[Congressional Record Volume 144, Number 146 (Wednesday, October 14, 1998)]
[Senate]
[Pages S12558-S12564]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. DORGAN:
  S. 2629. A bill to amend the Internal Revenue Code of 1986 to provide 
an investment credit to promote the availability of jet aircraft to 
underserved communities, to reduce the passenger tax rate on rural 
domestic flight segments, and for other purposes; to the Committee on 
Finance.


                   regional jet investment tax credit

 Mr. DORGAN. Mr. President, today I am introducing legislation 
to help bring much-needed regional jet service to underserved 
communities. This legislation is designed to help restore air service 
to underserved communities and to stimulate airline competition by 
offering an investment tax credit to new entrant carriers to provide 
regional jet service to underserved markets. My bill also significantly 
reduces the current airline ticket tax on passengers flying in and out 
of rural America. Together, these tax incentives will encourage new 
entrants to enter thinner rural markets.
  This legislation has two objectives: (A) incentivize the purchase and 
deployment of regional jets for under-served markets; and (B) stimulate 
competition in rural areas by providing financial incentives for new 
entrants to serve underserved markets with regional jets. Using tax 
credits is a fair and effective means to accomplish these goals.
  Most small communities have not benefitted from airline deregulation. 
In fact, airline deregulation has been a steady decline for much of 
rural America. Since 1978, when the Congress deregulated the airline 
industry, more than 30 small communities have had jet service replaced 
with turbo prop service; out of the 320 small communities served by a 
major airline in 1978 declined from 213 to 33 by 1995; and the number 
of small communities receiving service to only one major hub airport 
nearly doubled, increasing from 79 in 1978 to 174 in 1995.
  Countless studies from the General Accounting Office and the U.S. 
Department of Transportation have documented that as the airline 
industry grows more and more concentrated under deregulation, small 
rural communities are being left behind with less service and higher 
fares. Several GAO studies have pointed to the correlation between 
industry concentration and higher air fares and that small rural 
communities are being hit especially hard as a result of the chilling 
of competition in the industry. In 1990, the GAO identified several 
market barriers thwarting the emergence of competition. In 1996, the 
GAO found that not only do the same problems continue to exist, but 
have gotten worse.
  In the present deregulated environment, small rural communities see 
very little to give them hope that air service will improve. The advent 
of regional jets holds some promise, but most RJs are presently being 
purchased by the major carriers who are using them to serve high 
density markets. Thus, if air service to rural America is going to be 
revitalized, we must find a way to incentivize the deployment of 
regional jets in underserved markets.
  Last August, Northwest Airlines had a pilot strike and therefore a 
shutdown of their airline service. That might not have meant much to 
some. In some airports, Northwest was one of a number of carriers that 
was serving certain airports and serving passengers. But in

[[Page S12559]]

North Dakota, the State which I represent, Northwest Airlines was the 
only airline providing jet service to my State. That is a very 
different picture than the last time we had an airline strike, which 
was over 25 years ago.
  Nearly a quarter of a century ago when Northwest had another strike 
and a shutdown prior to deregulation of the airlines, we had five 
different airline companies flying jets into the State of North Dakota. 
At roughly the same time, we had folks in Congress saying: ``What we 
really need to do is foster competition. We need to deregulate the 
airline industry.'' Thus, Congress deregulated the airline industry 
about 20 years ago. I wasn't here at the time, but the results for 
North Dakota was that we went from five jet carriers to one and we pay 
some of the highest fares of anywhere in the country.
  All those folks who swallowed the goal to deregulation in order to 
stimulate competition are now choking on the word ``competition.'' 
Today, stimulating competition is likened to re-regulation. What a 
twist. But, the fact is that competition is more the exception than the 
rule.
  If you live in Chicago and you are flying to New York or Los Angeles, 
God bless you, because you are going to have a lot of carriers to 
choose from and you are going to find very inexpensive ticket prices. 
You have a choice of carriers and ticket prices that are very 
attractive to you. You live in a city with millions and millions of 
people and you want to fly to another city with millions and millions 
of people. This is not an awfully bad deal for you; more choices and 
low fares. But if you get beyond those cities and ask how has this 
airline deregulation affected other Americans, what you will find is 
less selection, fewer choices, and higher prices.
  North Dakota is just one example, and the recent shutdown of our 
state's only jet carrier highlighted the problem. When the strike was 
called and the airline shut down, just like that, an entire State lost 
all of its jet service.
  A complete shutdown of all jet service chokes the economy very 
quickly. People can't move in and out. Now, I happen to think Northwest 
is a good carrier. I believe the same about all the major carriers. 
Most of them are well-run, good companies.
  What I do not admire is what they have done by retreating into 
regional monopolies--dominating the access points of our Nation's air 
transportation system. The major carriers have retreated into fortress 
hubs where one airline controls 60 or 70 or 80 percent of all the 
traffic at a major hub airport. With that level of market dominance, 
does anyone believe that another carrier is going to be able to come in 
and take them on? Competition is not flourishing. It's dying. This is 
not a free market--new entrants cannot access these dominated hubs and 
the result is that we now have regional monopolies without any 
regulation.
  What sense does that make, to have monopolies without regulation? The 
minute I say ``regulation,'' we have people here having apoplectic 
seizures on the floor of the Senate. Oh, Lord, we cannot talk about 
``regulation!'' I am not standing here today talking about regulation 
and I am not suggesting to re-regulate the airlines. All I want to do 
is see if we can provide some sort of industrial-strength vitamin B-12 
shot right in the rump of those airlines to see if we cannot get them 
competing again. How do we do that? We do it by creating the conditions 
that require competition. This legislation is one attempt to do just 
that.
  In order to encourage new startup regional jet service, I am 
proposing a 10 percent investment tax credit for regional jet 
purchases. That is, those startup companies that want to begin regional 
jet service to fly these new regional jets between certain cities and 
hubs that are not now served with regional jet service, we would say to 
them that we will help with a 10 percent investment tax credit on the 
purchase or lease of those regional jets. We will help because we want 
to provide incentives for the establishment of regional jet service 
once again in our country.
  Under this legislation, qualifying carriers would be eligible for an 
investment tax credit--up to ten percent of the purchase or lease 
price--of regional jet aircraft that are used primarily to serve under-
served markets. To receive the investment tax credit, an air carrier 
must have less than $10 billion annual revenue passenger miles and the 
aircraft for which the tax credit applies must be used primarily (over 
50% of its flight segments) to serve underserved markets for 5 years. 
An under-served market is defined as a community served by an airport 
with fewer than 60,000 annual emplanements.
  The investment tax credit would be offset by closing a corporate tax 
loophole regarding the deductible liquidating distributions or 
regulated investment companies and real estate investment trusts. The 
remaining revenue available from the offset would be used to reduce the 
airline ticket tax for the domestic segment serving a rural airport.
  Under current law, an 8 percent ad velorem tax is imposed on all 
domestic flights, plus a $2 flight segment tax. Beginning in fiscal 
year 1999, the ad velorem tax is reduced to 7.5 percent and the flight 
segment tax is increased to $2.25. In subsequent years, the ad velorem 
tax remains at 7.5 percent while the flight segment tax increases $0.25 
per year through 2003 at which point is capped at $3.00 per flight 
segment. Current law provides that the flight segment tax is not 
imposed on domestic flights to and from rural airports, which are 
defined as an airport with fewer than 100,000 passenger departures and 
is not located within 75 miles of another airport (that has fewer than 
100,000 passenger departures) or is receiving EAS subsidies. Under this 
legislation, the 7.5 percent ad velorem tax on domestic flights to 
rural airports would be reduced in proportion to the amount remaining 
from the revenue offset after the regional jet aircraft investment tax 
credit has been provided.
  It is targeted, it makes good sense, and it will stimulate investment 
in an activity that this country that very much needs more competition. 
The so-called free market is clogged--a kind of an airline cholesterol 
here that clogs up the arteries, and they say, ``This is the way we 
work, these are our hubs, these are out spokes, and you cannot mess 
with them.''
  My legislation simply says we would like to assist areas that no 
longer have jet service but could support it. We would like to 
encourage companies that decide they want to come in and serve there to 
be able to purchase the regional jets and be able to initiate that kind 
of service.
  My legislation has a second provision which reduces the airline 
ticket tax for certain qualified flights in rural America. This 
proposal also has a revenue offset so it would not be a net loser for 
the Federal budget.
  We are not in a situation in rural areas of this country where we can 
just sit back and say what is going to happen to us is going to happen 
to us and there is nothing we can do about it. There are some, I 
suppose, who sit around and wring their hands and gnash their teeth and 
fret and sweat and say, ``I really cannot alter things very much, this 
is the way it is.''
  The way it is not satisfactory to the people of my State. It is not 
satisfactory to have only one jet carrier serving our entire State. Our 
State's transportation services and airline service, especially jet 
airline service, is an essential transportation service. It ought not 
be held hostage by labor problems or other problems of one jet carrier. 
We must have competition. If all of those in this Chamber who mean what 
they say when they talk about competition will weigh in here and say, 
``Let's stand for competition, let's stand for the free market, let's 
try to help new starts, let's breed opportunities for broader based 
economic ownership and more competition in the airline industry,'' then 
I think we will have done something important and useful and good for 
States like mine and for many other rural States in this country.
  Mr. President, I ask unanimous consent that a copy of this bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2627

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

     SECTION 1. TAX CREDIT FOR REGIONAL JET AIRCRAFT SERVING 
                   UNDERSERVED COMMUNITIES.

       (a) Allowance of Credit.--
       (1) In general.--Section 46 of the Internal Revenue Code of 
     1986 (relating to amount of

[[Page S12560]]

     credit) is amended by striking ``and'' at the end of 
     paragraph (2), by striking the period at the end of paragraph 
     (3) and inserting ``, and'', and by inserting after paragraph 
     (3) the following new paragraph:
       ``(4) in the case of an eligible small air carrier, the 
     underserved community jet access credit.''
       (2) Underserved community jet access credit.--Section 48 of 
     such Code (relating to the energy credit and the 
     reforestation credit) is amended by adding after subsection 
     (b) the following new subsection:
       ``(c) Underserved Community Jet Access Credit.--
       ``(1) In general.--For purposes of section 46, the 
     underserved community jet access credit of an eligible small 
     air carrier for any taxable year is an amount equal to 10 
     percent of the qualified investment in any qualified regional 
     jet aircraft.
       ``(2) Eligible small air carrier.--For purposes of this 
     subsection and section 46--
       ``(A) In general.--The term `eligible small air carrier' 
     means, with respect to any qualified regional jet aircraft, 
     an air carrier--
       ``(i) to which part 121 of title 14, Code of Federal 
     Regulations, applies, and
       ``(ii) which has less than 10,000,000,000 (10 billion) 
     revenue passenger miles for the calendar year preceding the 
     calendar year in which such aircraft is originally placed in 
     service.
       ``(B) Air carrier.--The term `air carrier' means any air 
     carrier holding a certificate of public convenience and 
     necessity issued by the Secretary of Transportation under 
     section 41102 of title 49, United States Code.
       ``(C) Start-up carriers.--If an air carrier has not been in 
     operation during the entire calendar year described in 
     subparagraph (A)(ii), the determination under such 
     subparagraph shall be made on the basis of a reasonable 
     estimate of revenue passenger miles for its first full 
     calendar year of operation.
       ``(D) Aggregation.--All air carriers which are treated as 1 
     employer under section 52 shall be treated as 1 person for 
     purposes of subparagraph (A)(ii).
       ``(3) Qualified regional jet aircraft.--For purposes of 
     this subsection, the term `qualified regional jet aircraft' 
     means a civil aircraft--
       ``(A) which is originally placed in service by the 
     taxpayer,
       ``(B) which is powered by jet propulsion and is designed to 
     have a maximum passenger seating capacity of not less than 30 
     passengers and not more than 100 passengers, and
       ``(C) at least 50 percent of the flight segments of which 
     during any 12-month period beginning on or after the date the 
     aircraft is originally placed in service are between a hub 
     airport (as defined in section 41731(a)(3) of title 49, 
     United States Code, and an underserved airport.
       ``(4) Underserved airport.--The term `underserved airport' 
     means, with respect to any qualified regional jet aircraft, 
     an airport which for the calendar year preceding the calendar 
     year in which such aircraft is originally placed in service 
     had less than 600,000 enplanements.
       ``(5) Qualified investment.--For purposes of paragraph (1), 
     the term `qualified investment' means, with respect to any 
     taxable year, the basis of any qualified regional jet 
     aircraft placed in service by the taxpayer during such 
     taxable year.
       ``(6) Qualified progress expenditures.--
       ``(A) Increase in qualified investment.--In the case of a 
     taxpayer who has made an election under subparagraph (E), the 
     amount of the qualified investment of such taxpayer for the 
     taxable year (determined under paragraph (5) without regard 
     to this subsection) shall be increased by an amount equal to 
     the aggregate of each qualified progress expenditure for the 
     taxable year with respect to progress expenditure property.
       ``(B) Progress expenditure property defined.--For purposes 
     of this paragraph, the term `progress expenditure property' 
     means any property which is being constructed for the 
     taxpayer and which it is reasonable to believe will qualify 
     as a qualified regional jet aircraft of the taxpayer when it 
     is placed in service.
       ``(C) Qualified progress expenditures defined.--For 
     purposes of this paragraph, the term `qualified progress 
     expenditures' means the amount paid during the taxable year 
     to another person for the construction of such property.
       ``(D) Only construction of aircraft to be taken into 
     account.--Construction shall be taken into account only if, 
     for purposes of this subpart, expenditures therefor are 
     properly chargeable to capital account with respect to the 
     qualified regional jet aircraft.
       ``(E) Election.--An election under this paragraph may be 
     made at such time and in such manner as the Secretary may by 
     regulations prescribe. Such an election shall apply to the 
     taxable year for which made and to all subsequent taxable 
     years. Such an election, once made, may not be revoked except 
     with the consent of the Secretary.
       ``(7) Coordination with other credits.--This subsection 
     shall not apply to any property with respect to which the 
     energy credit or the rehabilitation credit is allowed unless 
     the taxpayer elects to waive the application of such credits 
     to such property.
       ``(8) Special lease rules.--For purposes of section 
     50(d)(5), section 48(d) (as in effect on the day before the 
     date of the enactment of the Revenue Reconciliation Act of 
     1990) shall be applied for purposes of this section without 
     regard to paragraph (4)(B) thereof (relating to short-term 
     leases of property with class life of under 14 years).
       ``(9) Application.--This subsection shall apply to periods 
     after the date of the enactment of this subsection and before 
     January 1, 2009, under rules similar to the rules of section 
     48(m) (as in effect on the day before the date of the 
     enactment of the Revenue Reconciliation Act of 1990).''
       (3) Recapture.--Section 50(a) of such Code (relating to 
     recapture in the case of dispositions, etc.) is amended by 
     adding at the end the following new paragraph:
       ``(6) Special rules for aircraft credit.--
       ``(A) In general.--For purposes of determining whether a 
     qualified regional jet aircraft ceases to be investment 
     credit property, an airport which was an underserved airport 
     as of the date such aircraft was originally placed in service 
     shall continue to be treated as an underserved airport during 
     any period this subsection applies to the aircraft.
       ``(B) Property ceases to qualify for progress 
     expenditures.--Rules similar to the rules of paragraph (2) 
     shall apply in the case of qualified progress expenditures 
     for a qualified regional jet aircraft under section 48(c).''
       (4) Technical amendments.--
       (A) Subparagraph (C) of section 49(a)(1) of such Code is 
     amended by striking ``and'' at the end of clause (ii), by 
     striking the period at the end of clause (iii) and inserting 
     ``, and'', and by adding at the end the following new clause:
       ``(iv) the portion of the basis of any qualified regional 
     jet aircraft attributable to any qualified investment (as 
     defined by section 48(c)(5)).''
       (B) Paragraph (4) of section 50(a) of such Code is amended 
     by striking ``and (2)'' and inserting ``, (2), and (6)''.
       (C)(i) The section heading for section 48 of such Code is 
     amended to read as follows:

     ``SEC. 48. OTHER CREDITS.''

       (ii) The table of sections for subpart E of part IV of 
     subchapter A of chapter 1 of such Code is amended by striking 
     the item relating to section 48 and inserting the following 
     new item:

``Sec. 48. Other credits.''

       (5) Effective date.--The amendments made by this subsection 
     shall apply to periods after the date of the enactment of 
     this Act, under rules similar to the rules of section 48(m) 
     of the Internal Revenue Code of 1986 (as in effect on the day 
     before the date of the enactment of the Revenue 
     Reconciliation Act of 1990.
       (b) Reduced Passenger Tax Rate on Rural Domestic Flight 
     Segments.--Section 4261(e)(1)(C) of such Code (relating to 
     segments to and from rural airports) is amended to read as 
     follows:
       ``(C) Reduction in general tax rate.--
       ``(i) In general.--The tax imposed by subsection (a) shall 
     apply to any domestic segment beginning or ending at an 
     airport which is a rural airport for the calendar year in 
     which such segment begins or ends (as the case may be) at the 
     rate determined by the Secretary under clause (ii) for such 
     year in lieu of the rate otherwise applicable under 
     subsection (a).
       ``(ii) Determination of rate.--The rate determined by the 
     Secretary under this clause for each calendar year shall 
     equal the rate of tax otherwise applicable under subsection 
     (a) reduced by an amount which reflects the net amount of the 
     increase in revenues to the Treasury for such year resulting 
     from the amendments made by subsections (a) and (c) of 
     section ____ of the Wendell H. Ford National Air 
     Transportation System Improvement Act of 1998.
       ``(iii) Transportation involving multiple segments.--In the 
     case of transportation involving more than 1 domestic segment 
     at least 1 of which does not begin or end at a rural airport, 
     the rate applicable by reason of clause (i) shall be applied 
     by taking into account only an amount which bears the same 
     ratio to the amount paid for such transportation as the 
     number of specified miles in domestic segments which begin or 
     end at a rural airport bears to the total number of specified 
     miles in such transportation.''.
       (c) Treatment of Certain Deductible Liquidating 
     Distributions of Regulated Investment Companies and Real 
     Estate Investment Trusts.--
       (1) In general.--Section 332 of the Internal Revenue Code 
     of 1986 (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.''.
       (2) Conforming amendments.--
       (A) The material preceding paragraph (1) of section 332(b) 
     of such Code is amended by striking ``subsection (a)'' and 
     inserting ``this section''.
       (B) Paragraph (1) of section 334(b) of such Code is amended 
     by striking ``section 332(a)'' and inserting ``section 332''.

[[Page S12561]]

       (3) Effective date.--The amendments made by this subsection 
     shall apply to distributions after May 21, 1998.
                                 ______
                                 
      By Mr. MACK:
  S. 2630. A bill to amend the Internal Revenue Code of 1986 to provide 
a special rule regarding allocation of interest expense of qualified 
infrastructure indebtedness of taxpayers; to the Committee on Finance.


                            tax legislation

 Mr. MACK. Mr. President, today I am introducing legislation to 
remedy a problem in the way the U.S. taxes the foreign operations of 
U.S. electric and gas utilities. With the 1992 passage of the National 
Energy Policy Act, Congress gave a green light to U.S. utilities 
wishing to do business abroad, lifting a long-standing prohibition. 
U.S. utilities were allowed to compete for the foreign business 
opportunities created by the privatization of national utilities and 
the need for the construction of facilities to meet increased energy 
demands abroad.
  Since 1992, U.S. utility companies have made significant investments 
in utility operations in the United Kingdom, Australia, Eastern Europe, 
the Far East and South America. These investments in foreign utilities 
have created domestic jobs in the fields of design, architecture, 
engineering, construction, and heavy equipment manufacturing. They also 
allow U.S. utilities an opportunity to diversify and grow.
  Unfortunately, the Internal Revenue Code penalizes these investments 
by subjecting them to double-taxation. U.S. companies with foreign 
operations receive tax credits for a portion of the taxes they pay to 
foreign countries, to reduce the double-taxation that would otherwise 
result from the U.S. policy of taxing worldwide income. The size of 
these foreign tax credits are affected by a number of factors, as U.S. 
tax laws recalculate the amount of foreign income that is recognized 
for tax credit purposes.
  Section 864 of the tax code allocates deductible interest expenses 
between the U.S. and foreign operations based on the relative book 
values of assets located in the U.S. and abroad. By ignoring business 
realities and the peculiar circumstances of U.S. utilities, this 
allocation rule overtaxes them. Because U.S. utilities were until 
recently prevented from operating abroad, their foreign plants and 
equipment have been recently-acquired and consequently have not been 
much depreciated, in contrast to their domestic assets which are in 
most cases fully-depreciated. Thus a disproportionate amount of 
interest expenses are allocated to foreign income, reducing the foreign 
income base that is recognized for U.S. tax purposes thus the size of 
the corresponding foreign tax credits.
  As the allocation rules increase the double-taxation of foreign 
income by reducing foreign tax credits, they also increase domestic 
taxation by shifting interest deductions from U.S. to foreign 
operations. The unfairness of this misallocation is magnified by the 
fact that interest expenses are usually associated with domestically-
regulated debt, which is tied to domestic production and is not as 
fungible as the tax code assumes.
  The result of this economically-irrational taxation scheme is a very 
high effective tax rate on certain foreign investment and a loss of 
U.S. foreign tax credits. Rather than face this double-tax penalty, 
some U.S. utilities have actually chosen not to invest overseas and 
others have pulled back from their initial investments.
  One solution to this problem is found in the legislation that I am 
introducing today. This remedy is to exempt from the interest 
allocation rules of Section 864 the debt associated with a U.S. 
utility's furnishing and sale of electricity or natural gas in the 
United States. This proposed rule is similar to the rule governing 
``non-recourse'' debt, which is not subjected to foreign allocation. In 
both cases, lenders look to specific cash flows for repayment and 
specific assets as collateral. These loans are thus distinguishable 
from the typical risks of general credit lending transactions.
  The specific cash flow aspect of non-recourse financing is a critical 
element of the non-recourse debt exception, and logic requires that the 
same tax treatment should be given to analogous utility debt. Thus, my 
bill would exempt from allocation to foreign source income the interest 
on debt incurred in the trade or business of furnishing or selling 
electricity or natural gas in the United States. The current situation 
is a very real problem that must be remedied, and I urge my colleagues 
to support the solution I am proposing.
  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. 2630

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

     SECTION 1. TREATMENT OF INTEREST EXPENSE OF QUALIFIED 
                   INFRASTRUCTURE INDEBTEDNESS.

       (a) In General.--Section 864(e) of the Internal Revenue 
     Code of 1986 (relating to rules for allocating interest, 
     etc.) is amended by redesignating paragraphs (6) and (7) as 
     paragraphs (7) and (8), respectively, and inserting after 
     paragraph (5) the following new paragraph:
       ``(6) Treatment of certain interest expense relating to 
     qualified infrastructure indebtedness.--
       ``(A) In general.--Interest expense attributable to 
     qualified infrastructure indebtedness of a taxpayer shall be 
     allocated and apportioned solely to sources within the United 
     States and the taxpayer's assets (whether or not held in the 
     United States) shall be reduced by the amount of qualified 
     infrastructure indebtedness.
       ``(B) Qualified infrastructure indebtedness.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `qualified infrastructure indebtedness' means debt incurred 
     to carry on, or to acquire, build, or finance property used 
     predominantly in, the trade or business of the furnishing or 
     sale of electrical energy or natural gas in the United 
     States. The determination of whether debt constitutes 
     qualified infrastructure indebtedness under the previous 
     sentence shall be made at the time the debt is incurred.
       ``(ii) Required rate regulation.--The rates for the 
     furnishing or sale of electrical energy or natural gas by a 
     trade or business under clause (i) must be established or 
     approved by--

       ``(I) the District of Columbia or a State or political 
     subdivision thereof,
       ``(II) any agency or instrumentality of the United States, 
     or
       ``(III) a public service or public utility commission or 
     other similar body of the District of Columbia or of any 
     State or political subdivision thereof.

       ``(iii) Limitation.--If the rate regulation under clause 
     (ii) applies only to a portion of the trade or business of 
     the furnishing or sale of electrical energy or natural gas, 
     the debt incurred to carry on, or to acquire, build, or 
     finance property used in, such trade or business shall 
     constitute qualified infrastructure indebtedness only to the 
     extent that the ratio of the total outstanding qualified 
     infrastructure indebtedness with respect to such trade or 
     business (including such debt) to the total outstanding 
     indebtedness with respect to such trade or business does not 
     exceed the ratio of the assets used in the portion of the 
     trade or business that is subject to such rate regulation to 
     the total assets used in such trade or business. For purposes 
     of the determination under the preceding sentence, assets 
     shall be measured using book value for taxation purposes 
     unless the taxpayer makes an election to use fair market 
     value. Such election shall apply to the taxable year for 
     which the election is made and all subsequent taxable years 
     unless revoked with the consent of the Secretary.''
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to debt incurred in taxable years beginning after the 
     date of enactment of this Act.
       (2) Outstanding debt.--In the case of debt outstanding as 
     of the date of enactment of this Act, the determination of 
     whether such debt constitutes ``qualified infrastructure 
     indebtedness'' shall be made by applying the rules of section 
     864(e)(6)(B) of the Internal Revenue Code of 1986, as added 
     by this section, on the date such debt was incurred.
                                 ______
                                 
      By Mr. JOHNSON:
  S. 2631. A bill to establish a toll free number in the Department of 
Commerce to assist consumers in determining if products are American-
made; to the Committee on Commerce, Science, and Transportation.


              made in america consumer hotline legislation

 Mr. JOHNSON. Mr. President, today I introduce common-sense 
legislation which will greatly benefit America's manufacturers and 
consumers. My colleague, Senator DeWine of Ohio, is joining me as an 
original cosponsor of this bill. The ``Made In America'' Consumer 
Hotline bill will establish a toll free number in the Department of 
Commerce to assist consumers in determining whether the products they 
buy are American-made. The House has passed this legislation and I urge 
my colleagues to move this bill swiftly in our remaining days of the 
Congress.

[[Page S12562]]

  As the world economy becomes more inter-related, determining to what 
extent a product is ``Made in America'' is increasingly difficult for 
American consumers. We have come to expect access to information about 
so many of the products and services we rely on every day, information 
to help us make decisions about what's best for our families, our 
communities and our economy. With auto parts, computers, clothing, or 
appliances, American consumers know that the ``Made in America'' 
designation on products represents quality, reliability, and value.
  This legislation would establish a pilot program for the operation of 
a three-year, toll-free number to assist consumers in determining what 
products are ``Made in America.'' This legislation will have no cost to 
American taxpayers. Instead, fees collected from manufacturers who 
voluntarily choose to register their product will fully fund the toll-
free line. In the past, I cosponsored this hotline legislation in the 
House and I applaud my House colleagues for passing this bill.
  Providing consumers access to accurate and reliable information on 
the content of the products they buy is common-sense legislation that 
is long overdue. Some may object to the creation of such an information 
hotline as a protectionist endeavor. On the contrary, I believe there 
is nothing more conducive to fair trade than providing consumers the 
freedom to decide what product is best for them. This legislation is 
not about telling consumers what to buy, it's about providing consumers 
the resources they need to make their own decisions.
  I have worked hard to advance the issue of freedom of information on 
country of origin labeling, but we need to do more to facilitate 
consumer access to information. As you and I know, we can easily 
determine which country manufactured the automobiles we drive. We trust 
the tags on our shirts or trousers and we can see where our computers, 
stereos, and telephones were made by simply looking at the products' 
label. But many areas remain void of information on product origin. For 
example, when we go to the grocery store to purchase meat products for 
our families to eat, we have no idea where that meat originated.
  Throughout my service in the United States Congress, I have been a 
strong believer in country of origin labeling for all types of consumer 
products. I have been an especially strong supporter of country of 
origin labeling for meat products because of its common-sense nature, 
its benefits to ranchers, farmers, and consumers, its strong bipartisan 
and agricultural group support, its cost-free benefit to taxpayers as 
scored by the Congressional Budget Office (CBO), and its trade friendly 
provisions. I don't intend to stop at agricultural products. The 
legislation I am introducing today targets general consumer products 
greater than $250 in value.
  Freedom of information about country of origin labeling is fair trade 
because it provides global consumers with freedom of choice. In today's 
global economy, consumers deserve access to information on where the 
products their families use are from. By passing this ``Made in 
America'' toll-free hotline legislation, Congress will help consumers 
assert their right to know.
                                 ______
                                 
      By Mr. D'AMATO (for himself and Mr. Moynihan):
  S. 2632. A bill for the relief of Thomas J. Sansone, Jr.; to the 
Committee on Labor and Human Relations.


               private relief bill for tommy sansone, jr.

  Mr. D'AMATO. Mr. President, I rise today to introduce a bill for 
myself and for Senator Moynihan that will provide compensation under 
the National Vaccine Injury Compensation Program (VICP) to Tommy 
Sansone, Jr. Tommy was injured by a DPT vaccine in June 1994 and 
continues to suffer seizures and brain damage to this day. Tommy is the 
unintended and helpless victim of a drug designed to help him. He needs 
our help because while the Vaccine Injury Program is meant to make 
reparations for these injuries, it is hampered by regulations that 
challenges the worthiest of claims.
  Let me be clear, I am not advocating against our national 
immunization program. Vaccines are an integral part of our preventive 
health program, and in no way should we stop vaccinating our kids. 
However, in rare instances, a child will receive a shot designed to 
keep him safe from whooping cough or measles or other illness but react 
violently to the serum and end up crippled or sometimes killed. The 
answer is not to stop inoculating our children. We must review the 
program to ensure we provide our children with the greatest protection 
possible against the tragic diseases that older generations of 
Americans knew all too well, and we must review the Vaccine Injury Act.
  Back in 1986, Congress passed the Vaccine Injury Act to take care of 
vaccine injuries because the shots that we required our children to get 
were not as safe as they could have been. Since the program was 
established, more than 1100 children have been compensated. Over the 
first ten years, a great percentage of those with seizures or brain 
damage or other symptoms were recognized to be DPT-injured, and, they 
were summarily compensated. But, by 1995, the Institutes of Medicine 
(IOM) and others concluded that because the symptoms had no unique 
clinical profile, they were not necessarily DPT injuries. So, HHS 
changed the definitions of encephalopathy (inflammation of the brain), 
and of vaccine injury. Those new definitions had unintended 
consequences. Now, the program that we set up to be expeditious and 
fair, uses criteria that are so strict that the fund from which these 
claims are paid pays fewer claims than before and the fund has 
ballooned to over $1.2 billion. As a result, families of children like 
Tommy find it nearly impossible to win a claim against the Vaccine 
Injury Compensation Program. Most importantly, the program is failing 
its mission.
  Today, the Vaccine Injury Compensation Program is seen as a Fort Knox 
of government funds that not even the worthiest claim can access 
without a high-priced lawyer to guide it through a labyrinth of 
bureaucratic regulations. It is no longer the ``no-fault compensation 
program under which awards can be made to vaccine-injured persons 
quickly, easily, and with certainty and generosity,'' as we originally 
intended in 1986.
  To be clear, VICP is not a medical insurance policy. The program is 
not designed to take care of those who cannot get or receive care. VICP 
is a compensation program, where the government makes amends for a 
failure in the system that it established. Claims are paid from a trust 
fund established from surcharged that are paid on each shot a child 
receives. The fund serves as an insurance policy against vaccine 
injuries. But, following the regulatory changes made in 1995, the 
government is not recognizing even the most legitimate of claims. We 
are failing the very children we are trying to protect.
  Senator Jeffords, the chairman of the Senate Labor Committee and I 
have commissioned the GAO to study the vaccine injury program. We asked 
them to examine the overall operation and effectiveness of the Vaccine 
Injury Compensation Program and the National Vaccine Program. They will 
look at how revenues in the compensation fund are being managed and 
dispersed and whether vaccine injury claims are reviewed and processed 
in a fair and timely manner. They will look for those barriers, if any, 
that petitioners face in proving vaccine-related injuries. We've asked 
them to look into how well information about vaccine safety and 
injuries is collected, maintained and distributed, and to recommend 
changes (legislative or regulatory) to improve the Vaccine Injury 
Compensation Program and the National Vaccine Program. We want to fix 
VICP for children nationwide who needlessly suffer twice at the hands 
of the federal government; once with an adverse reaction to a vaccine 
they are required to receive and a second time when they cannot hold 
the federal government liable for their pain and suffering. But, there 
is something we can do now. We need to take care of this little guy, 
Tommy Sansone, Jr.
  Over the years after his DPT shot (the combined shot for diphtheria, 
pertussis and tetanus), Tommy suffers severe seizures and from brain 
damage that has hampered his mental development. When he wakes in the 
morning or from a nap, either his mother or father is at his side 
waiting for the inevitable. Tommy's eyes tear and his face cringes in 
agony as his entire body is wracked with a muscle-clenching seizure. 
His parents hold him helplessly

[[Page S12563]]

until the seizure subsides, sometimes for as long as five minutes. 
Tommy will then look into his mother's loving eyes, and say, ``No more, 
mommy. Make them stop.''
  At the very least, Tommy's parents know that the strain of vaccine 
used on Tommy is now being phased out because of the rash of adverse 
reactions it caused. But, this does nothing for Tommy or his parents 
who have been in and out of countless hospitals, and consulted with 
doctors and experts at the Centers for Disease Control and the Health 
Resources and Services Administration. Their claim for compensation was 
dismissed in the Federal Court of Claims, but they and Tommy's doctor 
feel (and I agree with them) that they should have known more about the 
potential dangers of the DPT vaccine that Tommy received on June 1, 
1994. No one told them that there was a chance that the DPT vaccine 
could cause such trauma. No one told them about ``hot lots,'' an 
unofficial team for a batch of shots that has had an abundance of 
adverse reactions. The lot that Tommy received is known to have had 44 
such reactions from March-November 1994, including 2 deaths. These are 
reactions beyond the short-lived fever and rashes that accompany many 
vaccines. Their doctor didn't know about the availability of the 
``new'' acellular strain of pertussis vaccine that is replacing the 
whole cell version that has been used since the 1930s. Sure, it costs a 
couple of dollars more, but who wouldn't choose that for their child--
given the choice?
  Tommy's claim would have been covered before the 1995 changes, but 
that is not the case any longer. He's the victim of a bad DPT vaccine, 
yet his case continues to be denied because the first seizure didn't 
occur within 72 hours of the shot. It occurred 18 days later, and he 
suffers to this day. Tommy also has brain damage (encephalopathy) 
because of the DPT shot, but it doesn't fit that new definition either. 
He cried and moaned at a shrill pitch from the moment of the shot until 
his first seizure, but that doesn't matter either. For the first six 
months of his life, tommy was in all ways normal, but for 4 and a half 
years since the DPT vaccine he and his family have suffered. As a 
parent and grandparent, I would do anything to protect my family from 
such pain and suffering. Tom Senior has done everything he knows how to 
help his son. Now he has turned to me because he knows I am in a 
position to help and I will not relent in my pursuit of relief for the 
Sansone family. The Vaccine Injury Compensation Program should take 
care of Tommy, but it doesn't. This bill will enable us to ensure that 
it does.
  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. 2632

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

     SECTION 1. COMPENSATION FOR VACCINE-RELATED INJURY.

       (a) Cause of Injury.--In consideration of the petition 
     filed under subtitle 2 of title XXI of the Public Health 
     Service Act (42 U.S.C. 300aa-10 et seq.) (relating to the 
     National Vaccine Injury Compensation Program) by the legal 
     representatives of Thomas J. Sansone, Jr., including the 
     claims contained in that petition that the injury described 
     in that petition was cause by a vaccine covered in the 
     Vaccine Injury Table specified in section 2114 of such Act 
     (42 U.S.C. 300aa-14) and given on June 1, 1994, such injury 
     is deemed to have been caused by such vaccine for the 
     purposes of subtitle 2 of title XXI of such Act.
       (b) Payment.--The Secretary of Health and Human Services 
     shall pay compensation to Thomas J. Sansone, Jr. for the 
     injury referred to in subsection (a) in accordance with 
     section 2115 of the Public Health Service Act (42 U.S.C. 
     300aa-15).
                                 ______
                                 
      By Mr. FIRST:
  S. 2633. A bill to amend the Internal Revenue Code of 1986 to allow 
registered venders to administer claims for refund of kerosene sold for 
home heating use; to the Committee on Finance.


      tax claims for refund of kerosene sold for home heating use

 Mr. FRIST. Mr. President, today I introduce a bill that will 
correct a grave injustice to users of kerosene for home heating. My 
bill would amend last year's change to the tax code concerning kerosene 
to allow registered vendors to administer claims for the refund of 
kerosene sold for home heating use.
  As many of you know, on July 1, 1998, new regulations regarding the 
taxation of kerosene went into effect, and I have heard from many 
Tennesseans who are concerned about the new tax policies. These 
provisions were included in the House version of the ``Taxpayer Relief 
Act of 1997.'' While these provisions were not included in the Senate 
version of the bill, the House language prevailed when the Senate and 
House worked out the conference agreement on this bill. Prior to the 
1997 change in law, kerosene was not taxable unless it was blended with 
taxable diesel fuel or used as an aviation fuel, nor was it subject to 
dyeing requirements.
  There have been continued problems with the use of untaxed kerosene 
being blended with taxable highway fuel, like diesel. As a result, some 
members of the House of Representatives determined and diesel fuel 
compliance measures, like dyeing, should be extended to kerosene. 
According to the new law, kerosene is taxed at 24.4 cents per gallon 
unless it is indelibly dyed and used only for a nontaxable use like 
home heating.
  I am concerned about these changes, especially since kerosene is 
often used as a heating oil or in space heaters. This is a nontaxable 
use; however, it is unclear whether dyed kerosene may be used in space 
heaters due to health concerns. In addition, many small oil companies 
and kerosene venders do not have sufficient facilities to sell both 
dyed and undyed kerosene, and many states have regulations mandating 
that only undyed kerosene may be used in home heaters. As a result, 
many consumers of kerosene for non-taxable home heating purposes will 
either be forced, or will choose for safety reasons, to purchase the 
taxable undyed kerosene. Under current law and IRS regulation, only the 
taxpayer is allowed to file a claim for a fuel credit if he or she 
purchases taxable kerosene for a non-taxable purpose other than from a 
blocked pump.
  The Internal Revenue Service (IRS) has provided refund and credit 
procedures for vendors and/or purchasers of the clear, taxed kerosene 
when the kerosene is intended for nontaxable purposes like home 
heating. This process, however, is complex and potentially unwieldy. 
Individual purchasers may claim a credit on line 59 of the 1040 tax 
form for whatever amount of tax they paid on clear kerosene bought for 
a nontaxable use. It is true that an individual must file a return, 
even if he or she otherwise would not, in order to receive the credit 
from the IRS. Vendors may claim a credit on their tax returns or may 
claim a quarterly refund if at least $750 is owed.

  Because many of these kerosene consumers do not file tax return form 
1040, this provision is an undue burden on hundreds, perhaps thousands, 
of Tennesseans, and many thousands of Americans. The complex nature of 
the kerosene tax refund policies on individual consumers who use 
kerosene for home heating is unduly burdensome. Additionally, for the 
consumers to pay a 24.4 cent tax per gallon at all strikes me as unjust 
taxation. Many of those who use kerosene for home heating are poor and 
can ill-afford to pay approximately 25% more per gallon of kerosene--
even if it is to be refunded at a later time.
  I sent a letter to the Internal Revenue Service (IRS) on August 13, 
1998 asking Commissioner Rossotti to issue a regulation that would 
allow kerosene vendors to file refund claims on behalf of their 
consumers. The Commissioner responded that such a regulation would 
require Congressional action to actually change the statute.
  This bill would do just that. I urge my colleagues to support this 
measure and I strongly urge passage of this bill.
                                 ______
                                 
      By Mr. GREGG (for himself and Mr. Breaux):
  S. 2635. A bill to amend the Internal Revenue Code of 1986 to provide 
for retirement savings for the 21st century; to the Committee on 
Finance.


                  21st century retirement savings act

  Mr. GREGG. Mr. President, I rise, along with my colleague Senator 
John Breaux, to introduce the 21st Century Retirement Savings Act.
  Earlier this year, I joined Senator Breaux as two of six co-sponsors 
of S.

[[Page S12564]]

2313, a bill to strengthen and preserve Social Security. This 
legislation was developed through the expertise of the National 
Commission on Retirement Policy, convened by the Center of Strategic 
and International Studies.
  The Commission was unique among such efforts in that it looked at the 
entire picture surrounding retirement saving, and did not seek to 
increase income through one venue at the expense of another. It was our 
finding that income through all of the components of the national 
retirement structures--Social Security, employer-provided pensions, and 
individual savings--needed to be increased if we are to meet the needs 
of the 21st century.
  This legislation to shore up private retirement savings is a 
companion piece to S. 2313, which dealt with Social Security. I am 
pleased that it will also be introduced by Congressmen Kolbe and 
Stenholm in the House.

                          ____________________