurance company was
created or organized, calculated in the same manner as the
mid-term AFR. If a qualifying insurance company uses such a
preliminary term method with respect to contracts insuring
risks located in the country in which the company is created
or organized, then such method is the method that applies for
purposes of this election.
Third, reserves for such contracts can be determined to be
equal to the net surrender value of the contract (as defined
in section 807(e)(1)(A).
In no event can the reserve for any contract at any time
exceed the foreign statement reserve for the contract,
reduced by any catastrophe or deficiency reserve. This rule
applies whether the contract is regulated as a property,
casualty, health, life insurance, annuity or any other type
of contract.
A temporary exception from foreign personal holding company
income also applies for income from investment of assets
equal to: (1) one-third of premiums earned during the taxable
year on insurance contracts regulated in the country in which
sold as property, casualty, or health insurance contracts;
and (2) the greater of 10 percent of reserves, or, in the
case of qualifying insurance company that is a startup
company, $10 million. For this purpose, a startup company is
a company (including any predecessor) that has not been
engaged in the active conduct of an insurance business for
more than 5 years. In general, the 5-year period commences
when the foreign company first is engaged in the active
conduct of an insurance business. If the foreign company was
formed before being acquired by the U.S. shareholder, the 5-
year period commences when the acquired company first was
engaged in the active conduct of an insurance business. In
the event of the acquisition of a book of business from
another company through an assumption or indemnity
reinsurance transaction, the 5-year period commences when the
acquiring company first engaged in the active conduct of an
insurance business, except that if more than a substantial
part (e.g., 80 percent) of the business of the ceding company
is acquired, then the 5-year period commences when the ceding
company first engaged in the active conduct of an insurance
business. Reinsurance transactions among related persons may
not be used to multiply the number of 5-year periods.
Under rules prescribed by the Secretary, income is
allocated to contracts as follows.
[[Page S12331]]
In the case of contracts that are separate account-type
contracts (including variable contracts not meeting the
requirements of sec. 817), only the income specifically
allocable to such contracts are taken into account. In the
case of other contracts, income not specifically allocable is
allocated ratably among such contracts.
A qualifying insurance company is defined as any entity
which: (1) is regulated as an insurance company under the
laws of the country in which it is incorporated; (2) derived
at least 50 percent of its net written premiums from the
insurance or reinsurance of risks situated within its country
of incorporation; and (3) is engaged in the active conduct of
an insurance business and would be subject to tax under
subchapter L if it were a domestic corporation.
The temporary exceptions do not apply to investment income
(includable in the income of a U.S. shareholder of a CFC
pursuant to sec. 953) allocable to contracts that insure
related party risks or risks located in a country other than
the country in which the qualifying insurance company is
created or organized.
Anti-abuse rule
An anti-abuse rule applies for purposes of these temporary
exceptions. For purposes of applying these exceptions, items
with respect to a transaction or series of transactions are
disregarded if one of the principal purposes of the
transaction or transactions is to qualify income or gain for
these exceptions, including any change in the method of
computing reserves or any other transaction or transactions
one of the principal purposes of which is the acceleration or
deferral of any item in order to claim the benefits of these
exceptions.
Foreign base company services income
A temporary exception from foreign base company services
income applies for income derived from services performed in
connection with the active conduct of a banking, financing,
insurance or similar business by a CFC that is predominantly
engaged in the active conduct of such business or is a
qualifying insurance company.
Description of Proposal
The proposal extends for one year the present-law temporary
exceptions from foreign personal holding company income and
foreign base company services income for income that is
derived in the active conduct of a banking, financing,
insurance or similar business.
Effective Date
The proposal applies only to the first full taxable year of
a foreign corporation beginning in 1998 and to the taxable
year of such corporation immediately following such first
full taxable year, and to taxable years of U.S. shareholders
with or within which such taxable years of such foreign
corporation end. If a foreign corporation does not have such
a first full taxable year beginning in 1998, the proposal
applies only to the first taxable year of the foreign
corporation beginning in 1999, and to taxable years of U.S.
shareholders with or within which such taxable year of such
foreign corporation ends.
f. extend placed in service date for certain nonconventional fuels
facilities (sec. 106 of the bill and sec. 29 of the Code)
Present Law
Under present law, certain fuels produced from
``nonconventional sources'' and sold to unrelated parties are
eligible for an inflation-adjusted income tax credit (equal
to $6.10 in 1997) per barrel of oil or British Thermal Unit
barrel oil equivalent. The credit is available for qualified
fuels produced through December 31, 2007, by coal or biomass
facilities placed in service before July 1, 1998, pursuant to
a binding written contract in effect before January 1, 1997.
Description of Proposal
The proposal extends the placed in service date, but not
the binding contract date, for facilities producing
nonconventional fuels from coal and biomass through June 30,
1999.
Effective Date
This proposal is effective on the date of enactment (i.e.,
applies to facilities placed in service after June 30, 1998
and before July 1, 1999).
g. disclosure of return information to department of education in
connection with income contingent loans (sec. 107 of the bill and sec.
6103(l)(13) of the Code)
Present Law
Under section 6103(l)(13) of the Code, the Secretary of the
Treasury was authorized to disclose to the Department of
Education certain return information with respect to any
taxpayer who has received an ``applicable student loan.'' An
``applicable student loan'' is any loan made under (1) part D
of title IV of the Higher Education Act of 1965 or (2) parts
B or E of title IV of the Higher Education Act of 1965 which
is in default and has been assigned to the Department of
Education, if the loan repayment amounts are based in whole
or in part on the taxpayer's income. The Secretary is
permitted to disclose only taxpayer identity information and
the adjusted gross income of the taxpayer. The Department of
Education may use the information only to establish the
appropriate income contingent repayment amount for an
applicable student loan.
The disclosure authority under section 6103(l)(13)
terminated with respect to requests made after September 30,
1998.
Description of Proposal
The provision reinstates the disclosure authority under
section 6103(l)(13) with respect to requests made after the
date of enactment and before October 1, 2004.
Effective Date
The disclosure authority under section 6103(l)(13) applies
to requests made after the date of enactment and before
October 1, 2004.
Subtitle B--Trade Provisions
A. Extension of the Generalized System of Preferences (sec. 111 of the
bill and sec. 505 of the Trade Act of 1974)
Present Law
Title V of the Trade Act of 1974, as amended, grants
authority to the President to provide duty-free treatment on
imports of certain articles from beneficiary developing
countries subject to certain conditions and limitations. To
qualify for GSP privileges, each beneficiary country is
subject to various mandatory and discretionary eligible
criteria. Import sensitive products are ineligible for GSP.
The GSP program, which is designed to promote development
through trade rather than traditional aid programs, expired
after June 30, 1998.
Description of Proposal
The proposal reauthorizes the GSP program to terminate
after December 31, 1999. Refunds are authorized, upon request
of the importer, for duties paid between July 1, 1998, and
the date of enactment of the bill.
Effective Date
The proposed is effective for duties paid on or after July
1, 1998, and before December 31, 1999.
B. Extension of the Trade Adjustment Assistance Program (sec. 112 of
the bill and sec. 245 of the Trade Act of 1974)
Present Law
Title II of the Trade Act of 1974, as amended, authorizes
three trade adjustment assistance (TAA) programs for the
purpose of providing assistance to individual workers and
firms that are adversely affected by the reduction of
barriers to foreign trade. Those programs include--
(1) The general TAA program for workers provides training
and income support for workers adversely affected by import
competition.
(2) The TAA program for firms provides technical assistance
by qualifying firms.
(3) The third program, the North American Free Trade
Agreement (``NAFTA'') program for workers (established by the
North American Free Trade Agreement Implementation Act of
1993) provides training and income support for workers
adversely affected by trade with or production shifts to
Canada and/or Mexico.
All three TAA programs expired on September 30, 1998. The
TAA program for firms is also subject to annual
appropriations.
Description of Proposal
The proposal reauthorizes each of the three TAA programs
through June 30, 1999.
Effective Date
The proposal is effective on the date of enactment.
Title II. Other Tax Provisions
a. increase deduction for health insurance expenses of self-employed
individuals (sec. 201 of the bill and sec. 162(l) of the Code)
Present Law
Under present law, self-employed individuals are entitled
to deduct a portion of the amount paid for health insurance
for the self-employed individual and the individual's spouse
and dependents. The deduction for health insurance expenses
of self-employed individuals is not available for any month
in which the taxpayer is eligible to participate in a
subsidized health plan maintained by the employer of the
taxpayer or the taxpayer's spouse. The deduction is available
in the case of self insurance as well as commercial
insurance. The self-insured plan must in fact be insurance
(e.g., there must be appropriate risk shifting) and not
merely a reimbursement arrangement.
The portion of health insurance expenses of self-employed
individuals that is deductible is 45 percent for taxable
years beginning in 1998 and 1999, 50 percent for taxable
years beginning in 2000 and 2001, 60 percent for taxable
years beginning in 2002, 80 percent for taxable years
beginning in 2003, 2004, and 2005, 90 percent for taxable
years beginning in 2006, and 100 percent for taxable years
beginning in 2007 and thereafter.
Under present law, employees can exclude from income 100
percent of employer-provided health insurance.
Description of Proposal
The proposal increases the deduction for health insurance
of self-employed individuals to 70 percent for taxable years
beginning in 2001 and to 100 percent for taxable years
beginning in 2002 and thereafter.
Effective Date
The proposal is effective for taxable years beginning after
December 31, 2000.
b. farm production flexibility contract payments (sec. 202 of the bill)
Present Law
A taxpayer generally is required to include an item in
income no later than the time of its actual or constructive
receipt, unless such amount properly is accounted for in a
different period under the taxpayer's method of accounting.
If a taxpayer has an unrestricted right to demand the payment
of an amount, the taxpayer is in constructive receipt of that
amount whether or not the taxpayer makes the demand and
actually receives the payment.
[[Page S12332]]
The Federal Agriculture Improvement and Reform Act of 1996
(the ``FAIR Act'') provides for production flexibility
contracts between certain eligible owners and producers and
the Secretary of Agriculture. These contracts generally cover
crop years from 1996 through 2002. Annual payments are made
under such contracts at specific times during the Federal
government's fiscal year. Section 112(d)(2) of the FAIR Act
provides that one-half of each annual payment is to be made
on either December 15 or January 15 of the fiscal year, at
the option of the recipient.\6\ This option to receive the
payment on December 15 potentially results in the
constructive receipt (and thus potential inclusion in income)
of one-half of the annual payment at that time, even if the
option to receive the amount on January 15 is elected.
The remaining one-half of the annual payment must be made
no later than September 30 of the fiscal year. The Emergency
Farm Financial Relief Act of 1998 added section 112(d)(3) to
the FAIR Act which provides that all payments for fiscal year
1999 are to be paid at such time or times during fiscal year
1999 as the recipient may specify. Thus, the one-half of the
annual amount that would otherwise be required to be paid no
later than September 30, 1999 can be specified for payment in
calendar year 1998. This potentially results in the
constructive receipt (and thus required inclusion in taxable
income) of such amounts in calendar year 1998, whether or not
the amounts actually are received or the right to their
receipt is fixed.
Description of Proposal
The time a production flexibility contract payment under
the FAIR Act properly is includable in income is determined
without regard to the options granted by section 112(d)(2)
(allowing receipt of one-half of the annual payment on either
December 15 or January 15 of the fiscal year) or section
112(d)(3) (allowing the acceleration of all payments for
fiscal year 1999) of that Act.
Effective Date
The proposal is effective for production flexibility
contract payments made under the FAIR Act in taxable years
ending after December 31, 1995.
C. Permanent Extension of Income Averaging for Farmers (sec. 203 of the
bill and sec. 1301 of the Code)
Present Law
An individual engaged in a farming business may elect to
compute his or her current year tax liability by averaging,
over the prior three-year period, all or a portion of the
taxable income that is attributable to the farming business.
In general, an individual who makes the election (1)
designates all or a portion of his or her taxable income
attributable to any farming business from the current year as
``elected farm income;'' \7\ (2) allocates one-third of the
elected farm income to each of the three prior taxable years;
and (3) determines the current year section 1 tax liability
by combining (a) his or her current year section 1 tax
liability excluding the elected farm income allocated to the
three prior taxable years, plus (b) the increases in the
section 1 tax liability for each of the three prior taxable
years caused by including one-third of the elected farm
income in each such year. Any allocation of elected farm
income pursuant to the election applies for purposes of any
election in a subsequent taxable year.
The provision does not apply for employment tax purposes,
or to an estate or a trust. The provision also does not apply
for purposes of the alternative minimum tax. The provision is
effective for taxable years beginning after December 31,
1997, and before January 1, 2001.
Description of Proposal
The proposal permanently extends the income averaging
provision for farmers.
Effective Date
The proposal is effective for taxable years beginning after
December 31, 2000.
D. Personal Credits Fully Allowed Against Regular Tax Liability During
1998 (sec. 204 of the bill and sec. 26 of the Code)
Present law provides for certain nonrefundable personal tax
credits (i.e., the dependent care credit, the credit for the
elderly and disabled, the adoption credit, the child tax
credit, the credit for interest on certain home mortgages,
the HOPE Scholarship and Lifetime Learning credits, and the
D.C. homebuyer's credit). Generally, these credits are
allowed only to the extent that the individual's regular
income tax liability exceeds the individual's tentative
minimum tax (determined without regard to the AMT foreign tax
credit).
The tentative minimum tax is an amount equal to (1) 26
percent of the first $175,000 ($87,500 in the case of a
married individual filing a separate return) of alternative
minimum taxable income (``AMTI'') in excess of a phased-out
exemption amount and (2) 28 percent of the remaining AMTI.
The maximum tax rates on net capital gain used in computing
the tentative minimum tax are the same as under the regular
tax. AMTI is the individual's taxable income adjusted to take
account of specified preferences and adjustments. The
exemption amounts are: (1) $45,000 in the case of married
individuals filing a joint return and surviving spouses; (2)
$33,750 in the case of other unmarried individuals; and (3)
$22,500 in the case of married individuals filing a separate
return, estates and trusts. The exemption amounts are phased
out by an amount equal to 25 percent of the amount by which
the individual's AMTI exceeds (1) $150,000 in the case of
married individuals filing a joint return and surviving
spouses, (2) $112,500 in the case of other unmarried
individuals, and (3) $75,000 in the case of married
individuals filing separate returns or an estate or a trust.
These amounts are not indexed for inflation.
For families with three or more qualifying children, an
additional child credit is provided which may offset the
liability for social security taxes to the extent that tax
liability exceeds the amount of the earned income credit. The
additional child credit is reduced by the amount of the
individual's minimum tax liability (i.e., the amount by which
the tentative minimum tax exceeds the regular tax liability).
Description of Proposal
The proposal allows the nonrefundable personal credits to
offset the individual's regular tax in full for taxable years
beginning in 1998 (as opposed to only the amount by which the
regular tax exceeds the tentative minimum tax, as under
present law).
The provision of present law that reduces the additional
child credit by the amount of an individual's AMT will not
apply for taxable years beginning in 1998.
Effective Date
The proposal is effective for taxable years beginning in
1998.
Title III. Revenue Offset Provision
A. treatment of certain deductible liquidating distributions of
regulated investment companies and real estate investment trusts (sec.
301 of the bill and secs. 332 and 334 of the code)
Present Law
Regulated investment companies (``RICs'') and real estate
investment trusts (``REITs'') are allowed a deduction for
dividends paid to their shareholders. The deduction for
dividends paid includes amounts distributed in liquidation
which are properly chargeable to earnings and profits, as
well as, in the case of a complete liquidation occurring
within 24 months after the adoption of a plan of complete
liquidation, any distribution made pursuant to such plan to
the extent of earnings and profits. Rules that govern the
receipt of dividends from RICs and REITs generally provide
for including the amount of the dividend in the income of the
shareholder receiving the dividend that was deducted by the
RIC or REIT. Generally, any shareholder realizing gain from a
liquidating distribution of a RIC or REIT includes the amount
of gain in the shareholder's income. However, in the case of
a liquidating distribution to a corporation owning 80-percent
of the stock of the distributing corporation, a separate rule
generally provides that the distribution is tax-free to the
parent corporation. The parent corporation succeeds to the
tax attributes, including the adjusted basis of assets, of
the distributing corporation. Under these rules, a
liquidating RIC or REIT might be allowed a deduction for
amounts paid to its parent corporation, without a
corresponding inclusion in the income of the parent
corporation, resulting in income being subject to no tax.
A RIC or REIT may designate a portion of a dividend as a
capital gain dividend to the extent the RIC or REIT itself
has a net capital gain, and a RIC may designate a portion of
the dividend paid to a corporate shareholder as eligible for
the 70-percent dividends-received deduction to the extent the
RIC itself received dividends from other corporations. If
certain conditions are satisfied, a RIC also is permitted to
pass through to its shareholders the tax-exempt character of
the RIC's net income from tax-exempt obligations through the
payment of ``exempt interest dividends,'' though no deduction
is allowed for such dividends.
Description of Proposal
Any amount which a liquidating RIC or REIT may take as a
deduction for dividends paid with respect to an otherwise
tax-free liquidating distribution to an 80-percent corporate
owner is includible in the income of the recipient
corporation. The includible amount is treated as a dividend
received from the RIC or REIT. The liquidating corporation
may designate the amount distributed as a capital gain
dividend or, in the case of a RIC, a dividend eligible for
the 70-percent dividends received deduction or an exempt
interest dividend, to the extent provided by the RIC or REIT
provisions of the Code.
The provision does not otherwise change the tax treatment
of the distribution to the parent corporation or to the RIC
or REIT. Thus, for example, the liquidating corporation will
not recognize gain (if any) on the liquidating distribution
and the recipient corporation will hold the assets at a
carryover basis, even where the amount received is treated as
a dividend.
Effective Date
The provision is effective for distributions on or after
May 22, 1998, regardless of when the plan of liquidation was
adopted.
No inference is intended regarding the treatment of such
transactions under present law.
Title IV. Tax Technical Corrections
Except as otherwise provided, the technical corrections
contained in the bill generally are effective as if included
in the originally enacted related legislation.
[[Page S12333]]
a. technical corrections to the 1998 act
1. Burden of proof (sec. 402(b) of the bill, sec. 3001 of the
1998 Act, and sec. 7491(a)(2)(C) of the Code)
Present Law
The Treasury Secretary has the burden of proof in any court
proceeding with respect to a factual issue if the taxpayer
introduces credible evidence with respect to any factual
issue relevant to ascertaining the taxpayer's tax liability,
provided specified conditions are satisfied (sec. 7491). One
of these conditions if that corporations, trust, and
partnerships must meet certain net worth limitations. These
net worth limitations do not apply to individuals or to
estates.
Description of Proposal
The proposal removes that net worth limitation from certain
revocable trusts for the same period of time that the trust
would have been treated as part of the estate had the trust
made the election under section 645 to be treated as part of
the estate.
2. Relief for innocent spouses (sec. 402(c) of the bill, sec.
3201 of the 1998 Act, and secs. 6015(e) and 7421(a) of
the Code)
Present Law
A taxpayer who is no longer married to, is separated from,
or has been living apart for at least 12 months from the
person with whom he or she originally joined in filing a
joint Federal income tax return may elect to limit his or her
liability for a deficiency arising from such joint return to
the amount of the deficiency that is attributable to items
that are allocable to such electing spouse. The election is
limited to deficiency situations and only affects the amount
of the deficiency for which the electing spouse is liable.
Thus, the election cannot be used to generate a refund, to
direct a refund to one spouse or the other, or to allocate
responsibility for payment where a balance due is reported
on, but not paid with, a joint return.
In addition to the election to limit the liability for
deficiencies, a taxpayer may be eligible for innocent spouse
relief. Innocent spouse relief allows certain taxpayers who
joined in the filing of a joint return to be relieved of
liability for an understatement of tax that is attributable
to items of the other spouse to the extent that the taxpayer
did not know or have reason to know of the understatement.
The Secretary is also authorized to provide equitable relief
in situations where, taking into account all of the facts and
circumstances, it is inequitable to hold an individual
responsible for all or part of any unpaid tax or deficiency
arising from a joint return. Under certain circumstances, it
is possible that a refund could be obtained under this
authority.
Description of Proposal
The proposal clarifies that the ability to obtain a credit
or refund of Federal income tax is limited to situations
where the taxpayer qualifies for innocent spouse relief or
where the Secretary exercises his authority to provide
equitable relief.
3. Interest netting (sec. 402(d) of the bill and sec.
3301(c)(2) of the 1998 Act)
Present Law
Fro calendar quarters beginning after July 22, 1998, a net
interest rate of zero applies where interest is payable and
allowable on equivalent amounts of overpayment and
underpayment of any tax imposed by the Internet Revenue Code.
In addition, the net interest rate of zero applies to periods
on or before July 22, 1998, providing (1) the statute of
limitations has not expired with respect to either the
underpayment or overpayment, (2) the taxpayer identifies the
periods of underpayment and overpayment where interest is
payable and allowable for which the net interest rate of zero
would apply, and (3) on or before December 31, 1999, the
taxpayer asks the Secretary to apply the net zero rate.
Description of Proposal
The proposal restores language originally included in the
Senate amendment that clarifies that the applicability of the
zero net interest rate for periods on or before July 22, 1998
is subject to any applicable statute of limitations not
having expired with regard to either a tax underpayment or
overpayment.
4. Effective date for elimination of 18-month holding period
for capital gains (sec. 402(i) of the bill, sec. 5001 of
the 1998 Act, and sec. 1(h) of the Code)
Present Law
The 1998 Act repealed the provision in the 1997 Act
providing a maximum 28-percent rate for the long-term capital
gain attributable to property held more than one year but not
more than 18 months. Instead, the 1998 Act treated this gain
in the same manner as gain from property held more than 18
months. The provision in the 1998 Act is effective for
amounts properly taken into account after December 31, 1997.
For gains taken into account by a pass-thru entity, such as a
partnership, S corporation, trust, estate, RCI or REIT, the
date that the entity properly took the gain into account is
the appropriate date in applying this provision. Thus, for
example, amounts properly taken into account by a pass-thru
entity after July 28, 1997, and before January 1, 1998,
with respect to property held more than one year but not
more than 18 months which are included in income on an
individual's 1998 return are taken into account in
computing 28-percent rate gain.
Description of Proposal
Under the proposal, in the case of a capital gain dividend
made by a RIC or REIT after 1997, no amount will be taken
into account in computing the net gain or loss in the 28-
percent rate gain category by reason of property being held
more than one year but not more than 18 months, other than
amounts taken into account by the RIC or REIT from other
pass-thru entities (other than in structures, such as a
``master-feeder structure'', in which the RIC invests a
substantial portion of its assets in one or more partnerships
holding portfolio securities and having the same taxable year
as the RIC). A similar rule applies to amounts properly taken
into account by a RIC or REIT by reason of holding, directly
or indirectly, an interest in another RIC or REIT to which
the rule in the preceding sentence applies.
For example, if a RIC sold stock held more than one year
but not more than 18 months on November 15, 1997, for a gain,
and makes a capital gain dividend in 1998, the gain is not
taken into account in computing 28-percent rate gain for
purposes of determining the taxation of the 1998 dividend.
(Thus, all the netting and computations made by the RIC need
to be redone with respect to all post-1997 capital gain
dividends, whether or not dividends of 28-percent rate gain.)
If, however, the gain was taken into account by a RIC by
reason of holding an interest in a calendar year 1997
partnership which itself sold the stock, the gain will not be
recharacterized by reason of this proposal (unless the RIC's
investment in the partnership satisfies the exception for
master-feeder structures). If the gain was taken into account
by a RIC by reason of holding an interest in a REIT and the
gain was excluded from 28-percent rate gain by reason of the
application of this proposal to the REIT, the gain will be
excluded from 28-percent rate gain in determining the tax of
the RIC shareholders.
The proposal also corrects a cross reference.
b. technical corrections to the 1997 act
1. Treatment of interest on qualified education loans (sec.
403(a) of the bill, sec. 202 of the 1997 Act, and secs.
221 and 163(h) of the Code)
Present Law
Present law, as modified by the 1997 Act, provides that
certain individuals who have paid interest on qualified
education loans may claim an above-the-line deduction for
such interest expense, up to a maximum dollar amount per year
($1,000 for taxable years beginning in 1998), subject to
certain requirements (sec. 221). The maximum deduction is
phased out ratably for individual taxpayers with modified AGI
between $40,000 and $55,000 ($60,000 and $75,000 for joint
returns). Present law also provides that in the case of a
taxpayer other than a corporation, no deduction is allowed
for personal interest (sec. 163(h)). For this purpose,
personal interest means any interest allowable as a
deduction, other than certain types of interest listed in the
statute. This proposal does not specifically provide that
otherwise deductible qualified education loan interest is not
treated as personal interest.
Present law provides that a qualified education loan does
not include any indebtedness owed to a person who is related
(within the meaning of sec. 267(b) or 707(b)) to the taxpayer
(sec. 221(e)(1)).
Description of Proposal
The proposal clarifies that otherwise deductible qualified
education loan interest is not treated as nondeductible
personal interest.
The proposal also clarifies that, for purposes of section
221, modified AGI is determined after application of section
135 (relating to income from certain U.S. savings bonds) and
section 137 (relating to adoption assistance programs).
The proposal also provides that a qualified education loan
does not include any indebtedness owed to any person by
reason of a loan under any qualified employer plan (as
defined in section 72(p)(4)) or under any contract purchased
under a qualified employer plan (as described in sec.
72(p)(5)).
2. Capital gain distributions of charitable remainder trusts
(secs. 402(i)(3) and 403(b) of the bill, sec. 311 of the
1997 Act and sec. 5001 of the 1998 Act, and sec. 1(h) of
the Code)
Present Law
Under present law, the income beneficiary of a charitable
remainder trust (``CRT'') includes the trust's capital gain
in income when the gains are distributed to the beneficiary
(sec. 664(b)(2)). Internal Revenue Service Notice 98-20
provides guidance with respect to the categorization of
long-term gain distributions from a CRT under the capital
gain rules enacted by the 1997 Act. Under the Notice,
long-term capital gains properly taken into account by the
trust before January 1, 1997, are treated as falling in
the 20-percent group of gain (i.e., gain not in the 28-
percent rate gain or unrecaptured sec. 1250 gain). Long-
term capital gains properly taken into account by the
trust after December 31, 1996, and before May 7, 1997, are
included in 28-percent rate gain. Long-term capital gains
properly taken into account by the trust after May 6,
1997, are treated as falling into the category which would
apply if the trust itself were subject to tax.
Description of Proposal
The proposal provides that, in the case of a capital gain
distribution by a CRT after December 31, 1997, with respect
to amounts
[[Page S12334]]
properly taken into account by the trust during 1997, amounts
will not be included in the 28-percent rate gain category
solely by reason of being properly taken into account by the
trust before May 7, 1997, or by reason of the property being
held not more than 18 months. Thus, for example, gain on the
sale of stock by a CRT on February 1, 1997, will not be taken
into account in determining 28-percent rate gain where the
gain is distributed after 1997.\8\
Effective Date
The proposal applies to taxable years beginning after
December 31, 1997.
3. Gifts may not be revalued for estate tax purposes after
expiration of statute of limitations (sec. 403(c) of the
bill, sec. 504 of the 1997 Act, and sec. 2001(f)(2) of
the Code)
Present Law
Basic structure of Federal estate and gift taxes.--The
Federal estate and gift taxes are unified so that a single
progressive rate schedule is applied to an individual's
cumulative gifts and bequests. The tax on gifts made in a
particular year is computed by determining the tax on the sum
of the taxable gifts made in that year and in all prior years
and then subtracting the tax on the prior years taxable gifts
and the unified credit. Similarly, the estate tax is computed
by determining the tax on the sum of the taxable estate and
prior taxable gifts and then subtracting the tax on taxable
gifts, the unified credit, and certain other credits.
This structure raises two different, but related, issues:
(1) what is the period beyond which additional gift taxes
cannot be assessed or collected--generically referred to as
the ``period of limitations''--and (2) what is the period
beyond which the amount of prior transfers cannot be revalued
for the purpose of determining the amount of tax on
subsequent transfers.
Gift and estate tax period of limitations.--Section 6501(a)
provides the general rule that any tax (including gift and
estate tax) must be assessed, or a proceeding begun in a
court for the collection of such tax without assessment,
within three years after the return is filed by the taxpayer.
Under section 6501(e)(2), the period for assessments of gift
or estate tax is increased to six years where there is more
than a 25 percent omission in the amount of the total gifts
or gross estate disclosed on the gift or estate tax return.
Section 6501(c)(9) provides an exception to these rules under
which gift tax may be assessed, or a proceeding in a court
for collection of gift tax may be begun, at any time unless
the gift is disclosed on a gift tax return or a statement
attached to a gift tax return.
Revaluation of gifts for estate tax purposes.--The value of
a gift is its value as finally determined under the rules for
purposes of determining the applicable estate tax bracket and
available unified credit. The value of a gift is finally
determined if (1) the value of the gift is shown on a gift
tax return for that gift and that value is not contested by
the Treasury Secretary before the expiration of the period of
limitations on assessment of gift tax even where the value of
the gift as shown on the return does not result in any gift
tax being owned (e.g., through use of the unified credit),
(2) the value is specified by the Treasury Secretary pursuant
to a final notice of redetermination of value (a ``final
notice'') within the period of limitations applicable to the
gift for gift tax purposes (generally, three years) and the
taxpayer does not timely contest that value, or (3) the value
is determined by a court or pursuant of a settlement
agreement between the taxpayer and the Treasury Secretary
under an administrative appeals process whereby a taxpayer
can challenge a redetermination of value by the IRS prior to
issuance of a final notice. In the event the taxpayer and the
IRS cannot agree on the value of a gift, the 1997 Act
provided the U.S. Tax Court with jurisdiction to issue a
declaratory judgment on the value of a gift (section 7477). A
taxpayer who is mailed a final notice may challenge the
redetermined value of the gift (as contained in the final
notice) by filing a motion for a declaratory judgment with
the U.S. Tax Court. The motion must be filed on or before 90
days from the date that the final notice was mailed. The
statute of limitations is tolled during the pendency of the
Tax Court proceeding.
Revaluation of gifts for gift tax purposes.--Similarly,
under a rule applicable to the computation of the gift tax
(sec. 2504(c)), the value of gifts made in prior years is its
value as finally determined if the period of limitations for
assessment of gift tax on the prior gifts has expired.
Description of Proposal
The bill clarifies the rules relating to revaluations of
prior transfers for computation of the estate or gift tax to
provide that the value of a prior transfer cannot be
redetermined after the period of limitations if the transfer
was disclosed in a statement attached to the gift tax return,
as well as on a gift tax return, in a manner to adequately
apprise the Treasury Secretary of the nature the transfer,
even if there was no gift tax imposed on that transfer.
4. Coordinate Vaccine Injury Compensation Trust Fund
expenditure purposes with list of taxable vaccines (sec.
403(d) of the bill, sec. 904 of the 1997 Act, and sec.
9510(c) of the Code)
Present Law
A manufacturer's excise tax is imposed on certain vaccines
routinely recommended for administration to children (sec.
4131). The tax is imposed at a rate of $0.75 per dose on any
listed vaccine component. Taxable vaccine components are
vaccines against diphtheria, tetanus, pertussis, measles,
mumps, rubella, polio, HIB (haemophilus influenza type B),
hepatitis B, and varicella (chicken pox). Tax was imposed on
vaccines against diphtheria, tetanus, pertussis, measles,
mumps, rubella, and polio by the Omnibus Budget
Reconciliation Act of 1987. Tax was imposed on vaccines
against HIB, hepatitis B, and varicella by the 1997 Act.
Amounts equal to net revenues from this excise tax are
deposited in the Vaccine Injury Compensation Trust Fund
(``Vaccine Trust Fund'') to finance compensation awards under
the Federal Vaccine Injury Compensation Program for
individuals who suffer certain injuries following
administration of the taxable vaccines. Present law provides
that payments from the Vaccine Trust Fund may be made only
for vaccines eligible under the program as of December 22,
1987 (sec. 9510(c)(1)). Thus, payments may not be made for
injuries related to the HIB, hepatitis B or varicella
vaccines.
Description of Proposal
The proposal provides that payments are permitted from the
Vaccine Trust Fund for injuries related to the administration
of the HIB, hepatitis B, and varicella vaccines. The proposal
also clarifies that expenditures from the Vaccine Trust Fund
may occur only as provided in the Code and makes conforming
amendments.
5. Abatement of interest by reason of Presidentially declared
disaster (sec. 403(e) of the bill, sec. 915 of the 1997
Act, and sec. 6404(h) of the Code)
Present Law
The Taxpayer Relief Act of 1997 (``1997 Act'') provided
that, if the Secretary of the Treasury extends the filing
date of an individual tax return for 1997 for individuals
living in an area that has been declared a disaster area by
the President during 1997, no interest shall be charged as a
result of the failure of an individual taxpayer to file an
individual tax return, or pay the taxes shown on such return,
during the extension.
The Internal Revenue Service Restructuring and Reform Act
of 1998 (``1998 Act'') contains a similar rule applicable to
all taxpayers for tax years beginning after 1997 for
disasters declared after 1997. The status of disasters
declared in 1998 but that relate to the 1997 tax year is
unclear.
Description of Proposal
The proposal amends the 1997 Act rule so that it is
available for disasters declared in 1997 or in 1998 with
respect to the 1997 tax year.
6. Treatment of certain corporate distributions (sec. 403(f)
of the bill, sec. 1012 of the 1997 Act, and secs. 351(c)
and 368(a)(2)(H) of the Code)
Present Law
The 1997 Act (sec. 1012(a)) requires a distributing
corporation to recognize corporate level gain on the
distribution of stock of a controlled corporation under
section 355 of the Code if, pursuant to a plan or series of
related transactions, one or more persons acquire a 50-
percent or greater interest (defined as 50 percent or more of
the voting power or value of the stock) of either the
distributing or controlled corporation (Code sec. 355(e)).
Certain transactions are excepted from the definition of
acquisition for this purpose. Under the technical corrections
included in the Internal Revenue Service Restructuring and
Reform Act of 1998, in the case of acquisitions under section
355(e)(3)(A)(iv), the acquisition of stock in the
distributing corporation or any controlled corporation is
disregarded to the extent that the percentage of stock owned
directly or indirectly in such corporation by each person
owning stock in such corporation immediately before the
acquisition does not decrease.\9\
In the case of a 50-percent or more acquisition of either
the distributing corporation or the controlled corporation,
the amount of gain recognized is the amount that the
distributing corporation would have recognized had the stock
of the controlled corporation been sold for fair market value
on the date of the distribution. No adjustment to the basis
of the stock or assets of either corporation is allowed by
reason of the recognition of the gain.\10\
The 1997 Act (as amended by the technical corrections
contained in the Internal Revenue Service Restructuring and
Reform Act of 1998) also modified certain rules for
determining control immediately after a distribution in the
case of certain divisive transactions in which a controlled
corporation is distributed and the transaction meets the
requirements of section 355. In such cases, under section 351
and modified section 368(a)(2)(H) with respect to
reorganizations under section 368(a)(1)(D), the fact that the
shareholders of the distributing corporation dispose of part
or all of the distributed stock shall not be taken into
account.
The effective date (Act section 1012(d)(1)) states that the
relevant provisions of the 1997 Act apply to distributions
after April 16, 1997, pursuant to a plan (or series of
related transactions) which involves an acquisition occurring
after such date (unless certain transition provisions apply).
Description of Proposal
The proposal clarifies the ``control immediately after''
requirement of section 351(c) and section 368(a)(2)(H) in the
case of certain
[[Page S12335]]
divisive transactions in which a corporation contributes
assets to a controlled corporation and then distributes the
stock of the controlled corporation in a transaction that
meets the requirements of section 355 (or so much of section
356 as related to section 355). In such cases, not only the
fact that the shareholders of the distributing corporation
dispose of part or all of the distributed stock, but also the
fact that the corporation whose stock was distributed issues
additional stock, shall not be taken into account.
7. Treatment of affiliated group including formerly tax-
exempt organization (sec. 403(g) of the bill and sec.
1042 of the 1997 Act)
Present Law
Present law provides that an organization described in
sections 501(c) (3) or (4) of the Code is exempt from tax
only if no substantial part of its activities consists of
providing commercial-type insurance. When this rule was
enacted in 1986, certain treatment applied to Blue Cross and
Blue Shield organizations providing health insurance that
were submitted to this rule and that met certain
requirements. Treasury regulations were promulgated providing
rules for filing consolidated returns for affiliated groups
including such organizations (Treas. Reg. sec. 1.1502-
75(d)(5)).
The 1997 act repealed the grandfather rules provided in
1986 (permitting the retention of tax-exempt status) that
were applicable to that portion of the business of the
Teachers Insurance Annuity Association and College Retirement
Equities Fund which is attributable to pension business and
to the portion of the business of Mutual of America which is
attributable to pension business. The 1997 Act did not
specifically provide rules for filing consolidated returns
for affiliated groups including such organizations.
Present law with respect to consolidated returns provides
for an election to treat a life insurance company as an
includable corporation, and also provides that a life
insurance company may not be treated as an includable
corporation for the 5 taxable years immediately preceding the
taxable year for which the consolidated return is filed (sec.
1504(c)(2)). Present law also provides that a corporation
that is exempt from taxation under Code section 501 is not an
includable corporation (sec. 1504(b)(1)).
Description of Proposal
The proposal provides rules for filing consolidated returns
for affiliated groups including any organization with respect
to which the grandfather rule under Code section 501(m) was
repealed by section 1042 of the 1997 Act. The proposal
provides that rules similar to the rules of Treasury
Regulation section 1.1502-75(d)(5) apply in the case of such
an organization. Thus, an affiliated group including such an
organization may make the election described in section
1504(c)(2) (relating to a 5-year period) without regard to
whether the organization was previously exempt from tax under
Code section 501.
8. Treatment of net operating losses arising from certain
eligible losses (sec. 403(h) of the bill, sec. 1082 of
the 1997 Act, and sec. 172(b)(1)(F) of the Code)
Present Law
The 1997 Act changed the general net operating loss
(``NOL'') carryback period of a taxpayer from three years to
two years. The three-year carryback period was retained in
the case of an NOL attributable to an eligible loss. An
eligible loss is defined as (1) a casualty or theft loss of
an individual taxpayer, or (2) an NOL attributable to a
Presidentially declared disaster area by a taxpayer engaged
in a farming business or a small business. Other special
rules apply to real estate investment trusts (REITs) (no
carrybacks), specified liability losses (10-year carryback),
and excess interest losses (no carrybacks).
Description of Proposal
The proposal coordinates the use of eligible losses with
the general rule for NOLs in the same manner as a loss
arising from a specified liability loss. Thus, an eligible
loss for any year is treated as a separate net operating loss
and is taken into account after the remaining portion of the
net operating loss for the taxable year.
9. Determination of unborrowed policy cash value under COLI
pro rata interest disallowance rules (sec. 403(i) of the
bill, sec. 1084 of the 1997 Act, and sec. 246(f) of the
Code)
Present Law
In the case of a taxpayer other than a natural person, no
deduction is allowed for the portion of the taxpayer's
interest expense that is allocable to unborrowed policy cash
surrender values with respect to any life insurance policy or
annuity or endowment contract issued after June 8, 1997.
Interest expense is allocable to unborrowed policy cash
values based on the ratio of (1) the taxpayer's average
unborrowed policy cash values of life insurance policies and
annuity and endowment contracts, issued after June 8, 1997,
to (2) the sum of (a) in the case of assets that are life
insurance policies or annuity or endowment contracts, the
average unborrowed policy cash values and (b) in the case of
other assets the average adjusted bases for all such other
assets of the taxpayer. The unborrowed policy cash values
means the cash surrender value of the policy or contract
determined without regard to any surrender charge, reduced by
the amount of any loan with respect to the policy or
contract. The cash surrender value is to be determined
without regard to any other contractual or noncontractual
arrangement that artificially depresses the unborrowed policy
cash value of a contract.
Description of Proposal
The proposal clarifies the meaning of ``unborrowed policy
cash value'' under section 264(f)(3), with respect to any
life insurance, annuity or endowment contract. The technical
correction clarifies that under section 264(f)(3), if the
cash surrender value (determined without regard to any
surrender charges) with respect to any policy or contract
does not reasonably approximate its actual value, then the
amount taken into account for this purpose is the greater of
(1) the amount of the insurance company's liability with
respect to the policy or contract, as determined for purposes
of he annual statement approved by the National Association
of Insurance Commissioners, (2) the amount of the insurance
company's reserve with respect to the policy or contract for
purposes of such annual statement; or such other amount as is
determined by the Treasury Secretary. No inference is
intended that such amounts may not be taken into account in
determining the cash surrender value of a policy or contract
in such circumstances for purposes of any other provision of
the Code.
10. Payment of taxes by commercially acceptable means (sec.
403(k) of the bill, sec. 1205 of the 1997 Act, and sec.
6311 (d)(2) of the Code)
Present Law
The Code generally permits the payment of taxes by
commercially acceptable means (such as credit cards) (sec.
6311(d)). The Treasury Secretary may not pay any fee or
provide any other consideration in connection with this
provision. This fee prohibition may have an unintended impact
on Treasury contracts for the provision of services unrelated
to the payment of income taxes by commercially acceptable
means.
Description of Proposal
The proposal clarifies that the prohibition on paying any
fees or providing any other consideration applies to the use
of credit, debit, or charge cards for the payment of income
taxes.
C. Technical Corrections to the 1984 Act
1. Casualty loss deduction (sec. 404 of the bill, sec. 711(c)
of the 1984 Act, and secs. 172(d)(4), 67(b)(3), 68(c)(3),
and 873(b) of the Code)
Present Law
The Tax Reform Act of 1984 (``1984 Act'') deleted casualty
and theft losses from property connected with a nonbusiness
transaction entered into for profit from the list of losses
set forth in section 165(c)(3). This amendment was made in
order to provide that these losses were deductible in full
and not subject to the $100 per casualty limitation or the
10-percent adjusted gross income floor applicable to personal
casualty losses. However, the amendment inadvertently
eliminated the deduction for these losses from the
computation of the net operating loss. Also, the Tax Reform
Act of 1986 provided that casualty losses described in
section 165(c)(3) are not miscellaneous itemized deductions
subject to the 2-percent adjusted gross income floor, and the
Revenue Reconciliation Act of 1990 provided that these losses
are not treated as itemized deductions in computing the
overall limitation on itemized deductions. The losses of
nonresident aliens are limited to deductions described in
section 165(c)(3). Because of the change made by the 1984
Act, the reference to section 165(c)(3) does not include
casualty and theft losses from nonbusiness transActions
entered into for profit.
Description of Proposal
The proposal provides that all deductions for nonbusiness
casualty and theft losses are taken into account in computing
the net operating loss. Also, these deductions are not
treated as miscellaneous itemized deductions subject to the
2-percent adjusted gross income floor, or as itemized
deductions subject to the overall limitation on itemized
deductions, and are allowed to nonresident aliens.
Effective Dates
The proposal relating to the net operating loss and the
deduction for nonresident aliens applies to taxable years
beginning after December 31, 1983.
The proposal relating to miscellaneous itemized deduction
applies taxable years beginning after December 31, 1986.
The proposal relating to the overall limitation on itemized
deductions applies to taxable years beginning after December
31, 1990.
D. DISCLOSURE OF TAX RETURN INFORMATION TO THE DEPARTMENT OF
AGRICULTURE (SEC. 405(A) OF THE BILL AND SEC. 6103(J) OF THE cODE)
Present Law
Tax return information generally may not be disclosed,
except as specifically provided by statute. Disclosure is
permitted to the Bureau of the Census for specified purposes,
which included the responsibility of structuring, conducting,
and preparing the census of agriculture (sec. 6103(j)(1)).
The Census of Agriculture Act of 1997 (P.L. 105-113)
transferred this responsibility from the Bureau of the Census
to the Department of Agriculture.
Description of Proposal
The proposal permits the continuation of disclosure of tax
return information for the
[[Page S12336]]
purpose of structuring, conducting, and preparing the census
of agriculture by authorizing the Department of Agriculture
to receive this information.
Effective Date
The proposal is effective on the date of enactment of this
technical correction.
e. technical corrections to the transportation equity act for the 21st
century (sec. 405(b) of the bill, sec. 9004 of the Act, and sec.
9503(f) of the Code)
Present Law
The Transportation Equity Act for the 21st Century
(``Transportation Equity Act'') (P.L. 105-178) extended the
Highway Trust Fund and accompanying highway excise taxes. The
Transportation Equity Act also changed the budgetary
treatment of Highway Trust Fund expenditures, including
repeal of a provision that balances maintained in the Highway
Trust Fund pending expenditure earn interest from the General
Fund of the Treasury.
Description of Proposal
The proposal clarifies that the Secretary of the Treasury
is not required to invest Highway Trust Fund balances in
interest-bearing obligations (because any interest paid to
the Trust Fund by the General Fund would be immediately
returned to the General Fund).
f. repeal of provisions relating to district of columbia judicial
retirement program (sec. 405(c) of the bill)
Present Law
Section 804 of the Treasury and General Government
Appropriations Act, 1999, makes certain technical and
clarifying amendments to the Judicial Retirement Program of
the District of Columbia. Included in these amendments were
certain amendments that applied for purposes of the Internal
Revenue Code of 1986.
Description of Proposal
Section 804 of the Treasury and General Government
Appropriations Act, 1999, is repealed.
Effective Date
The proposal is effective on the date of enactment.
g. perfecting amendments related to withholding from social security
benefits and other federal payments (sec. 406 of the bill and secs. 201
and 207 of the Social Security Act)
Present Law
The Uruguay Round Agreements Act (P.L. 103-465) contained a
provision requiring that U.S. taxpayers who receive specified
Federal payments (including Social Security benefits) be
given the option of requesting that the Federal agency making
the payments withhold Federal income taxes from the payments.
Description of Proposal
Due to a drafting oversight, the Uruguay Round Agreements
Act included only the necessary changes to the Internal
Revenue Code (``Code'') and failed to make certain conforming
changes to the Social Security Act (specifically a section
that prohibits assignments of benefits). The proposal amends
the Social Security Act anti-assignment section to allow the
Code provisions to be implemented. The proposal also
allocates funding for the Social Security Administration to
administer the tax-withholding provisions.
Effective Date
The proposal applies to benefits paid on or after the first
day of the second month beginning after the month of
enactment.
FOOTNOTES
\1\ This document may be cited as follows: Joint Committee on
Taxation, Description of Provisions in S. 2622, the Tax
Relief Extension Act of 1998 (JCX-70-98), October 10, 1998.
(References in this document to the ``1997 Act'' refer to the
Taxpayer Relief Act of 1997.)
\2\ A special rule is designed to gradually recompute a
start-up firm's fixed-base percentage based on its actual
research experience. Under this special rule, a start-up firm
will be assigned a fixed-base percentage of 3 percent for
each of its first five taxable years after 1993 in which it
incurs qualified research expenditures. In the event that the
research credit is extended beyond the scheduled expiration
date, a start-up firm's fix-based percentage for its sixth
through tenth taxable years after 1993 in which it incurs
qualified research expenditures will be a phased-in ratio
based on its actual research experience. For all subsequent
taxable years, the taxpayer's fixed-based percentage will be
its actual ratio of qualified research expenditures to gross
receipts for any five years selected by the taxpayer from its
fifth through tenth taxable years after 1993 (sec.
41(c)(3)(B)).
\3\ Under a special rule, 75 percent of amounts paid to a
research consortium for qualified research is treated as
qualified research expenses eligible for the research credit
(rather than 65 percent under the general rule under sec.
41(b)(3) governing contract research expenses) if (1) such
research consortium is a tax-exempt organization that is
described in section 501(c)(3) (other than a private
foundation) or section 501(c)(6) and is organized and
operated primarily to conduct scientific research, and (2)
such qualified research is conducted by the consortium on
behalf of the taxpayer and one or more persons not related to
the taxpayer.
\4\ The amount of the deduction allowable for a taxable year
with respect to a charitable contribution may be reduced
depending on the type of property contributed, the type of
charitable organization to which the property is contributed,
and the income of the taxpayer (secs. 170(b) and 170(e)).
\5\ The President canceled these exceptions in 1997 pursuant
to the Line Item Veto Act. On June 25, 1998, the U.S. Supreme
Court held that the cancellation procedures set forth in the
Line Item Veto Act are unconstitutional Clinton v. City of
New York, 118 S. Ct. 2091 (June 25, 1998).
\6\ This rule applies to fiscal years after 1996. For fiscal
year 1996, this payment was to be made not later than 30 days
after the production flexibility contract was entered into.
\7\ The amount of elected farm income of a taxpayer for a
taxable year may not exceed the taxable income attributable
to any farming business for the year.
\8\ The bill contains a similar amendment to section
1(h)(13), as amended by section 5001 of the 1998 Act, to
provide that, for purposes of taxing the recipient of a
distribution made after 1997 by a CRT, amounts will not be
taken into account in computing 28-percent rate gain by
reason of being properly taken into account before May 7,
1997, or by reason of the property being held for not more
than 18 months. Thus, no amount distributed by a CRT after
1997 will be treated as in the 28-percent category (other
than by reason of the disposition of collectibles or small
business stock).
\9\ This exception (as certain other exceptions) does not
apply if the stock held before the acquisition was acquired
pursuant to a plan (or series of related transactions) to
acquire a 50-percent or greater interest in the distributing
or a controlled corporation.
\10\ The 1997 Act does not limit the otherwise applicable
Treasury regulatory authority under section 336(e) of the
Code. Nor does it limit the otherwise applicable provisions
of section 1367 with respect to the effect on shareholder
stock basis of gain recognized by an S corporation under this
provision.
____
ESTIMATED REVENUE EFFECTS OF S. 2626, THE ``TAX RELIEF EXTENSION RELIEF ACT OF 1998''
[Fiscal years 1999-2007, in millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Provision Effective 1999 2000 2001 2002 2003 2004 2005 2006 2007 1999-02 2003-07 1999-07
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
I. EXTENSION OF EXPIRING PROVISIONS:
Subtitle A. Expiring Tax Provisions:
A. Extend the R&E Credit (through 6/30/ 7/1/98........................... -1,126 -505 -258 -184 -94 -20 ....... ....... ....... 2,073 -114 -2,187
99).
B. Extend the Work Opportunity Tax wpoifibwa 6/30/98................ -191 -140 -73 -29 -10 -2 ....... ....... ....... -434 -11 -445
Credit (through 6/30/99).
C. Extend the Welfare-to-Work Tax wpoifibwa 4/30/99................ -4 -10 -7 -3 -1 ....... ....... ....... ....... -24 -1 -25
Credit (through 6/30/99).
D. Extend Contributions of Appreciated 7/1/98........................... -63 -13 -4 ....... ....... ....... ....... ....... ....... 80 ......... -80
Stock to Private Foundations (through
6/30/99).
E. 1-Year Extension of Exemption from tybi 1999........................ -80 -180 ....... ....... ....... ....... ....... ....... ....... -260 ......... -260
Subpart F for Active Financing Income.
F. Extension of Placed-in-Service Date DOE.............................. -7 -26 -27 -38 -39 -40 -41 -42 -43 -109 -207 -315
For Certain Nonconventional Fuels
Facilities (though 6/30/99).
G. Extension of Tax Information (\2\)............................ NEGLIGIBLE BUDGET EFFECT
Reporting for Income Contingent
Student Loan Program (through 9/30/
04) \1\.
Subtotal of Extension of Expiring ................................. -1,471 -874 -379 -254 -144 -62 -41 -42 -43 -2,980 -333 -3,312
Tax Provisions.
=====================================================================================================================================================
SUBTITLE B. EXPIRING TRADE PROVISIONS:
A. Extend the Generalized System of dpo/a 7/1/98..................... -393 -84 ....... ....... ....... ....... ....... ....... ....... -477 ......... -477
Preferences (through 12/31/99/) \1\.
B. Extend Trade Adjustment Assistance DOE.............................. -34 -15 -1 ....... ....... ....... ....... ....... ....... -50 ......... -50
(through 6/30/99)\1\.
-----------------------------------------------------------------------------------------------------------------------------------------------------
Subtotal of Extension of Expiring ................................. -427 -99 -1 - - - - - - -527 - -527
Trade Provisions.
=====================================================================================================================================================
II. OTHER TAX PROVISIONS
A. Increase Deduction for Health tyba 12/31/00.................... ........ ....... -163 -702 -959 -637 -680 -602 -257 -864 -3,134 -3,998
Insurance Expenses of Self-Employed
Individuals--70% in 2001 and 100% in
2002 and thereafter.
B. Production Flexibility Contract tyea 12/31/95.................... NEGLIGIBLE BUDGET EFFECT
Payments to Farmers Not Included in
Income Prior to Receipt.
C. Permanent Extension of Income tyba 12/31/00.................... ........ ....... -2 -21 -22 -22 -23 -24 -24 -23 -115 -138
Averaging for Farmers.
D. Treatment of Nonrefundable Personal tybi 1998........................ -474 ....... ....... ....... ....... ....... ....... ....... ....... -474 ......... -474
Credits (child credit, adoption,
credit, HOPE and Lifetime Learning
credits, etc.) Under the Alternative
Individual Minimum Tax (for 1998
only).
-----------------------------------------------------------------------------------------------------------------------------------------------------
Subtotal of Other Tax Provisions.. ................................. -474 ....... -165 -723 -981 -659 -703 -626 -281 -1,361 -3,249 -4,610
=====================================================================================================================================================
REVENUE OFFSET PROVISION
A. Change the Treatment of Certain dma 5/21/98...................... 2,425 1,109 723 640 672 705 741 778 817 4,897 3,713 8,610
Deductible Liquidating Distributions
of RICs and REITs.
[[Page S12337]]
Subtotal of Revenue Offset ................................. 2,425 1,109 723 640 672 705 741 778 817 4,897 3,713 8,610
Provision.
V. TAX TECHNICAL CORRECTIONS PROVISIONS ................................. NO REVENUE EFFECT
Net total......................... ................................. 53 136 178 -337 -453 -16 -3 110 493 29 131 161
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Estimate provided by the Congressional Budget Office.
\2\ Effective for requests made after the date of enactment and before 10/1/03.
NOTES: Details may not add to totals due to rounding. Legend for ``Effective'' column: dma = distributions made after; DOE = Date of enactment; dpo/a = duties paid on or after; tyba = taxable
years beginning after; tybi = taxable years beginning in; tyea = taxable years ending after; wpoifibwa = wages paid or incurred for individuals beginning work after.
Prepared by Joint Committee on Taxation.
Mr. MOYNIHAN. Mr. President, I am pleased to cosponsor, along with
our esteemed Chairman, Senator Roth, a Senate Finance Committee bill to
extend a package of expired tax provisions. Unfortunately, dealing with
this group of expired tax items has become a routine annual event for
the Committee and for the Congress. This bill extends universally
popular items such as the credit for increasing research activities,
the Work Opportunity Credit, and the deduction for gifts of appreciated
stock to private foundations through June of next year. It is my hope
that 1999 will be the year that the entire group of ``extenders'' are
finally made permanent.
We thank Senator Roth for ensuring that the Finance Committee is
heard on this matter. Our action is a reminder that the United States
Congress does not act, on tax bills or any other measures, as a
unicameral legislature. Indeed, this Finance committee measure improves
in several ways on the bill passed by the House Ways and Means
Committee yesterday:
First, we extend the Trade Assistance Program from October 1, 1998
through June 30, 1999. This is an important program established in the
Trade Expansion Act of 1962 that provides training and income support
for workers adversely affected by import competition. It is a
commitment we have made to workers, and it ought to be kept.
Second, the bill includes a provision that prevents the tax benefit
of nonrefundable personal credits such as the $500 per child credit and
the adoption credit from being eroded by the Alternative Minimum Tax.
This was to have been included as part of the Taxpayer Relief Act of
1997, but was dropped for some unknown reason as part of the final
compromise. Without the ``fix'' included in this bill, we will trap
many unsuspecting taxpayers who sit down to prepare their 1998 Federal
income tax returns next spring.
I applaud the work of the chairman and the committee in moving
quickly to agree on this bill and, for the greater good, deferring
action on a number of very important narrower items until next year.
______
By Mr. THOMPSON (for himself, Mr. Lieberman, Mr. Brownback, Mr.
Roth, and Mr. Stevens):
S. 2623. A bill to increase the efficiency and effectiveness of the
Federal Government, and for other purposes; to the Committee on
Governmental Affairs.
Mr. THOMPSON. Mr. President, today I am pleased to introduce
the Government for the 21st Century Act of 1998, a bill to establish a
commission to bring the structure of our government in line with the
needs of our Nation in the next century. This bipartisan legislation is
the result of work over several months between myself and Senators
Glenn, Brownback, Lieberman, Roth, and Stevens. It has been carefully
crafted to address not just what our government should look like, but
the more fundamental question of what it should do.
We all know the old adage, ``form follows function''--but in the case
of our government, form too often impedes function. The federal
infrastructure should enable it to respond to national needs and the
needs of individual citizens quickly, efficiently, and successfully--
but years of outmoded bureaucracies, procedures and red tape have
impeded the kind of responsible service our citizens deserve and
expect. The government we have today was designed for a world which has
long since passed into history, a world in which personal computers did
not exist, two-income families were the exception and no one had ever
heard of a ``sport utility vehicle''. In short, it is time to modernize
the federal government, and there is no more appropriate time to do it
than on the eve of the next century.
It seems to me that the federal government is doing too many things
to do them all well. I believe we must reevaluate the functions of
government to improve government service where it is needed, redirect
resources where it is necessary, and get the federal government out of
activities in which it does not belong. Our Founding Fathers envisioned
a government of defined and limited powers. I can imagine their dismay
if they knew the size and scope of the federal government today. We
need to return to the limited government that the Founders intended,
and the Commission established in the legislation we are introducing
today is a major step in that direction.
The Government Restructuring and Reform Commission established by
this legislation would take a hard look at federal departments,
agencies and programs and ask--
Can and should we consolidate these agencies and programs to improve
the implementation of their statutory missions, eliminate activities
not essential to their statutory missions, and reduce duplication of
activities while increasing accountability for performance?
How can we improve management to maximize productivity, effectiveness
and accountability?
What criteria should we use in determining whether a federal activity
should be privatized?
Which departments or agencies should be eliminated because their
functions are obsolete, redundant, or better performed by state and
local governments or the private sector?
We all want a federal government that is as innovative and responsive
as the government we envision. Our challenge is to determine how to get
there. We must start by asking ourselves what the essential functions
of government will be in the next century, so we may tailor the scope
and structure of the executive branch accordingly. Some activities now
performed by the federal government may require more resources; others
will surely require less. The Commission on Government Restructuring
and Reform will give us a blueprint for designing a federal government
to meet our Nation's needs now and in the future.
I am pleased that Senators Lieberman, Brownback, Roth, and Stevens
are joining me in introducing this bill today, and I thank them for the
time and staff they have devoted to the effort. I look forward to
working with them on this important legislation.
I ask unanimous consent that the Government for the 21st Century Act,
along with the brief summary and section-by-section analysis, be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 2623
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND PURPOSE.
(a) Short Title.--This Act may be cited as the ``Government
for the 21st Century Act of 1998''.
(b) Purpose.--
(1) In general.--The purpose of this Act is to reduce the
cost and increase the effectiveness of the Federal Government
by reorganizing departments and agencies, consolidating
redundant activities, streamlining operations, and
decentralizing service delivery in a manner that promotes
economy, efficiency, and accountability in Government
programs. This Act is intended to result in a Federal
Government that--
(A) utilizes a smaller and more effective workforce;
(B) motivates its workforce by providing a better
organizational environment; and
(C) ensures greater access and accountability to the public
in policy formulation and service delivery.
[[Page S12338]]
(2) Specific goals.--This Act is intended to achieve the
following goals for improvements in the performance of the
Federal Government by October 1, 2002:
(A) A restructuring of the cabinet and sub-cabinet level
agencies.
(B) A substantial reduction in the costs of administering
Government programs.
(C) A dramatic and noticeable improvement in the timely and
courteous delivery of services to the public.
(D) Responsiveness and customer-service levels comparable
to those achieved in the private sector.
SEC. 2. DEFINITIONS.
For purposes of this Act, the term--
(1) ``agency'' includes all Federal departments,
independent agencies, Government-sponsored enterprises, and
Government corporations; and
(2) ``private sector'' means any business, partnership,
association, corporation, educational institution, nonprofit
organization, or individuals.
SEC. 3. THE COMMISSION.
(a) Establishment.--There is established an independent
commission to be known as the Commission on Government
Restructuring and Reform (hereafter in this Act referred to
as the ``Commission'').
(b) Duties.--The Commission shall examine and make
recommendations to reform and restructure the organization
and operations of the executive branch of the Federal
Government to improve economy, efficiency, effectiveness,
consistency, and accountability in Government programs and
services, and shall include and be limited to proposals to--
(1) consolidate or reorganize programs, departments, and
agencies in order to--
(A) improve the effective implementation of their statutory
missions;
(B) eliminate activities not essential to the effective
implementation of statutory missions;
(C) reduce the duplication of activities among agencies; or
(D) reduce layers of organizational hierarchy and personnel
where appropriate to improve the effective implementation of
statutory missions and increase accountability for
performance.
(2) improve and strengthen management capacity in
departments and agencies (including central management
agencies) to maximize productivity, effectiveness, and
accountability;
(3) propose criteria for use by the President and Congress
in evaluating proposals to establish, or to assign a function
to, an executive entity, including a Government corporation
or Government-sponsored enterprise;
(4) define the missions, roles, and responsibilities of any
new, reorganized, or consolidated department or agency
proposed by the Commission;
(5) eliminate the departments or agencies whose missions
and functions have been determined to be--
(A) obsolete, redundant, or complete; or
(B) more effectively performed by other units of government
(including other Federal departments and agencies and State
and local governments) or by the private sector; and
(6) establish criteria for use by the President and
Congress in evaluating proposals to privatize, or to contract
with the private sector for the performance of, functions
currently administered by the Federal Government.
(c) Limitations on Commission Recommendations.--The
Commission's recommendations or proposals under this Act may
not provide for or have the effect of--
(1) continuing an agency beyond the period authorized by
law for its existence;
(2) continuing a function beyond the period authorized by
law for its existence;
(3) authorizing an agency to exercise a function which is
not already being performed by any agency;
(4) eliminating the enforcement functions of an agency,
except such functions may be transferred to another executive
department or independent agency; or
(5) adding, deleting, or changing any rule of either House
of Congress.
(d) Appointment.--
(1) Members.--The Commissioners shall be appointed for the
life of the Commission and shall be composed of nine members
of whom--
(A) three shall be appointed by the President of the United
States;
(B) two shall be appointed by the Speaker of the House of
Representatives;
(C) one shall be appointed by the minority Leader of the
House of Representatives;
(D) two shall be appointed by the majority Leader of the
Senate; and
(E) one shall be appointed by the minority Leader of the
Senate.
(2) Consultation required.--The President, the Speaker of
the House of Representatives, the minority leader of the
House of Representatives, the majority leader of the Senate,
and the minority leader of the Senate shall consult among
themselves prior to the appointment of the members of the
Commission in order to achieve, to the maximum extent
possible, fair and equitable representation of various points
of view with respect to the matters to be studied by the
Commission under subsection (b).
(3) Chairman.--At the time the President nominates
individuals for appointment to the Commission the President
shall designate one such individual who shall serve as
Chairman of the Commission.
(4) Membership.--A member of the Commission may be any
citizen of the United States who is not an elected or
appointed Federal public official, a Federal career civil
servant, or a congressional employee.
(5) Conflict of interests.--For purposes of the provisions
of chapter 11 of part I of title 18, United States Code, a
member of the Commission (to whom such provisions would not
otherwise apply except for this paragraph) shall be a special
Government employee.
(6) Date of appointments.--All members of the Commission
shall be appointed within 90 days after the date of enactment
of this Act.
(e) Terms.--Each member shall serve until the termination
of the Commission.
(f) Vacancies.--A vacancy on the Commission shall be filled
in the same manner as was the original appointment.
(g) Meetings.--The Commission shall meet as necessary to
carry out its responsibilities. The Commission may conduct
meetings outside the District of Columbia when necessary.
(h) Pay and Travel Expenses.--
(1) Pay.--
(A) Chairman.--Except for an individual who is chairman of
the Commission and is otherwise a Federal officer or
employee, the chairman shall be paid at a rate equal to the
daily equivalent of the minimum annual rate of basic pay
payable for level III of the Executive Schedule under section
5314 of title 5, United States Code, for each day (including
traveltime) during which the chairman is engaged in the
performance of duties vested in the Commission.
(B) Members.--Except for the chairman who shall be paid as
provided under subparagraph (A), each member of the
Commission who is not a Federal officer or employee shall be
paid at a rate equal to the daily equivalent of the minimum
annual rate of basic pay payable for level IV of the
Executive Schedule under section 5315 of title 5, United
States Code, for each day (including traveltime) during which
the member is engaged in the performance of duties vested in
the Commission.
(2) Travel.--Members of the Commission shall receive travel
expenses, including per diem in lieu of subsistence, in
accordance with sections 5702 and 5703 of title 5, United
States Code.
(i) Director.--
(1) Appointment.--The Chairman of the Commission shall
appoint a Director of the Commission without regard to
section 5311(b) of title 5, United States Code.
(2) Pay.--The Director shall be paid at the rate of basic
pay payable for level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
(j) Staff.--
(1) Appointment.--The Director may, with the approval of
the Commission, appoint and fix the pay of employees of the
Commission without regard to the provisions of title 5,
United States Code, governing appointment in the competitive
service, and any Commission employee may be paid without
regard to the provisions of chapter 51 and subchapter III of
chapter 53 of that title relating to classification and
General Schedule pay rates, except that a Commission employee
may not receive pay in excess of the annual rate of basic pay
payable for level V of the Executive Schedule under section
5316 of title 5, United States Code.
(2) Detail.--
(A) Details from agencies.--Upon request of the Director,
the head of any Federal department or agency may detail any
of the personnel of the department or agency to the
Commission to assist the Commission in carrying out its
duties under this Act.
(B) Details from congress.--Upon request of the Director, a
Member of Congress or an officer who is the head of an office
of the Senate or House of Representatives may detail an
employee of the office or committee of which such Member or
officer is the head to the Commission to assist the
Commission in carrying out its duties under this Act.
(C) Reimbursement.--Any Federal Government employee may be
detailed to the Commission with or without reimbursement, and
such detail shall be without interruption or loss of civil
service status or privilege.
(k) Support.--
(1) Support services.--The Office of Management and Budget
shall provide support services to the Commission.
(2) Assistance.--The Comptroller General of the United
States may provide assistance, including the detailing of
employees, to the Commission in accordance with an agreement
entered into with the Commission.
(l) Other Authority.--The Commission may procure by
contract, to the extent funds are available, the temporary or
intermittent services of experts or consultants pursuant to
section 3109 of title 5, United States Code. The Commission
shall give public notice of any such contract before entering
into such contract.
(m) Application of Federal Advisory Committee Act.--The
Commission shall be subject to the provisions of the Federal
Advisory Committee Act (5 U.S.C. App.).
(n) Funding.--There are authorized to be appropriated to
the Commission $2,500,000 for fiscal year 1999, and
$5,000,000 for each of fiscal years 2000 and 2001 to enable
the Commission to carry out its duties under this Act.
(o) Termination.--The Commission shall terminate no later
than September 30, 2001.
SEC. 4. PROCEDURES FOR MAKING RECOMMENDATIONS.
(a) Presidential Recommendations.--No later than July 1,
1999, the President may
[[Page S12339]]
submit to the Commission a report making recommendations
consistent with the criteria under section 3 (b) and (c).
Such a report shall contain a single legislative proposal
(including legislation proposed to be enacted) to implement
those recommendations for which legislation is necessary or
appropriate.
(b) In General.--No later than December 1, 2000, the
Commission shall prepare and submit a single preliminary
report to the President and Congress, which shall include--
(1) a description of the Commission's findings and
recommendations, taking into account any recommendations
submitted by the President to the Commission under subsection
(a); and
(2) reasons for such recommendations.
(c) Commission Votes.--No legislative proposal or
preliminary or final report (including a final report after
disapproval) may be submitted by the Commission to the
President and Congress without the affirmative vote of at
least 6 members.
(d) Department and Agency Cooperation.--All Federal
departments, agencies, and divisions and employees of all
departments, agencies, and divisions shall cooperate fully
with all requests for information from the Commission and
shall respond to any such requests for information
expeditiously, or no later than 15 calendar days or such
other time agreed upon by the requesting and requested
parties.
SEC. 5. PROCEDURE FOR IMPLEMENTATION OF REPORTS.
(a) Preliminary Report and Review Procedure.--Any
preliminary report submitted to the President and Congress
under section 4(b) shall be made immediately available to the
public. During the 60-day period beginning on the date on
which the preliminary report is submitted, the Commission
shall announce and hold public hearings for the purpose of
receiving comments on the reports.
(b) Final Report.--No later than 6 months after the
conclusion of the period for public hearing under subsection
(a), the Commission shall prepare and submit a final report
to the President. Such report shall be made available to the
public on the date of submission to the President. Such
report shall include--
(1) a description of the Commission's findings and
recommendations, including a description of changes made to
the report as a result of public comment on the preliminary
report;
(2) reasons for such recommendations; and
(3) a single legislative proposal (including legislation
proposed to be enacted) to implement those recommendations
for which legislation is necessary or appropriate.
(c) Extension of Final Report.--By affirmative vote
pursuant to section 4(c), the Commission may extend the
deadline under subsection (b) by a period not to exceed 90
days.
(d) Review by the President.--
(1) In general.--
(A) Presidential action.--No later than 30 calendar days
after receipt of a final report under subsection (b), the
President shall approve or disapprove the report.
(B) Presidential inaction.--
(i) In general.--If the President does not approve or
disapprove the final report within 30 calendar days in
accordance with subparagraph (A), Congress shall consider the
report in accordance with clause (ii).
(ii) Submission.--Subject to clause (i), the Commission
shall submit the final report, without further modification,
to Congress on the date occurring 31 calendar days after the
date on which the Commission submitted the final report to
the President under subsection (b).
(2) Approval.--If the report is approved, the President
shall submit the report to Congress for legislative action
under section 6.
(3) Disapproval.--If the President disapproves a final
report, the President shall report specific issues and
objections, including the reasons for any changes recommended
in the report, to the Commission and Congress.
(4) Final report after disapproval.--The Commission shall
consider any issues or objections raised by the President and
may modify the report based on such issues and objections. No
later than 30 calendar days after receipt of the President's
disapproval under paragraph (3), the Commission shall submit
the final report (as modified if modified) to the President
and to Congress.
SEC. 6. CONGRESSIONAL CONSIDERATION OF REFORM PROPOSALS.
(a) Definitions.--For purposes of this section--
(1) the term ``implementation bill'' means only a bill
which is introduced as provided under subsection (b), and
contains the proposed legislation included in the final
report submitted to the Congress under section 5(d) (1)(B),
(2), or (4), without modification; and
(2) the term ``calendar day'' means a calendar day other
than one on which either House is not in session because of
an adjournment of more than three days to a date certain.
(b) Introduction, Referral, and Report or Discharge.--
(1) Introduction.--On the first calendar day on which both
Houses are in session, on or immediately following the date
on which a final report is submitted to the Congress under
section 5(d) (1)(B), (2), or (4), a single implementation
bill shall be introduced (by request)--
(A) in the Senate by the Majority Leader of the Senate, for
himself and the Minority Leader of the Senate, or by Members
of the Senate designated by the Majority Leader and Minority
Leader of the Senate; and
(B) in the House of Representatives by the Majority Leader
of the House of Representatives, for himself and the Minority
Leader of the House of Representatives, or by Members of the
House of Representatives designated by the Majority Leader
and Minority Leader of the House of Representatives.
(2) Referral.--The implementation bills introduced under
paragraph (1) shall be referred to the appropriate committee
of jurisdiction in the Senate and the appropriate committee
of jurisdiction in the House of Representatives. A committee
to which an implementation bill is referred under this
paragraph may report such bill to the respective House with
amendments proposed to be adopted. No such amendment may be
proposed unless such proposed amendment is relevant to such
bill.
(3) Report or discharge.--If a committee to which an
implementation bill is referred has not reported such bill by
the end of the 30th calendar day after the date of the
introduction of such bill, such committee shall be
immediately discharged from further consideration of such
bill, and upon being reported or discharged from the
committee, such bill shall be placed on the appropriate
calendar.
(c) Senate Consideration.--
(1) In general.--On or after the fifth calendar day after
the date on which an implementation bill is placed on the
Senate calendar under subsection (b)(3), it is in order (even
if a previous motion to the same effect has been disagreed
to) for any Senator to make a motion to proceed to the
consideration of the implementation bill. The motion is not
debatable. All points of order against the implementation
bill (and against consideration of the implementation bill)
other than points of order under Senate Rule 15, 16, or for
failure to comply with requirements of this section are
waived. The motion is not subject to a motion to postpone. A
motion to reconsider the vote by which the motion to proceed
is agreed to or disagreed to shall not be in order. If a
motion to proceed to the consideration of the implementation
bill is agreed to, the Senate shall immediately proceed to
consideration of the implementation bill.
(2) Debate.--In the Senate, no amendment which is not
relevant to the bill shall be in order. A motion to postpone
is not in order. A motion to recommit the implementation bill
is not in order. A motion to reconsider the vote by which the
implementation bill is agreed to or disagreed to is not in
order.
(3) Appeals from chair.--Appeals from the decisions of the
Chair relating to the application of the rules of the Senate
to the procedure relating to an implementation bill shall be
decided without debate.
(d) Consideration in the House of Representatives.--
(1) In general.--At any time on or after the fifth calendar
day after the date on which each committee of the House of
Representatives to which an implementation bill is referred
has reported that bill, or has been discharged under
subsection (b)(3) from further consideration of that bill,
the Speaker may, pursuant to clause 1(b) of rule XXIII,
declare the House resolved into the Committee of the Whole
House on the State of the Union for the consideration of that
bill. All points of order against the bill, the consideration
of the bill, and provisions of the bill shall be waived, and
the first reading of the bill shall be dispensed with. After
general debate, which shall be confined to the bill and which
shall not exceed 10 hours, to be equally divided and
controlled by the Majority Leader and the Minority Leader,
the bill shall be considered for amendment by title under the
five-minute rule and each title shall be considered as having
been read.
(2) Amendments.--Each amendment shall be considered as
having been read, shall not be subject to a demand for a
division of the question in the House or in the Committee of
the Whole, and shall be debatable for not to exceed 30
minutes, equally divided and controlled by the proponent and
a Member opposed thereto, except that the time for
consideration, including debate and disposition, of all
amendments to the bill shall not exceed 20 hours.
(3) Final passage.--At the conclusion of the consideration
of the bill, the Committee shall rise and report the bill to
the House with such amendments as may have been agreed to,
and the previous question shall be considered as ordered on
the bill and amendments thereto to final passage without
intervening motion except one motion to recommit.
(e) Conference.--
(1) Appointment of conferees.--In the Senate, a motion to
elect or to authorize the appointment of conferees by the
presiding officer shall not be debatable.
(2) Conference report.--No later than 20 calendar days
after the appointment of conferees, the conferees shall
report to their respective Houses.
(f) Rules of the Senate and House.--This section is enacted
by Congress--
(1) as an exercise of the rulemaking power of the Senate
and House of Representatives, respectively, and as such it is
deemed a part of the rules of each House, respectively, but
applicable only with respect to the procedure to be followed
in that House in the case of an implementation bill described
in subsection (a), and it supersedes other rules only to the
extent that it is inconsistent with such rules; and
[[Page S12340]]
(2) with full recognition of the constitutional right of
either House to change the rules (so far as relating to the
procedure of that House) at any time, in the same manner, and
to the same extent as in the case of any other rule of that
House.
SEC. 7. IMPLEMENTATION.
(a) Responsibility for Implementation.--The Director of the
Office of Management and Budget shall have primary
responsibility for implementation of the Commission's report
and the Act enacted under section 6 (unless such Act provides
otherwise). The Director of the Office of Management and
Budget shall notify and provide direction to heads of
affected departments, agencies, and programs. The head of an
affected department, agency, or program shall be responsible
for implementation and shall proceed with the recommendations
contained in the report as provided under subsection (b).
(b) Departments and Agencies.--After the enactment of an
Act under section 6, each affected Federal department and
agency as a part of its annual budget request shall transmit
to the appropriate committees of Congress its schedule for
implementation of the provisions of the Act for each fiscal
year. In addition, the report shall contain an estimate of
the total expenditures required and the cost savings to be
achieved by each action, along with the Secretary's
assessment of the effect of the action. The report shall also
include a report of any activities that have been eliminated,
consolidated, or transferred to other departments or
agencies.
(c) GAO Oversight.--The Comptroller General shall
periodically report to Congress and the President regarding
the accomplishment, the costs, the timetable, and the
effectiveness of the implementation of any Act enacted under
section 6.
SEC. 8. DISTRIBUTION OF ASSETS.
Any proceeds from the sale of assets of any department or
agency resulting from the enactment of an Act under section 6
shall be--
(1) applied to reduce the Federal deficit; and
(2) deposited in the Treasury and treated as general
receipts.
____
Government for the 21st Century Act--Brief Summary
This legislation will reduce the cost and increase the
effectiveness of the Federal government. It achieves this by
establishing a commission to propose to Congress and the
President a plan to bring the structure and operations of the
Federal government in line with the needs of Americans in the
next century.
Duties of the Commission: The Commission is authorized
under this legislation to: Reorganize Federal departments and
agencies, eliminate activities not essential to fulfilling
agency missions, streamline government operations, and
consolidate redundant activities.
The Commission would not be authorized to: Continue any
agency or function beyond its current authorization,
authorize functions not performed already by the Federal
government, eliminate enforcement functions, and change rules
of Congress.
Composition of the Commission: The Commission shall consist
of 9 members appointed by the President and the Congressional
Leadership of both parties. No more than 5 members can be
affiliated with one party.
How the Commission Works: The process established in this
legislation is bipartisan, allows input by the President, and
is fully open and public.
1. The Commission Report: By July 1, 1999, the President
may submit his recommendations to the Commission. By December
1, 1999, the Commission shall submit to the President and
Congress a preliminary recommendations on restructuring the
Federal Government. After a public comment period, the
Commission shall prepare a final report and submit it to the
President for review and comment.
2. Presidential Review and Comment: The President has 30
days to approve or disapprove the Commission's report. The
Commission may or may not modify its report based on the
President's comments, at its discretion, and shall issue its
final report to Congress.
3. Congressional Consideration: The final report shall be
introduced in both Houses by request and referred to the
appropriate committee(s). After 30 days, the bills may be
considered by the full House and Senate, and are subject to
amendment.
Implementation: Once legislation effecting the Commission's
recommendations is enacted, the Office of Management and
Budget shall be responsible for implementing it, and the
General Accounting Office shall report to Congress on the
progress of implementation.
Government for the 21st Century Act of 1998--Section by Section
Analysis
SECTION 1. SHORT TITLE AND PURPOSE
This act may be known as the ``Government for the 21st
Century Act of 1998.'' Its purpose is to reduce the cost and
increase the effectiveness of the Executive Branch. It
achieves this by creating a commission to propose to Congress
and the President a plan to reorganize departments and
agencies, consolidate redundant activities, streamline
operations, and decentralize service delivery in a manner
that promotes economy, efficiency, and accountability in
government programs.
SECTION 2. DEFINITIONS
This section defines ``agency'' as all Federal departments,
independent agencies, government-sponsored enterprises and
government corporations, and defines ``private sector'' as
any business, partnership, association, corporation,
educational institution, nonprofit or individual.
SECTION 3. THE COMMISSION
This section establishes a commission, known as the
Commission on Government Restructuring and Reform, to make
recommendations to reform and restructure the executive
branch. The Commission shall make proposals to consolidate,
reorganize or eliminate executive branch agencies and
programs in order to improve effectiveness, efficiency,
consistency and accountability in government. The Commission
shall also recommend criteria by which to determine which
functions of government should be privatized. The Commission
may not propose to continue agencies or functions beyond
their current legal authorization, nor may the Commission
propose to eliminate enforcement functions of any agencies or
change the rules of either House of Congress.
The Commission shall be composed of 9 members appointed by
the President, the Majority and Minority Leaders of the
Senate, and the Speaker and Minority Leader of the House of
Representatives.
The Commission shall be managed by a Director and shall
have a staff, which may include detailees. The Office of
Management and Budget shall provide support services and the
Comptroller General may provide assistance to the Commission.
This section also authorizes $2.5 million to be
appropriated in fiscal years 1999 and $5 million for fiscal
years 2000 and 2001 for the Commission to carry out its
duties, and states that the Commission shall terminate no
later than September 30, 2001.
SECTION 4. PROCEDURES FOR MAKING RECOMMENDATIONS
By July 1, 1999, the President may submit his
recommendation on government reorganization to the
Commission. The President's recommendation must be consistent
with the duties and limitations given to the Commission in
formulating its recommendations by this act and must be
transmitted to the Commission as a single legislative
proposal.
By December 1, 1999, the Commission shall prepare and
submit a single preliminary report to the President and
Congress. That report must include a description of the
Commission's findings and recommendations and the reasons for
such recommendations. This proposed must be approved by at
least 6 members of the Commission.
This section also provides that all Federal departments and
agencies must cooperate fully with all requests for
information from Commission.
section 5. procedures for implementation of reports
This section provides that any preliminary report submitted
to the President and the Congress under Section 4 be made
available immediately to the public. During the 60-day period
after the submission of the preliminary report, the
Commission shall hold public hearings to receive comments on
the report.
Six months after the conclusion of the period for public
comments, the Commission shall submit a final report to the
President. This report shall be made available to the public,
and shall include a description of the Commission's findings
and recommendations, the reasons for such recommendations,
and a single legislative proposal to implement the
recommendations.
The President shall then approve or disapprove the report
within 30 days. If he fails to act, after 30 days the report
is immediately submitted to Congress. If the President
approves the report, he than shall submit the report to
Congress for legislative action under Section 6.
If he disapproves the final report, the President shall
report specific issues and objections, including the reasons
for any changes recommended in the report, to the Commission
and Congress. For 30 days after the President disapproves a
report, the Commission may consider any issues and objections
raised by the President and may modify the report on these
issues and objections. After 30 days, the Commission must
submit its final report (as modified if modified) to the
President and Congress.
SECTION 6. CONGRESSIONAL CONSIDERATION OF REFORM PROPOSALS
After a final report is submitted to the Congress, the
single implementation bill shall be introduced by request in
the House and Senate by the Majority and Minority Leaders in
each chamber or their designees.
This section stipulates that the implementation bill be
referred to the appropriate committee of jurisdiction in the
Senate and the appropriate committee of jurisdiction in the
House of Representatives. Each committee must report the bill
to its respective House chamber within 30 days with relevant
amendments proposed to be adopted. If a committee fails to
report such bill within 30 days, that committees is
immediately discharged from further consideration, and the
bill is placed on the appropriate calendar.
Section 6(c) outlines procedures for Senate floor
consideration of legislation implementing the Commission's
recommendation. On or after the fifth calendar day after the
date on which the implementation bill is placed on the Senate
calendar, any Senator may make a privileged motion to
consider the implementation bill. Only relevant amendments
shall be in order, and motions to postpone, recommit, or
reconsider the vote by which the bill is agreed to are not in
order.
Section 6(d) outlines procedures for House floor
consideration of legislation implementing the Commission's
recommendations.
[[Page S12341]]
General debate on the implementation bill is limited to 10
hours equally divided in the House, and controlled by the
Majority and Minority Leaders. Amendments shall be considered
by title under the five minute rule, and shall be debatable
for 30 minutes equally divided. Debate on all amendments
shall not exceed 20 hours.
This section further states that within 20 calendar days,
conferees shall report to their respective House.
SECTION 7. IMPLEMENTATION
The Office of Management and Budget shall have primary
responsibility for implementing the Commission's report and
any implementation legislation that is enacted, unless
otherwise specified in the implementation bill.
Federal departments and agencies are required to include a
schedule for implementation of the provisions of the
implementation as a part of their annual budget request.
GAO is given oversight responsibility and is required to
report to the Congress and the President regarding the
accomplishment, the costs, the timetable, and the
effectiveness of the implementation process.
SECTION 8. DISTRIBUTION OF ASSETS
Any proceeds from the sale of assets of any department or
agency resulting from the implementation legislation shall be
applied to the Federal deficit and deposited in the Treasury
and treated as general receipts.
Mr. BROWNBACK. Mr. President, I am pleased to join Senator
Thompson in introducing the Government for the 21st Century Act of
1998. Both majority and minority members of the Senate Governmental
Affairs Committee have been working on this legislation throughout this
Congress and have come to agreement to introduce this important bill.
The Government for the 21st Century Act would establish a commission
to propose to Congress and the President a plan to reduce the cost and
increase the effectiveness of the Federal government by bringing its
structure and operations in line with the needs of America in the next
century. The commission would consist of nine members appointed by the
President and the congressional leadership of both parties.
The President may submit his recommendations to the Commission by
July 1, 1999. By December 1, 1999, the Commission shall submit to the
President and Congress preliminary recommendations on restructuring the
Federal government. After a public comment period, the Commission will
prepare a final report to the President. Legislation based on the final
report would be introduced in both Houses and referred to the
appropriate committee of jurisdiction. The bill would be considered by
both Houses after 30 days. Once the legislation is signed into law, the
Office of Management and Budget would be responsible for
implementation.
The Commission would reinforce our work to maintain a balanced
budget. Good government must have agencies that operate efficiently and
effectively within their core mission and within their budget. We have
achieved one goal of operating within a balanced budget but we must
continue to work towards the other. Even under a balanced budget and a
budget surplus, inefficiencies and rising costs remain in the Federal
government. A balanced budget and a budget surplus does not preclude
the Federal government from being accountable to the American people.
The Government for the 21st Century Act would see to it that the
Federal government will continue to be accountable.
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By Mr. DOMENICI:
S. 2624. A bill to establish a program for training residents of low-
income rural areas for, and employing the residents in, new
telecommunications industry jobs located in the rural areas, and for
other purposes; to the Committee on Labor and Human Resources.
The Rural Employment in Telecommunications Industry Act of 1998
Mr. DOMENICI. Mr. President, today, with great pleasure, I introduce
``The Rural Employment in Telecommunications Industry Act of 1998.''
The introduction of this Bill marks a historic opportunity for rural
communities to create jobs within the telecommunications industry. The
Bill establishes a program to train residents of low income rural areas
for employment in telecommunications industry jobs located in those
same rural areas.
As many of my colleagues know, I have an initiative called ``rural
payday'' and I believe this Bill is yet another step in creating jobs
for our rural areas. All too often a rural area is characterized by a
high number of low income residents and a high unemployment rate.
Moreover, our rural areas are often dependent upon a small number of
employers or a single industry for employment opportunities.
Consequently, when there is a plant closing or a downturn in the
economy or a slowdown in the area's industry the already present
problems are only compounded. Mr. President, I would like to take a
moment and talk about New Mexico.
While New Mexico may be the 5th largest state by size with its
beautiful mountains, desert, and Great Plains and vibrant cities such
as Albuquerque, Santa Fe, and Las Cruces it is also a very rural state.
The Northwest and Southeast portions of the state are currently
experiencing difficulties as a result of the downturn in the oil and
gas industry. Additionally, the community of Roswell has been dealt a
blow with the closing of the Levi Straus manufacturing plant.
As I stated before, rural areas that simply do not have the resources
of more metropolitan areas can be simply devastated by a single event
or downturn in the economy. And that Mr. President is why I am
introducing ``The Rural Employment in Telecommunications Industry Act
of 1998.''
The Bill will allow the Secretary of Labor to establish a program to
promote rural employment in the telecommunications industry by
providing grants to states with low income rural areas. The program
will be a win win proposition for all involved because employers
choosing to participate in the project by bringing jobs to the rural
area will be assured of a highly skilled workforce.
The program will provide residents with intensive services to train
them for the new jobs in the telecommunications industry. The intensive
services will include customized training and appropriate remedial
training, support services and placement of the individual in one the
new jobs created by the program.
And that is what this bill is about, providing people with the tools
needed to succeed. With these steps we are embarking on the road of
providing our rural areas throughout our nation with a vehicle to
create jobs. We are creating opportunities and an environment where our
citizens can succeed and our communities can be vibrant.
I ask unanimous consent that the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2684
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 ``Rural Employment in
Telecommunications Industry Act of 1998.''
SEC. 2. DEFINITIONS.
In this Act:
(1) Dislocated worker; low-income individual.--The terms
``dislocated worker'' and ``low-income individual'' have the
meanings given the terms in section 101 of the Workforce
Investment Act of 1998 (29 U.S.C. 2801).
(2) Low-income rural area.--The term ``low-income rural
area'' means a county that--
(A) has a 1996 population of not less than 60,000 and not
more than 105,000 persons;
(B) contains a municipality with a 1996 population of not
less than 35,000 and not more than 50,000 persons;
(C) has a land area of not less than 5,500 and not more
than 6,100 square miles;
(D) has a population density of not less than 10 and not
more than 20 persons per square mile;
(E) has a 1996 per capita income that is--
(i) not less than $16,000 and not more than $16,500; and
(ii) not less than 86 and not more than 88 percent of the
statewide per capita income for the State in which the county
is located; or
(F) is a county no part of which is--
(i) within an area designated as a standard metropolitan
statistical area by the Director of the Office of Management
and Budget; or
(ii) within an area designated as a metropolitan
statistical area by the Director of the Office of Management
and Budget; or
(G)(i) is experiencing a significant contraction in the oil
and natural gas exploration and development industry;
(ii) experienced a plant closing within 1 year before the
date of enactment of this Act that significantly impacted the
county; or
(iii) is in close proximity to an Indian reservation, as
determined by the Bureau of Indian Affairs.
(3) Intensive services.--The term ``intensive services''
means services described in section 134(d)(3) of the
Workforce Investment Act of 1998 (29 U.S.C. 2864(d)(3)).
[[Page S12342]]
(4) Secretary.--The term ``Secretary'' means the Secretary
of Labor.
(5) State.--The term ``State'' means 1 of the several
States.
SEC. 3. RURAL EMPLOYMENT IN THE TELECOMMUNICATIONS INDUSTRY
PROGRAM.
(a) In General.--The Secretary shall establish a program to
promote rural employment in the telecommunications industry.
In carrying out the program, the Secretary shall make grants
to States for projects described in subsection (b).
(b) Use of Funds.--A State that receives a grant under
subsection (a) shall use the funds made available through the
grant to carry out a State telecommunications employment and
training project. In carrying out the project, the State
shall--
(1) train eligible individuals for new telecommunications
industry jobs that will be located in low-income rural areas
pursuant to arrangements with employers participating in the
project, including ensuring that individuals receive--
(A) intensive services;
(B) customized training and appropriate remedial training
described in paragraphs (2) and (3) of section 4; and
(C) appropriate supportive services; and
(2) arrange for the employment of the individuals in the
telecommunications industry jobs.
(c) Eligible Participants.--To be eligible to participate
in a project described in subsection (a), an individual shall
be--
(1) a resident of a low-income rural area;
(2)(A) a low-income individual;
(B) a dislocated worker from the oil and natural gas
exploration and development industry;
(C) an out-of-school youth;
(D) an individual with a disability, as defined in section
101 of the Workforce Investment Act of 1998;
(E) an individual who is receiving, or who has received
within the past year, assistance under the State temporary
assistance for needy families program established under part
A of title IV of the Social Security Act (42 U.S.C. 601 et
seq.) or other public assistance;
(F) a veteran, as defined in section 101 of the Workforce
Investment Act of 1998;
(G) a displaced homemaker, as defined in section 101 of the
Workforce Investment Act of 1998;
(H) an older individual, as defined in section 101 of the
Workforce Investment Act of 1998;
(I) a homeless individual;
(J) an individual eligible to participate in activities
carried out under section 166 of the Workforce Investment Act
of 1998;
(K) an individual eligible to participate in employment and
training activities under section 134 of the Workforce
Investment Act of 1998;
(L) a long-term unemployed individual; or
(M) an individual with multiple barriers to employment; and
(3) an individual who has been assessed by the entity
carrying out the project and determined to need intensive
services.
(d) Limitation.--The Secretary shall make the grants to not
more than 3 States.
SEC. 4. APPLICATION AND STATE PLAN.
(a) Contents.--To be eligible to receive a grant under this
Act, a State shall submit an application to the Secretary of
Labor at such time, in such manner, and containing such
information as the Secretary may require, including a State
plan that includes--
(1) information demonstrating how the project will train
and employ eligible individuals, including individuals
described in subparagraphs (C) through (M) of section
3(c)(2);
(2) an assurance that the project will include a customized
training program for the customer service and supervisory
competencies needed in the telecommunications industry jobs
to be located in the low-income rural areas served;
(3) an assurance that the project will include appropriate
remedial training in such areas as reading, writing, math,
and English as a second language for eligible individuals who
the entity carrying out the project assesses and determines
need such training;
(4) includes information describing linkages, including
linkages relating to providing supportive services for
participants in and graduates of the project, between--
(A) the entity carrying out the project; and
(B) one-stop operators (as defined in section 101 of the
Workforce Investment Act of 1998), one-stop partners (as
defined in section 101 of the Workforce Investment Act of
1998), State workforce investment boards established under
section 111 of such Act, and local workforce investment
boards established under section 117 of such Act;
(5) information identifying certification criteria for
individuals who successfully complete the training;
(6) an assurance that employers participating in the
project will make available contributions to the costs of
assessing and training participants in the project including
those participants who are not eligible individuals described
in subparagraph (c) for the new telecommunications jobs in an
amount equal to not less than $1 for every $1 of Federal
funds provided under the grant;
(7)(A) an assurance that the project will include an
appropriate performance assessment program that will
measure--
(i) the rate of completion of the training by participants
in the training;
(ii) the percentage of the participants who obtain
unsubsidized employment;
(iii) the wages of the participants at placement in the
employment; and
(iv) the percentage of the participants retained in the
employment after 6 months of employment; and
(B) an assurance that the entity carrying out the project
will annually submit to the Secretary the results of the
performance assessment program; and
(8)(A) information explaining how the activities carried
out through the project are linked to State economic
development activities; and
(B) information describing commitments from private sector
employers to locate new telecommunications jobs and
facilities within the low-income rural areas to be served,
including commitments to provide any needed upgrade in the
telecommunications infrastructure.
(b) Acceptance of Applications.--The Secretary shall accept
applications submitted under subsection (a) not later than 90
days after the date of enactment of this Act.
(c) Evaluation of Applications.--The Secretary shall
evaluate, and approve or reject, each application submitted
under subsection (a) that meets the criteria described in
subsections (a) and (b) not later than 60 days after
submission of the application.
(d) Priority.--In determining which States receive grants
under subsection (a), the Secretary will give priority to a
State submitting a State plan describing a project that--
(1) will serve an area of high unemployment;
(2) will serve an area with a significant bilingual
population;
(3) will serve an area with a significant minority
population, including Native Americans;
(4) will serve an area with a high percentage of youth who
have failed to complete secondary school;
(5) will serve an area significantly impacted by the
contraction of the oil and natural gas exploration and
development industry;
(6) will serve an area significantly impacted by recent
plant closings; or
(7) is designed to create 1,000 or more new jobs within 2
years of the commencement of the training.
SEC. 5. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as may be
necessary to carry out this Act for fiscal years 1999 through
2003.
In the Record of October 9, 1998, on page S12187 the following
statement of Mr. Kerrey to accompany his introduced bill. S. 2613, was
incorrectly attributed to Mr. Kerrey. The permanent Record will be
corrected to reflect the following:
By Mr. KERREY:
S. 2613. A bill to accelerate the percentage of health insurance
costs deductible by self-employed individuals through the use of
revenues resulting from an estate tax technical correction; to the
Committee on Finance.
health care deductibility legislation
Mr. KERREY. Mr. President, I have a very simple proposition for the
Senate. Let's close an accidental tax loophole for the heirs of people
who leave estates worth more than $17 million and use the savings to
help self-employed Americans--like the thousands of entrepreneurs on
Nebraska's farms and ranches--afford the soaring cost of health care.
Today I am submitting legislation to accomplish that purpose.
The facts are very simple. Prior to 1997, when we passed the 1997
Balanced Budget Agreement, the first $600,000 of an estate was excluded
from taxes. The old law gradually phased out this exclusion once an
estate reached $17 million. The 1997 Act increases the value of an
estate not subject to taxes. But a drafting error in the 1997 Balanced
Budget Agreement failed to include the accompanying phase out of the
exclusion on estates over $17 million.
Clearly this error needs to be fixed. Letting this mistake stand
uncorrected will cost the American taxpayers nearly $900 million over
the next ten years. To give you an idea of how much this provision does
to benefit the few, consider that in 1995, the Internal Revenue Service
estimates that just 300 tax returns were filed on estates over $20
million.
Congress had the opportunity to correct this error during
consideration of the IRS Reform bill this year. Regrettably, the
objections of a few to making this right overcame the support of the
many for doing so.
Meanwhile, Mr. President, self-employed Americans are struggling to
cope with the rising cost of health insurance, which they--unlike
Americans employed by others--cannot fully deduct from their taxable
income. The face of their struggle is most evident on farms and
ranches. In Nebraska, producers are facing plunging commodity prices at
the same time they face soaring costs of living, especially for
[[Page S12343]]
health insurance. Today they can deduct 40 percent of the cost of their
insurance. Under current law, they cannot fully deduct that cost until
2007.
So, my proposal is simple. Let's close the loophole that everyone
admits was an accident, and use that money to accelerate the full
deductibility of health insurance for the self-employed. It's a clear
choice between a loophole that nobody wanted to exist and entrepreneurs
who--especially those on our farms and ranches--may not exist much
longer if we don't get them some help.
While I recognize time is short for passing this bill this year, I
urge my colleagues to join me in supporting this legislation and in
pursuing this goal next year.
____________________