Congressional Record, Volume 145 Issue 39 (Thursday, March 11, 1999)

[Congressional Record Volume 145, Number 39 (Thursday, March 11, 1999)]
[Senate]
[Pages S2576-S2604]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mrs. FEINSTEIN:
S. 585. A bill to require health insurance coverage for certain
reconstructive surgery; to the Committee on Health, Education, Labor,
and Pensions.

reconstructive surgery act of 1999

Mrs. FEINSTEIN. Mr. President, today, I am introducing a bill
to require health insurance plans to cover medically necessary
reconstructive surgery for congenital defects, developmental
abnormalities, trauma, infection, tumors, or disease.
This bill is modeled on a new California law and responds to the
growing incidence of denials of coverage by insurance, often managed
care. Despite physicians' judgment that surgery is often medically
necessary, too many plans are labeling it ``cosmetic surgery.'' The
American Medical News calls the HMO's response that these surgeries are
cosmetic as, ``a classic health plan word game. . . .''
Testifying before the California Assembly Committee on Insurance, Dr.
Henry Kawamoto put it well. He said:

It used to be that if you were born with something
deforming, or were in an accident and had bad scars, the
surgery performed to fix the problem was considered
reconstructive surgery. Now, insurers of many kinds are
calling it cosmetic surgery and refusing to pay for it.

The Los Angeles Times reported on July 9, 1997, ``There has been a
virtual wipeout of coverage to repair the appearance of children whose
looks are affected by illness, congenital abnormalities or trauma.''
Similarly, the New York University Physician reported in their spring
1998 issue:

Before the advent of managed care, repairing abnormalites
was considered reconstructive surgery and insurance companies
reimbursed for the medical, hospital and surgical costs of
their rehabilitation. But in today's reconfigured medical
reimbursement system, many insurance companies and managed
care organizations will not pay for reconstruction of facial
deformities because it is deemed a ``cosmetic'' and not a
``functional'' repair.

This bill is endorsed by the March of Dimes, the American Academy of
Pediatrics, the National Organization for Rare Disorders, the American
Society of Plastic and Reconstructive Surgeons, the American College of
Surgeons, the American Association of Pediatric Plastic Surgeons, the
American Society of Craniofacial Surgery, the American Society of
Maxillofacial Surgeons, the American Society of Plastic and
Reconstructive Surgeons and the National Foundation for Facial
Reconstruction.
The children who face refusals to pay for surgery are the true
evidence that this bill is needed.
Hanna Gremp, a 6-year old from my own state of California, was born
with a congenital birth defect, called bilateral microtia, the absence
of an inner ear. Once the first stage of the surgery was complete, the
Gremp's HMO denied the next surgery for Hanna. They called the other
surgeries ``cosmetic'' and not medically necessary.
Michael Hatfield, a 19-year old from Texas, who has gone through
similar struggles. He was born with a congenital birth defect, that is
known as a midline facial cleft. The self-insured plan his parents had
only paid for a small portion of the surgery which reconstructed his
nose. The HMO also refused to pay any part of the surgery that
reconstructed his cheekbones and eye sockets. The HMO considered some
of these surgeries to be ``cosmetic.''
Cigna Health Care denied coverage for surgery to construct an ear for
a little California girl born without an ear and only after adverse
press coverage reversed its position saying that, ``It was determined
that studies have show some functional improvement following surgery.''
Qual-Med, another California HMO, denied coverage for reconstructive
surgery for a little boy without an ear, a condition called microtia,
and after only many appeals and two years delay, authorized it.
The bill uses medically-recognized terms to distinguish between
medically necessary surgery and cosmetic surgery. It defines medically
necessary reconstructive surgery as surgery ``performed to correct or
repair abnormal structures of the body caused by congenital defects,
developmental abnormalities, trauma, infection, tumors, or disease to
(1) improve functions; or (2) give the patient a normal appearance, to
the extent possible, in the judgment of the physician performing the
surgery.'' The bill specifically excludes cosmetic surgery, defined as
``surgery that is performed to alter or reshape normal structures of
the body in order to improve appearance.''
Examples of conditions for which surgery might be medically necessary
are the following: cleft lips and palates, burns, skull deformities,
benign tumors, vascular lesions, missing pectoral muscles that cause
chest deformities, Crouson's syndrome (failure of the mid-face to
develop normally), and injuries from accidents.
The American Society of Plastic and Reconstructive Surgeons has
released a survey on reconstructive surgery, concluding that 53.5
percent of surgeons surveyed have had pediatric patients who in the
last two years were denied coverage for reconstructive surgery. Of
those same surgeons surveyed whose pediatric patients were totally or
partially denied coverage, 74 percent had patients denied for initial
procedures and 53 percent denied for subsequent procedures.
Another reason for this bill is that only 17 out of 50 states have
state legislation which requires insurance coverage for children's
deformities and congenital defects. My own state, California, passed
legislation in 1998 requiring insurance plans to cover medically
necessary reconstructive surgery, and on September 23, 1998 it was
signed by former Governor Pete Wilson. This bill was enacted after many
sad personal stories, and hours of testimony were presented to the
state legislators.
This bill is an effort to address yet one more development in the
health insurance industry that almost daily is creating new hassles
when people try to get coverage for the plan they pay for every month.
We need our body parts to function and fortunately modern medicine
today often make that happen. We can restore, repair and make whole
parts which by fate, accident, genes, or whatever, do not perform as
they should. I hope this bill can make that happen.
______

By Mr. KOHL (for himself, and Mr. Sessions):

[[Page S2577]]

S. 586. A bill to amend title 11, United States Code, to limit the
value of certain real property that a debtor may elect to exempt under
State or local law, and for other purposes to the Committee on the
Judiciary.

bankruptcy abuse reform act of 1999

Mr. KOHL. Mr. President, I rise today, with Senator Sessions, to
introduce the bipartisan Bankruptcy Abuse Reform Act of 1999,
legislation which addresses a serious problem that threatens Americans'
confidence in our bankruptcy laws. The measure would cap at $100,000
the State homestead exemption that an individual filing for personal
bankruptcy can claim. It passed the Senate last year when it was
included in the Consumer Bankruptcy Reform Act of 1998 (H.R. 3150), and
I hope that we can all support this measure again this year. The goal
of our measure is simple but vitally important: to make sure that our
Bankruptcy Code is more than just a beachball for crooked millionaires
who want to hide their assets.
Let me tell you why this legislation is critically needed. In chapter
7 Federal personal bankruptcy proceedings, the debtor is allowed to
exempt certain possessions and interests from being used to satisfy his
outstanding debts. One of the chief things that a debtor seeks to
protect is his home, and I agree with that in principle. Few question
that debtors should be able to keep a roof over their heads. But, in
practice, this homestead exemption has become a source of great abuse.
Under section 522 of the Code, a debtor may opt to exempt his home
according to local, State, or Federal bankruptcy provisions. The
Federal exemption allows the debtor to shield up to $15,000 of value in
his house. The State exemptions vary tremendously: some States do not
allow the debtor to exempt any of his home's value, while a handful of
states set no ceiling and allow an unlimited exemption. The vast
majority of states have exemptions under $40,000.
Our proposal would amend Section 522 to cap State exemptions so that
no debtor could ever exempt more than $100,000 of the value of his
home.
Mr. President, in the past few years, the ability of debtors to use
State homestead exemptions has led to flagrant abuses of the Bankruptcy
Code. Multimillionaire debtors have moved to one of the states with
unlimited exemptions--most often Florida or Texas--bought multi-
million-dollar houses, and continued to live like kings even after
declaring bankruptcy. This shameless manipulation of the Bankruptcy
Code cheats honest creditors out of compensation and rewards only those
who can ``game'' the system. Oftentimes, the creditor who is robbed is
the American taxpayer. In recent years, S&L swindlers, convicted
insider trader convicts, and others have managed to protect their ill-
gotten gains through this loophole.
The owner of a failed Ohio S&L, who was convicted of securities
fraud, wrote off most of $300 million in bankruptcy claims, but still
held on to the multimillion dollar ranch he bought in Florida. A
convicted Wall Street financier filed bankruptcy while owing at least
$50 million in debts and fines, but still kept his $5 million Florida
mansion with 11 bedrooms and 21 bathrooms. And just last year, movie
star Burt Reynolds wrote off over $8 million in debt through
bankruptcy, but still held onto his $2.5 million Florida estate. These
deadbeats stay wealthy while legitimate creditors--including the U.S.
Government--get the short end of the stick.
Simply put, the current practice is grossly unfair and contravenes
the intent of our laws: People are supposed to get a fresh start, not a
head start, under the Bankruptcy Code.
Mr. President, the legislation that I have introduced today is
simple, effective and straightforward. It caps the homestead exemption
at $100,000, which is far more than estimated median home equity of
people in bankruptcy. It is endorsed by the National Bankruptcy Review
Commission. And it will protect middle class Americans while preventing
the abuses that are making the middle class question the integrity of
our laws--the abuses the average American taxpayer is paying for out of
pocket.
Indeed, it is even generous to debtors. Less than ten states have a
homestead exemption that exceeds $100,000. More than two-thirds of
states cap the exemption at $40,000 or less. My own home state of
Wisconsin has a $40,000 exemption and that, in my opinion, is more than
sufficient.
Mr. President, this proposal is an effort to make our bankruptcy laws
more equitable. I urge my colleagues to support this important measure.
______

By Mr. ASHCROFT:
S. 587. A bill to provide for the mandatory suspension of Federal
benefits to convicted drug traffickers, and for other purposes; to the
Committee on the Judiciary.

no federal benefits for drug traffickers act of 1999

Mr. ASHCROFT. Mr. President, the time for mixed messages in our war
against drugs has passed. There was a time when our message on illegal
drugs was crystal clear. ``Just say no.'' The results of that simple
message were also clear: The decade of the 1980's saw substantial and
persistent decreases in the level of drug use, and in the level of
teenage drug use in particular. Sadly, however, the current
Administration has offered America and its children a mixed message on
drugs.
The President himself has shifted the message from ``just say no'' to
``just don't inhale.'' Even the head of the Drug Enforcement Agency
candidly has admitted that in the current climate we lack the will to
win the war against drugs. This is intolerable. We must return to a
clear message in the war against drugs--a message of zero tolerance for
those who would attempt to ruin our children's lives through the
scourge of illegal drugs. The government must speak clearly and
unequivocally. Trafficking in illegal drugs will not be tolerated.
However, we will not succeed in convincing either drug dealers or our
children that we are serious about the war on drugs if we send them
mixed messages. One mixed message sent by current law is that convicted
drug dealers remain eligible for federal government benefits. We need
to change that practice.
Mr. President, the bill I introduce today, the ``No Federal Benefits
for Drug Traffickers Act'' requires the suspension of federal benefits
to convicted drug traffickers. This bill will send a clear message that
we mean what we say in the war against drugs. Current federal law
provides for the denial of federal benefits (excluding certain programs
like food stamps, aid to families with dependent children, and approved
drug treatment programs) for individuals convicted of drug trafficking
offenses. Unfortunately, however, the law gives judges unlimited
discretion to decide whether or not to suspend a convicted drug
trafficker's federal benefits. For example, under current law a repeat
offender could retain his full federal benefits.
The ``No Federal Benefits for Drug Traffickers Act'' addresses this
loophole in the current law by mandating the suspension of a convicted
drug trafficker's federal benefits for at least a minimum period of
time. Specifically, the bill requires the suspension of a convicted
drug offender's federal benefits for a minimum of one year. The bill
also mandates suspension of benefits for at least three years upon a
second conviction.
In addition, the bill closes a loophole that allowed drug trafficker
who were supposed to be barred from receiving federal benefits for life
because of three separate drug trafficking convictions to regain their
eligibility for federal benefits. Once again we need to make our
message clear and unmistakable. Under the bill I introduce today, life
means life and it is truly three strikes and you're out.
This is what we need in the war against drugs--a clear message. Those
who choose to traffic in drugs have no legitimate claim to federal
benefits. This is common sense. There is no need for exceptions or
discretion. There is a need for clarity, and this bill provides that
clarity.
______

By Mr. HARKIN:
S. 589. A bill to require the National Park Service to undertake a
study of the Loess Hills area in western Iowa to review options for the
protection and interpretation of the area's natural, cultural, and
historical resources; to the Committee on Energy and Natural Resources.

loess hills preservation act of 1999

Mr. HARKIN. Mr. President, today, I am introducing legislation
calling

[[Page S2578]]

upon the National Park Service to conduct a study of the Loess Hills in
western Iowa. This study would be the first official step towards
possible national protection for the Loess Hills.
Specifically, this legislation would require the National Park
Service to monitor the area between Waubansie State Park and Stone Park
to study the possibility of a portion of this area to receive National
Park status.
Loess Hills is a unique national treasure that was formed by ancient
glaciers and hundreds of centuries of westerly winds. Only the loess
soil in China has accumulated as high as Iowa's. Although these hills
have survived for hundreds of centuries, today they are beginning to
crumble. Urban sprawl is unfortunately beginning to take its toll on
Loess Hills. Protecting this area must be given a high priority.
In 1986, the Loess Hills area was designated as a National Natural
Landmark by the National Park Service. This gives recognition to this
area as an area of national significance. Although this designation
encourages landowners to use conservation practices in use of the area,
this designation does nothing to control land ownership or to restrict
land use.
The only thing holding the loess in place is the roots of the
vegetation. Today, however, as the human exploitation of the hills
continues to increase the destruction of the vegetation, loess is left
once again blowing in the winds as the fragile hills begins to flatten.
This is of great concern to me. This area which marks one of the only
remaining natural ecosystems in the state is one of the few areas where
Iowans can experience nature. Iowa presently ranks 49th among the 50
states in National Park and Forest space. Iowa is also 400 miles away
from a sizable national recreation area (the Boundary Waters Canoe
Area). The Loess Hills, however, is an area of national significance
and has the potential to be a much needed National Park for the Plains
States.
Mr. President, since 1992, I have secured funding through the United
States Department of Agriculture to design better bridges and other
structures in the Loess Hills area to reduce soil erosion. But more
needs to be done.
One thing I would like to make clear--this study can only be
successfully implemented with the participation of local governments in
western Iowa and private property owners.
The Loess Hills are an Iowa treasure. This legislation would begin
the process of making Loess Hills a national treasure.
I invite my colleagues to join me as co-sponsors of this much needed
legislation. 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. 589

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 ``Loess Hills Preservation Act
of 1999''.

SEC. 2. FINDINGS.

The Congress finds that--
(1) The Loess Hills area in western Iowa, formed by ancient
glaciers and hundreds of centuries of westerly winds blowing
across the Missouri River, has resulted in the largest loess
formation in the United States, and one of the two largest in
the world;
(2) portions of the Loess Hills remain undeveloped and
provide an important opportunity to protect an historic and
unique natural resource;
(3) a program to study the Loess Hills can only be
successfully implemented with the cooperation and
participation of affected local governments and landowners;
(4) in 1986, the Loess Hills area was designated as a
National Natural Landmark in recognition of the area's
nationally significant natural resources;
(5) although significant natural resources remain in the
area, increasing development in the area has threatened the
future stability and integrity of the Loess Hills area; and
(6) the Loess Hills area merits further study by the
National Park Service, in cooperation with the State of Iowa,
local governments, and affected landowners, to determine
appropriate means to better protect, preserve, and interpret
the significant resources in the area;

SEC. 3. DEFINITIONS.

As used in this Act--
(1) the term ``Loess Hills'' means the area in the State of
Iowa located between Waubansie State Park and Stone Park, and
which includes Plymouth, Woodbury, Monona, Harrison,
Pottawattamie, Mills, and Fremont counties.
(2) the term ``Secretary'' means the Secretary of the
Interior.
(3) the term ``State'' means the State of Iowa.

SEC. 4. LOESS HILLS STUDY.

(a) The Secretary shall undertake a study of the Loess
Hills area to review options for the protection and
interpretation of the area's natural, cultural, and
historical resources. The study shall include, but need not
be limited to an analysis of the suitability and feasibility
of designating the area as--
(1) a unit of the National Park System;
(2) a National Heritage Area or Heritage Corridor; or
(3) such other designation as may be appropriate.
(b) The study shall examine the appropriateness and
feasibility of cooperative protection and interpretive
efforts between the United States, the State, and its
political subdivisions.
(c) The Secretary shall consult in the preparation of the
study with State and local governmental entities, affected
landowners, and other interested public and private
organizations and individuals.
(d) The study shall be completed within one year after the
date funds are made available. Upon its completion, the
Secretary shall transmit a report of the study, along with
any recommendations, to the Committee on Energy and Natural
Resources of the United States Senate and the Committee on
Resources of the United States House of Representatives.

SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

There is authorized to be appropriated such sums as may be
necessary to carry out this Act.
______

By Mr. FEINGOLD (for himself and Mr. Leahy):
S. 590. A bill to amend the Internal Revenue Code of 1986 to repeal
the percentage depletion allowance for certain hardrock mines, and for
other purposes; to the Committee on Finance.

ELIMINATION OF DOUBLE SUBSIDIES FOR THE HARDROCK MINING INDUSTRY ACT OF
1999

Mr. FEINGOLD. Mr. President, I am pleased to introduce legislation to
eliminate from the federal tax code percentage depletion allowances for
hardrock minerals mined on federal public lands. I am joined in
introducing this legislation by my colleague from Vermont, Mr. Leahy.

The President proposes the elimination of the percentage depletion
allowance on public lands in his FY 2000 budget. The President's FY
2000 budget estimates that, under this legislation, income to the
federal treasury from the elimination of percentage depletion
allowances for hardrock mining on public lands would total $478 million
over five years, more than $95 million in this year alone. These
savings are calculated as the excess amount of federal revenues above
what would be collected if depletion allowances were limited to ``sunk
costs'' in capital investments. Percentage depletion allowances are
contained in the tax code for extracted fuel, minerals, metal and other
mined commodities. These allowances have a combined value, according to
1994 estimates by the Joint Committee on Taxation, of $4.8 billion.
Mr. President, these percentage depletion allowances were initiated
by the Corporation Excise Act of 1909. That's right, 1909. Provisions
for a depletion allowance based on the value of the mine were made
under a 1912 Treasury Department regulation, but difficulty in applying
this accounting principle to mineral production led to the initial
codification of the mineral depletion allowance in the Tariff Act of
1913. The Revenue Act of 1926 established percentage depletion much in
its present form for oil and gas. The percentage depletion allowance
was then extended to metal mines, coal, and other hardrock minerals by
the Revenue Act of 1932, and has been adjusted several times since.
Percentage depletion allowances were historically placed in the tax
code to reduce the effective tax rates in the mineral and extraction
industries far below tax rates on other industries, providing
incentives to increase investment, exploration and output. However,
percentage depletion also makes it possible to recover many times the
amount of the original investment.
There are two methods of calculating a deduction to allow a firm to
recover the costs of their capital investment: cost depletion, and
percentage depletion. Cost depletion allows for the recovery of the
actual capital investment--the costs of discovering, purchasing, and
developing a mineral reserve--over the period during which the reserve
produces income. Using

[[Page S2579]]

cost depletion, a company would deduct a portion of its original
capital investment minus any previous deductions, in an amount that is
equal to the fraction of the remaining recoverable reserves. Under this
method, the total deductions cannot exceed the original capital
investment.
However, under percentage depletion, the deduction for recovery of a
company's investment is a fixed percentage of ``gross income''--namely,
sales revenue--from the sale of the mineral. Under this method, total
deductions typically exceed, let me be clear on that point, Mr.
President, exceed the capital that the company invested.
The rates for percentage depletion are quite significant. Section 613
of the U.S. Code contains depletion allowances for more than 70 metals
and minerals, at rates ranging from 10 percent to 22 percent.
In addition to repealing the percentage depletion allowances for
minerals mined on public lands, Mr. President, my bill also creates a
new fund, called the Abandoned Mine Reclamation Fund. One fourth of the
revenue raised by the bill, or approximately $120 million dollars, will
be deposited into an interest bearing fund in the Treasury to be used
to clean up abandoned hardrock mines in states that are subject to the
1872 Mining Law. Mineral Policy Center estimates that there are 557,650
hardrock abandoned mine sites nationwide and the cost of cleaning them
up will range from $32.7 billion to $71.5 billion.
There are currently no comprehensive federal or state programs to
address the need to clean up old mine sites. Reclaiming these sites
requires the enactment of a program with explicit authority to clean up
abandoned mine sites and the resources to do it. My legislation is a
first step toward providing the needed authority and resources.
Mr. President, in today's budget climate we are faced with the
question of who should bear the costs of exploration, development, and
production of natural resources: all taxpayers, or the users and
producers of the resource? For more than a century, the mining industry
has been paying next to nothing for the privilege of extracting
minerals from public lands and then abandoning its mines. Now those
mines are adding to the nation's environmental and financial burdens.
We face serious budget choices this fiscal year, yet these subsidies
remain a persistent tax expenditure that raise the deficit for all
citizens or shift a greater tax burden to other taxpayers to compensate
for the special tax breaks provided to the mining industry.
Mr. President, the measure I am introducing is fairly
straightforward. It eliminates the percentage depletion allowance for
hardrock minerals mined on public lands while continuing to allow
companies to recover reasonable cost depletion.
Though at one time there may have been an appropriate role for a
government-driven incentive for enhanced mineral production, there is
now sufficient reason to adopt a more reasonable depletion allowance
that is consistent with those given to other businesses.
Mr. President, the time has come for the Federal Government to get
out of the business of subsidizing business. We can no longer afford
its costs in dollars or its cost to the health of our citizens. This
legislation is one step toward the goal of ending these corporate
welfare subsidies.
I ask unanimous consent that a copy of the legislation be printed in
the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 590

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 ``Elimination of Double
Subsidies for the Hardrock Mining Industry Act of 1999''.

SEC. 2. REPEAL OF PERCENTAGE DEPLETION ALLOWANCE FOR CERTAIN
HARDROCK MINES.

(a) In General.--Section 613(a) of the Internal Revenue
Code of 1986 (relating to percentage depletion) is amended by
inserting ``(other than hardrock mines located on lands
subject to the general mining laws or on land patented under
the general mining laws)'' after ``In the case of the
mines''.
(b) General Mining Laws Defined.--Section 613 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following:
``(f) General Mining Laws.--For purposes of subsection (a),
the term `general mining laws' means those Acts which
generally comprise chapters 2, 12A, and 16, and sections 161
and 162 of title 30 of the United States Code.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1998.

SEC. 3. ABANDONED MINE RECLAMATION FUND.

(a) In General.--Subchapter A of chapter 98 of the Internal
Revenue Code of 1986 (relating to establishment of trust
funds) is amended by adding at the end the following:

``SEC. 9511. ABANDONED MINE RECLAMATION FUND.

``(a) Creation of Trust Fund.--There is established in the
Treasury of the United States a trust fund to be known as the
`Abandoned Mine Reclamation Trust Fund' (in this section
referred to as `Trust Fund'), consisting of such amounts as
may be appropriated or credited to the Trust Fund as provided
in this section or section 9602(b).
``(b) Transfers to Trust Fund.--There are hereby
appropriated to the Trust Fund amounts equivalent to 25
percent of the additional revenues received in the Treasury
by reason of the amendments made by section 2 of the
Elimination of Double Subsidies for the Hardrock Mining
Industry Act of 1999.
``(c) Expenditures From Trust Fund.--
``(1) In general.--Amounts in the Trust Fund shall be
available, as provided in appropriation Acts, to the
Secretary of the Interior for--
``(A) the reclamation and restoration of lands and water
resources described in paragraph (2) adversely affected by
mineral (other than coal and fluid minerals) and mineral
material mining, including--
``(i) reclamation and restoration of abandoned surface mine
areas and abandoned milling and processing areas,
``(ii) sealing, filling, and grading abandoned deep mine
entries,
``(iii) planting on lands adversely affected by mining to
prevent erosion and sedimentation,
``(iv) prevention, abatement, treatment, and control of
water pollution created by abandoned mine drainage, and
``(v) control of surface subsidence due to abandoned deep
mines, and
``(B) the expenses necessary to accomplish the purposes of
this section.
``(2) Lands and water resources.--
``(A) In general.--The lands and water resources described
in this paragraph are lands within States that have land and
water resources subject to the general mining laws or lands
patented under the general mining laws--
``(i) which were mined or processed for minerals and
mineral materials or which were affected by such mining or
processing, and abandoned or left in an inadequate
reclamation status before the date of the enactment of this
section,
``(ii) for which the Secretary of the Interior makes a
determination that there is no continuing reclamation
responsibility under State or Federal law, and
``(iii) for which it can be established to the satisfaction
of the Secretary of the Interior that such lands or resources
do not contain minerals which could economically be extracted
through remining of such lands or resources.
``(B) Certain sites and areas excluded.--The lands and
water resources described in this paragraph shall not include
sites and areas which are designated for remedial action
under the Uranium Mill Tailings Radiation Control Act of 1978
(42 U.S.C. 7901 et seq.) or which are listed for remedial
action under the Comprehensive Environmental Response
Compensation and Liability Act of 1980 (42 U.S.C. 9601 et
seq.).
``(3) General mining laws.--For purposes of paragraph (2),
the term `general mining laws' means those Acts which
generally comprise chapters 2, 12A, and 16, and sections 161
and 162 of title 30 of the United States Code.''
(b) Conforming Amendment.--The table of sections for
subchapter A of chapter 98 of the Internal Revenue Code of
1986 is amended by adding at the end the following:

``Sec. 9511. Abandoned Mine Reclamation Trust Fund.''
______

By Mr. BOND:
S. 592. A bill to improve the health of children; to the Committee on
Finance.

Healthy Kids 2000 Act

Mr. BOND. Mr. President, one year ago today, the Birth Defects
Prevention Act passed the House of Representatives, clearing its way
for the President's signature.
With this new funding, the Centers for Disease Control has
implemented a national strategy, in conjunction with the States and
local organizations such as the March of Dimes, to prevent the
devastating incidence of birth defects.
Building upon that success, today I rise to introduce the Healthy
Kids 2000 Act--comprehensive approach which addresses the broad
spectrum of health issues affecting our nation's children.
And I want to thank the March of Dimes and the National Association
of Children's Hospitals for supporting me in this effort to improve the
health of our nation's children and pregnant women as we move into the
new millennium.

[[Page S2580]]

I also want to thank my colleague from Ohio, Mike DeWine, for his
work on children's health issues, and for allowing me to adopt some of
his ideas for inclusion in this bill. Senator DeWine has been a
dedicated leader on children's health, and has been essential to the
development of the sections of this bill that focus on poison control
centers and pediatric research within the National Institutes of
Health.
I am struck, every time I go into the neonatal wards across my home
state of Missouri, at the tiny one and two pound babies, hooked up to
monitors and tubes and looking so helpless. Many of them will survive;
a few may not. My first thought is always one of thanks that I have
been blessed with a very healthy son.
The good news is that we are making progress in preventing diseases
and in making sick and injured children well. Healing never thought
possible a few years ago for those who are burn victims, or born with
birth defects, or trauma victims, or even cancer patients, now occurs
on a daily basis around our country.
The question about how to finance health care and how to improve
access to and the quality of health care, however, are the hottest
challenges we face as a nation.
There are some things we can all agree on: that the care and well-
being of our children should come first, particularly those who are
ill. Prenatal care is also paramount, because a great deal of child
health is determined in the womb.
Thus as a nation, we must stand up and speak for those who cannot
speak for themselves.
That is why I am introducing the ``Healthy Kids 2000 Act.'' The idea
behind it is simple: we want pregnant women to be healthy, and we want
children to be healthy. So we are going to remove some of the barriers
they encounter in receiving good, appropriate health care.
This bill will give States the flexibility to enroll eligible
pregnant women in the State Children's Health Insurance Program (CHIP)
and to coordinate essential outreach efforts to enroll qualified
children. This program has already been funded by Congress to assist 10
million children whose families lack health insurance. These children
are eligible to receive basic health care services like immunizations
and antibiotics for ear infections, but pregnant women are not now
eligible. Since so much of a child's health is determined in the womb,
it is imperative that low-income pregnant women receive quality
prenatal care.
Similarly, we need to ensure that the National Institutes of Health
research machine is focusing on diseases and conditions which afflict
our nation's children, such as birth defects, SIDS, cystic fibrosis,
juvenile diabetes, and arthritis, just to name a few. A simple
statistic will highlight this need: 80% of prescription medications
marketed in the U.S. today are not approved by the FDA for use by
children under 12 because studies have not been conducted to document
their safety or whether or not they work for children. That is a
terrible disservice to the young people of our country who may need the
relief of a particular prescription drug.
This bill will also consolidate programs and provide more funds for
local initiatives to prevent birth defects and maternal mortality.
150,000 infants are born each year with a serious birth defect, and
birth defects are still the leading cause of infant death. During the
1990s we have witnessed an increase in maternal death during pregnancy
and childbirth. There is no question that we need better approaches to
ensure that women have healthier, safe pregnancies, and healthier
babies. And my bill will help fund these vital prevention strategies.
This bill will also ensure direct access to obstetric care, and
direct access to pediatric care. Children have health needs that are
very different than those of the adult population. Diseases and
medications behave differently than in adults, and when children are
treated, it should be by those who understand those differences.
Finally, this initiative will assist children's hospitals in
educating the next generation of pediatricians. Even with strapped
budgets, teaching children's hospitals offer the more egalitarian
health care in this country. These hospitals turn no one away. And it
is essential that we support this noble mission by equipping children's
hospitals with the tools to continue their educational and research
efforts.
So much of the most important work in our society goes unnoticed, and
unrewarded. Saving the lives of our children, improving the health of
our children, even caring for our children on a daily basis is not
glamorous work, or sometimes even all that much fun. Doctors, nurses,
mothers, fathers, child-care workers and teachers are performing the
most difficult, and the most important, work of our society: raising up
the next generation to be happy, healthy, and productive citizens.
We must assist them in their efforts, and we can take a positive step
by debating and enacting Healthy Kids 2000.
Mr. President, I ask unanimous consent that letters of support be
printed in the Record.
There being no objection, the letters were ordered to be printed in
the Record, as follows:

National Association of

Children's Hospitals,

Alexandria, VA, March 9, 1999.
Hon. Christopher ``Kit'' Bond,
U.S. Senate, Russell Senate Office Building, Washington, DC.
Dear Senator Bond: The National Association of Children's
Hospitals (N.A.C.H.), which represents more than 100
children's hospitals across the country, strongly supports
your efforts to address the full spectrum of children's
health care needs through your new ``Healthy Kids 200 Act,''
legislation that knits together several important individual
initiatives to improve the health and well-being of our
nation's children.
This legislation takes a comprehensive approach to
addressing barriers and obstacles, both health system and
governmental, that families and pediatric providers encounter
in improving the health care of children. Its focus on
strengthening health coverage, graduate medical education,
research, and public health protections for children clearly
reflects the children's hospitals' own four-fold missions of
clinical care, education, research, and public health
advocacy for child health. Together, they are essential to
the ability of communities to meet the unique health care
needs of their children.

children's health coverage

This legislation recognizes that the prescription for good,
comprehensive health care for children is not only health
insurance coverage but also quality and access to care. The
``Healthy Kids 200 Act'' would provide important health care
protections for children as well as enable providers,
professionals, systems, and workers to assure improved
quality of health care for children.
By providing families access to providers that specialize
in pediatrics for the care delivered to their children, the
legislation takes the important step of ensuring that
children receive health care in the most appropriate setting
and condition possible.
The legislation recognizes that, as the President's
Advisory Commission on Consumer Protection and Quality in the
Health Care Industry writes, ``[c]hildren have health and
development needs that are markedly different from adults and
require age-appropriate care. Developmental changes,
dependency on others, and different patterns of illness,
disability and injury require that attention be paid to the
unique needs of children in the health system.''
In addition, the legislation improves upon the State
Children's Health Insurance Program (SCHIP) by allowing
states the option to use SCHIP to provide health insurance
coverage for pregnant women. The linkages between prenatal
care and healthy children have long been understood in
American social policy, including Medicaid, the Maternal and
Child Health Block Grant and WIC. As the GAO found in its
report Health Insurance; Coverage Leads to Increased Health
Care Access for Children, Medicaid coverage of maternal and
child health improves health care access but also decreases
infant and child mortality.
For these reasons, N.A.C.H. supports giving states the
option of covering low income, uninsured pregnant women
through SCHIP, as well as the bill's provision to establish
automatic enrollment of their infants upon birth through that
critical first year of life.

Pediatric Education

N.A.C.H. applauds you for including in the ``Healthy Kids
2000 Act'' the commitment to commensurate federal graduate
medical education support for independent children's
hospitals proposed by the ``Children's Hospitals Education
and Research Act,'' which you have twice co-sponsored with
Senator Bob Kerrey (D-MO). Through the establishment of a
capped time-limited fund, the legislation would go a long way
toward providing a more equitable competitive playing field
for independent children's hospitals.
Like all teaching hospitals, children's hospitals receive
less and less support for their graduate medical education
(GME) programs from most insurers. Unlike other teaching
hospitals, independent children's hospitals receive virtually
no support for GME from the one remaining, stable source of
GME support--the Medicare program--because

[[Page S2581]]

they serve children, not the elderly. Yet, these hospitals
play a critical role in training the next generation of
health care providers for children. Although they represent
less than one percent of all hospitals, they train nearly 30
percent of all pediatricians and nearly half of all pediatric
subspecialists.

pediatric research

As centers of research devoted to improving the prevention,
diagnosis, treatment, and evaluation of children's illnesses
and conditions, children's hospitals very much appreciate
your efforts to bring new visibility the need for increased
NIH investment in pediatric biomedical research overall and
in pediatric research training in particular. While there are
a variety of ways to structure this increased investment in
NIH, we know that you share our conviction that in the end,
the result must be a real increase in total support for
pediatric research. Its purpose should be to stimulate
significant additional pediatric research investment and
growth in the number of researchers focusing on children's
health, not to cause a shift in funding that comes at the
expense of any current NIH research efforts for children.

pediatric public health promotion

With so many children's hospitals serving as their states'
or regions' poison control centers, N.A.C.H. especially
appreciates the provisions of your legislation to stabilize
and improve our nation's poison control system. Over half of
the two million poisonings reported in 1996 were by parents
of children under age 6. Almost 2 out of 3 poison calls are
on behalf of children under age 18. Legislation that serves
to improve and stabilize this critical system will
undoubtedly improve the lives and health of children as well.
N.A.C.H. also supports the bill's provisions to improve
prenatal care and birth defects research through the Centers
for Disease Control and Prevention, which are important to
reduce morbidity and mortality from birth, improving health,
and preventing life-long health care costs for children and
adults.
In conclusion, Senator Bond, we commend you for the breadth
and depth that this bill undertakes to improve the health of
our nation's children. This legislation certainly sets the
standard for what the 106th Congress should consider and pass
with respect to child health.
If you have any questions or need additional information,
call Peters Willson or Bruce Lesley at 703-684-1355.
Sincerely,
Lawrence A. McAndrews.
____

March of Dimes,

Birth Defects Foundation,

Washington, DC, March 8, 1999.
Hon. Christopher Bond,
U.S. Senate, Russell Senate Office Building, Washington, DC.
Dear Senator Bond: On behalf of more than 3 million
volunteers and 1500 staff members of the March of Dimes, I
want to commend you for introducing the ``Healthy Kids 2000
Act.'' We are particularly pleased that you have included in
this legislation three specific initiatives important to the
Foundation and to the health of mothers, infants and
children.
The first section of the bill, ``Health Care Accessibility
and Accountability for Mothers and Newborns,'' includes a
much needed initiative to improve access to health care for
pregnant women. Numerous studies have shown that prenatal
care improves the likelihood that a child will be born
healthy. Your proposal that states be given the flexibility
to cover prenatal care for income-eligible pregnant women
through the new State Children's Health Insurance Program (S-
CHIP) is an important step to take. If enacted, this
provision would help provide women the prenatal and maternity
care they need to have healthy, full term babies. The March
of Dimes strongly supports access to prenatal care. Because
of the Foundation's concern that more than 350,000 women do
not have access to these needed services, the Foundation has
identified the expansion of S-CHIP to cover pregnant women as
one of its highest federal legislative priorities for 1999.
The Foundation is also pleased to support the ``Pediatric
Public Health Promotion'' provision that would establish a
National Center for Birth Defects Research and Prevention at
the Centers for Disease Control and Prevention. This change
in law would elevate the visibility of the birth defects
activities of the CDC, authorized by the Birth Defects
Prevention Act (P.L. 105-168), which you guided to enactment
in 1998. As you know, for many years the March of Dimes has
been a strong supporter of federal birth defects research and
prevention activities. We applaud you for proposing to
integrate the activities of various programs to further
promote the prevention of birth defects.
In addition, the March of Dimes commends you on including
the ``Pediatric Research Initiative'' in the ``Healthy Kids
2000 Act.'' If enacted, this initiative would establish the
authorization needed to obtain additional funding for
pediatric biomedical research within the National Institutes
of Health. The Foundation believes that a partnership between
the public and private sectors is the more effective way to
raise the level of investment in clinical research pertaining
to children. The March of Dimes urges Congress to strengthen
the national commitment to all children.
We thank you for your leadership and are eager to work with
you on this and other legislative initiatives important to
the health of the nation's mothers, infants and children.
Sincerely,
Dr. Jennifer L. Howse,
President.
______

By Mr. COVERDELL (for himself, Mr. Torricelli, and Mr. Abraham):
S. 593. A bill to amend the Internal Revenue Code of 1986 to increase
maximum taxable income for the 15 percent rate bracket, to provide a
partial exclusion from gross income for dividends and interest received
by individuals, to provide a long-term capital gains deduction for
individuals, to increase the traditional IRA contribution limit, and
for other purposes; to the Committee on Finance.

the small savers act

Mr. COVERDELL. Mr. President, I rise today, joined by my good friends
Senator Torricelli and Senator Abraham, to introduce legislation whose
time I believe has clearly come. We are faced with a real crisis. That
crisis is the state of personal savings, savings by families that let
them prepare for the bumps in the road.
Families are not saving, and I believe it is not happening because
our government takes too much from them. A recent report by the
Congressional Budget Office showed that taxes on the American public
are at their highest level since World War II. Too many middle-class
families have been squeezed to the point where they live paycheck to
paycheck without the option of saving for the future.
Today, the Nation's economy remains the envy of the world. The United
States has the first federal budget surplus in thirty years,
unemployment is down and the stock market is up, but there are
troubling signs on the horizon. Manufacturing activity slowed in
December for the seventh straight month, dropping to its lowest level
in almost eight years as global economic problems continued to hinder
exports. At the same time, personal savings are at Depression-era lows.
In 1982, families saved nine percent of their personal income. In
1992, it was between five and six percent. Last year, it was one-half
of one percent and headed into the red. Personal savings is so
important because it helps prepare families for any crisis that could
occur, such as a health emergency or job loss.
Having said that, I believe we would all do well to remember the
lessons from the biblical parable of Joseph. Recall that Joseph warned
Pharaoh his kingdom would experience seven years of plenty followed by
seven years of famine. His message to Pharaoh was to build reserves
during the years of plenty in preparation for the years of famine, so
that his people would not suffer. To ensure the longevity of our recent
economic gains, it is important to remember the lessons of Joseph and
heed the words of President Kennedy who, in his second State of the
Union address said: ``Pleasant as it is to bask in the warmth of
recovery . . . the time to repair the roof is when the sun is
shining.''
One-third of Americans have no savings at all, and the next third
have less than $3,000 in savings. Although the baby-boom generation has
contributed to the explosion of people investing in the equities, only
two in five baby boomers will have enough savings to maintain their
current standard of living when they begin to retire in 2011.
The Small Savers Act would help to reverse these troubling trends.
First, our proposal returns middle class taxpayers to the lowest
Federal income tax bracket. Under our legislation, 7 million taxpayers
would no longer find themselves taxed at 28%. Instead, they would be
taxed at the 15% bracket.
Second, it would encourage modest savings and investment. We propose
to enable savers to earn $500, or $250 for singles, in interest and
dividends without paying a tax. According to the Joint Economic
Committee, 30 million low and middle income taxpayers would be able to
save tax free. Our proposal also would wipe out capital gains taxes for
10 million low and middle income investors by exempting the first
$5,000 of long-term capital gains. For those committed to ending the
taxation of capital gains, this would be an opportunity to take that
first step while encouraging lower and middle class workers to invest
for their future.

[[Page S2582]]

Finally, we provide for a modest $1,000 increase in the contribution
limit for deductible IRA contributions, from $2,000 to $3,000, and
index for inflation after 2009. These contribution limits have not been
raised since 1981.
The Nation faces many challenges in the years ahead. None is more
important than sustaining economic growth and ensuring our retirement
security. The Small Savers Act is a modest and progressive step to
begin shoring up personal savings and to keep the Nation on the path to
long-term economic health.
______

By Mrs. FEINSTEIN:
S. 594. A bill to ban the importation of large capacity ammunition
feeding devices; to the Committee on the Judiciary.

large-capacity ammunition magazine import ban of 1999

Mr. FEINSTEIN. Mr. President, I rise today to introduce legislation
that will plug a gaping loophole in our gun laws and protect us all
from the deadly, tragic violence of assault weapons.
This bill is not about gun control. This bill is not about politics.
And this bill is not about partisanship. But this bill is about
stopping foreign manufacturers from skirting the laws that already
apply to companies within our borders.
The bill we introduce today will address, finally, the loophole in
the law that allows foreign manufacturers to flood our shores with high
capacity ammunition clips, while domestic manufacturers are prohibited
from selling those very clips.
Our bill bans future importation of all ammunition clips with a
capacity of greater than 10 rounds.
Mr. President, this legislation would not ban the sale or possession
of clips already in circulation. And the domestic manufacture of these
clips is already illegal for most purposes. Under current law, U.S.
manufacturers are already prohibited from manufacturing large capacity
clips for sale to the general public, but foreign companies continue to
do so.
As the author of the 1994 provision, I can assure you that this was
not our intent. We intended to ban the future manufacture of all high
capacity clips, leaving only a narrow clause allowing for the
importation of clips already on their way to this country. Instead, the
Bureau of Alcohol, Tobacco and Firearms has allowed millions of foreign
clips into this country, with no true method of determining date of
manufacture.
In fact, between March and August of last year alone, BATF approved
more than 8 million large-capacity clips for importation into America.
Many of these clips were surely manufactured after 1994, but ATF has
no way to determining whether or not this is true. As a result, they
simply must take the word of the exporting company or country.
The clips come from at least 20 different countries, from Austria to
Zimbabwe.
The clips approved during this one short period accounted for almost
128 million rounds of ammunition--and every round represents the
potential for taking one human life.
These clips come in sizes ranging from 15 rounds per clip to 30, 75,
90, or even 250 rounds per clip.
Twenty thousand clips of 250-rounds came from England;
Two million 15-round magazines came from Italy;
Five thousand clips of 70-rounds came from the Czech Republic.
And the list goes on, and on.
Mr. President, 250-round clips have no sporting purpose. They are not
used for self defense. They have only one use--the purposeful killing
of other men, women and children.
It is both illogical and irresponsible to permit foreign companies to
sell items to the American public--particularly items that are so often
used for deadly purposes--that U.S. companies are prohibited from
selling. It is time to plug this loophole and close our borders to
these tools of death and destruction. Our domestic manufacturers are
complying with the law, and we must now force foreign manufacturers to
comply as well.
In April of last year, President Clinton and Treasury Secretary Rubin
closed one loophole in the 1994 ban on assault weapons by blocking
further imports of modified semiautomatic assault weapons. However, the
Department of Justice advises me that the President lacks the legal
authority to take the same action regarding large-capacity clips. As a
result, we must take legislative action to stop further imports of
these killer clips.
In closing our borders to these high capacity clips, we will not put
an end to all incidents of gun violence. But we will limit the
destructive power of that violence. We will not stop every troubled
child who decides to commit an act of violence from doing so, but we
can limit the tools that a child can find to carry out the act.
Each of us has been touched in some way by the devastating effects of
gun violence. Each of our states has faced unnecessary tragedy and
senseless destruction as a result of the high-powered, high-capacity
weapons falling into the hands of gangs, drive-by shooters, cop
killers, grievance killers, and yes, even children. My own state of
California has too often been the subject of national attention due to
incidents of gun violence.
Just a few short months ago in Oakland, California, officer James
Williams became yet another example of what can happen when a troubled
teenager gets hold of a high-capacity weapon. Soon after midnight on a
Sunday early this New Year, Officer Williams and two colleagues found
themselves searching the side of the road for a gun that had reportedly
been thrown by suspects involved in a recent chase. Officer Williams
had been out of the police academy for only eleven weeks, and was
undoubtedly looking forward to getting home to see his three children.
But tragically, James Williams never made it home that night. While
Williams searched for the lost gun, a 19-year-old man stood on the
freeway overpass above and fired the shots that would change Williams'
family forever. Using a Hungarian made AK-47 with a Chinese made high-
capacity ammunition clip, the teenager fired many shots--too many.

One Telfon-coated bullet from this high capacity clip fatally wounded
officer Williams, tearing through his bulletproof vest and leaving his
three children without a father. And that lone bullet tore through more
than just James Williams' body armor. It tore through the very fabric
of his entire family, and its damage cannot be repaired.
To many, Officer Williams has now become just another statistic in
the fight against gun violence. But he is more than that to his family,
and he must mean more than that to us, as well. We must fight to end
the tragedies faced by so many families across this nation. We must
fight to give meaning to the countless lives that have been
extinguished before their time.
One phenomenon which has most tragically revealed the problems
presented by these high capacity clips has been the use of these clips
by youngsters to kill other youngsters.
In Springfield, Oregon, a 15-year-old boy used a 30-round clip to
kill two of his fellow students and wound 22 others.
In Jonesboro, Arkansas, one of two boys carried a Universal carbine
equipped with a 15-round killer clip. Firing every one of those 15
bullets, the boy helped his partner kill five people and wound 10 more.
And just last December in Los Angeles, 27 year old LAPD officer Bryan
Brown was shot and killed by an assailant with a rifle and double
magazine. Following the tragic shooting, Officer Brown's 7 year old son
asked, ``Why did my daddy have to die?''
Mr. President, Officer Brown and Officer Williams gave their lives to
protect the lives of so many others, and their children have now been
left without a father. We must do what we can to make the lives of our
law enforcement officers more safe.
And we must also do what we can to bring foreign companies into
compliance with the same laws we impose on companies here at home. The
only way we can accomplish these goals is to pass this simple bill.
In 1994, we fired a first shot in the fight against assault weapons
and killer clips by banning the assault weapons most commonly used in
crime and to kill police officers. I am proud to have authored that
legislation, and many of my colleagues who joined me in that fight
remember how hard we worked to make a difference. Our opponents told

[[Page S2583]]

us our efforts would accomplish nothing--but they were wrong. They told
us our efforts would infringe upon the rights of innocent gun owners--
again, they were wrong.
In fact, recent statistics prove that the assault weapons ban is
working to reduce crime and to save the lives of law enforcement
officers and countless others.
A recent study by the Bureau of Alcohol, Tobacco and Firearms showed
that compared to other guns, the use of assault weapons in crimes is
rapidly falling. In fact, while assault weapons accounted for more than
6% of the guns traced in crimes before the 1994 crime bill went into
effect, these guns now account for less than 2.4% of those traces.
But it has now become apparent that the 1994 ban on assault weapons
left open certain loopholes. Through those loopholes fall the lives of
courageous police officers like Officer James Williams.
There is no convincing reason to allow foreign manufacturers to
circumvent the ban on assault weapons while domestic manufacturers
comply. And there is no convincing reason to keep an unlimited supply
of these clips flowing onto our shores and into the hands of American
criminals.
The ban on assault weapons is working to save lives and to keep us
safe. But we must act to fix those loopholes which still remain. Last
year we came close--we offered this bill as an amendment on short
notice and lost by only a few votes. I am confident that once my
colleagues understand what this bill does--and more importantly what it
does not do--we will win our fight.
I urge my colleagues to support this bill, and I look forward to
voting on this issue in the near future.
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. 594

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 ``Large Capacity Ammunition
Magazine Import Ban Act of 1999''.

SEC. 2. BAN ON IMPORTING LARGE CAPACITY AMMUNITION FEEDING
DEVICES.

Section 922(w) of title 18, United States Code, is
amended--
(1) in paragraph (1), by striking ``(1) Except as provided
in paragraph (2)'' and inserting ``(1)(A) Except as provided
in subparagraph (B)'';
(2) in paragraph (2), by striking ``(2) Paragraph (1)'' and
inserting ``(B) Subparagraph (A)'';
(3) by inserting before paragraph (3) the following:
``(2) It shall be unlawful for any person to import a large
capacity ammunition feeding device.''; and
(4) in paragraph (4)--
(A) by striking ``(1)'' each place it appears and inserting
``(1)(A)''; and
(B) by striking ``(2)'' and inserting ``(1)(B)''.

SEC. 3. CONFORMING AMENDMENT.

Section 921(a)(31) of title 18, United States Code, is
amended by striking ``manufactured after the date of
enactment of the Violent Crime Control and Law Enforcement
Act of 1994''.
______

By Mr. DOMENICI (for himself and Mr. Inhofe):
S. 595. A bill to amend the Internal Revenue Code of 1986 to
establish a graduated response to shrinking domestic oil and gas
production and surging foreign oil imports, and for other purposes; to
the Committee on Finance.

THE DOMESTIC OIL AND GAS CRISIS TAX RELIEF AND FOREIGN OIL RELIANCE
REVERSAL ACT OF 1999

Mr. DOMENICI. Mr. President, I rise today to introduce the Domestic
Oil and Gas Crisis Tax Relief and Foreign Oil Reliance Reversal Act of
1999.
It is a comprehensive, graduated approach to ensure that the United
States retains control of its foreign policy and its economic destiny.
I believe that oil is essential to our way of life. Oil is power.
It has been pointed out by numerous commentators that major oil
reserves and political volatility go together. The Middle East has the
world's most abundant and cheapest oil, unfortunately, the U.S. does
not.
Saudi Arabia, United Arab Emirates and Kuwait are our current allies,
but Iran and Iraq are not. Russia is a major natural gas producer, but
reliable Russia is not.
Our dependence on foreign oil is reaching 57 percent, projected to
reach 68 percent by 2010 if current prices prevail.
This isn't the usual boom and bust that the oil and gas industry goes
through. The price has dropped by half in the past two years. In real
terms, oil now costs roughly what it did before 1973. And prices could
stay low or drop lower according to the March 6th, Economist magazine.
Chairman Greenspan, thus, far has been more cautious.
At a Budget Committee hearing recently, I asked Chairman Greenspan
about the oil and gas depressed prices. For the first time that I can
remember, Greenspan blessed Independent Petroleum Association of
America (IPAA) numbers.
Greenspan said, ``In the short term, profits for the oil and gas
industry are likely to come under pressure. According to industry
surveys, exploration and production spending in the U.S. is projected
to decline 21 percent this year to $22.6 billion from $28.2 billion in
1998. A recent survey by the Independent Petroleum Association of
America (IPAA) estimates that over 36 thousand crude oil wells and more
than 56 thousand natural gas wells have been shut down since November
1997. During the same period, the IPAA estimates that 24 thousand jobs
in the industry have been eliminated * * * The financial pressures are
most serious among small producers in the United States.''
Let me describe the financial pressures facing New Mexico.
One of the city officials told me that oil and gas revenues were so
low that the town of Eunice has to decide which it will keep open--the
school or the hospital. There isn't enough tax revenue in the coffers
to do both! In New Mexico, the oil and gas industry is a major source
of revenue. For some communities it is the only significant source.
The bill I am introducing today is a comprehensive, graduated
response to the problem of the shrinking domestic oil and gas industry.
It builds upon, and includes all of the provisions included in S. 325
introduced by Senator Kay Bailey Hutchison and cosponsored by Senators
Nickles, Murkowski, Breaux and Landreu and myself.
The Hutchison bill focuses on helping our independent producers and
maintaining marginal wells. These are wells that produce less than 15
barrels a day by IRS definition, but in reality, on average produce
about 2.2 barrels of oil a day. There are a lot of marginal wells in
the United States, and together they produce as much oil as the United
States imports from Saudi Arabia.
I am also told if prices stay where they are the state could lose
half of those wells by the end of the year.
Title I of the bill I am introducing today is part of S. 325. It
includes a marginal well tax credit designed to prolong marginal
domestic oil and gas well production. The credit is equal to $3.00 a
barrel.
The bill also provides a Federal income tax exclusion for income
earned from inactive wells. It is an incentive for producers to keep
pumping and not to plug the wells because low prices make them
uneconomic. Once a well is plugged, the oil from that well is lost for
ever.
The bill expands the Enhanced Oil Recovery credit (EOR) that was
enacted in 1990.
Enhanced oil recovery techniques can recover the other seventy-five
percent of the oil left behind when regular techniques have pumped as
much oil as they can from a well. The EOR credit is expanded to cover
additional techniques and to be used by AMT taxpayers.
The oil and gas industry is a capital intensive industry.
When the price of oil drops, the cash flow for small producers dries
up. There are countless producers who haven't been able to make an
interest payment on their operating loans in months and as loans come
due, the banks haven't been willing to renew them.
The world is feasting on cheap oil, and yet the oil patch is starving
for capital. This credit crunch is made all the more painful because
producers know that they have accumulated tax

[[Page S2584]]

benefits and credits that they have not been able to use, first,
because they were Alternative Minimum Tax (AMT) taxpayers, and more
recently, because low prices have devastated their bottomline.
The AMT was intended to make sure that profitable companies paid
their fair share of taxes. It has not worked as it was intended. In
practice, the AMT imposes four penalties on investments made by U.S.-
based taxpayers who explore for and produce oil and natural gas.
Penalties are imposed on drilling investment and asset depreciation.
These penalties significantly increase the after-tax costs and the
business risks of drilling new wells. This is a very imprudent policy
at a time when the U.S. is experiencing historically low drilling
activity and growing import dependency.
The AMT increases the cost of capital of AMT taxpayers by
approximately 15 to 20 percent over what it would be under the regular
corporate income tax according to testimony given before the Senate
Finance Committee.
TITLE II of the bill tries to correct the past imprudence of the AMT
and other tax cod provisions by providing domestic oil and gas industry
crisis tax relief triggered when the price of oil is below $15 a
barrel.
This title of the bill creates what I call a ``credits to cash''
program.
The purpose is to transform earned tax credits and other accumulated
tax benefits into working capital for the cash-strapped domestic oil
and gas producers and service companies.
This is accomplished by creating a ten year carry-back for unused AMT
credits, and unused percentage depletion for oil and gas producers. The
bill would also eliminate one of the most restrictive limitations on an
oil and gas producer's ability to claim his intangible drilling costs--
the so-called 65 percent net income limitation. The bill repeals it so
that producers can finally recover their out of pocket costs.

The bill also includes a provision similar to a bill introduced by
Congressman Thomas. My bill allows both producers and the oil and gas
service industry to go back ten years and use up their Net operating
losses (NOL)s.

Hard times tax relief when price of oil is less than $14 a barrel

The National Energy Policy Act partially eliminated Intangible
Drilling Costs as a preference item under the AMT. This bill finishes
the job for any year when the price of oil is less than $14 a barrel
(phased out when oil prices hit $17)
IDCs are up front, out of pocket costs that have to be paid before a
producer even knows whether there will be any oil produced.
IDCs are one of the principal ordinary and necessary business costs
of the oil and gas industry. IDCs can comprise up to 80 percent of the
total costs incurred in developing a well.
IDCs are comparable to research and development costs because they
are incurred before a capital asset is known to exist. Examples of IDCs
include amounts paid to negotiate and finalize drilling contracts;
costs to prepare the drill site, costs of transporting and setting up
the rigs and costs of cementing casing in place; costs for wages, fuel,
repairs, supplies, and other costs in the drilling, shooting and
cleaning of wells, onsite preparation for the drilling of wells, and
the construction of the physical structures that are necessary for the
drilling of wells. IDCs are funded with cold, hard cash and typically
cannot be financed by a bank or financial institution, and must be paid
through an operator's internal cash flow or outside equity money
supplied by an investor.
Under the regular corporate tax, IDCs are generally allowed to be
expensed.
If they were the expenses of any other business they would not be
included as add-back preference items for purposes of the AMT. We took
the first step to correcting this injustice in the National Energy
Policy Act. It is time to finish the job now.
Percentage depletion is also an ordinary and necessary business cost.
It recognizes that the economic profit from successful wells must
compensate for economic losses from dry holes and marginal wells that
do not recover their investment. Percentage depletion also recognizes
that oil and gas properties are wasting assets with no residual value.
These expenses correspond to ordinary business expenses that are
deductible for every other business without limitations.
The bill would also eliminate the depreciation adjustment under the
AMT for oil and gas assets so that the depreciation schedules for the
regular tax are also used for AMT.
The oil and gas industry must spend significant amounts of capital to
acquire, find, develop and produce oil and gas resources The regular
tax system's modified accelerated cost recovery system (MACRS) is
designed to encourage such investments. The incentive of accelerated
tax depreciation is especially important in periods when oil is cheap
and companies are under economic pressure to reduce capital investment
and jobs. Yet, the depreciation adjustment required under the AMT
results in removing much of the regular tax incentive precisely when it
is needed most. This occurs because companies in the industry are more
likely to be subject to AMT in periods of low commodity prices.
While the AMT is the second tax system imbedded in our Internal
Revenue code, the Accumulated Current Earnings (ACE) effectively acts
as a third system of taxation, in addition to the regular tax system
and the AMT. ACE generally acts to measure income in the same manner
``earnings and profits'' which is a measure of income used by ``C''
corporations to determine whether their dividends will be taxable.
Under ACE, a corporate taxpayer must compute the deductions for
equipment depreciation (pre-1994), and intangible drilling cost
recovery in a third manner in addition to that mandated under the
regular tax system and the AMT.
Congress has nibbled at fixing the ACE several times in the 1990's.
It is time to get rid of it and its complexity. The bill eliminates the
Adjusted Current Earnings adjustment (ACE) as it applies to IDCs.
The bill would also permit the EOR credit and the Section 29 credit
to reduce the Alternative Minimum Tax.
The Alternative Minimum Tax (AMT) imposes tax penalties on the oil
and gas industry. It taxes investment, not income, and it is more
punitive the less profitable a company is. The longer prices are low
and profits thin, the harsher is the AMT's impact.
The bill recognizes that the Oil for Food program is contributing to
the depressed oil and gas prices and is causing economic hardship for
our domestic oil and gas producers. To compensate our domestic industry
for the economic loss that is being caused by this UN policy, the bill
would restore percentage depletion to 27.5 percent. It also would
include the remaining tax provisions included in S. 325 e.g., Allows
expensing geological and geophysical expenditures Allows producers to
make an election to Expense Delay Rentals payments; and provides an
Extension of Spudding rule
Title III of the bill would be triggered whenever foreign oil
reliance exceeds 50 percent. The purpose of this title is to reverse
the trend of increased foreign dependence of oil and gas by encouraging
exploration and development of oil and gas reserves here at home in the
U.S. Our goal should be to double current domestic oil and gas
production.
The bill provides a 20 percent exploration and development credit.
Title IV recognizes that 60 percent foreign oil dependence is a
national security risk and provides for an emergency procedure. When
foreign imports exceed 60 percent the President is required to
implement an energy security strategic plan designed to prevent crude
oil and product imports from exceeding 60 percent. I will remind my
colleagues that when we experienced the economic disruption of the 1973
oil embargo our dependence on foreign oil was only 36 percent.
Mr. President, we need a comprehensive response to foreign oil
dependence. We need to have a healthy domestic oil and gas industry.
This bill along with measures to help the industry through the current
credit crunch are essential. I ask that my colleagues join me in
developing a comprehensive plan to insure our energy and foreign policy
independence.
Mr. President, I ask unanimous consent that the text of the bill and
a summary be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[[Page S2585]]

S. 595

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.

(a) Short Title.--This Act may be cited as the ``Domestic
Oil and Gas Crisis Tax Relief and Foreign Oil Reliance
Reversal Act of 1999.''
(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.

SEC. 2. PURPOSES.

The purposes of this Act are--
(1) to establish a graduated response to shrinking domestic
oil and gas production and surging foreign oil imports;
(2) to prevent the abandonment of marginal oil and gas
wells responsible for half of the domestic oil and gas
production of the United States;
(3) to transform earned tax credits and other tax benefits
into working capital for the cash-strapped domestic oil and
gas producers and service companies;
(4) to reverse the trend of increased dependence on foreign
oil and gas by encouraging exploration and development of oil
and gas reserves in the United States to achieve the goal of
doubling current domestic oil and gas production; and
(5) to provide an emergency procedure for times when
foreign imports exceed 60 percent of the total United States
crude and oil product consumption, thereby recognizing that
when imports exceed a statutory level a national security
threat exists that demands Presidential action.

SEC. 3. FINDINGS.

Congress finds the following:
(1) Foreign oil consumption in the United States is
estimated to be equal to 56 percent of total oil consumption
and could reach 68 percent by the year 2010 if current prices
prevail.
(2) The number of oil and gas rigs operating in the United
States is at the lowest count since 1944, when records of
this number began to be recorded.
(3) If oil prices do not increase soon, the United States
could lose at least half of its marginal wells which, in the
aggregate, produce as much oil as the amount of oil the
United States imports from Saudi Arabia.
(4) Oil and gas prices are unlikely to increase for the
next several years.
(5) Declining production, well abandonment, and the lack of
exploration and development are shrinking the domestic oil
and gas industry.
(6) It is essential in order for the United States to have
a vibrant economy to have a healthy domestic oil and gas
industry.
(7) The world's richest oil producing regions in the Middle
East are experiencing great political stability.
(8) The policy of the United Nations may make Iraq the
swing oil producing nation, thereby granting an enemy of the
United States a tremendous amount of power.
(9) Reliance on foreign oil for more than 60 percent of the
daily oil and gas consumption in the United States is a
national security threat.
(10) The United States is the leader of the free world and
has a worldwide responsibility to promote economic and
political security.
(11) The exercise of traditional responsibilities in the
United States and abroad in foreign policy requires that the
United States be free of the risk of energy blackmail in
times of gas and oil shortages.
(12) The level of the United States security is directly
related to the level of domestic production of oil, natural
gas liquids, and natural gas.
(13) A national energy policy should be developed which
ensures that adequate supplies of oil are available at all
times free of the threat of embargo or other foreign hostile
acts.

SEC. 4. TABLE OF CONTENTS.

The table of contents of this Act is as follows:

Sec. 1. Short title; amendment of 1986 Code.
Sec. 2. Purposes.
Sec. 3. Findings.
Sec. 4. Table of contents.

TITLE I--DOMESTIC OIL AND GAS PRODUCTION PRESERVATION PROVISIONS

Sec. 101. Tax credit for marginal domestic oil and natural gas well
production.
Sec. 102. Exclusion of certain amounts received from recovered inactive
wells.
Sec. 103. Enhanced oil recovery credit extended to certain nontertiary
recovery methods.

TITLE II--DOMESTIC OIL AND GAS INDUSTRY CRISIS TAX RELIEF

Sec. 200. Purpose.

Subtitle A--Credits to Cash Provisions

Sec. 201. 10-year carryback for unused minimum tax credit.
Sec. 202. 10-year carryback for percentage depletion for oil and gas
property.
Sec. 203. 10-year net operating loss carryback for losses attributable
to oil servicing companies and mineral interests of oil
and gas producers.
Sec. 204. Waiver of limitations.

Subtitle B--Hard Times Tax Relief

Sec. 211. Phase-out of certain minimum tax preferences relating to
energy production.
Sec. 212. Depreciation adjustment not to apply to oil and gas assets.
Sec. 213. Repeal certain adjustments based on adjusted current earnings
relating to oil and gas assets.
Sec. 214. Enhanced oil recovery credit and credit for producing fuel
from a nonconventional source allowed against minimum
tax.

Subtitle C--Oil-for-Food Program Compensating Tax Benefits

Sec. 220. Purpose.
Sec. 221. Increase in percentage depletion for stripper wells.
Sec. 222. Net income limitation on percentage depletion repealed for
oil and gas properties.
Sec. 223. Election to expense geological and geophysical expenditures
and delay rental payments.
Sec. 224. Extension of Spudding rule.

TITLE II--FOREIGN OIL RELIANCE REVERSAL PROVISIONS

Sec. 300. Purpose.
Sec. 301. Crude oil and natural gas exploration and development credit.

TITLE IV--NATIONAL EMERGENCY PROVISIONS

Sec. 400. Purpose.
Sec. 401. Duties of the President.
Sec. 402. Congressional review.
Sec. 403. National security and oil production actions.

TITLE I--DOMESTIC OIL AND GAS PRODUCTION PRESERVATION PROVISIONS

SEC. 101. TAX CREDIT FOR MARGINAL DOMESTIC OIL AND NATURAL
GAS WELL PRODUCTION.

(a) Purpose.--The purpose of this section is to prevent the
abandonment of marginal oil and gas wells responsible for
half of the domestic production of oil and gas in the United
States.
(b) Credit for Producing Oil and Gas From Marginal Wells.--
Subpart D of part IV of subchapter A of chapter 1 (relating
to business credits) is amended by adding at the end the
following new section:

``SEC. 45D. CREDIT FOR PRODUCING OIL AND GAS FROM MARGINAL
WELLS.

``(a) General Rule.--For purposes of section 38, the
marginal well production credit for any taxable year is an
amount equal to the product of--
``(1) the credit amount, and
``(2) the qualified crude oil production and the qualified
natural gas production which is attributable to the taxpayer.
``(b) Credit Amount.--For purposes of this section--
``(1) In general.--The credit amount is--
``(A) $3 per barrel of qualified crude oil production, and
``(B) 50 cents per 1,000 cubic feet of qualified natural
gas production.
``(2) Reduction as oil and gas prices increase.--
``(A) In general.--The $3 and 50 cents amounts under
paragraph (1) shall each be reduced (but not below zero) by
an amount which bears the same ratio to such amount
(determined without regard to this paragraph) as--
``(i) the excess (if any) of the applicable reference price
over $14 ($1.56 for qualified natural gas production), bears
to
``(ii) $3 ($0.33 for qualified natural gas production).

The applicable reference price for a taxable year is the
reference price for the calendar year preceding the calendar
year in which the taxable year begins.
``(B) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2000, each of the
dollar amounts contained in subparagraph (A) shall be
increased to an amount equal to such dollar amount multiplied
by the inflation adjustment factor for such calendar year
(determined under section 43(b)(3)(B) by substituting `1999'
for `1990').
``(C) Reference price.--For purposes of this paragraph, the
term `reference price' means, with respect to any calendar
year--
``(i) in the case of qualified crude oil production, the
reference price determined under section 29(d)(2)(C), and
``(ii) in the case of qualified natural gas production, the
Secretary's estimate of the annual average wellhead price per
1,000 cubic feet for all domestic natural gas.
``(c) Qualified Crude Oil and Natural Gas Production.--For
purposes of this section--
``(1) In general.--The terms `qualified crude oil
production' and `qualified natural gas production' mean
domestic crude oil or natural gas which is produced from a
marginal well.
``(2) Limitation on amount of production which may
qualify.--
``(A) In general.--Crude oil or natural gas produced during
any taxable year from any well shall not be treated as
qualified crude oil production or qualified natural gas
production to the extent production from the well during the
taxable year exceeds 1,095 barrels or barrel equivalents.
``(B) Proportionate reductions.--
``(i) Short taxable years.--In the case of a short taxable
year, the limitations under this paragraph shall be
proportionately reduced to reflect the ratio which the number
of days in such taxable year bears to 365.
``(ii) Wells not in production entire year.--In the case of
a well which is not capable of production during each day of
a taxable year, the limitations under this paragraph
applicable to the well shall be proportionately reduced to
reflect the ratio which

[[Page S2586]]

the number of days of production bears to the total number of
days in the taxable year.
``(3) Definitions.--
``(A) Marginal well.--The term `marginal well' means a
domestic well--
``(i) the production from which during the taxable year is
treated as marginal production under section 613A(c)(6), or
``(ii) which, during the taxable year--
``(I) has average daily production of not more than 25
barrel equivalents, and
``(II) produces water at a rate not less than 95 percent of
total well effluent.
``(B) Crude oil, etc.--The terms `crude oil', `natural
gas', `domestic', and `barrel' have the meanings given such
terms by section 613A(e).
``(C) Barrel equivalent.--The term `barrel equivalent'
means, with respect to natural gas, a conversion ratio of
6,000 cubic feet of natural gas to 1 barrel of crude oil.
``(d) Other Rules.--
``(1) Production attributable to the taxpayer.--In the case
of a marginal well in which there is more than one owner of
operating interests in the well and the crude oil or natural
gas production exceeds the limitation under subsection
(c)(2), qualifying crude oil production or qualifying natural
gas production attributable to the taxpayer shall be
determined on the basis of the ratio which taxpayer's revenue
interest in the production bears to the aggregate of the
revenue interests of all operating interest owners in the
production.
``(2) Operating interest required.--Any credit under this
section may be claimed only on production which is
attributable to the holder of an operating interest.
``(3) Production from nonconventional sources excluded.--In
the case of production from a marginal well which is eligible
for the credit allowed under section 29 for the taxable year,
no credit shall be allowable under this section unless the
taxpayer elects not to claim the credit under section 29 with
respect to the well.''.
``(c) Credit Treated as Business Credit.--Section 38(b) is
amended by striking ``plus'' at the end of paragraph (11), by
striking the period at the end of paragraph (12) and
inserting ``, plus'', and by adding at the end the following
new paragraph:
``(13) the marginal oil and gas well production credit
determined under section 45D(a).''.
(d) Credit Allowed Against Regular and Minimum Tax.--
(1) In general.--Subsection (c) of section 38 (relating to
limitation based on amount of tax) is amended by
redesignating paragraph (3) as paragraph (4) and by inserting
after paragraph (2) the following new paragraph:
``(3) Special rules for marginal oil and gas well
production credit.--
``(A) In general.--In the case of the marginal oil and gas
well production credit--
``(i) this section and section 39 shall be applied
separately with respect to the credit, and
``(ii) in applying paragraph (1) to the credit--
``(I) subparagraphs (A) and (B) thereof shall not apply,
and
``(II) the limitation under paragraph (1) (as modified by
subclause (I)) shall be reduced by the credit allowed under
subsection (a) for the taxable year (other than the marginal
oil and gas well production credit).
``(B) Marginal oil and gas well production credit.--For
purposes of this subsection, the term `marginal oil and gas
well production credit' means the credit allowable under
subsection (a) by reason of section 45D(a).''.
(2) Conforming amendment.--Subclause (II) of section
38(c)(2)(A)(ii) is amended by inserting ``or the marginal oil
and gas well production credit'' after ``employment credit''.
(e) Carryback.--Subsection (a) of section 39 (relating to
carryback and carryforward of unused credits generally) is
amended by adding at the end the following new paragraph:
``(3) 10-year carryback for marginal oil and gas well
production credit.--In the case of the marginal oil and gas
well production credit--
``(A) this section shall be applied separately from the
business credit (other than the marginal oil and gas well
production credit),
``(B) paragraph (1) shall be applied by substituting `10
taxable years' for `1 taxable years' in subparagraph (A)
thereof, and
``(C) paragraph (2) shall be applied--
``(i) by substituting `31 taxable years' for `21 taxable
years' in subparagraph (A) thereof, and
``(ii) by substituting `30 taxable years' for `20 taxable
years' in subparagraph (B) thereof.''
(f) Coordination With Section 29.--Section 29(a) is amended
by striking ``There'' and inserting ``At the election of the
taxpayer, there''.
(g) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 is amended by
adding at the end the following item:

``45D. Credit for producing oil and gas from marginal wells.''

(h) Effective Date.--The amendments made by this section
shall apply to production after the date of the enactment of
this Act.

SEC. 102. EXCLUSION OF CERTAIN AMOUNTS RECEIVED FROM
RECOVERED INACTIVE WELLS.

(a) Purpose.--The purpose of this section is to encourage
producers to reopen wells that have not been producing oil
and gas because the wells have been plugged or abandoned.
(b) In General.--Part III of subchapter B of chapter 1
(relating to items specifically excluded from gross income)
is amended by redesignating section 139 as section 140 and by
inserting after section 138 the following new section:

``SEC. 139. OIL OR GAS PRODUCED FROM A RECOVERED INACTIVE
WELL.

``(a) In General.--Gross income does not include income
attributable to independent producer oil from a recovered
inactive well.
``(b) Definitions.--For purposes of this section--
``(1) Independent producer oil.--The term `independent
producer oil' means crude oil or natural gas in which the
economic interest of the independent producer is attributable
to an operating mineral interest (within the meaning of
section 614(d)), overriding royalty interest, production
payment, net profits interest, or similar interest.
``(2) Crude oil and natural gas.--The terms `crude oil' and
`natural gas' have the meanings given such terms by section
613A(e).
``(3) Recovered inactive well.--The term `recovered
inactive well' means a well if--
``(A) throughout the time period beginning any time prior
to January 15, 1999, and ending on such date, such well is
inactive or has been plugged and abandoned, as determined by
the agency of the State in which such well is located that is
responsible for regulating such wells, and
``(B) during the 5-year period beginning on the date of the
enactment of this section, such well resumes producing crude
oil or natural gas.
``(4) Independent producer.--The term `independent
producer' means a producer of crude oil or natural gas whose
allowance for depletion is determined under section 613A(c).
``(c) Deductions.--No deductions directly connected with
amounts excluded from gross income by subsection (a) shall be
allowed.
``(d) Election.--
``(1) In general.--This section shall apply for any taxable
year only at the election of the taxpayer.
``(2) Manner.--Such election shall be made, in accordance
with regulations prescribed by the Secretary, not later than
the time prescribed for filing the return (including
extensions thereof) and shall be made annually on a property-
by-property basis.''
(c) Minimum Tax.--Section 56(g)(4)(B) is amended by adding
at the end the following new clause:
``(iii) Inactive wells.--In the case of income attributable
to independent producers of oil recovered from an
inactive well, clause (i) shall not apply to any amount
allowable as an exclusion under section 139.''
(d) Clerical Amendment.--The table of sections for part III
of subchapter B of chapter 1 is amended by striking the item
relating to section 139 and inserting the following:

``Sec. 139. Oil or gas produced from a recovered inactive well.
``Sec. 140. Cross references to other Acts.;;

(e) Effective Date.--The amendments made by this section
shall apply to taxable years ending after the date of the
enactment of this Act.

SEC. 103. ENHANCED OIL RECOVERY CREDIT EXTENDED TO CERTAIN
NONTERTIARY RECOVERY METHODS.

(A) Purpose.--The propose of section is to extend the
productive lives of existing domestic oil and gas wells in
order to recover the 75 percent of the oil and gas that is
not recoverable using primary oil and gas recovery
techniques.
(b) In General.--Clause (i) of section 43(c)(2)(A)
(defining qualified enhanced oil recovery project) is amended
to read as follows:
``(i) which involves the application (in accordance with
sound engineering principles) of--
``(I) one or more tertiary recovery methods (as defined in
section 193(b)(3)) which can reasonably be expected to result
in more than an insignificant increase in the amount of crude
oil which will ultimately be recovered, or
``(II) one or more qualified nontertiary recovery methods
which are required to recover oil with traditionally immobile
characteristics or from formations which have proven to be
uneconomical or noncommercial under conventional recovery
methods,''
(c) Qualified Nontertiary Recovery Methods.--Section
43(c)(2) is amended by adding at the end the following new
subparagraphs:
``(C) Qualified nontertiary recovery method.--For purposes
of this paragraph--
``(i) In General.--The term `qualified nontertiary recovery
method' means any recovery method described in clause (ii),
(iii), or (iv), or any combination there of.
``(ii) Enhanced gravity drainage (egd) methods.--The
methods described in this clause are as follows:
``(I) Horizontal drilling.--The drilling of horizontal,
rather than vertical, wells to penetrate any hydrocarbon-
bearing formation which has an average in situ calculated
permeability to fluid flow of less than or equal to 12 or
less millidarcies and which has been demonstrated by use of a
vertical wellbore to be uneconomical unless drilled with
lateral horizontal lengths in excess of 1,000 feet.

[[Page S2587]]

``(II) Gravity drainage.--The production of oil by gravity
flow from drainholes that are drilled from a shaft or tunnel
dug within or below the oil-bearing zone.
``(iii) Marginally economic reservoir repressurization
(merr) methods.--The methods described in this clause are as
follows, except that this clause shall only apply to the
first 1,000,000 barrels produced in any project:
``(I) Cyclic gas injection.--The increase or maintenance of
pressure by injection of hydrocarbon gas into the reservoir
from which it was originally produced.
``(II) Flooding.--The injection of water into an oil
reservoir to displace oil from the reservoir rock and into
the bore of a producing well.
``(iv) Other methods.--Any method used to recover oil
having an average laboratory measured air permeability less
than or equal to 100 millidarcies when averaged over the
productive interval being completed, or an in situ calculated
permeability to fluid flow less than or equal to 12
millidarcies or oil defined by the Department of Energy as
being immobile.
``(D) Authority to add other nontertiary recovery
methods.--The Secretary shall provide procedures under
which--
``(i) the Secretary may treat methods not described in
clause (ii), (iii), or (iv) of subparagraph (C) as qualified
nontertiary recovery methods, and
``(ii) a taxpayer may request the Secretary to treat any
method not so described as a qualified nontertiary recovery
method.

The Secretary may only specify methods as qualified
nontertiary recovery methods under this subparagraph if the
Secretary determines that such specification is consistent
with the purposes of subparagraph (C) and will result in
greater production of oil and natural gas.''
(d) Conforming Amendment.--Clause (iii) of section
43(c)(2)(A) is amended to read as follows:
``(iii) with respect to which--
``(I) in the case of a tertiary recovery method, the first
injection of liquids, gases, or other matter commences after
December 31, 1990, and
``(II) in the case of a qualified nontertiary recovery
method, the implementation of the method begins after
December 31, 1998.''
(e) Effective Date.--The amendments made by this section
shall apply to taxable years ending after December 31, 1998.

TITLE II--DOMESTIC OIL AND GAS INDUSTRY CRISIS TAX RELIEF

SEC. 200. PURPOSE.

The purpose of this title is to transform earned tax
credits and other accumulated tax benefits into working
capital for the cash-strapped domestic oil and gas producers
and service companies.

Subtitle A--Credits to Cash Provisions

SEC. 201. 10-YEAR CARRYBACK FOR UNUSED MINIMUM TAX CREDIT.

(a) In General.--Section 53(c) of the Internal Revenue Code
of 1986 (relating to limitation) is amended by adding at the
end the following new paragraph:
``(2) Special rule for taxpayers with unused energy minimum
tax credits.--
``(A) In general.--If, during the 10-taxable year period
ending with the current taxable year, a taxpayer has an
unused energy minimum tax credit for any taxable year in such
period (determined without regard to the application of this
paragraph to the current taxable year)--
``(i) paragraph (1) shall not apply to each of the taxable
years in such period for which the taxpayer has an unused
energy minimum tax credit (as so determined), and
``(ii) the credit allowable under subsection (a) for each
of such taxable years shall be equal to the excess (if any)
of--
``(II) the sum of the regular tax liability and the net
minimum tax for such taxable year, over
``(II) the sum of the credits allowable under subparts A,
B, D, E, and F of this part.
``(B) Energy minimum tax credit.--For purposes of this
paragraph, the term `energy minimum tax credit' means the
minimum tax credit which would be computed with respect to
any taxable year if the adjusted net minimum tax were
computed by only taking into account items attributable to--
``(i) the taxpayer's mineral interests in oil and gas
property, and
``(ii) the taxpayer's active conduct of a trade or business
of providing tools, products, personnel, and technical
solutions on a contractural basis to persons engaged in oil
and gas exploration and production.''
(b) Conforming Amendments.--Section 53(c) of such Code (as
in effect before the amendment made by subsection (a)) is
amended--
(1) by striking ``The'' and inserting:
``(1) In general.--Except as provided in paragraph (2), the
'', and
(2) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B).
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1998, and to any taxable year beginning on or before such
date to the extent necessary to apply section 53(c)(2) of the
Internal Revenue Code of 1986 (as added by subsection (a)).

SEC. 202. 10-YEAR CARRYBACK FOR PERCENTAGE DEPLETION FOR OIL
AND GAS PROPERTY.

(a) In General.--Subsection (d)(1) of section 613A
(relating to limitations on percentage depletion in case of
oil and gas wells) is amended to read as follows:
``(1) Limitation based on taxable income.--
``(A) In general.--The deduction for the taxable year
attributable to the application of subsection (c) shall not
exceed the taxpayer's taxable income for the year computed
without regard to--
``(i) any depletion on production from an oil or gas
property which is subject to the provisions of subsection
(c),
``(ii) any net operating loss carryback to the taxable year
under section 172,
``(iii) any capital loss carryback to the taxable year
under section 1212, and
``(iv) in the case of a trust, any distributions to its
beneficiary, except in the case of any trust where any
beneficiary of such trust is a member of the family (as
defined in section 267(c)(4)) of a settlor who created inter
vivos and testamentary trusts for members of the family and
such settlor died within the last six days of the fifth month
in 1970, and the law in the jurisdiction in which such trust
was created requires all or a portion of the gross or net
proceeds of any royalty or other interest in oil, gas, or
other mineral representing any percentage depletion allowance
to be allocated to the principal of the trust.
``(B) Carrybacks and carryforwards.--
``(i) In general.--If any amount is disallowed as a
deduction for the taxable year (in this subparagraph referred
to as the `unused depletion year') by reason of application
of subparagraph (A), the disallowed amount shall be treated
as an amount allowable as a deduction under subsection (c)
for--
``(I) each of the 10 taxable years preceding the unused
depletion year, and
``(II) the taxable year following the unused depletion
year,

subject to the application of subparagraph (A) to such
taxable year.
``(ii) Applicable rules.--Rules similar to the rules of
section 39 shall apply for purposes of this subparagraph.
``(C) Allocation of disallowed amounts.--For purposes of
basis adjustments and determining whether cost depletion
exceeds percentage depletion with respect to the production
from a property, any amount disallowed as a deduction on the
application of this paragraph shall be allocated to the
respective properties from which the oil or gas was produced
in proportion to the percentage depletion otherwise allowable
to such properties under subsection (c).''
``(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1998, and to any taxable year beginning on or before such
date to the extent necessary to apply section 613A(d)(1)(B)
of the Internal Revenue Code of 1986 (as added by subsection
(a)).

SEC. 203. 10-YEAR NET OPERATING LOSS CARRYBACK FOR LOSSES
ATTRIBUTABLE TO OIL SERVICING COMPANIES AND
MINERAL INTERESTS OF OIL AND GAS PRODUCERS.

``(a) In General.--Paragraph (1) of section 172(b)
(relating to years to which loss may be carried) is amended
by adding at the end the following new subparagraph:
``(H) Losses on operating mineral interests of oil and gas
producers and oilfield servicing companies.--In the case of a
taxpayer which has an eligible oil and gas loss (as defined
in subsection (j)) for a taxable year, such eligible oil
and gas loss shall be a net operating loss carryback to
each of the 10 taxable years preceding the taxable year of
such loss.''
(b) Eligible Oil and Gas Loss.--Section 172 is amended by
redesignating subsection (j) as subsection (k) and by
inserting after subsection (i) the following new subsection:
``(j) Eligible Oil and Gas Loss.--For purposes of this
section--
``(1) In general.--The term `eligible oil and gas loss'
means the lesser of--
``(A) the amount which would be the net operating loss for
the taxable year if only income and deductions attributable
to--
``(i) mineral interests in oil and gas wells, and
``(ii) the active conduct of a trade or business of
providing tools, products, personnel, and technical solutions
on a contractual basis to persons engaged in oil and gas
exploration and production,

are taken into account, and
``(B) the amount of the net operating loss for such taxable
year.
``(2) Coordination with subsection (b)(2).--For purposes of
applying subsection (b)(2), an eligible oil and gas loss for
any taxable year shall be treated in a manner similar to the
manner in which a specified liability loss is treated.
``(3) Election.--Any taxpayer entitled to a 10-year
carryback under subsection (b)(1)(H) from any loss year may
elect to have the carryback period with respect to such loss
year determined without regard to subsection (b)(1)(H). Such
election shall be made in such manner as may be prescribed by
the Secretary and shall be made by the due date (including
extensions of time) for filing the taxpayer's return for the
taxable year of the net operating loss. Such election, once
made for any taxable year, shall be irrevocable for such
taxable year.''
(c) Effective Date.--The amendments made by this section
shall apply to net operating losses for taxable years
beginning after December 31, 1998, and to any taxable year
beginning on or before such date to the extent necessary to
apply section 172(b)(1)(H) of the Internal Revenue Code of
1986 (as added by subsection (a)).

SEC. 204. WAIVER OF LIMITATIONS.

If refund or credit of any overpayment of tax resulting
from the application of the

[[Page S2588]]

amendments made by this subtitle is prevented at any time
before the close of the 1-year period beginning on the date
of the enactment of this Act by the operation of any law or
rule of law (including res judicata), such refund or credit
may nevertheless be made or allowed if claim therefor is
filed before the close of such period.

Subtitle B--Hard Times Tax Relief

SEC. 211. PHASE-OUT OF CERTAIN MINIMUM TAX PREFERENCES
RELATING TO ENERGY PRODUCTION.

(a) Energy Preferences for Integrated Oil Companies.--
Section 56 (relating to alternative minimum taxable income)
is amended by adding at the end the following new subsection:
``(h) Adjustment Based on Energy Preference.--
``(1) In general.--In computing the alternative minimum
taxable income of any taxpayer which is an integrated oil
company (as defined in section 291(b)(4)) for any taxable
year beginning after 1998, there shall be allowed as a
deduction an amount equal to the alternative tax energy
preference deduction.
``(2) Phase-out of deduction as oil prices increases.--The
amount of the deduction under paragraph (1) (determined
without regard to this paragraph) shall be reduced (but not
below zero) by the amount which bears the same ratio to such
amount as--
``(A) the amount by which the reference price for the
calendar year preceding the calendar year in which the
taxable year begins exceeds $14, bears to
``(B) $3.

For purposes of this paragraph, the reference price for any
calendar year shall be determined under section 29(d)(2)(C)
and the $14 amount under subparagraph (A) shall be adjusted
at the same time and in the same manner as under section
43(b)(3).
``(3) Alternative tax energy preference deduction.--For
purposes of paragraph (1), the term `alternative tax energy
preference deduction' means an amount equal to the sum of--
``(A) the intangible drilling cost preference, and
``(B) the depletion preference.
``(4) Intangible drilling cost preference.--For purposes of
this subsection, the term `intangible drilling cost
preference' means the amount by which alternative minimum
taxable income would be reduced if it were computed without
regard to section 57(a)(2).
``(5) Depletion preference.--For purposes of this
subsection, the term `depletion preference' means the amount
by which alternative minimum taxable income would be reduced
if it were computed without regard to section 57(a)(1).
``(6) Alternative minimum taxable income.--For purposes of
paragraphs (1), (4), and (5), alternative minimum taxable
income shall be determined without regard to the deduction
allowable under this subsection and the alternative tax net
operating loss deduction under subsection (a)(4).
``(7) Regulations.--The Secretary may by regulation provide
for appropriate adjustments in computing alternative minimum
taxable income or adjusted current earnings for any taxable
year following a taxable year for which a deduction was
allowed under this subsection to ensure that no double
benefit is allowed by reason of such deduction.''
(b) Repeal of Limit on Reduction for Independent
Producers.--Subparagraphs (E) of section 57(a)(2) (relating
to exception for independent producers) is amended to read as
follows:
``(E) Exception for independent producers.--In the case of
any oil or gas well, this paragraph shall not apply to any
taxpayer which is not an integrated oil company (as defined
in section 291(b)(4)).''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after, and amounts
paid or incurred in taxable years after, December 31, 1998.

SEC. 212. DEPRECIATION ADJUSTMENT NOT TO APPLY TO OIL AND GAS
ASSETS.

(a) In General.--Subparagraph (B) of section 56(a)(1)
(relating to depreciation adjustments) is amended to read as
follows:
``(B) Exceptions.--This paragraph shall not apply to--
``(i) property described in paragraph (1), (2), (3), or (4)
of section 168(f), or
``(ii) property used in the active conduct of the trade or
business of exploring for, extracting, developing, or
gathering crude oil or natural gas.''
(b) Conforming Amendment.--Paragraph (4)(A) of section
56(g) (relating to adjustments based on adjusted current
earnings) is amended by adding at the end the following new
clause:
``(vi) Oil and gas property.--In the case of property used
in the active conduct of the trade or business of exploring
for, extracting, developing, or gathering crude oil or
natural gas, the amount allowable as depreciation or
amortization with respect to such property shall be
determined in the same manner as for purposes of computing
the regular tax.''
(c) Effective Date.--The amendment made by this section
shall apply to property placed in service in taxable years
beginning after December 31, 1998.

SEC. 213. REPEAL CERTAIN ADJUSTMENTS BASED ON ADJUSTED
CURRENT EARNINGS RELATING TO OIL AND GAS
ASSETS.

(a) Depreciation.--Clause (vi) of section 56(g)(4)(A), as
added by section 212(b), is amended to read as follows:
``(vi) Oil and gas property.--This subparagraph shall not
apply to property used in the active conduct of the trade or
business of exploring for, extracting, developing, or
gathering crude oil or natural gas.''
(b) Intangible Drilling Costs.--Clause (i) of section
56(g)(4)(D) is amended by striking the second sentence and
inserting ``In the case of any oil or gas well, this clause
shall not apply in the case of amounts paid or incurred in
taxable years beginning after December 31, 1998.''.
(c) Depletion.--Clause (ii) of section 56(g)(4)(F) is
amended to read as follows:
``(ii) Exception for oil and gas wells.--In the case of any
taxable year beginning after December 31, 1998, clause (i)
(and subparagraph (C)(i)) shall not apply to any deduction
for depletion computed in accordance with section 613A.''
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1998.

SEC. 214. ENHANCED OIL RECOVERY CREDIT AND CREDIT FOR
PRODUCING FUEL FROM A NONCONVENTIONAL SOURCE
ALLOWED AGAINST MINIMUM TAX.

(a) Enhanced Oil Recovery Credit Allowed Against Regular
and Minimum Tax.--
(1) Allowing credit against minimum tax.--Subsection (c) of
section 38 (relating to limitation based on amount of tax),
as amended by section 101(d), is amended by redesignating
paragraph (4) as paragraph (5) and by inserting after
paragraph (3) the following new paragraph:
``(4) Special rules for enhanced oil recovery credit.--
``(A) In general.--In the case of the enhanced oil recovery
credit--
``(i) this section and section 39 shall be applied
separately with respect to the credit, and
``(ii) in applying paragraph (1) to the credit--
``(I) subparagraphs (A) and (B) thereof shall not apply,
and
``(II) the limitation under paragraph (1) (as modified by
subclause (I)) shall be reduced by the credit allowed under
subsection (a) for the taxable year (other than the enhanced
oil recovery credit).
``(B) Enhanced oil recovery credit.--For purposes of this
subsection, the term `enhanced oil recovery credit' means the
credit allowable under subsection (a) by reason of section
43(a).''.
(2) Conforming amendments.--
(A) Subclause (II) of section 38(c)(2)(A)(ii), as amended
by section 101(d), is amended by striking ``or the marginal
oil and gas well production credit'' and inserting ``, the
marginal oil and gas well production credit, or the enhanced
oil recovery credit''.
(B) Subclause (II) of section 38(c)(3)(A)(ii), as added by
section 101(d), is amended by inserting ``or the enhanced oil
recovery credit'' after ``recovery credit''.
(b) Credit for Producing Fuel From a Non-conventional
Source.--
(1) Allowing credit against minimum tax.--Section 29(b)(6)
is amended to read as follows:
``(6) Application with other credits.--The credit allowed
by subsection (a) for any taxable year shall not exceed--
``(A) the regular tax for the taxable year and the tax
imposed by section 55, reduced by
``(B) the sum of the credits allowable under subpart A and
section 27.''
(2) Conforming amendments.--
(A) Section 53(d)(1)(B)(iii) is amended by inserting ``as
in effect on the date of the enactment of the Domestic Oil
and Gas Crisis Tax Reliance Reversal Act of 1999,'' after
``29(b)(6)(B),''.
(B) Section 55(c)(2) is amended by striking ``29(b)(6),''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1998.

Subtitle C--Oil-for-Food Program Compensating Tax Benefits

SEC. 220. PURPOSE.

The purpose of this subtitle is to provide compensation to
the domestic oil and gas industry in the form of tax benefits
to offset the depressing impact that the Oil-for-Food Program
is having on the world market.

SEC. 221. INCREASE IN PERCENTAGE DEPLETION FOR STRIPPER
WELLS.

(a) In General.--Subparagraph (C) of section 613A(c)(6)
(relating to oil and natural gas produced from marginal
properties) is amended--
(1) by striking ``25 percent'' and inserting ``27.5
percent'' in the matter preceding clause (i); and
(2) by striking ``$20'' and inserting ``$28'' in clause
(ii).
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1998.

SEC. 222. NET INCOME LIMITATION ON PERCENTAGE DEPLETION
REPEALED FOR OIL AND GAS PROPERTIES.

(a) In General.--Section 613(a) (relating to percentage
depletion) is amended by striking the second sentence and
inserting: ``Except in the case of oil and gas properties,
such allowance shall not exceed 50 percent of the taxpayer's
taxable income from the property (computed without allowances
for depletion).''
(b) Conforming Amendments.--
(1) Section 613A(c)(7) (relating to special rules) is
amended by striking subparagraph (C) and redesignating
subparagraph (D) as subparagraph (C).

[[Page S2589]]

(2) Section 613A(c)(6) (relating to oil and natural gas
produced from marginal properties) is amended by striking
subparagraph (H).
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1998.

SEC. 223. ELECTION TO EXPENSE GEOLOGICAL AND GEOPHYSICAL
EXPENDITURES AND DELAY RENTAL PAYMENTS.

(a) Purpose.--The purpose of this section is to recognize
that geological and geophysical expenditures and delay
rentals are ordinary and necessary business expenses that
should be deducted in the year the expense is incurred.
(b) Election To Expense Geological and Geophysical
Expenditures.--
(1) In general.--Section 263 (relating to capital
expenditures) is amended by adding at the end the following
new subsection:
``(j) Geological and Geophysical Expenditures for Domestic
Oil and Gas Wells.--Notwithstanding subsection (a), a
taxpayer may elect to treat geological and geophysical
expenses incurred in connection with the exploration for, or
development of, oil or gas within the United States (as
defined in section 638) as expenses which are not chargeable
to capital account. Any expenses so treated shall be allowed
as a deduction in the taxable year in which paid or
incurred.''
(2) Conforming amendment.--Section 263A(c)(3) is amended by
inserting by inserting ``263(j),'' after ``263(i),''.
(3) Effective date.--
(A) In general.--The amendments made by this subsection
shall apply to expenses paid or incurred after the date of
the enactment of this Act.
(B) Transition rule.--In the case of any expenses described
in section 263(j) of the Internal Revenue Code of 1986, as
added by this subsection, which were paid or incurred on or
before the date of the enactment of this Act, the taxpayer
may elect, at such time and in such manner as the Secretary
of the Treasury may prescribe, to amortize the unamortized
portion of such expenses over the 36-month period beginning
with the month in which the date of the enactment of this Act
occurs. For purposes of this subparagraph, the unamortized
portion of any expense is the amount remaining unamortized
as of the first day of the 36-month period.
(c) Election To Expense Delay Rental Payments.--
(1) In general.--Section 263 (relating to capital
expenditures), as amended by subsection (b)(1), is amended by
adding at the end the following new subsection:
``(k) Delay Rental Payments for Domestic Oil and Gas
Wells.--
``(1) In general.--Notwithstanding subsection (a), a
taxpayer may elect to treat delay rental payments incurred in
connection with the development of oil or gas within the
United States (as defined in section 638) as payments which
are not chargeable to capital account. Any payments so
treated shall be allowed as a deduction in the taxable year
in which paid or incurred.
``(2) Delay rental payments.--For purposes of paragraph
(1), the term `delay rental payment' means an amount paid for
the privilege of deferring development of an oil or gas
well.''
(2) Conforming amendment.--Section 263A(c)(3), as amended
by subsection (b)(2), is amended by inserting ``263(k),''
after ``263(j),''.
(3) Effective date.--
(A) In general.--The amendments made by this subsection
shall apply to payments made or incurred after the date of
the enactment of this Act.
(B) Transition rule.--In the case of any payments described
in section 263(k) of the Internal Revenue Code of 1986, as
added by this subsection, which were made or incurred on or
before the date of the enactment of this Act, the taxpayer
may elect, at such time and in such manner as the Secretary
of the Treasury may prescribe, to amortize the unamortized
portion of such payments over the 36-month period beginning
with the month in which the date of the enactment of this Act
occurs. For purposes of this subparagraph, the unamortized
portion of any payment is the amount remaining unamortized as
of the first day of the 36-month period.

SEC. 224. EXTENSION OF SPUDDING RULE.

(a) In General.--Section 461(i)(2)(A) (relating to special
rule for spudding of oil or gas wells) is amended by striking
``90th day'' and inserting ``180th day''.
(b) Effective Date--The amendment made by this section
shall apply to taxable years beginning after December 31,
1998.

TITLE III--FOREIGN OIL RELIANCE REVERSAL PROVISIONS

SEC. 300. PURPOSE.

The purpose of this title is to reverse the trend of
increased foreign dependence of oil and gas by encouraging
exploration and development of oil and gas reserves in the
United States to achieve the goal of doubling current
domestic oil and gas production.

``SEC. 301. CRUDE OIL AND NATURAL GAS EXPLORATION AND
DEVELOPMENT CREDIT.

(a) Crude Oil and Natural Gas Exploration and Development
Credit.--Subpart B of part IV of subchapter A of chapter 1 is
amended by adding at the end the following new section:

``SEC. 30B. CRUDE OIL AND NATURAL GAS EXPLORATION AND
DEVELOPMENT CREDIT.

``(a) General Rule.--The crude oil and natural gas
exploration and development credit determined under
this section for any applicable taxable year shall be an
amount equal to the sum of--
``(1) 20 percent of so much of the taxpayer's qualified
investment for the taxable year as does not exceed
$1,000,000, plus
``(2) 10 percent of so much of such qualified investment
for the taxable year as exceeds $1,000,000.
``(b) Applicale Taxable Year.--For purposes of subsection
(a)--
``(1) In general.--The term `applicable taxable year' means
any taxable year beginning in a calendar year during which
the imports of foreign crude and oil product are determined
by the Secretary of Energy to exceed 50 percent of the amount
of United States crude and oil product consumption for such
year.
``(2) Determination.--A determination under paragraph (1)
shall be made not later than March 1 of each year with
respect to the preceding calendar year.
``(c) Qualified Investment.--For purposes of this section,
the term `qualified investment' means amounts paid or
incurred by a taxpayer--
``(1) for the purpose of ascertaining the existence,
location, extent, or quality of any crude oil or natural gas
deposit, including core testing and drilling test wells
located in the United States or in a possession of the United
States as defined in section 638, or
``(2) for the purpose of developing a property (located in
the United States or in a possession of the United States as
defined in section 638) on which there is a reservoir capable
of commercial production and such amounts are paid or
incurred in connection with activities which are intended to
result in the recovery of crude oil or natural gas on such
property.
``(d) Limitation Based on Amount of Tax.--
``(1) Liability for tax.--The credit allowable under
subsection (a) for any taxable year shall not exceed the
excess (if any) of--
``(A) the sum of--
``(i) the taxpayer's tentative minimum tax liability under
section 55(b) for such taxable year determined without regard
to this section, plus
``(ii) the taxpayer's regular tax liability for such
taxable year (as defined in section 26(b)), over
``(B) the sum of the credits allowable against the
taxpayer's regular tax liability under part IV (other than
section 43 of this section).
``(2) Application of the credit.--Each of the following
amounts shall be reduced by the full amount of the credit
determined under paragraph (1):
``(A) the taxpayer's tentative minimum tax under section
55(b) for the taxable year, and
``(B) the taxpayer's regular tax liability (as defined in
section 26(b)) reduced by the sum of the credits allowable
under part IV (other than section 43 of this section).
If the amount of the credit determined under paragraph (1)
exceeds the amount described in subparagraph (B) of paragraph
(2), then the excess shall be deemed to be the adjusted net
minimum tax for such taxable year for purposes of section 53.
``(3) Carryback and carryforward of un-used credit.--
``(A) In general.--If the amount of the credit allowed
under subsection (a) for any taxable year exceeds the
limitation under paragraph (1) for such taxable year
(hereafter in this paragraph referred to as the `unused
credit year'), such excess shall be--
``(i) an oil and gas exploration and development credit
carryback to each of the 3 taxable years preceding the unused
credit year, and
``(ii) an oil and gas exploration and development credit
carryforward to each of the 15 taxable years following the
unused credit year,

and shall be added to the amount allowable as a credit under
subsection (a) for such years, except that no portion of the
unused oil and gas exploration and development credit for any
taxable year may be carried to a taxable year ending before
the date of the enactment of this section.
``(B) Limitations.--The amount of the unused credit which
may be taken into account under subparagraph (A) for any
succeeding taxable year shall not exceed the amount by which
the limitation provided by paragraph (1) for such taxable
year exceeds the sum of--
``(i) the credit allowable under subsection (a) for such
taxable year, and
``(ii) the amounts which, by reason of this paragraph, are
added to the amount allowable for such taxable year and which
are attributable to taxable years preceding the unused credit
year.
``(e) Special Rules.--For purposes of this section--
``(1) Aggregation of qualified investment expenses.--
``(A) Controlled groups; common control.--In determining
the amount of the credit under this section, all members of
the same controlled group of corporations (within the meaning
of section 52(a)) and all persons under common control
(within the meaning of section 52(b)) shall be treated as a
single taxpayer for purposes of this section.
``(B) Apportionment of credit.--The credit (if any)
allowable by this section to members of any group (or to any
person) described in subparagraph (A) shall be such member's
or person's proportionate share of

[[Page S2590]]

the qualified investment expenses giving rise to the credit
determined under regulations prescribed by the Secretary.
``(2) Partnerships, s corporations, estates and trusts.--
``(A) Partnerships and s corporations.--In the case of a
partnership, the credit shall be allocated among partners
under regulations prescribed by the Secretary. A similar rule
shall apply in the case of an S corporation and its
shareholders.
``(B) Pass-thru in the case of estates and trusts.--Under
regulations prescribed by the Secretary, rules similar to the
rules of subsection (d) of section 52 shall apply.
``(3) Adjustments for certain acquisitions and
dispositions.--Under regulations prescribed by the Secretary,
rules similar to the rules contained in section 41(f)(3)
shall apply with respect to the acquisition or disposition of
a taxpayer.
``(4) Short taxable years.--In the case of any short
taxable year, qualified investment expenses shall be
annualized in such circumstances and under such methods as
the Secretary may prescribe by regulation.
``(5) Denial of double benefit.--
``(A) Disallowance of deduction.--Any deduction allowable
under this chapter for any costs taken into account in
computing the amount of the credit determined under
subsection (a) shall be reduced by the amount of such
credit attributable to such costs.
``(B) Basis adjustments.--For purposes of this subtitle, if
a credit is determined under this section for any expenditure
with respect to any property, the increase in the basis of
such property which would (but for this subsection) result
from such expenditures shall be reduced by the amount of the
credit so allowed.''
(b) Clerical Amendment.--The table of sections for subpart
B of part IV of subchapter A of chapter 1 is amended by
adding at the end thereof the following new item:

``Sec. 30B. Crude oil and natural gas exploration and development
credit.''

(c) Effective Date.--The amendments made by this section
shall apply to expenses paid or incurred in taxable years
beginning after December 31, 1998.

TITLE IV--NATIONAL SECURITY EMERGENCY PROVISIONS

SEC. 400. PURPOSE.

The purpose of this title is to recognize that a national
security threat exists when foreign crude oil, oil product,
and natural gas imports exceed 60 percent of United States
oil and gas consumption and to create an emergency procedure
to address that threat.

SEC. 401. DUTIES OF THE PRESIDENT.

(a) Establishment of Ceiling.--The President shall
establish a National Security Energy Independence Ceiling
(Referred to in this title as the ``ceiling level'') which
shall represent a ceiling level beyond which foreign crude
oil, oil product, and natural gas imports as a share of
United States crude and oil product consumption shall not
rise.
(b) Level of Ceiling.--The ceiling level established under
subsection (a) shall not exceed 60 percent of United States
crude oil, oil product, and natural gas consumption for any
annual period.
(c) Report.--
(1) Contents.--
(A) In general.--The President shall prepare and submit an
annual report to Congress containing a national security
projection for energy independence (in this title referred to
as the ``projection''), which shall contain a forecast of
domestic oil and liquid natural gas (commonly known as
``NGL'') demand and production, and imports of crude oil, oil
product, and natural gas, for the subsequent 3 years.
(B) Required adjustments.--The projection shall contain
appropriate adjustments for expected price and production
changes.
(2) Presentation.--The projection prepared under paragraph
(1) shall be presented to Congress with the Budget.
(3) Certification.--The President shall certify in the
report whether foreign crude oil, oil product, and natural
gas imports will exceed the ceiling level for any year during
the 3 years succeeding the date of the report.

SEC. 402. CONGRESSIONAL REVIEW.

(a) Review.--Congress shall have 10 continuous session days
after submission of each projection under section 401 to
review the projection and make a determination whether the
ceiling level will be violated within 3 years.
(b) Certification Binding.--Unless disapproved or modified
by joint resolution, the Presidential certification shall be
binding 10 session days after submitted to Congress.

SEC. 403. NATIONAL SECURITY AND OIL AND GAS PRODUCTION
ACTIONS.

(a) National Security and Oil and Gas Production Policy.--
(1) Submission.--Upon certification under section 401(c)(3)
that the ceiling level will be exceeded, the President shall,
within 90 days, submit a National Security and Oil and Gas
Production Policy (in this section referred to as the
``policy'') to Congress. The policy shall prevent crude oil,
oil product, and natural gas imports from exceeding the
ceiling level.
(2) Approval.--Unless disapproved or modified by joint
resolution, the policy shall be effective 90 session days
after submitted to Congress.
(b) Contents of Policy.--The National Security and Oil
Production Policy may include--
(1) energy conservation actions, including improved fuel
efficiency for automobiles;
(2) expansion of the Strategic Petroleum Reserves to
maintain a larger cushion against projected oil import
blockages;
(3) additional production incentives for domestic oil and
gas, including tax and other incentives for stripper well
production, offshore, frontier, and other oil produced with
tertiary recovery techniques;
(4) regulatory burden relief; and
(5) other policy initiatives designed to lower foreign
import reliance.
____

Domestic Oil and Gas Crisis Tax Relief and Foreign Oil Reliance
Reversal Act of 1999

SEC. 2. PURPOSES.

To establish a graduated response to shrinking domestic oil
and gas production and surging foreign oil imports;
To prevent the abandonment of marginal oil and gas wells
responsible for half of U.S. domestic production;
To transform earned tax credits and other benefits into
working capital for the cash-strapped domestic oil and gas
producers and service companies;
To compensate U.S. producers for the hardship the Oil for
Food program is causing them;
To reverse the trend of increased foreign oil and gas
dependence by encouraging exploration and development of oil
and gas reserves in the U.S. to achieve the goal of doubling
current domestic oil and gas production;
To provide an emergency procedure when foreign imports
exceed 60 percent, thereby recognizing that when imports
exceed a Congressionally legislated peril point, a national
security threat exists that demands Presidential action.

SEC. 3. FINDINGS.

(a) Findings.--The Congress finds that--
(1) U.S. foreign oil consumption is estimated at 56 percent
and could reach 68 percent by 2010 if current prices prevail.
(2) The number of oil and gas rigs operating in the United
States is at the lowest count since 1944, when records of
this tally began.
(3) If prices do not increase soon, the U.S. could lose at
least half of its marginal wells which in aggregate produce
as much oil as we import from Saudi Arabia;
(4) Oil and gas prices are unlikely to increase for at
least several years;
(5) Declining production, well abandonment and greatly
reduced exploration and development are shrinking the
domestic oil and gas industry;
(6) The world's richest oil producing regions in the Middle
East are experiencing greater political instability;
(7) U.N. policy may make Iraq the swing oil producing
nation, thereby granting Saddem Hussein a tremendous amount
of power;
(8) Reliance on foreign oil for more than 60 percent of our
daily oil and gas consumption is a national security threat;
(9) the level of the United States energy security is
directly related to the level of domestic production of oil,
natural gas liquids, and natural gas; and
(10) a national security policy should be developed which
ensures that adequate supplies of oil shall be available at
all times free of the threat of embargo or other foreign
hostile acts.

SEC. 4. TABLE OF CONTENTS.

TITLE I--DOMESTIC OIL AND GAS PRODUCTION PRESERVATION PROVISIONS

(101(a)) Purpose: To prevent the abandonment of marginal
oil and gas wells responsible for half of U.S. Domestic
production
(101) Tax credit to prolong marginal domestic oil and gas
well production.
( ) Expand definition of marginal well to include high
water content wells.
(102) Exclusion of certain amounts received from the
production of wells reopened after they have been plugged or
abandoned.
(103) Tax credits to prolong domestic oil and gas well
production through secondary and other nontertiary recovery
methods in order to produce the remaining 75 percent of oil
and gas that is not recoverable using primary methods.

TITLE II--DOMESTIC OIL AND GAS INDUSTRY CRISIS TAX RELIEF TRIGGERED
WHEN PRICE OF OIL IS BELOW $15 A BARREL

A. Credits to cash provisions
(200) Purpose: To transform earned tax credits and other
accumulated tax benefits into working capital for the cash-
strapped domestic oil and gas producers and service
companies.
(201) Ten year carry-back for unused AMT credits for oil
and gas producers and servicing firms.
(202) Ten year carry-back for unused percentage depletion
for oil and gas producers.
( ) Repeal 65 percent of net rule.
(203) Ten year carry-back for NOLs for producers and
servicing firms.
B. Hard times tax relief when price of oil is less than $14 a
barrel
(211) Remove IDCs as AMT tax preference in any year when
price of oil is less than $14 a barrel (Phased out when oil
prices hit $17).
(212) Eliminate the depreciation adjustment under the AMT
for oil and gas assets so that the depreciation schedules for
the regular tax is also used for AMT.
(213) Eliminate the Adjusted Current Earnings adjustment
(ACE) as it applies to IDCs.

[[Page S2591]]

(214) Permit EOR credit and Section 29 credit to reduce the
Alternative Minimum Tax.
C. Tax benefits to offset the depressing impact on oil prices
that the Food for Oil Program is having
(221) Restore percentage depletion to 27.5 percent.
(222) Repeal net income limitation on percentage depletion.
(223) Allow Expensing geological and geophysical
expenditures.
(223) Allow Election to Expense Delay Rentals payments.
(224) Extension of Spudding rule.

TITLE III--FOREIGN OIL RELIANCE REVERSAL PROVISIONS TRIGGERED WHEN
IMPORTS EXCEED 50 PERCENT

(300) Purpose: To reverse the trend of increased foreign
dependence of oil and gas by encouraging exploration and
development of oil and gas reserves in the U.S. to achieve
the goal of doubling current domestic oil and gas production.
(301) 20 percent exploration and development credit when
imports exceed 50 percent.

TITLE IV--NATIONAL SECURITY EMERGENCY WHEN IMPORTS EXCEED 60 PERCENT

(400) Purpose: To provide an emergency procedure when
foreign imports exceed 60 percent to require the President to
implement an energy security strategic plan to designed to
prevent crude and product imports from exceeding 60 percent.
(401) Duties of the President.
(402) Congressional Review of the Strategic plan proposed
by the President.
(403) Energy Security strategic plan and course of action.
______

By Mr. SMITH of New Hampshire (for himself, Mr. Inhofe, Mr.
Burns, Mr. Enzi, and Mr. Murkowski):
S. 597. A bill to amend section 922 of chapter 44 of title 28, United
States Code, to protect the right of citizens under the Second
Amendment to the Constitution of the United States; to the Committee on
the Judiciary.

second amendment rights protection act of 1999

Mr. SMITH of New Hampshire. Mr. President, I rise to introduce the
``Second Anendment Rights Protection Act of 1999.'' I am pleased and
honored that Senators Inhofe, Burns, Enzi, and Murkowski are joining me
as original cosponsors.
Mr. President, the Second Amendment Rights Protection Act of 1999
encompasses all of the provisions of the Smith Amendment, which passed
the Senate by a vote of 69-31 on July 21, 1998, during consideration of
the Commerce, Justice, State appropriations bill for fiscal year 1999.
Only a substantially modified version of the Smith amendment was
included in the final omnibus appropriations measure.
The National Instant Criminal Background Check System (NICS) went
into effect on December 1, 1998. My bill would require the immediate
destruction of all information submitted by any person who has been
cleared by the NICS to purchase a firearm. There is no reason why such
private information on law-abiding gun owners should be retained. I
continue to be troubled by the Clinton administration's insistence upon
doing so.
In addition, Mr. President, my bill would prohibit the imposition of
any tax or fee in connection with the NICS. Once again, in his budget
submission for fiscal year 2000, President Clinton is seeking to fund
NICS with a gun tax.
With the Smith amendment last year, we told President Clinton ``no''
to the gun tax. Let us tell him ``no'' again, once and for all, by
enacting the Second Amendment Rights Protection Act.
Finally, Mr. President, my bill would create a private cause of
action for any individual who is aggrieved by a violation of its
provisions.
Mr. President, I ask unanimous consent for the printing of the text
of my bill, the Second Amendment Rights Protection Act of 1999, in the
Record.
There being no objection, the bill was ordered to the printed in the
Record, as follows:

S. 597

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 ``Second Amendment Rights
Protection Act of 1999.''

SEC. 2. PROTECTION OF SECOND AMENDMENT RIGHTS.

Subsection (t) of section 922 of chapter 44 of Title 18,
United States Code, is amended by inserting at the end
thereof the following new paragraph:
``(7) None of the funds appropriated pursuant to any
provision of law may be used for (1) any system to implement
this subsection that does not require and result in the
immediate destruction of all information, in any form
whatsoever, submitted by or on behalf of any person who has
been determined not be prohibited from owning a firearm; (2)
the implementation or collection of any tax or fee by any
officer, agent, or employee of the United States, or by any
state or local officer or agent acting on behalf of the
United States, in connection with the implementation of this
subsection, provided, that any person aggrieved by a
violation of this provision may bring an action in the
Federal district court for the district in which the person
resides; provided further, that any person who is successful
with respect to any such action shall receive damages,
punitive damages, and such other remedies as the court may
determine to be appropriate, including a reasonable
attorney's fee.''
______

By Mr. SANTORUM:
S. 598. A bill to amend the Federal Agriculture Improvement and
Reform Act of 1996 to improve the farmland protection program; to the
Committee on Agriculture, Nutrition, and Forestry.

FARMLAND PROTECTION ACT OF 1999

Mr. SANTORUM. Mr. President, I rise today to introduce legislation
that would reauthorize the Farmland Protection Program that was
originally authorized with passage of the 1996 Farm Bill.
Every year more than one million acres of our nation's most
productive farmland is lost to urbanization. This is land that produces
three-quarters of America's fruits and vegetables, and more than half
of our dairy products. While state and local governments have taken the
lead in preservation efforts, the demand for assistance continues to
grow.
Considering the importance of agriculture to our nation, and to
generations of families throughout our country, I was proud to take a
lead role in the United States Senate to assist farmers and communities
in confronting the obstacle of growing pressure on the use of farmland.
As such, I, with the support of many Senate colleagues, established the
Federal Farmland Protection Program to stem the loss of valuable
farmland, and to provide states with adequate tools to accomplish that
goal. Those efforts resulted in a $35 million authorization in the 1996
Farm Bill.
This money has been used to help states leverage dollars in order to
purchase development rights, and keep productive farmland in use--all
through voluntary efforts. In just three short years, the funds were
exhausted due to the overwhelming response by farmers and state
governments. In fact, by the end of fiscal year 1997 the original $35
million authorization had been spent, and the demand outstripped
funding availability by 900 percent.
The legislation that I'm introducing today, the Farmland Protection
Act of 1999, would provide a $50 million per year authorization for the
much-needed funds to carry out the important work of farmland
preservation. In addition, my bill would allow non-profit organizations
to participate in the program--where there is no established government
program--as they are currently precluded from doing so in certain
states.
Mr. President, I am proud to introduce this legislation that will
enable us to take another giant step forward in protecting a valuable
resource to many Americans. To date, nineteen states have capitalized
on this opportunity to augment their preservation efforts, and
hopefully, the Farmland Protection Act of 1999 will give more states
the tools to assist their local farming community.
Mr. President, I ask unanimous consent that a copy 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. 598

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 ``Farmland Protection Act of
1999''.

SEC. 2. FARMLAND PROTECTION PROGRAM.

Section 388 of the Federal Agriculture Improvement and
Reform Act of 1996 (16 U.S.C. 3830 note; Public Law 104-127)
is amended to read as follows:

[[Page S2592]]

``SEC. 388. FARMLAND PROTECTION PROGRAM.

``(a) Definition of Eligible Entity.--In this section, the
term `eligible entity' means--
``(1) any agency of any State or local government, or
federally recognized Indian tribe; and
``(2) any organization that--
``(A) is organized for, and at all times since its
formation has been operated principally for, 1 or more of the
conservation purposes specified in clause (i), (ii), or (iii)
of section 170(h)(4)(A) of the Internal Revenue Code of 1986;
``(B) is an organization described in section 501(c)(3) of
the Code that is exempt from taxation under section 501(a) of
the Code; and
``(C)(i) is described in section 509(a)(2) of the Code; or
``(ii) is described in section 509(a)(3) of the Code and is
controlled by an organization described in section 509(a)(2)
of the Code.
``(b) Authority.--The Secretary of Agriculture shall
establish and carry out a farmland protection program under
which the Secretary shall provide grants to eligible
entities, to provide the Federal share of the cost of
purchasing conservation easements or other interests in land
with prime, unique, or other productive soil for the purpose
of protecting topsoil by limiting nonagricultural uses of the
land.
``(c) Eligible Entities.--The Secretary may provide a grant
to an eligible entity described in subsection (a)(2) for the
purchase of a conservation easement or other interest in land
within the jurisdiction of a State or local government or
federally recognized Indian tribe only if the appropriate
agency of the State or local government or the federally
recognized Indian tribe does not operate a farmland
protection program.
``(d) Federal Share.--The Federal share of the cost of
purchasing a conservation easement or other interest
described in subsection (b) shall be not more than 50
percent.
``(e) Conservation Plan.--Any land for which a conservation
easement or other interest is purchased under this section
shall be subject to the requirements of a conservation plan
that requires, at the option of the Secretary, the conversion
of the land to less intensive uses.
``(f) Ranking Criteria.--The Secretary shall consult with
appropriate agencies of States and local governments and
federally recognized Indian tribes in developing criteria for
ranking applications for grants under this section.
``(g) Funding.--For each fiscal year, the Secretary shall
use not more than $50,000,000 of the funds of the Commodity
Credit Corporation to carry out this section.''.
______

By Mr. CHAFEE (for himself, Mr. Hatch, Mr. Cochran, Ms. Snowe,
Mr. Roberts, Mr. Specter, and Ms. Collins):
S. 599. A bill to amend the Internal Revenue Code of 1986 to provide
additional tax relief to families to increase the affordability of
child care, and for other purposes; to the Committee on Finance.

THE CARING FOR CHILDREN ACT

Mr. CHAFEE. Mr. President, I am pleased today to introduce the Caring
for Children Act, legislation to help all families with their child
care needs.
I want to thank my colleagues who have worked so hard to put this
bill together. Senator Hatch, who was a leader in the development of
the child care block grant, and is always a stalwart supporter of
children. Senator Snowe, who has worked on this issue for many years.
Senator Roberts, who has taken an active interest in this issue.
Senator Specter, who made an enormous contribution to the development
of this bill. And Senators Susan Collins and Thad Cochran, who we are
very fortunate to have on our child care proposal.
Our proposal is straightforward and far-reaching. It makes the
current child care credit more equitable for lower and middle income
families. And, for the first time, makes the credit available to
families where one parent stays at home to care for the children. That
is a critical step and an important change for families across America.
Raising children in today's world is a true challenge. In many
families, both parents must work in order to support the family. Often,
the child care expenses consume all or most of one parent's income. How
often do we hear the refrain, particularly from women, that after they
pay for day care, there is little or nothing left of their wages.
Another common complaint is from parents who desperately want to stay
home and raise their children themselves--especially in those very
critical, early years of childhood--but who simply cannot afford to
forgo that second income.
The legislation we are introducing today responds to both of these
concerns. We believe that parents should make their own decisions about
who is going to care for their children. The government and the Tax
Code should not be promoting one choice over another.
By making more of the existing child care tax credit available to
lower and middle income families, and making it available also to
families where one parent stays at home, we are sending the message
that the choice is yours, and we support your choice.
Our bill makes several changes to the existing dependent care tax
credit. First, the maximum credit percentage is increased from 30
percent to 50 percent to provide more benefits to those most in need.
Second, the income level at which the maximum credit begins to be
reduced is moved from $10,000 to $30,000, so that more lower-income
families will qualify for the maximum amount of assistance. Third, we
propose to completely phase out the credit for wealthier families.
Finally, families where one spouse stays at home to care for the
children will be eligible for a credit similar to the one they would
receive if both parents were working outside the home and the child was
in daycare.
We also acknowledge that we cannot solve the entire child care
problem through the Tax Code alone. Many low-income families do not
have taxable income, and therefore cannot benefit from a tax credit.
The Child Care and Development Block Grant (CCDBG) provides critical
funding to help these lower-income families--and I have been a strong
supporter of the program. Recognizing the critical role CCDBG plays in
subsidizing daycare for low-income families in the states, our proposal
doubles the block grant over a five-year period.
Of course, the problem with child care is not limited to just
affordability. Many parents cannot find an available child care slot.
Our proposal addresses this issue of accessibility by providing a tax
credit to businesses to build or renovate on or near-site child care
centers for their employees.
Finally, there is the issue of quality daycare. Parents cannot be
productive in the workplace if they are constantly worrying about the
health and safety of their children in daycare. We have all read the
horrifying stories in the newspapers about daycare facilities that are
unsafe or unsanitary, about the poor record of enforcement of standards
in many states.
While we acknowledge that the federal government should not be
setting standards for daycare providers, we do believe the states
should set at least minimum health and safety standards and enforce
them rigorously. Our legislation beefs up this enforcement by rewarding
states with a good enforcement record and penalizing those with poor
records.
I am very proud of this legislation, and proud that this group was
able to come together and produce this initiative. Child care is a
problem that must be solved, and we are committed to doing that. I look
forward to working with my colleagues in the Congress to find workable,
affordable solutions for all families. I ask unanimous consent that the
legislation be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 599

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Caring for
Children Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:

Sec. 1. Short title; table of contents.

TITLE I--TAX RELIEF TO INCREASE CHILD CARE AFFORDABILITY

Sec. 101. Expansion of dependent care tax credit.
Sec. 102. Promotion of dependent care assistance programs.
Sec. 103. Allowance of credit for employer expenses for child care
assistance.

TITLE II--ENCOURAGING QUALITY CHILD CARE

Subtitle A--Dissemination of Information About Quality Child Care

Sec. 201. Collection and dissemination of information.
Sec. 202. Grants for the development of a child care training
infrastructure.
Sec. 203. Authorization of appropriations.

Subtitle B--Increased Enforcement of State Health and Safety Standards

Sec. 211. Enforcement of State health and safety standards.

[[Page S2593]]

Subtitle C--Removal of Barriers to Increasing the Supply of Quality
Child Care

Sec. 221. Increased authorization of appropriations for the Child Care
and Development Block Grant Act.
Sec. 222. Small business child care grant program.
Sec. 223. GAO report regarding the relationship between legal liability
concerns and the availability and affordability of child
care.

Subtitle D--Quality Child Care Through Federal Facilities and Programs

Sec. 231. Providing quality child care in Federal facilities.

TITLE I--TAX RELIEF TO INCREASE CHILD CARE AFFORDABILITY

SEC. 101. EXPANSION OF DEPENDENT CARE TAX CREDIT.

(a) Percentage of Employment-Related Expenses Determined by
Taxpayer Status.--Section 21(a)(2) of the Internal Revenue
Code of 1986 (defining applicable percentage) is amended to
read as follows:
``(2) Applicable percentage defined.--For purposes of
paragraph (1), the term `applicable percentage' means 50
percent reduced (but not below zero) by 1 percentage point
for each $1,500, or fraction thereof, by which the
taxpayers's adjusted gross income for the taxable year
exceeds $30,000.''.
(b) Minimum Credit Allowed for Stay-at-Home Parents.--
Section 21(e) of the Internal Revenue Code of 1986 (relating
to special rules) is amended by adding at the end the
following:
``(11) Minimum credit allowed for stay-at-home parents.--
Notwithstanding subsection (d), in the case of any taxpayer
with one or more qualifying individuals described in
subsection (b)(1)(A) under the age of 4 at any time during
the taxable year, such taxpayer shall be deemed to have
employment-related expenses with respect to such qualifying
individuals in an amount equal to the greater of--
``(A) the amount of employment-related expenses incurred
for such qualifying individuals for the taxable year
(determined under this section without regard to this
paragraph), or
``(B) $150 for each month in such taxable year during which
such qualifying individual is under the age of 4.''.
(c) Effective Date.--The amendments made by this section
apply to taxable years beginning after December 31, 1998.

SEC. 102. PROMOTION OF DEPENDENT CARE ASSISTANCE PROGRAMS.

(a) Promotion of Dependent Care Assistance Programs.--The
Secretary of Labor shall establish a program to promote
awareness of the use of dependent care assistance programs
(as described in section 129(d) of the Internal Revenue Code
of 1986) by employers.
(b) Authorization of Appropriations.--There is authorized
to be appropriated to carry out the program under paragraph
(1) $1,000,000 for each of fiscal years 2000, 2001, 2002, and
2003.

SEC. 103. ALLOWANCE OF CREDIT FOR EMPLOYER EXPENSES FOR CHILD
CARE ASSISTANCE.

(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to
business related credits) is amended by adding at the end the
following:

``SEC. 45D. EMPLOYER-PROVIDED CHILD CARE CREDIT.

``(a) Allowance of Credit.--For purposes of section 38, the
employer-provided child care credit determined under this
section for the taxable year is an amount equal to 20 percent
of the qualified child care expenditures of the taxpayer for
such taxable year.
``(b) Dollar Limitation.--The credit allowable under
subsection (a) for any taxable year shall not exceed
$100,000.
``(c) Definitions.--For purposes of this section--
``(1) Qualified child care expenditure.--
``(A) In general.--The term `qualified child care
expenditure' means any amount paid or incurred--
``(i) to acquire, construct, rehabilitate, or expand
property--

``(I) which is to be used as part of a qualified child care
facility of the taxpayer,
``(II) with respect to which a deduction for depreciation
(or amortization in lieu of depreciation) is allowable, and
``(III) which does not constitute part of the principal
residence (within the meaning of section 1034) of the
taxpayer or any employee of the taxpayer,

``(ii) for the operating costs of a qualified child care
facility of the taxpayer, including costs related to the
training of employees,
``(iii) under a contract with a qualified child care
facility to provide child care services to employees of the
taxpayer, or
``(iv) under a contract to provide child care resource and
referral services to employees of the taxpayer.
``(2) Exclusion for amounts funded by grants, etc.--The
term `qualified child care expenditure' shall not include any
amount to the extent such amount is funded by any grant,
contract, or otherwise by another person (or any governmental
entity).
``(3) Qualified child care facility.--
``(A) In general.--The term `qualified child care facility'
means a facility--
``(i) the principal use of which is to provide child care
assistance, and
``(ii) which meets the requirements of all applicable laws
and regulations of the State or local government in which it
is located, including, but not limited to, the licensing of
the facility as a child care facility.

Clause (i) shall not apply to a facility which is the
principal residence (within the meaning of section 1034) of
the operator of the facility.
``(B) Special rules with respect to a taxpayer.--A facility
shall not be treated as a qualified child care facility with
respect to a taxpayer unless--
``(i) enrollment in the facility is open to employees of
the taxpayer during the taxable year,
``(ii) the facility is not the principal trade or business
of the taxpayer unless at least 30 percent of the enrollees
of such facility are dependents of employees of the taxpayer,
and
``(iii) the use of such facility (or the eligibility to use
such facility) does not discriminate in favor of employees of
the taxpayer who are highly compensated employees (within the
meaning of section 414(q)).
``(d) Recapture of Acquisition and Construction Credit.--
``(1) In general.--If, as of the close of any taxable year,
there is a recapture event with respect to any qualified
child care facility of the taxpayer, then the tax of the
taxpayer under this chapter for such taxable year shall be
increased by an amount equal to the product of--
``(A) the applicable recapture percentage, and
``(B) the aggregate decrease in the credits allowed under
section 38 for all prior taxable years which would have
resulted if the qualified child care expenditures of the
taxpayer described in subsection (c)(1)(A) with respect to
such facility had been zero.
``(2) Applicable recapture percentage.--
``(A) In general.--For purposes of this subsection, the
applicable recapture percentage shall be determined from the
following table:

The applicable
recapture
``If the recapture evpercentage is:
Years 1-3....................................................100
Year 4........................................................85
Year 5........................................................70
Year 6........................................................55
Year 7........................................................40
Year 8........................................................25
Years 9 and 10................................................10
Years 11 and thereafter........................................0.

``(B) Years.--For purposes of subparagraph (A), year 1
shall begin on the first day of the taxable year in which the
qualified child care facility is placed in service by the
taxpayer.
``(3) Recapture event defined.--For purposes of this
subsection, the term `recapture event' means--
``(A) Cessation of operation.--The cessation of the
operation of the facility as a qualified child care facility.
``(B) Change in ownership.--
``(i) In general.--Except as provided in clause (ii), the
disposition of a taxpayer's interest in a qualified child
care facility with respect to which the credit described in
subsection (a) was allowable.
``(ii) Agreement to assume recapture liability.--Clause (i)
shall not apply if the person acquiring such interest in the
facility agrees in writing to assume the recapture liability
of the person disposing of such interest in effect
immediately before such disposition. In the event of such an
assumption, the person acquiring the interest in the facility
shall be treated as the taxpayer for purposes of assessing
any recapture liability (computed as if there had been no
change in ownership).
``(4) Special rules.--
``(A) Tax benefit rule.--The tax for the taxable year shall
be increased under paragraph (1) only with respect to credits
allowed by reason of this section which were used to reduce
tax liability. In the case of credits not so used to reduce
tax liability, the carryforwards and carrybacks under section
39 shall be appropriately adjusted.
``(B) No credits against tax.--Any increase in tax under
this subsection shall not be treated as a tax imposed by this
chapter for purposes of determining the amount of any credit
under subpart A, B, or D of this part.
``(C) No recapture by reason of casualty loss.--The
increase in tax under this subsection shall not apply to a
cessation of operation of the facility as a qualified child
care facility by reason of a casualty loss to the extent such
loss is restored by reconstruction or replacement within a
reasonable period established by the Secretary.
``(e) Special Rules.--For purposes of this section--
``(1) Aggregation rules.--All persons which are treated as
a single employer under subsections (a) and (b) of section 52
shall be treated as a single taxpayer.
``(2) Pass-thru in the case of estates and trusts.--Under
regulations prescribed by the Secretary, rules similar to the
rules of subsection (d) of section 52 shall apply.
``(3) Allocation in the case of partnerships.--In the case
of partnerships, the credit shall be allocated among partners
under regulations prescribed by the Secretary.
``(f) No Double Benefit.--
``(1) Reduction in basis.--For purposes of this subtitle--
``(A) In general.--If a credit is determined under this
section with respect to any property by reason of
expenditures described in subsection (c)(1)(A), the basis of
such property shall be reduced by the amount of the credit so
determined.

[[Page S2594]]

``(B) Certain dispositions.--If during any taxable year
there is a recapture amount determined with respect to any
property the basis of which was reduced under subparagraph
(A), the basis of such property (immediately before the event
resulting in such recapture) shall be increased by an amount
equal to such recapture amount. For purposes of the preceding
sentence, the term `recapture amount' means any increase in
tax (or adjustment in carrybacks or carryovers) determined
under subsection (d).
``(2) Other deductions and credits.--No deduction or credit
shall be allowed under any other provision of this chapter
with respect to the amount of the credit determined under
this section.
``(g) Termination.--This section shall not apply to taxable
years beginning after December 31, 2003.''.
(b) Conforming Amendments.--
(1) Section 38(b) of the Internal Revenue Code of 1986 is
amended--
(A) by striking out ``plus'' at the end of paragraph (11),
(B) by striking out the period at the end of paragraph
(12), and inserting a comma and ``plus'', and
(C) by adding at the end the following new paragraph:
``(13) the employer-provided child care credit determined
under section 45D.''.
(2) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code is amended by adding
at the end the following new item:

``Sec. 45D. Employer-provided child care credit.''.

TITLE II--ENCOURAGING QUALITY CHILD CARE

Subtitle A--Dissemination of Information About Quality Child Care

SEC. 201. COLLECTION AND DISSEMINATION OF INFORMATION.

(a) Collection and Dissemination of Information.--The
Secretary of Health and Human Services shall, directly or
through a contract awarded on a competitive basis to a
qualified entity, collect and disseminate--
(1) information concerning health and safety in various
child care settings that would assist--
(A) the provision of safe and healthful environments by
child care providers; and
(B) the evaluation of child care providers by parents; and
(2) relevant findings in the field of early childhood
learning and development.
(b) Information and Findings To Be Generally Available.--
(1) Secretarial responsibility.--The Secretary of Health
and Human Services shall make the information and findings
described in subsection (a) generally available to States,
units of local governments, private nonprofit child care
organizations (including resource and referral agencies),
employers, child care providers, and parents.
(2) Definition of generally available.--For purposes of
paragraph (1), the term ``generally available'' means that
the information and findings shall be distributed through
resources that are used by, and available to, the public,
including such resources as brochures, Internet web sites,
toll-free telephone information lines, and public and private
resource and referral organizations.

SEC. 202. GRANTS FOR THE DEVELOPMENT OF A CHILD CARE TRAINING
INFRASTRUCTURE.

(a) Authority To Award Grants.--The Secretary of Health and
Human Services shall award grants to eligible entities to
develop distance learning child care training technology
infrastructures and to develop model technology-based
training courses for child care providers and child care
workers. The Secretary shall, to the maximum extent possible,
ensure that grants for the development of distance learning
child care training technology infrastructures are awarded in
those regions of the United States with the fewest training
opportunities for child care providers.
(b) Eligibility Requirements.--To be eligible to receive a
grant under subsection (a), an entity shall--
(1) develop the technological and logistical aspects of the
infrastructure described in this section and have the
capability of implementing and maintaining the
infrastructure;
(2) to the maximum extent possible, develop partnerships
with secondary schools, institutions of higher education,
State and local government agencies, and private child care
organizations for the purpose of sharing equipment, technical
assistance, and other technological resources, including--
(A) sites from which individuals may access the training;
(B) conversion of standard child care training courses to
programs for distance learning; and
(C) ongoing networking among program participants; and
(3) develop a mechanism for participants to--
(A) evaluate the effectiveness of the infrastructure,
including the availability and affordability of the
infrastructure, and the training offered the infrastructure;
and
(B) make recommendations for improvements to the
infrastructure.
(c) Application.--To be eligible to receive a grant under
subsection (a), an entity shall submit an application to the
Secretary at such time and in such manner as the Secretary
may require, and that includes--
(1) a description of the partnership organizations through
which the distance learning programs will be disseminated and
made available;
(2) the capacity of the infrastructure in terms of the
number and type of distance learning programs that will be
made available;
(3) the expected number of individuals to participate in
the distance learning programs; and
(4) such additional information as the Secretary may
require.
(d) Limitation On Fees.--No entity receiving a grant under
this section may collect fees from an individual for
participation in a distance learning child care training
program funded in whole or in part by this section that
exceed the pro rata share of the amount expended by the
entity to provide materials for the training program and to
develop, implement, and maintain the infrastructure (minus
the amount of the grant awarded by this section).
(e) Rule of Construction.--Nothing in this section shall be
construed as requiring a child care provider to subscribe to
or complete a distance learning child care training program
made available by this section.

SEC. 203. AUTHORIZATION OF APPROPRIATIONS.

There is authorized to be appropriated to carry out this
subtitle $50,000,000 for each of fiscal years 2000 through
2004.

Subtitle B--Increased Enforcement of State Health and Safety Standards

SEC. 211. ENFORCEMENT OF STATE HEALTH AND SAFETY STANDARDS.

(a) Identification of State Inspection Rate.--
(1) In general.--Section 658E(c)(2)(G) of the Child Care
and Development Block Grant Act of 1990 (42 U.S.C.
9858c(2)(G)) is amended by striking the period and inserting
``, and provide the percentage of completed child care
provider inspections that were required under State law for
each of the 2 preceding fiscal years.''.
(2) Effective date.--The amendment made by paragraph (1)
applies to State plans under the Child Care and Development
Block Grant Act of 1990 (42 U.S.C. 9858 et seq.) on and after
September 1, 1999.
(b) Increased or Decreased Allotments.--Section 658O(b) of
the Child Care and Development Block Grant Act of 1990 (42
U.S.C. 9858m(b)) is amended--
(1) in paragraph (1), in the matter preceding subparagraph
(A), by inserting ``, subject to paragraph (5),'' after
``shall''; and
(2) by adding at the end the following:
``(5) Increased or decreased allotment based on state
inspection rate.--
``(A) Increased allotment for fiscal years 2000, 2001, and
2002.--
``(i) In general.--Subject to clause (iii), for fiscal
years 2000, 2001, and 2002, the allotment determined for a
State under paragraph (1) for each such fiscal year shall be
increased by an amount equal to 10 percent of such allotment
for the fiscal year involved with respect to any State--

``(I) that certifies to the Secretary that the State has
not reduced the scope of any State child care health or
safety standards or requirements that were in effect as of
December 31, 1998; and
``(II) that, with respect to the preceding fiscal year, had
a percentage of completed child care provider inspections (as
required to be reported under section 658E(c)(2)(G)), that
equaled or exceeded the target inspection and enforcement
percentage specified under clause (ii) for the fiscal year
for which the allotment is to be paid.

``(ii) Target inspection and enforcement percentage.--For
purposes of clause (i)(II), the target inspection and
enforcement percentage is--

``(I) for fiscal year 2000, 75 percent;
``(II) for fiscal year 2001, 80 percent; and
``(III) for fiscal year 2002, 100 percent.

``(iii) Pro rata reductions if insufficient
appropriations.--The Secretary shall make pro rata reductions
in the percentage increase otherwise required under clause
(i) for a State allotment for a fiscal year as necessary so
that the aggregate of all the allotments made under this
section do not exceed the amount appropriated for that fiscal
year under section 658B.
``(B) Decreased allotment for fiscal years 2001 and 2002.--
``(i) In general.--The allotment determined for a State
under paragraph (1) for each of fiscal years 2001 and 2002
shall be decreased by an amount equal to 10 percent of such
allotment for the fiscal year involved with respect to any
State that, with respect to the preceding fiscal year, had a
percentage of completed child care provider inspections (as
required to be reported under section 658E(c)(2)(G)) that was
below the minimum inspection and enforcement percentage
specified under clause (ii) for the fiscal year for which the
allotment is to be paid.
``(ii) Minimum inspection and enforcement percentage.--For
purposes of clause (i), the minimum inspection and
enforcement percentage is--

``(I) for fiscal year 2001, 50 percent; and
``(II) for fiscal year 2002, 75 percent.

``(iii) Requirement to expend State funds to replace
reduction.--If the allotment determined for a State for a
fiscal year is reduced by reason of clause (i), the State
shall, during the immediately succeeding fiscal year, expend
additional State funds

[[Page S2595]]

under the State plan funded under this subchapter by an
amount equal to the amount of such reduction.''.

Subtitle C--Removal of Barriers to Increasing the Supply of Quality
Child Care

SEC. 221. INCREASED AUTHORIZATION OF APPROPRIATIONS FOR THE
CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT.

Section 658B of the Child Care and Development Block Grant
Act of 1990 (42 U.S.C. 9858) is amended to read as follows:

``SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

``There is authorized to be appropriated to carry out this
subchapter--
``(1) for fiscal year 1999, $1,182,672,000;
``(2) for fiscal year 2000, $1,500,000,000;
``(3) for fiscal year 2001, $1,750,000,000;
``(4) for fiscal year 2002, $2,000,000,000;
``(5) for fiscal year 2003, $2,250,000,000; and
``(6) for fiscal year 2004, $2,500,000,000.''.

SEC. 222. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

(a) Establishment.--The Secretary of Health and Human
Services (in this section referred to as the ``Secretary'')
shall establish a program to award grants to States to assist
States in providing funds to encourage the establishment and
operation of employer operated child care programs.
(b) Application.--To be eligible to receive a grant under
this section, a State shall prepare and submit to the
Secretary an application at such time, in such manner, and
containing such information as the Secretary may require,
including an assurance that the funds required under
subsection (e) will be provided.
(c) Amount of Grant.--The Secretary shall determine the
amount of a grant to a State under this section based on the
population of the State as compared to the population of all
States.
(d) Use of Funds.--
(1) In general.--A State shall use amounts provided under a
grant awarded under this section to provide assistance to
small businesses located in the State to enable the small
businesses to establish and operate child care programs. Such
assistance may include--
(A) technical assistance in the establishment of a child
care program;
(B) assistance for the start up costs related to a child
care program;
(C) assistance for the training of child care providers;
(D) scholarships for low-income wage earners;
(E) the provision of services to care for sick children or
to provide care to school aged children;
(F) the entering into of contracts with local resource and
referral or local health departments;
(G) care for children with disabilities; or
(H) assistance for any other activity determined
appropriate by the State.
(2) Application.--To be eligible to receive assistance from
a State under this section, a small business shall prepare
and submit to the State an application at such time, in such
manner, and containing such information as the State may
require.
(3) Preference.--
(A) In general.--In providing assistance under this
section, a State shall give priority to applicants that
desire to form a consortium to provide child care in
geographic areas within the State where such care is not
generally available or accessible.
(B) Consortium.--For purposes of subparagraph (A), a
consortium shall be made up of 2 or more entities which may
include businesses, nonprofit agencies or organizations,
local governments, or other appropriate entities.
(4) Limitation.--With respect to grant funds received under
this section, a State may not provide in excess of $100,000
in assistance from such funds to any single applicant.
(e) Matching Requirement.--To be eligible to receive a
grant under this section a State shall provide assurances to
the Secretary that, with respect to the costs to be incurred
by an entity receiving assistance in carrying out activities
under this section, the entity will make available (directly
or through donations from public or private entities) non-
Federal contributions to such costs in an amount equal to--
(1) for the first fiscal year in which the entity receives
such assistance, not less than 50 percent of such costs ($1
for each $1 of assistance provided to the entity under the
grant);
(2) for the second fiscal year in which an entity receives
such assistance, not less than 66\2/3\ percent of such costs
($2 for each $1 of assistance provided to the entity under
the grant); and
(3) for the third fiscal year in which an entity receives
such assistance, not less than 75 percent of such costs ($3
for each $1 of assistance provided to the entity under the
grant).
(f) Requirements of Providers.--To be eligible to receive
assistance under a grant awarded under this section a child
care provider shall comply with all applicable State and
local licensing and regulatory requirements and all
applicable health and safety standards in effect in the
State.
(g) Administration.--
(1) State responsibility.--A State shall have
responsibility for administering the grant awarded under this
section and for monitoring entities that receive assistance
under such grant.
(2) Audits.--A State shall require each entity receiving
assistance under a grant awarded under this section to
conduct an annual audit with respect to the activities of the
entity. Such audits shall be submitted to the State.
(3) Misuse of funds.--
(A) Repayment.--If the State determines, through an audit
or otherwise, that an entity receiving assistance under a
grant awarded under this section has misused the assistance,
the State shall notify the Secretary of the misuse. The
Secretary, upon such a notification, may seek from such an
entity the repayment of an amount equal to the amount of any
misused assistance plus interest.
(B) Appeals process.--The Secretary shall by regulation
provide for an appeals process with respect to repayments
under this paragraph.
(h) Reporting Requirements.--
(1) 2-year study.--
(A) In general.--Not later than 2 years after the date on
which the Secretary first provides grants under this section,
the Secretary shall conduct a study to determine--
(i) the capacity of entities to meet the child care needs
of communities within a State;
(ii) the kinds of partnerships that are being formed with
respect to child care at the local level; and
(iii) who is using the programs funded under this section
and the income levels of such individuals.
(B) Report.--Not later than 28 months after the date of
enactment of this Act, the Secretary shall prepare and submit
to the appropriate committees of Congress a report on the
results of the study conducted in accordance with
subparagraph (A).
(2) 4-year study.--
(A) In general.--Not later than 4 years after the date on
which the Secretary first provides grants under this section,
the Secretary shall conduct a study to determine the number
of child care facilities funded through entities that
received assistance through a grant made under this section
that remain in operation and the extent to which such
facilities are meeting the child care needs of the
individuals served by such facilities.
(B) Report.--Not later than 52 months after the date of
enactment of this Act, the Secretary shall prepare and submit
to the appropriate committees of Congress a report on the
results of the study conducted in accordance with
subparagraph (A).
(i) Definition.--As used in this section, the term ``small
business'' means an employer who employed an average of at
least 2 but not more than 50 employees on business days
during the preceding calendar year.
(j) Authorization of Appropriations.--There is authorized
to be appropriated to carry out this section, $60,000,000 for
the period of fiscal years 2000 through 2002. With respect to
the total amount appropriated for such period in accordance
with this subsection, not more than $5,000,000 of that amount
may be used for expenditures related to conducting
evaluations required under, and the administration of, this
section.
(k) Termination of Program.--The program established under
subsection (a) shall terminate on September 30, 2003.

SEC. 223. GAO REPORT REGARDING THE RELATIONSHIP BETWEEN LEGAL
LIABILITY CONCERNS AND THE AVAILABILITY AND
AFFORDABILITY OF CHILD CARE.

Not later than 6 months after the date of enactment of this
Act, the Comptroller General of the United States shall
report to Congress regarding whether and, if so, the extent
to which, concerns regarding potential legal liability
exposure inhibit the availability and affordability of child
care. The report shall include an assessment of whether such
concerns prevent--
(1) employers from establishing on or near-site child care
for their employees;
(2) schools or community centers from allowing their
facilities to be used for on-site child care; and
(3) individuals from providing professional, licensed child
care services in their homes.

Subtitle D--Quality Child Care Through Federal Facilities and Programs

SEC. 231. PROVIDING QUALITY CHILD CARE IN FEDERAL FACILITIES.

(a) Definitions.--In this section:
(1) Administrator.--The term ``Administrator'' means the
Administrator of General Services.
(2) Executive agency.--The term ``Executive agency'' has
the meaning given the term in section 105 of title 5, United
States Code, but does not include the Department of Defense.
(3) Executive facility.--The term ``executive facility''
means a facility that is owned or leased by an Executive
agency.
(4) Federal agency.--The term ``Federal agency'' means an
Executive agency, a judicial office, or a legislative office.
(5) Judicial facility.--The term ``judicial facility''
means a facility that is owned or leased by a judicial
office.
(6) Judicial office.--The term ``judicial office'' means an
entity of the judicial branch of the Federal Government.
(7) Legislative facility.--The term ``legislative
facility'' means a facility that is owned or leased by a
legislative office.
(8) Legislative office.--The term ``legislative office''
means an entity of the legislative branch of the Federal
Government.
(b) Executive Branch Standards and Enforcement.--
(1) State and local licensing requirements.--

[[Page S2596]]

(A) In general.--The Administrator shall issue regulations
requiring any entity operating a child care center in an
executive facility to comply with applicable State and local
licensing requirements related to the provision of child
care.
(B) Compliance.--The regulations shall require that, not
later than 6 months after the date of enactment of this Act--
(i) the entity shall comply, or make substantial progress
(as determined by the Administrator) toward complying, with
the requirements; and
(ii) any contract for the operation of such a child care
center shall include a condition that the child care be
provided in accordance with the requirements.
(2) Evaluation and enforcement.--The Administrator shall
evaluate the compliance of the entities described in
paragraph (1) with the regulations issued under that
paragraph. The Administrator may conduct the evaluation of
such an entity directly, or through an agreement with another
Federal agency, other than the Federal agency for which the
entity is providing child care. If the Administrator
determines, on the basis of such an evaluation, that the
entity is not in compliance with the regulations, the
Administrator shall notify the Executive agency.
(c) Legislative Branch Standards and Enforcement.--
(1) State and local licensing requirements and
accreditation standards.--The Architect of the Capitol shall
issue regulations for entities operating child care centers
in legislative facilities, which shall be the same as the
regulations issued by the Administrator under subsection
(b)(1), except to the extent that the Architect may
determine, for good cause shown and stated together with the
regulations, that a modification of such regulations would be
more effective for the implementation of the requirements and
standards described in such paragraphs.
(2) Evaluation and enforcement.--Subsection (b)(2) shall
apply to the Architect of the Capitol, entities operating
child care centers in legislative facilities, and legislative
offices. For purposes of that application, references in
subsection (b)(2) to regulations shall be considered to be
references to regulations issued under this subsection.
(d) Judicial Branch Standards and Enforcement.--
(1) State and local licensing requirements and
accreditation standards.--The Director of the Administrative
Office of the United States Courts shall issue regulations
for entities operating child care centers in judicial
facilities, which shall be the same as the regulations issued
by the Administrator under subsection (b)(1), except to the
extent that the Director may determine, for good cause shown
and stated together with the regulations, that a modification
of such regulations would be more effective for the
implementation of the requirements and standards described in
such paragraphs.
(2) Evaluation and enforcement.--Subsection (b)(2) shall
apply to the Director described in paragraph (1), entities
operating child care centers in judicial facilities, and
judicial offices. For purposes of that application,
references in subsection (b)(2) to regulations shall be
considered to be references to regulations issued under this
subsection.
(e) Application.--Notwithstanding any other provision of
this section, if 3 or more child care centers are operated in
facilities owned or leased by a Federal agency, the head of
the Federal agency may carry out the responsibilities
assigned to the Administrator under subsection (b)(2), the
Architect of the Capitol under subsection (c)(2), or the
Director described in subsection (d)(2) under such
subsection, as appropriate.

Mr. HATCH. Mr. President, as this decade nears a close, and as our
Nation has enjoyed an unprecedented period of economic growth, there
remains an issue that affects many American families. I am referring to
child care.
It has been nearly 9 years since the passage of the bipartisan Child
Care and Development Block Grant Act. I was proud to have been a
sponsor of this legislation, and I remain committed to its goals,
structure, and principles.
Though the CCDBG has led to great improvements in the child care
situation facing low-income families in every State, it has become
clear that more needs to be done to help the family. In my home State
of Utah, an extraordinary 57 percent of mothers with children under the
age of 6 are in the labor force, and 134,000 children under the age of
6 in Utah will be cared for by someone other than their parents.
I am pleased to again join my colleagues--Senators Chafee, Snowe,
Roberts, Specter, Collins, and Cochran--each of whom has a long record
of concern and involvement in child care issues--in sponsoring this
measure. The Caring for Children Act is a comprehensive, realistic
child care proposal, which we believe will benefit middle- and lower-
income American families who struggle to get ahead or struggle to keep
up.
First, the Caring for Children Act will, by expanding the Dependent
Care Tax Credit, cut taxes for many middle- and lower-income families.
Under the current system, the maximum credit of 30 percent is available
only to families with incomes of $10,000 or less. Our proposal
increases the Dependent Care Tax Credit (DCTC) from 30 percent to 50
percent. The maximum income is also increased to $30,000. The maximum
allowable expenses of $2,400 for one child and $4,800 for two or more
children will remain the same.
For example, a working family in Vernal, UT, earning $30,000 with two
children, could receive a tax credit of $2,400 (50 percent of $4,800),
instead of $960 under the current law.
Our bill also lowers the maximum credit more gradually than current
law. This provides a form of tax relief for DCTC-eligible families
earning between $30,000 and $75,000. This change is intended to benefit
an often forgotten group--taxpayers who earn too much for Federal
breaks but not enough for child care expenses not to be a big bite out
of their budget.
This proposal also breaks new ground. It recognizes, for the first
time, as a matter of Federal child care policy, that many families
elect to have one parent remain at home to serve as the primary are
giver. We understand the value of a parent at home to care for a child,
both in terms of quality of care and monetary sacrifice. Such families
pay for their child care by forfeiting a second income. The Caring for
Children Act would expand eligibility for the Dependent Care Tax Credit
(DCTC) to families with young children in which one parent remained at
home.
Our bill assumes child care expenses for such a family of $150 per
month. Thus, a family earning $30,000 with two children, ages 3 and 1,
in Farmington, UT, in which one parent remains at home, would receive a
tax credit of $900 (50 percent of $15012 months).
Some have criticized our bill for not giving the same tax benefits to
families with a stay-at-home parent. Frankly, I support such parity in
the DCTC. I would like our bill to be able to provide a larger credit.
But, expanding eligibility for this credit is an expensive proposition.
While we may not be able to propose DCTC parity in one fell swoop, we
should establish the concept in this bill and increase the level of
benefit as quickly as we can. But, we should not fail to do something
just because we cannot do it all.
Many families across America elect to forego a second income in order
to have a parent remain at home with children. Federal policy has so
far failed to recognize parental care as child care, even if many
people, myself included, consider it the best possible care. I happen
to believe that parental care is the best care there is.
And, let me offer a word of praise and gratitude for my wife, Elaine.
Elaine could have had a successful career as a professional educator.
Instead, she chose to stay home with our children--all of whom are now
married with children of their own.
Of course, my daughters and daughters-in-law will make their own
choices about balancing career and family. Different families make
different choices and face different circumstances that drive their
choices. Our bill asserts that the Dependent Care Tax Credit should be
available to families regardless of their choice. The DCTC should be a
tax credit to help families care for children, not just a credit for
employment expenses. We should not minimize the significance of this
change in the federal child care paradigm.

Yet, many working but low-income families have no tax liability and
will not benefit from our proposed changes to the DCTC. These families,
many of which may be headed by single parents or headed by individuals
moving from welfare to work, are struggling to make ends meet.
One of the family's biggest expenses is child care.
The cost of child care, like almost everything else, has increase in
the 9 years since the implementation of the Child Care and Development
Block Grant. When the CCDBG was enacted, the average cost of care per
child was $3,000. Today, it is estimated to be more than $4,000 per
child.
I invite senators to do the math: If a parent is making $10 an hour
($20,800 per year before taxes) and has just one child, child care
expenses claim almost

[[Page S2597]]

one-fifth of the family budget. It is no wonder that the Utah Child
Protective Services told me some years ago about a mother who was
forced to choose between groceries and child care.
The Caring for Children Act proposes to increase the authorization of
appropriations for the Child Care and Development Block grant Act
(CCDBG), which states use to subsidize child care for low-income
parents and to develop new capacity in areas--both geographic and
functional--where there are shortages.
In Utah, as in other states as well, smaller and more rural
communities often have shortages of child care. And, nearly every
community suffers shortages of infant care, after school care, and care
for special needs children.
The CCDBG is the only federal program we have for assisting low-
income working families with child care expenses. We are not proposing
to create another one. We are not expanding the statutory eligibility
or entitlement for this program. The Caring for Children Act merely
makes it possible for states to serve more eligible people and to
address more of the problem of shortages under the provisions of the
CCDBG.
I have said many times in this body that I do not support federal
assistance for those who are able but do not help themselves. But, I
likewise believe that some help is warranted when people are working
and doing all they can to provide for their families. This is why I
joined as a sponsor of the Child Care and Development Block Grant 10
years ago. I do not want Utah families to have to choose between child
care and food.
We still face issues of quality of care. Our bill affirms state
prerogatives to set their own standards for child care. My colleagues
are well aware of my strong opposition to any federal effort to set or
imply federal standards. States must be allowed discretion in this.
But, our bill also recognizes that standards are worthless if they are
not enforced.
To encourage states to make a stronger commitment to enforce their
own standards for child care, the Caring for Children Act provides a
system of bonuses for states who exceed a threshold of inspections or,
conversely, penalties for those who fail to conduct a minimum number of
inspections. In my view, the most stringent standards in the world do
not provide any assurance of quality care if providers do not believe
standards will be enforced.
I also believe that the best assurance of quality is a parent's own
good judgment. The Caring for Children Act takes the very inexpensive,
but potentially very productive step of providing funds for beefed up
consumer information to parents.
There are other important provisions in our bill that are designed to
encourage private sector initiatives in child care as well as to
enhance training opportunities for child care providers.
All together, the Caring for Children Act attempts to address all
three of the major issues in child care: affordability, availability,
and quality. I believe the bill we are introducing today is measured
and responsible.
In no way is this a government knows best model of social problem
solving; rather, it builds on what we already know works and what we
already know that parents want. They want resources and information to
make their own decisions and to care for their own children. They want
input into the plans developed by states. They want control over child
care.
The bill we are introducing today endeavors to put government on the
side of parents by returning resources to them through tax credits, by
enabling states to do more under the CCDBG, by increasing available
child care information, and, finally by respecting the choices they
make.
I am again pleased to join my colleagues in this legislation and hope
other Senators will support this measure as well.
Mr. ROBERTS. Mr. President, I am pleased to join with my colleagues
to reintroduce legislation to help meet the child care challenges
facing families in Kansas and around the nation.
Child care, in the home when possible and outside the home when
parents work, goes right to the heart of keeping families strong.
Unfortunately, just being able to afford child care is a major issue
for most families. Some child care can cost as much as college tuition
and consume up to 40 percent of a family's income. Finding quality care
is another challenge.
Welfare reforms have cut Kansas welfare rolls in half since 1996. As
more and more of these families come off the rolls, child care needs
grow. About half of the 11,000 families that have left welfare rolls in
Kansas have young children. In order to continue the successful
transition from welfare to work, parents, especially single parents,
must have access to affordable, quality child care.
Only parents can and should decide what child care arrangements work
best for their children. This includes the decision to stay at home.
The Caring for Children Act includes provisions to allow a parent who
is able to stay at home and care for a child to receive a tax credit to
help cover expenses. This credit applies during the first three years
of a child's life and amounts to about $900 per year.
The Caring for Children Act takes steps to assist small businesses
that want to provide child care. I am pleased that this bill includes a
short-term flexible grant program to encourage these businesses to work
together to provide child care services. This program, which provides
$60 million to the states, allows those closer to home to make
decisions necessary to improve child care in communities. This funding
provides the start-up assistance necessary to create self-sustaining
child care programs.
I have pledged to work to improve child care. I will continue this
effort. I look forward to working with my colleagues to expand child
care options and protect our nation's most valuable resource, our
children.
Mr. SPECTER. Mr. President, I have sought recognition to once again
join my colleagues in introducing the Caring for Children Act, which
will ease the financial burden of child care for American families--for
those parents who work, and for those who choose to stay home to raise
their children for a period of time. This legislation is identical to
the child care proposal my colleagues and I introduced during the 105th
Congress, on January 28, 1998. I believe it is vital that the Congress
recognize the importance of affordable, quality child care to the
successful development of our children.
The Caring for Children Act is a middle-ground, targeted response to
the growing child care needs facing American families. Our bill
includes tax incentives for employers and parents, and an increase in
funding for programs that assist the most needy families. Most
importantly, our bill proposes prudent adjustments to discretionary
programs rather than implementing new mandatory spending.
Our bill would expand the Dependent Care tax credit to make it more
accessible to families who need it, double the authorization for the
Child Care Development Block Grant, and provide grants to small
businesses to create or enhance child care facilities for their
employees. This bill also includes provisions from the proposal I
introduced during the 105th Congress with my colleagues, Congressman
Jon Fox, The Affordable Child Care Act, which provides a tax credit for
employers who provide on-site or site-adjacent child care to their
employees in order to reduce the child care expenses of the employee.
Not all families choose the same option for child care. Many families
rely on relatives, centers operated by churches and other religious
organizations, centers at or near their workplace, or make other
arrangements to provide care for their children while they work. In
light of the diverse needs for child care in America, this bill
represents a good start toward expanding the choices for American
parents. And, any such legislation must recognize that there is a need
to provide some relief to families where one parent stays at home.

The need for affordable and accessible day care is critical given the
increasing numbers of working parents and dual-income families in the
United States. According to the Bureau of the Census, in 1975, 31
percent of married mothers with a child younger than age one
participated in the labor force. By 1995, that figure had risen to 59
percent. Almost 64 percent of married mothers and 53 percent of single
mothers with children younger than age six participated in the labor
force in 1995.

[[Page S2598]]

The cost of child care for families is also significant. Licensed day
care centers in some urban areas cost as much as $200 per week, and the
disparity in costs and availability of child care between urban and
rural grows greater every day. For families which need or choose to
have both parents work outside the home, the burden of making child
care decisions is great. These figures serve to underscore the need for
action on the part of the Federal Government to provide the necessary
assistance to our Nation's working families.
As Chairman of the Labor, Health and Human Services, and Education
Appropriations Subcommittee, I am pleased that this legislation would
build on an existing Federal child care program by authorizing an
additional $5 billion over 5 years to the Child Care Development Block
Grant program, bringing total spending for this program to nearly $2.5
billion annually by fiscal year 2003. The child care block grant works
well to assist low-income families acquire child care, and helped over
93,000 Pennsylvania families last year. Fiscal year 1999 funding for
this vital assistance program totaled $1.182 billion, $182 billion,
$182 million above the currently authorized level. By increasing the
authorization, we can help even more families without creating a new
entitlement program.
Our legislation will also require States to create and enforce safety
and health standards in child care facilities, and provide money for
the Department of Health and Human Services to disseminate information
to parents and providers about quality child care, through brochures,
toll-free hotlines, the Internet, and other technological assistance.
The Caring for Children Act complements my recent efforts to assist
working families in the context of welfare reform and children's health
insurance. When Congress debated welfare reform in 1995 and 1996, I
worked to ensure that adequate funds were provided for child care, a
critical component for welfare mothers who would be required to work to
receive new limited welfare benefits. I am pleased that the welfare
reform bill that became law provided $20 billion in child care funding
over a 6-year period. Similarly, I was pleased to participate in the
bipartisan effort in 1997 to enact legislation to provide $24 billion
over the next 5 years for States to establish or broaden children's
health insurance programs. Utilizing these new Federal funds, over
10,000 previously uninsured children in Pennsylvania have been enrolled
in this program since May of 1998.
In conclusion, Mr. President, I believe that it is critical that the
106th Congress not adjourn without enacting legislation to assist
families in their ability to afford safe, quality child care for their
children, either at home with a parent or another arrangement. Our
legislation will provide peace of mind to millions of American families
struggling to balance career and child raising. I urge my colleagues to
join me in cosponsoring this important legislation, and I urge its
swift adoption.
______

By Mr. WELLSTONE.
S. 600. A bill to combat the crime of international trafficking and
to protect the rights of victims; to the Committee on Foreign
Relations.

international trafficking of women and children victim protection act
of 1999

Mr. WELLSTONE. Mr. President, this week across the globe, men and
women have celebrated International Women's Day, highlighting the
achievements of women around the world. From Qatar to Indonesia, the
day was marked by women marching, meeting, and protesting for
recognition of their inherent dignity and fundamental human rights. I
believe there is much work yet to be done to ensure that women and
girls' human rights are protected and respected.
One of the most horrendous human rights violations of our time is
trafficking in human beings, particularly among women and children, for
purposes of sexual exploitation and forced labor. To curb this horrific
practice, I am introducing the ``International Trafficking of Women and
Children Victim Protection Act of 1999'' which will put Congress on
record as opposing trafficking for forced prostitution and domestic
servitude, and acting to check it before the lives of more women and
girls are shattered.
One of the fastest growing international trafficking businesses is
the trade in women. Women and girls seeking a better life, a good
marriage, or a lucrative job abroad, unexpectedly find themselves
forced to work as prostitutes, or in sweat shops. Seeking this better
life, they are lured by local advertisements for good jobs in foreign
countries at wages they could never imagine at home.
Every year, the trafficking of human beings for the sex trade affects
hundreds of thousands of women throughout the world. Women and children
whose lives have been disrupted by economic collapse, civil wars, or
fundamental changes in political geography, such as the disintegration
of the Soviet Union, have fallen prey to traffickers. The United States
government estimates that 1-2 million women and girls are trafficked
annually around the world. According to experts, between 50 and 100
thousand women are trafficked each year into the United States alone.
They come from Thailand, Russia, the Ukraine and other countries in
Asia and the former Soviet Union.
Upon arrival in countries far from their homes, these women are often
stripped of their passports, held against their will in slave-like
conditions, and sexually abused. Rape, intimidation, and violence are
commonly employed by traffickers to control their victims and to
prevent them from seeking help. Through physical isolation and
psychological trauma, traffickers and brothel owners imprison women in
a world of economic and sexual exploitation that imposes a constant
fear of arrest and deportation, as well as of violent reprisals by the
traffickers themselves, to whom the women must pay off ever-growing
debts. Many brothel owners actually prefer women--women who are far
from help and home, and who do not speak the language--precisely
because of the ease of controlling them.
Most of these women never imagined that they would enter such a
hellish world, having traveled abroad to find better jobs or to see the
world. Many in their naivete, believed that nothing bad could happen to
them in the rich and comfortable countries such as Switzerland,
Germany, or the United States. Others, who are less naive but desperate
for money and opportunity, are no less hurt by the trafficker's brutal
grip.
Last year, First Lady Hilary Clinton spoke powerfully of this human
tragedy. She said: ``I have spoken to young girls in northern Thailand
whose parents were persuaded to sell them as prostitutes, and they
received a great deal of money by their standards. You could often tell
the homes of where the girls had been sold because they might even have
a satellite dish or an addition built on their house. But I met girls
who had come home after they had been used up, after they had
contracted HIV or AIDS. If you've ever held the hand of a 13-year-old
girl dying of AIDS, you can understand how critical it is that we take
every step possible to prevent this happening to any other girl
anywhere in the world. I also, in the Ukraine, heard of women who told
me with tears running down their faces that young women in their
communities were disappearing. They answered ads that promised a much
better future in another place and they were never heard from again.''
These events are occurring not just in far off lands, but here at
home in the U.S. as well. According to a report in the Washington Post
in 1997, the FBI raided a massage parlor in downtown Bethesda. The
massage parlor was involved in the trafficking of Russian women into
the United States. The eight Russian women who worked there, lived at
the massage parlor, sleeping on the massage tables at night. They were
charged a $150 a week for ``housing'' and were not paid any salary,
only receiving a portion of their tips.

According to recent reports by the Justice Department, teenage
Mexican girls were held in slavery in Florida and the Carolinas and
forced to submit to prostitution. In addition, Russian and Latvian
women were forced to work in nightclubs in Chicago. According to
charges filed against the traffickers, the traffickers picked the women
up upon their arrival at the airport, seized their documents and return
tickets, locked them in hotels and beat

[[Page S2599]]

them. The women were told that if they refused to dance nude in various
nightclubs, the Russian mafia would kill their families. Further, over
three years, hundreds of women from the Czech Republic who answered
advertisements in Czech newspapers for modeling were ensnared in an
illegal prostitution ring.
Trafficking in women and girls is a human rights problem that
requires a human rights response. Trafficking is condemned by human
rights treaties as a violation of basic human rights and a slavery-like
practice. Women who are trafficked are subjected to other abuses--rape,
beatings, physical confinement--squarely prohibited by human rights
law. The human abuses continue in the workplace, in the forms of
physical and sexual abuse, debt bondage and illegal confinement, and
all are prohibited.
Fortunately, the global trade in women and children is receiving
greater attention by governments and NGOs following the UN World
Conference on Women in Beijing. The United Nations General Assembly has
called upon all governments to criminalize trafficking, to punish its
offenders, while not penalizing its victims. The President's
Interagency Council on Women is working hard to mobilize a response to
this problem. Churches, synagogues, and NGOs, such as Human Rights
Watch and the Global Survival Network, are fighting this battle daily.
But, much, much more must be done.
My legislation provides a human rights response to the problem. It
has a comprehensive and integrated approach focused on prevention,
protection and assistance for victims, and prosecution of traffickers.
I will highlight a few of its provisions now:
It sets an international standard for governments to meet in their
efforts to fight trafficking and assist victims of this human rights
abuse. It calls on the State Department and Justice Department to
investigate and take action against international trafficking. In
addition, it creates an Interagency Task Force to Monitor and Combat
Trafficking in the Office of the Secretary of State and directs the
Secretary to submit an annual report to Congress on international
trafficking.
The annual report would, among other things, identify states engaged
in trafficking, the efforts of these states to combat trafficking, and
whether their government officials are complicit in the practice.
Corrupt government or law enforcement officials sometimes directly
participate and benefit in the trade of women and girls. And,
corruption also prevents prosecution of traffickers. U.S. police
assistance would be barred to countries found not to have taken
effective action in ending the participation of their officials in
trafficking, and in investigating and prosecuting meaningfully their
officials involved in trafficking. A waiver is provided for the
President if he finds that provision of such assistance is in the
national interest.
On a national level, it ensures that our immigration laws do not
encourage rapid deportation of trafficked women, a practice which
effectively insulates traffickers from ever being prosecuted for their
crimes. Trafficking victims are eligible for a nonimmigrant status
valid for three months. If the victim pursues criminal or civil actions
against her trafficker, or if she pursues an asylum claim, she is
provided with an extension of time. Further, it provides that
trafficked women should not be detained, but instead receive needed
services, safe shelter, and the opportunity to seek justice against
their abusers. Finally, my bill provides much needed resources to
programs assisting trafficking victims here at home and abroad.
We must commit ourselves to ending the trafficking of women and girls
and to building a world in which such exploitation is relegated to the
dark past. I urge my colleagues to support the International
Trafficking of Women and Children Protection Act of 1999.
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. 600

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``International Trafficking of
Women and Children Victim Protection Act of 1999''.

SEC. 2. FINDINGS.

Congress makes the following findings:
(1) The worldwide trafficking of persons has a
disproportionate impact on women and girls and has been and
continues to be condemned by the international community as a
violation of fundamental human rights.
(2) The fastest growing international trafficking business
is the trade in women, whereby women and girls seeking a
better life, a good marriage, or a lucrative job abroad,
unexpectedly find themselves in situations of forced
prostitution, sweatshop labor, exploitative domestic
servitude, or battering and extreme cruelty.
(3) Trafficked women and children, girls and boys, are
often subjected to rape and other forms of sexual abuse by
their traffickers and often held as virtual prisoners by
their exploiters, made to work in slavery-like conditions, in
debt bondage without pay and against their will.
(4) The President, the First Lady, the Secretary of State,
the President's Interagency Council on Women, and the Agency
for International Development have all identified trafficking
in women as a significant problem.
(5) The Fourth World Conference on Women (Beijing
Conference) called on all governments to take measures,
including legislative measures, to provide better protection
of the rights of women and girls in trafficking, to address
the root factors that put women and girls at risk to
traffickers, and to take measures to dismantle the national,
regional, and international networks on trafficking.
(6) The United Nations General Assembly, noting its concern
about the increasing number of women and girls who are being
victimized by traffickers, passed a resolution in 1998
calling upon all governments to criminalize trafficking in
women and girls in all its forms and to penalize all those
offenders involved, while ensuring that the victims of these
practices are not penalized.
(7) Numerous treaties to which the United States is a party
address government obligations to combat trafficking,
including such treaties as the 1956 Supplementary Convention
on the Abolition of Slavery, the Slave Trade and Institutions
and Practices Similar to Slavery, which calls for the
complete abolition of debt bondage and servile forms of
marriage, and the 1957 Abolition of Forced Labor Convention,
which undertakes to suppress and requires signatories not to
make use of any forced or compulsory labor.

SEC. 3. PURPOSES.

The purposes of this Act are to condemn and combat the
international crime of trafficking in women and children and
to assist the victims of this crime by--
(1) setting a standard by which governments are evaluated
for their response to trafficking and their treatment of
victims;
(2) authorizing and funding an interagency task force to
carry out such evaluations and to issue an annual report of
its findings to include the identification of foreign
governments that tolerate or participate in trafficking and
fail to cooperate with international efforts to prosecute
perpetrators;
(3) assisting trafficking victims in the United States by
providing humanitarian assistance and by providing them
temporary nonimmigrant status in the United States;
(4) assisting trafficking victims abroad by providing
humanitarian assistance; and
(5) denying certain forms of United States foreign
assistance to those governments which tolerate or participate
in trafficking, abuse victims, and fail to cooperate with
international efforts to prosecute perpetrators.

SEC. 4. DEFINITIONS.

In this Act:
(1) Police assistance.--The term ``police assistance''--
(A) means--
(i) assistance of any kind, whether in the form of grant,
loan, training, or otherwise, provided to or for foreign law
enforcement officials, foreign customs officials, or foreign
immigration officials;
(ii) government-to-government sales of any item to or for
foreign law enforcement officials, foreign customs officials,
or foreign immigration officials; and
(iii) any license for the export of an item sold under
contract to or for the officials described in clause (i); and
(B) does not include assistance furnished under section 534
of the Foreign Assistance Act of 1961 (22 U.S.C. 2346c;
relating to the administration of justice) or any other
assistance under that Act to promote respect for
internationally recognized human rights.
(2) Trafficking.--The term ``trafficking'' means the use of
deception, coercion, debt bondage, the threat of force, or
the abuse of authority to recruit, transport within or across
borders, purchase, sell, transfer, receive, or harbor a
person for the purpose of placing or holding such person,
whether for pay or not, in involuntary servitude, or slavery
or slavery-like conditions, or in forced, bonded, or coerced
labor.
(3) Victim of trafficking.--The term ``victim of
trafficking'' means any person subjected to the treatment
described in paragraph (2).

SEC. 5. INTER-AGENCY TASK FORCE TO MONITOR AND COMBAT
TRAFFICKING.

(a) Establishment.--

[[Page S2600]]

(1) In general.--There is established within the Department
of State in the Office of the Secretary of State an Inter-
Agency Task Force to Monitor and Combat Trafficking (in this
section referred to as the ``Task Force''). The Task Force
shall be co-chaired by the Assistant Secretary of State for
Democracy, Human Rights, and Labor Affairs and the Senior
Coordinator on International Women's Issues, President's
Interagency Council on Women.
(2) Appointment of members.--The members of the Task Force
shall be appointed by the Secretary of State. The Task Force
shall consist of no more than twelve members.
(3) Composition.--The Task Force shall include
representatives from the--
(A) Violence Against Women Office, Office of Justice
Programs, Department of Justice;
(B) Office of Women in Development, United States Agency
for International Development; and
(C) Bureau of International Narcotics and Law Enforcement
Affairs, Department of State.
(4) Staff.--The Task Force shall be authorized to retain up
to five staff members within the Bureau of Democracy, Human
Rights, and Labor Affairs, and the President's Interagency
Council on Women to prepare the annual report described in
subsection (b) and to carry out additional tasks which the
Task Force may require. The Task Force shall regularly hold
meetings on its activities with nongovernmental
organizations.
(b) Annual Report to Congress.--Not later than March 1 of
each year, the Secretary of State, with the assistance of the
Task Force, shall submit a report to Congress describing the
status of international trafficking, including--
(1) a list of foreign states where trafficking originates,
passes through, or is a destination; and
(2) an assessment of the efforts by the governments
described in paragraph (1) to combat trafficking. Such an
assessment shall address--
(A) whether any governmental authorities tolerate or are
involved in trafficking activities;
(B) which governmental authorities are involved in anti-
trafficking activities;
(C) what steps the government has taken toward ending the
participation of its officials in trafficking;
(D) what steps the government has taken to prosecute and
investigate those officials found to be involved in
trafficking;
(E) what steps the government has taken to prohibit other
individuals from participating in trafficking, including the
investigation, prosecution, and conviction of individuals
involved in trafficking, the criminal and civil penalties for
trafficking, and the efficacy of those penalties on reducing
or ending trafficking;
(F) what steps the government has taken to assist
trafficking victims, including efforts to prevent victims
from being further victimized by police, traffickers, or
others, grants of stays of deportation, and provision of
humanitarian relief, including provision of mental and
physical health care and shelter;
(G) whether the government is cooperating with governments
of other countries to extradite traffickers when requested;
(H) whether the government is assisting in international
investigations of transnational trafficking networks; and
(I) whether the government--
(i) refrains from prosecuting trafficking victims or
refrains from other discriminatory treatment towards
trafficking victims due to such victims having been
trafficked, or the nature of their work, or their having left
the country illegally; and
(ii) recognizes the rights of victims and ensures their
access to justice.
(c) Reporting Standards and Investigations.--
(1) Responsibility of the secretary of state.--The
Secretary of State shall ensure that United States missions
abroad maintain a consistent reporting standard and
thoroughly investigate reports of trafficking.
(2) Contacts with nongovernmental organizations.--In
compiling data and assessing trafficking for the Human Rights
Report and the Inter-Agency Task Force to Monitor and Combat
Trafficking Annual Report, United States mission personnel
shall seek out and maintain contacts with human rights and
other nongovernmental organizations, including receiving
reports and updates from such organizations, and, when
appropriate, investigating such reports.

SEC. 6. INELIGIBILITY FOR POLICE ASSISTANCE.

(a) Ineligibility.--Except as provided in subsection (b),
any foreign government country identified in the latest
report submitted under section 5 as a government that--
(1) has failed to take effective action towards ending the
participation of its officials in trafficking; and
(2) has failed to investigate and prosecute meaningfully
those officials found to be involved in trafficking,

shall not be eligible for police assistance.
(b) Waiver of Ineligibility.--The President may waive the
application of subsection (a) to a foreign country if the
President determines and certifies to Congress that the
provision of police assistance to the country is in the
national interest of the United States.

SEC. 7. PROTECTION OF TRAFFICKING VICTIMS.

(a) Nonimmigrant Classification for Trafficking Victims.--
Section 101(a)(15) of the Immigration and Nationality Act (8
U.S.C. 1101(a)(15)) is amended--
(1) by striking ``or'' at the end of subparagraph (R);
(2) by striking the period at the end of subparagraph (S)
and inserting ``; or''; and
(3) by adding at the end the following new subparagraph:
``(T) an alien who the Attorney General determines--
``(i) is physically present in the United States, and
``(ii) is or has been a trafficking victim (as defined in
section 4 of the International Trafficking of Women and
Children Victim Protection Act of 1999),

for a stay of not to exceed 3 months in the United States,
except that any such alien who has filed a petition seeking
asylum or who is pursuing civil or criminal action against
traffickers shall have the alien's status extended until the
petition or litigation reaches its conclusion.''.
(b) Waiver of Grounds for Ineligibility for Admission.--
Section 212(d) of the Immigration and Nationality Act (8
U.S.C. 1182(d)) is amended--
(1) by inserting ``(1)'' after ``(d)''; and
(2) by adding at the end the following:
``(2) The Attorney General shall, in the Attorney General's
discretion, waive the application of subsection (a) (other
than paragraph (3)(E)) in the case of a nonimmigrant
described in section 101(a)(15)(T), if the Attorney General
considers it to be in the national interest to do so.''.
(c) Involuntary Servitude.--Section 1584 of title 18,
United States Code, is amended--
(1) inserting ``(a)'' before ``Whoever'';
(2) by striking ``or'' after ``servitude'';
(3) by inserting ``transfers, receives or harbors any
person into involuntary servitude, or'' after ``servitude,'';
and
(4) by adding at the end the following:
``(b) In this section, the term `involuntary servitude'
includes trafficking, slavery-like practices in which persons
are forced into labor through non-physical means, such as
debt bondage, blackmail, fraud, deceit, isolation, and
psychological pressure.''.
(d) Trafficking Victim Regulations.--Not later than 180
days after the date of enactment of this Act, the Attorney
General and the Secretary of State shall jointly promulgate
regulations for law enforcement personnel, immigration
officials, and Foreign Service officers requiring that--
(1) Federal, State and local law enforcement, immigration
officials, and Foreign Service officers shall be trained in
identifying and responding to trafficking victims;
(2) trafficking victims shall not be jailed, fined, or
otherwise penalized due to having been trafficked, or nature
of work;
(3) trafficking victims shall have access to legal
assistance, information about their rights, and translation
services;
(4) trafficking victims shall be provided protection if,
after an assessment of security risk, it is determined the
trafficking victim is susceptible to further victimization;
and
(5) prosecutors shall take into consideration the safety
and integrity of trafficked persons in investigating and
prosecuting traffickers.

SEC. 8. ASSISTANCE TO TRAFFICKING VICTIMS.

(a) In the United States.--The Secretary of Health and
Human Services is authorized to provide, through the Office
of Refugee Resettlement, assistance to trafficking victims
and their children in the United States, including mental and
physical health services, and shelter.
(b) In Other Countries.--The President, acting through the
Administrator of the United States Agency for International
Development, is authorized to provide programs and activities
to assist trafficking victims and their children abroad,
including provision of mental and physical health services,
and shelter. Such assistance should give special priority to
programs by nongovernmental organizations which provide
direct services and resources for trafficking victims.

SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

(a) Authorization of Appropriations for the Inter-Agency
Task Force.--To carry out the purposes of section 5, there
are authorized to be appropriated to the Secretary of State
$2,000,000 for fiscal year 2000 and $2,000,000 for fiscal
year 2001.
(b) Authorization of Appropriations to the Secretary of
HHS.--To carry out the purposes of section 8(a), there are
authorized to be appropriated to the Secretary of Health and
Human Services $20,000,000 for fiscal year 2000 and
$20,000,000 for fiscal year 2001.
(c) Authorization of Appropriations to the President.--To
carry out the purposes of section 8(b), there are authorized
to be appropriated to the President $20,000,000 for fiscal
year 2000 and $20,000,000 for fiscal year 2001.
(d) Prohibition.--Funds made available to carry out this
Act shall not be available for the procurement of weapons or
ammunition.
______

By Mr. COCHRAN:
S. 601. A bill to improve the foreign language assistance program; to
the Committee on Health, Education, Labor, and Pensions.

foreign language education improvement amendments of 1999

Mr. COCHRAN. Mr. President, today I am introducing a bill to amend
the Foreign Language Assistance Program which is administered under the
Elementary and Secondary Education Act.

[[Page S2601]]

The Foreign Language Education Improvement Amendments of 1999 make
changes that encourage and make possible the teaching of a second
language to students in elementary and secondary schools with limited
resources--in particular, those schools heavily impacted by the unique
problems of educating a high population of disadvantaged students.
My bill also provides schools an incentive to initiate foreign
language programs, promotes technology, distance learning, and other
innovative activities in the effective instruction of a foreign
language.
Recent research about the human brain and language acquisition, which
we've heard a lot about in connection to the teaching of reading and
early childhood development, revealed that the ability to learn new
languages is highest between birth and age six. ``Windows of
opportunity'' is how a February 3, 1997, Time article described this
neurological function, which effectively is open and pliable during the
early years of life and closes by the age of ten.
We all know, from personal and other practical experience, that of
course, people learn foreign languages beyond the age of ten. But, the
enlightening fact of the research is that humans learn languages
easier, and best at an early age.
The National School Boards Association publication, School Board
News, printed an article in July, 1997 that describes early foreign
language programs, and the benefits of learning languages early:

According to the Center for Applied Linguistics (CAL) in
Washington, D.C., the early study of a second language offers
many benefits for students, including gains in academic
achievement, positive attitudes toward diversity, increased
flexibility in thinking, greater sensitivity to language, and
a better ear for listening and pronunciation. Foreign
language study also improves children's understanding of
their native language, increase creativity, helps students
get better SAT scores, and increase their job opportunities.

The evidence shows that children who learn foreign languages score
higher in all academic subjects than those who speak only English. Most
developed countries recognize this and, according to the National
Foreign Language Center, the United States is alone in not teaching
foreign languages routinely before the age of twelve. Congress
recognized the need for foreign language study when it passed Goals
2000 in 1994, making foreign language acquisition an education
priority.
In February of this year, the Center for Applied Linguistics released
the results of a U.S. Department of Education funded survey of foreign
language teaching in preschool through 12th grade in the United States.
The results show a rising awareness and increase in the teaching of
foreign languages, but in the 31 percent of elementary schools that
offer foreign language instruction, only 21 percent have proficiency as
the goal of the program. Among the most frequently cited problems
facing foreign language programs were inadequate funding, inadequate
in-service teacher training, teacher shortages and a lack of sequencing
from elementary to secondary school.
This survey is a good snapshot of the state of the teaching of
foreign languages K-12 in our country. It can be read as encouraging:
that we know we should be teaching languages earlier; that more schools
are attempting to teach foreign languages; and that more languages are
being taught. It also clearly shows where we need improvement: that we
need to show accomplishment in teaching our students foreign languages;
that more schools need to have the resources to offer the necessary
course work for attaining this skill; and, that foreign languages
should be a priority.
The advantages of having foreign language ability range from greater
opportunities for college admission to fulfilling national security
needs. The National Council for Languages and International Studies
found that the top attainable skill cited as a determining factor for
likely college admission is foreign language proficiency. There are
also social and cultural tolerance advantages that the National Council
for Languages and International Studies and others cite, which most of
us can appreciate. According to a February 1998, USA Today survey, top
executives of America's businesses cited a need for and lack of foreign
language skills twice as great as any other skill in demand.
The National Foreign Language Center published a 1999 report titled,
Language and National Security for the 21st Century: The Federal Role
in Supporting National Language Capacity. This report is very
compelling in its review of the need for military and civilian
personnel with foreign language capability, and the lack thereof in our
current and rising workforces. Here are some quotes from that report:

For example, the admission of a DEA official in September,
1997 that the agency lacks sufficient Russian language
expertise to combat organized crime in groups from the former
Soviet Union indicates a shortfall in supply of such
expertise.

* * * * *

The Foreign Service reports that only 60% of its billets
requiring language are at present filled, with waivers
applied to the other 35%.

* * * * *

Clearly, the academic system falls short in producing
speakers minimally qualified to hold jobs requiring the use
of foreign language, which is why the federal language
programs exist and why the language training business in the
private sector is so successful.

The same report further explains that the language training business
is estimated to be $20 billion internationally. That is money spent by
our government, our businesses and individuals to teach adults a skill
essential in the global relationships of industry, diplomacy, defense,
and higher education.
The evidence of need is great, and yet there is a lack of sufficient
foreign language training at the K-12 level. We have one program in the
Elementary and Secondary Education Act aimed at providing incentives
and giving grants to schools for this purpose. It is a program that is
currently funded at just $5 million for a few matching grants in a
handful of states. However, the section of this law providing a grant
for schools that offer foreign language instruction programs has never
been funded. A frustrating aspect of this good program is that the
schools in the most need of the assistance can't afford the ante. My
amendments establish a 50 percent set aside for schools serving the
most disadvantaged students, and eliminates the matching share
requirement for those schools. This bill also increases the annual
authorization for the program from $55,000,000 to $75,000,000.
I hope that we will give greater attention to this program when we
make funding decisions, so that schools without the advantages of
plentiful resources can provide their students with a high quality and
competitive education.
My amendments to the ESEA Foreign Language Assistance Program will
provide new opportunities and encouragement to our school children,
teachers, and parents, so we can better meet our global business
challenges and national security needs.
______

By Mr. SHELBY (for himself, Mr. Bond, Mr. Coverdell, Mr. Hagel,
Mr. Kyl, Mr. Burns, Mr. Gramm, Mr. Ashcroft, Mr. Thomas, Mr.
Abraham, Mr. Grassley, Mr. Helms, Mr. Inhofe, Mr. Sessions, Mr.
Grams, Mr. Cochran, Mr. Hutchinson and Ms. Snowe):
S. 602. A bill to amend chapter 8 of title 5, United States Code, to
provide for congressional review of any rule promulgated by the
Internal Revenue Service that increases Federal Revenue, and for other
purposes; to the Committee on Government Affairs.

the stealth tax prevention act

Mr. SHELBY. Mr. President, I rise today with my colleague Senator
Bond, to introduce the Stealth Tax Prevention Act. Among the many
powers given to Congress by the Constitution of the United States, the
responsibility of taxation is perhaps the most important. The Founding
Fathers rationale behind bestowing this power to Congress is that
because, as elected representative, Congress remains accountable to the
voters when they levy and collect taxes. Politicians are rightly held
responsible to the public for producing fair and prudent tax
legislation.
Three years ago, Mr. President, Congress passed the Congressional
Review Act, which provides that when a major agency rule takes effect,
Congress has 60 days to review it. During this time

[[Page S2602]]

period, Congress has the option to pass a disapproval resolution. If no
such resolution is passed, the rule then goes into effect.
As you know, Mr. President, the Internal Revenue Service maintains an
enormous amount of power over the lives and the livelihoods of the
American taxpayers through their authority to interpret the Tax Code.
The Stealth Tax Prevention Act, that Senator Bond and I are introducing
along with Mr. Coverdell, Mr. Hagel, Mr. Kyl, Mr. Burns, Mr. Gramm, Mr.
Ashcroft, Mr. Thomas, Mr. Abraham, Mr. Grassley, Mr. Helms, Mr. Inhofe,
Mr. Sessions, Mr. Grams, Mr. Cochran, Mr. Hutchinson, and Ms. Snowe,
will expand the definition of a major rule to include, Mr. President,
any IRS regulation which increases Federal revenue. Why? Because we
need to return the authority of taxation to the United States Congress.
For example, if the Office of Management and Budget finds that the
implementation and enforcement of a rule would result in an increase of
Federal revenues over current practices or revenues anticipated from
the rule on the date of the enactment of the statute, the Stealth Tax
Prevention Act would allow Congress to review the regulations and take
appropriate measures to avoid raising taxes on hard working Americans,
in most cases, small businesses.
The discretionary authority of the Internal Revenue Service exposes
small businesses, farmers, and others to the sometimes arbitrary
actions of bureaucrats, thus creating an uncertain and, under certain
cases, hostile environment in which to conduct day-to-day activities.
Most of these people do not have lobbyists that work for them other
than their elected Representatives. The Stealth Tax Prevention Act will
be particularly helpful in lowering the tax burden on small business
which suffers disproportionately, Mr. President, from IRS regulations.
This burden discourages the startup of new firms and ultimately the
creation of new jobs in the economy, which has really made America
great today.
Americans are now paying a higher share of their income to the
Federal government than at any time since the end of World War II.
They, Mr. President, as you well know, pay State income taxes. They pay
property taxes. On the way to work in the morning they pay a gasoline
tax when they fill up their car, and a sales tax when they buy a cup of
coffee.
Allowing bureaucrats to increase taxes even further, at their own
discretion through interpretation of the Tax Code is unconscionable.
The Stealth Tax Prevention Act will leave tax policy where it belongs,
to elected Members of the Congress, not unelected and unaccountable IRS
bureaucrats.
Mr. BOND. Mr. President, today I join my distinguished colleague from
Alabama, Senator Shelby, in reintroducing legislation, which we proudly
offered in the 105th Congress and will work to enact during the 106th
Congress. Our goal is to ensure that the Treasury Department's Internal
Revenue Service does not usurp the power to tax--a power solely vested
in Congress by the U.S. Constitution. ``The Stealth Tax Prevention
Act'' will ensure that the duly elected representatives of the people,
who are accountable to the electorate for our actions, will have
discretion to exercise the power to tax. This legislation is intended
to curb the ability of the Treasury Department to bypass Congress by
proposing a tax increase without the authorization or consent of
Congress.
The Stealth Tax Prevention Act builds on legislation passed
unanimously by the Senate in the 104th Congress. As Chairman of the
Committee on Small Business, I authored the Small Business Regulatory
Enforcement Fairness Act--better known as the Red Tape Reduction Act--
to ensure that small businesses are treated fairly in agency rulemaking
and enforcement activities. Subtitle E of the Red Tape Reduction Act
provides that a final rule issued by a Federal agency and deemed a
``major rule'' by the Office of Information and Regulatory Affairs of
the Office of Management and Budget cannot go into effect for at least
sixty days. This delay is to provide Congress with a window during
which we can review the rule and its impact, allowing time for Congress
to consider whether a resolution of disapproval should be enacted to
strike down the regulation. To become effective, the resolution must
pass both the House and Senate and be signed into law by the President
or enacted as the result of a veto override.
Later this month, I will commemorate the third anniversary of the Red
Tape Reduction Act's enactment by highlighting the progress made to
date and the obstacles small businesses continue to face primarily due
to agency noncompliance. Because of the IRS' significant impact on the
activities of small businesses, the Service's implementation of the Red
Tape Reduction Act and the Regulatory Flexibility Act is of utmost
importance to the Committee on Small Business.
The bill Senator Shelby and I introduce today amends this law to
provide that any rule issued by the Treasury Department's Internal
Revenue Service that will result in a tax increase--any increase--will
be deemed a major rule by OIRA and, consequently, not go into effect
for at least 60 days. This procedural safeguard will ensure that the
Department of the Treasury and its Internal Revenue Service cannot make
an end-run around Congress, as it attempted with the ``stealth tax'' it
proposed on January 13, 1997.
In that case, the IRS issued a proposal that is tantamount to a tax
increase on businesses structured as limited liability companies. The
IRS proposed to disqualify a taxpayer from being considered as a
limited partner if he or she ``participates in the partnership's trade
or business for more than 500 hours during a taxable year'' or is
involved in a ``service'' partnership, such as lawyers, accountants,
engineers, architects, and health-care providers.
The IRS alleges that its proposal merely interprets section
1402(a)(13) of the Internal Revenue Code, providing clarification, when
in actuality it is a tax increase regulatory fiat. Under the IRS
proposal, disqualification as a limited partner will result in a tax
increase on income from both capital investments as well as earnings of
the partnership. The effect will be to add the self-employment tax
(12.4% for social security and 2.9% for Medicare) to income from
investments as well as earnings for limited partners who under current
rules can exclude such income from the self employment tax.
Under the bill introduced today, this tax increase on limited
partners, if later issued as a final rule, could not go into effect for
at least 60 days following its publication in the Federal Register.
This window, which coincides with issuance of a report by the
Comptroller General, would allow Congress the opportunity to review the
rule and vote on a resolution to disapprove the tax increase before it
is applied to a single taxpayer.
The Stealth Tax Prevention Act strengthens the Red Tape Reduction Act
and the vital procedural safeguards it provides to ensure that small
businesses are not burdened unnecessarily by new Federal regulations.
Congress enacted the 1996 provisions to strengthen the effectiveness of
the Regulatory Flexibility Act, a law which had been ignored too often
by government agencies, especially the Internal Revenue Service. Three
of the top recommendations of the 1995 White House Conference on Small
Business sought reforms to the way government regulations are developed
and enforced, and the Red Tape Reduction Act passed the Senate without
a single dissenting vote on its way to being signed into law on March
29, 1996. Despite the inclusion of language in the 1996 amendments that
expressly addresses coverage of IRS interpretative rules, the IRS
continues to bypass compliance with the Regulatory Flexibility Act.
As 18 of my Senate colleagues and I advised Secretary Rubin in an
April 9, 1997, letter, the proposed IRS regulation on limited-partner
taxation is precisely the type or rule for which a regulatory
flexibility analysis should be done. Although, on its face, the
rulemaking seeks merely to ``define a limited partner'' or to
``eliminate uncertainty'' in determining net earnings from self-
employment, the real effect of the rule would be to raise taxes by
executive fiat and expand substantially the spirit and letter of the
underlying statute. The rule also seeks to impose on small businesses a
burdensome new recordkeeping and collection of information requirement
that would affect

[[Page S2603]]

millions of limited partners and members of limited liability
companies. The IRS proposed this ``stealth'' tax increase with the
knowledge that Congress declined to adopt a similar tax increase in the
Health Security Act proposed in 1994--a provision that the
Congressional Joint Committee on Taxation estimated in 1994 would have
resulted in a tax increase of approximately $500 million per year.
The Stealth Tax Prevention Act would remove any incentive for the
Treasury Department to underestimate the cost imposed by an IRS
proposed or final rule in an effort to skirt the Administration's
regulatory review process or its obligations under the Regulatory
Flexibility Act. By amending the definition of ``major rule'' under the
Congressional Review Act, which is Subtitle E of the Red Tape Reduction
Act, we ensure that an IRS rule that imposes a tax increase will be a
major rule, whether or not it has an estimated annual effect on the
economy of $100,000,000. Our amendment does not change the trigger for
a regulatory flexibility analysis, which still will be required if a
proposed rule would have ``a significant economic impact on a
substantial number of small entities.'' We believe the heightened
scrutiny of IRS regulations called for by this legislation will provide
an additional incentive for the Treasury Department's Internal Revenue
Service to meet all of its procedural obligations under the Reg Flex
Act and the Red Tape Reduction Act.
I urge my colleagues to join us in supporting this important
legislation to ensure that the IRS neither usurps the proper role of
Congress--nor skirts its obligations to identify the impact of its
proposed and final rules. When the Department of the Treasury issues a
final IRS rule that increases taxes, Congress should have the ability
to exercise its discretion to enact a resolution of disapproval before
the rule is applicable to a single taxpayer. The Stealth Tax Prevention
Act Senator Shelby and I introduce today provides that opportunity.
______

By Mr. SHELBY:
S. 603. A bill to promote competition and greater efficiency of
airlines to ensure the rights of airline passengers, to provide for
full disclosure to those passengers, and for other purposes; to the
Committee on Commerce, Science, and Transportation.

airline deregulation and disclosure act of 1999

Mr. SHELBY. Mr. President, the legislation that abolished the Civil
Aeronautics Board in 1978 and deregulated the airline industry has been
a huge success. Americans are flying more, and more Americans are
flying; at the same time, air fares have dropped and air travel has
become safer. The average price of an airline ticket has decreased
approximately 33 percent in real terms since market forces replaced the
whims of federal bureaucrats in setting fares. The number of passengers
flying domestic routes has more than doubled to approximately 600
million annually. It is not surprising, then, that air travel is no
longer an exclusive privilege of the elite and today is accessible to
most Americans.
While deregulation of the airline industry overall has yielded the
benefits that free markets promise, there are growing pains. As the
number of air passengers increases, so has the number of consumer
complaints against air carriers. Some members of Congress have
concluded that competition does not work for commercial aviation. They
have stepped forward with proposals to reimpose federal control over
air fares and carrier routes, to offer taxpayer subsidies to fledgling
air carriers to compete against industry goliaths, or to levy a variety
of new fines that would add to the Department of Transportation's duty
the role of meter maid. We should be wary of any such effort to
reintroduce the heavy hand of government under the auspices of
protecting airline passengers.
Mr. President, lets not rush to throw out the baby with the bath
water and undo twenty years of unprecedented growth and consumer
savings under deregulation. Now is the time to reinvigorate competition
in the air passenger market, even if the air carriers do not welcome
it. The best way to increase competition is to regulate less, not more.
Regulations that serve as barriers to the commercial aviation market
should be removed. Regulations that promote the division of the
marketplace into regional cartels should be abandoned. Regulations and
FAA management practices that delay the installation of new technology
that facilitates competition should be streamlined.
I believe that we can also increase competition in the airline
industry by providing the traveling public with more useful information
and by giving consumers ownership of the commodity they have
purchased--their seat on an airplane. Today, I am introducing
legislation that will provide passengers with greater information about
their air fare and flight and with greater flexibility over unused or
partially used fares.
The price of an airline ticket is as much a mystery as the Pyramids
or the Hanging Gardens. In fact, The New York Times reported that on a
single flight, passengers paid 27 different fares, ranging from $87 to
$728. We should not adopt any measure that discourage air carriers from
discounting fares or that chill the benefits airline consumers are now
receiving. Air carriers, however, should not be allowed to continue
bait-and-switch advertising. If an air carrier offers a discounted
fare, my bill permits all passengers to make a confirmed reservation at
that same price for a twenty-four hour period.
Under my bill, consumers will get more ticket and flight information.
Airlines will be required to notify passengers about flight delays,
cancellations, or diversions. Air carriers must also disclose if the
passenger will be traveling on a carrier other than the one from whom
the consumer purchased the ticket or if the flight will require the
passenger to change planes.
At the same time, my bill will ensure that air carriers are penalized
for canceling flights, bumping passengers, and holding travelers
hostage on board an aircraft with inpunity. Whenever an airline
passenger is unable to make a flight, the passenger will have the
opportunity to board a similar flight on a standby basis. Whenever an
airline cancels a flight for their convenience, it will have to offer
to compensate each passenger. Whenever an airline keeps passengers on
board an aircraft that sits on the tarmac for more than two hours, it
will have to offer to compensate each passenger.
The Airline Deregulation Act of 1978 started a revolution in the
airline industry, a revolution that according to a Brookings
Institution study has benefitted consumers by $18.4 billion. That
revolution is unfinished. I want to take the next step and promote new
competition in the passenger aviation marketplace. My bill does this by
taking away much of the mystery associated with flying.
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:
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 ``Airline Deregulation and
Disclosure Act of 1999''.

SEC. 2. AIRLINE PASSENGER PROTECTION.

(a) In General.--Subchapter I of chapter 417 of title 49,
United States Code, is amended by adding at the end the
following:

``Sec. 41716. Air carrier passenger protection

``(a) Delay, Cancellation, or Diversion.--
``(1) Explanation of delay, cancellation, or diversion
required.--An announcement by an air carrier of a delay or
cancellation of a flight, or a diversion of a flight to an
airport other than the airport at which the flight is
scheduled to land, shall include an explanation of each
reason for the delay, cancellation, or diversion.
``(2) Prohibition on false or misleading explanations.--No
air carrier shall provide an explanation under paragraph (1)
that the air carrier knows or has reason to know is false or
misleading.
``(3) Delays After Enplaning or Before Deplaning.--
``(A) In general.--Except as provided in subparagraph (B),
no air carrier may require a passenger on a flight of that
air carrier to remain onboard an aircraft for a period longer
than 2 hours after--
``(i) the passenger enplaned, in any case in which the
aircraft has not taken flight from the airport during that
period; or
``(ii) the aircraft has landed at an airport, if the
aircraft remains in that airport without taking flight.
``(B) Election.--A passenger described in subparagraph (A)
may remain onboard an aircraft described in clause (i) or
(ii) of that

[[Page S2604]]

subparagraph for a period longer than the applicable period
described in that subparagraph, if, not later than the end of
that 2-hour period--
``(i) the air carrier offers the passenger an opportunity
to deplane with a full refund of air fare; and
``(ii) the passenger declines that offer.''.
``(b) Economic Cancellations.--
``(1) Nonsafety cancellations.--If, on the date a flight of
an air carrier is scheduled, the carrier cancels the flight
for any reason other than safety, the carrier shall provide
to each passenger that purchased air transportation on the
flight a refund of the amount paid for the air
transportation.
``(2) Cancellations for safety.--A cancellation for safety
is a cancellation made by reason of--
``(A) an insufficient number of crew members;
``(B) weather;
``(C) a mechanical problem; or
``(D) any other matter that prevents--
``(i) the safe operation of the flight; or
``(ii) the flight from operating in accordance with
applicable regulations of the Federal Aviation
Administration.
``(c) Code Sharing.--An air carrier, foreign air carrier,
or ticket agent may sell air transportation in the United
States for a flight that bears a designator code of a carrier
other than the carrier that will provide the air
transportation, only if the carrier or ticket agent selling
the air transportation first informs the person purchasing
the air transportation that the carrier providing the air
transportation will be a carrier other than the carrier whose
designator code is used to identify the flight.
``(d) Multiple Flights.--An air carrier, foreign air
carrier, or ticket agent that sells air transportation in the
United States that requires taking flights on more than 1
aircraft shall be required to provide notification on a
ticket, receipt, or itinerary provided to the purchaser of
that air transportation that the passenger shall be required
to change aircraft.
``(e) Air Carrier Pricing Policies.--An air carrier may
not--
``(1) prohibit a person (including a governmental entity)
that purchases air transportation from only using a portion
of the air transportation purchased (including using the air
transportation purchased only for 1-way travel instead of
round-trip travel); or
``(2) assess an additional fee or charge for using only a
portion of that purchased air transportation to be paid by--
``(A) that person; or
``(B) any ticket agent that sold the air transportation to
that person.
``(f) Equitable Fares; Frequent Flyer Program Awards.--
``(1) Reduced fares.--Subject to paragraph (2), if an air
carrier makes seats available on a specific date at a reduced
fare, that air carrier shall be required to make available
air transportation at that reduced fare for any passenger
that requests a seat at that reduced fare during a 24-hour
period beginning with the initial offering of that reduced
fare.
``(2) Limitation.--
``(A) In general.--An air carrier shall not be required
under paragraph (1) to make a seat available for a route at a
reduced fare, if providing that seat at that fare would
result in the air carrier being unable to provide, for the
24-hour period specified in that paragraph, the applicable
historic average number of seats offered at an unreduced fare
for the route, as determined under subparagraph (B).
``(B) Historic average.--With respect to a route, the
historic average number of seats offered at an unreduced fare
for the route is the average number of seats offered at an
unreduced fare per day by an air carrier for flights
scheduled on that route during the 24-month period preceding
the 24-hour period specified in paragraph (1).
``(3) Standby use of tickets.--An air carrier shall permit
an individual to use a ticket (or equivalent electronic
record) issued by that air carrier on a standby basis for any
flight that has the same origin and destination as are
indicated on that ticket (or equivalent electronic record).
``(4) Frequent flyer program awards.--
``(A) In general.--Subject to subparagraph (C), in a manner
consistent with applicable requirements of a frequent flyer
program, if an air carrier makes any seat available on a
specific date for use by a person redeeming an award under
that frequent flyer program on any route in air
transportation provided by the air carrier, that air carrier
shall, to the extent practicable during the 24-hour period
beginning with the redemption of that award--
``(i) redeem any other award under that frequent flyer
program for air transportation on that route; and
``(ii) make a seat available for the person who redeems
that other award on a flight on that route.
``(B) Standby use of frequent flyer program awards.--An air
carrier shall permit an individual to redeem a ticket (or
equivalent electronic record) acquired through a frequent
flyer award on a standby basis for any flight that has the
same origin and destination as are indicated on that ticket
(or equivalent electronic record).
``(C) Limitation.--
``(i) In general.--An air carrier shall not be required
under subparagraph (A) to make a seat available for a route
for use by a person redeeming a frequent flyer award, if
providing that seat to that person would result in the air
carrier being unable to provide, for the 24-hour period
specified in that paragraph, the applicable historic average
number of seats offered at an unreduced fare for the route,
as determined under clause (ii).
``(ii) Historic average.--With respect to a route, the
historic average number of seats offered at an unreduced fare
for the route is the average number of seats offered at an
unreduced fare per day by an air carrier for flights
scheduled on that route during the 24-month period preceding
the 24-hour period specified in subparagraph (A).
``(g) Access to All Fares.--Each air carrier operating in
the United States shall make information concerning all fares
for air transportation charged by that air carrier available
to the public, through--
``(1) computer-based technology; and
``(2) means other than computer-based technology.''.
(b) Penalties.--Section 46301(a)(1)(A) of title 49, United
States Code, is amended by striking ``or 41715 of this
title'' and inserting ``, 41715, or 41716 of this title''.
(c) Conforming Amendment.--The table of sections for
chapter 417 of title 49, United States Code, is amended by
inserting after the item relating to section 41715 the
following:

``41716. Air carrier passenger protection.''.

____________________