[Congressional Record Volume 147, Number 95 (Tuesday, July 10, 2001)]
[Senate]
[Pages S7428-S7432]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BREAUX:
  S. 1158. A bill to amend the Internal Revenue Code of 1986 to modify 
the active business definition relating to distributions of stock and 
securities of controlled corporations; to the Committee on Finance.
  Mr. BREAUX. Mr. President, I rise today to introduce tax legislation 
which proposes only a small technical modification of current law, but, 
if enacted, would provide significant simplification of routine 
corporate reorganizations. The legation is identical to S. 773 which I 
introduced on April 13 of last year.
  This proposed change is small but very important. It would not alter 
the substance of current law in any way. It would, however, greatly 
simplify a common corporate transaction. This small technical change 
will alone save corporations millions of dollars in unnecessary 
expenses and economic costs that are incurred when they divide their 
businesses.
  Past Treasury Departments have agreed, and I have no reason to 
believe the current Treasury Department will feel any differently, that 
this change would bring welcome simplification to section 355 of the 
Internal Revenue Code. Indeed, the Clinton Administration in its last 
budget submission to the Congress had proposed this change. The last 
scoring of this proposal showed no loss of revenue to the U.S. 
Government, and I am aware of no opposition to its enactment.
  Corporations, and affiliated groups of corporations, often find it 
advantageous , or even necessary, to separate two or more businesses. 
The division of AT&T from its local telephone companies is an example 
of such a transaction. The reasons for these corporate divisions are 
many, but probably chief among them is the ability of management to 
focus on one core business.
  At the end of the day, when a corporation divides, the stockholders 
simply have the stock of two corporations,

[[Page S7429]]

instead of one. The Tax Code recognizes this is not an event that 
should trigger tax, as it includes corporate divisions among the tax-
free reorganization provisions.
  One requirement the Tax Code imposes on corporate divisions is very 
awkwardly drafted, however. As a result, an affiliated group of 
corporations that wishes to divide must often engage in complex and 
burdensome preliminary reorganizations in order to accomplish what, for 
a single corporate entity, would be a rather simple and straightforward 
spinoff of a business to its shareholders. The small technical change I 
propose today would eliminate the need for these unnecessary 
transactions, while keeping the statue true to Congress's original 
purpose.
  More specifically, section 355, and related provision of the Code, 
permits a corporation or an affiliated group of corporations to divide 
on a tax-free basis into two or more separate entities with separate 
businesses. There are numerous requirements for tax-free treatment of a 
corporate division, or ``spinoff,'' including continuity of historical 
shareholder interest, continuity of the business enterprises, business 
purpose, and absence of any device to distribute earning and profits. 
In addition, section 355 requires that each of the divided corporate 
entities be engaged in the active conduct of a trade or business. The 
proposed change would alter none of these substantive requirements of 
the Code.
  Section 355(b)(2)(A) currently provides an attribution or ``look 
through'' rule for groups of corporations that operate active 
businesses under a holding company, which is necessary because a 
holding company, by definition, is not itself engaged in an active 
business.
  This lookthrough rule inexplicably requires, however, that 
``substantially all'' of the assets of the holding company consist of 
stock of active controlled subsidiaries. The practical effect of this 
language is to prevent holding companies from engaging in spinoffs if 
they own almost any other assets. This is in sharp contrast to 
corporations that operate businesses directly, which can own 
substantial assets unrelated to the business and still engage in tax-
free spinoff transactions.
  In the real world, of course, holding companies may, for many sound 
business reasons, hold other assets, such as non-controlling, less than 
80 percent, interests in subsidiaries, controlled subsidiaries that 
have been owned for less than five years, which are not considered 
``active businesses'' under section 355, or a host of non-business 
assets. Such holding companies routinely undertake spinoff 
transactions, but because of the awkward language used in section 
355(b)(2)(A), they must first undertake one or more, often a series of, 
preliminary reorganizations solely for the purpose of complying with 
this inexplicable language of the Code.
  Such preliminary reorganizations are at best costly, burdensome, and 
without any business purpose, and at worst, they seriously interfere 
with business operations. In a few cases, they may be so costly as to 
be prohibitive, and cause the company to abandon an otherwise sound 
business transaction that is clearly in the best interest of the 
corporation and the businesses it operates.
  There is no tax policy reasons, tax advisors agree, to require the 
reorganization of a consolidated group that is clearly engaged in the 
active conduct of a trade or business, as a condition to a spinoff. Nor 
is there any reason to treat affiliated groups differently than single 
operating companies. Indeed, no one has ever suggested one. The 
legislative history indicates Congress was concerned about non-
controlled subsidiaries, which is elsewhere adequately addressed, no 
consolidated groups.
  For many purposes, the Tax Code treats affiliated groups as a single 
corporation. Therefore, the simple remedy I am proposing today for the 
problem created by the awkward language of section 355(b)(2)(A) is to 
apply the active business test to an affiliated group as if it were a 
single entity.
  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. 1158

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

     SECTION 1. MODIFICATION OF ACTIVE BUSINESS DEFINITION.

       (a) In General.--Section 355(b)(2) of the Internal Revenue 
     Code of 1986 (defining active conduct of a trade or business) 
     is amended by adding at the end the following: ``For purposes 
     of subparagraph (A), all corporations that are members of the 
     same affiliated group (as defined in section 1504(a)) shall 
     be treated as a single corporation.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions or transfers after the date of 
     the enactment of this Act.
                                 ______
                                 
      By Ms. COLLINS (for herself and Ms. Snowe):
  S. 1159. A bill to direct the Secretary of the Army to repair and 
expand a wave attenuation system to protect fishermen and other boaters 
and promote the welfare of the town of Lubec, Maine; to the Committee 
on Environment and Public Works.
  Ms. COLLINS. Mr. President, I rise today to introduce the Lubec Safe 
Harbor Act of 2001.
  Small communities up and down the coast of Maine literally depend 
upon the sea for their survival. From the rich fishing grounds that 
supply Maine's great fishing industry to the beautiful coastlines that 
draw tourist by both land and water, the sea provides Maine's coastal 
communities with their livelihoods.
  But while the sea provides life and income to Maine's coastal 
communities, it can also take back what it gives.
  One small community in Maine that has been particularly hard hit by 
the sea's fury is Lubec. In 1997, a winter storm took the lives of two 
Lubec fishermen.
  Earlier this year, storms destabilized the existing wave attenuation 
system in Lubec and consequently caused extensive damage to the Lubec 
marina. The destruction has been very difficult for this small town, 
whose existence, like many coastal Maine communities, is largely 
dependent on fishing and tourists who arrive by boat. Without the 
attenuator, the marina, the pier, and the harbor will cease to function 
effectively. Without a harbor, Lubec can neither support its fishing 
industry nor provide landing capacity for tour boats. Without a safe 
berth for their boats, the lives of Lubec's fishermen are further at 
risk.
  Today, I am introducing legislation that directs the Army Corps of 
Engineers to construct a wave attenuation system for the Town of Lubec. 
For the sake of the safety of the fishermen of Lubec and the well being 
of the community, this legislation directs the Army Corps to begin work 
immediately. My legislation authorizes $2.2 million dollars for the 
Army Corps to complete this project.
  I call upon my colleagues to recognize the urgency of this situation. 
The longer Lubec goes without a safe harbor, the greater the risk to 
the lives of Lubec's fishermen, and the greater the threat to the 
economic well-being of this coastal community. I ask my colleagues to 
help me pass this legislation as soon as possible.
  I am pleased to be joined in this effort by my colleague from Maine, 
Senator Snowe. I know she will also work very hard on behalf of the 
people of Lubec to see this legislation enacted.
                                 ______
                                 
      By Mr. ROCKEFELLER:
  S. 1160. A bill to amend section 1714 of title 38, United States 
Code, to modify the authority of the Secretary of Veterans Affairs to 
provide dog-guides to blind veterans and authorize the provision of 
service dogs to hearing-impaired veterans and veterans with spinal cord 
injuries, and for other purposes; to the Committee on Veterans' 
Affairs.
  Mr. ROCKEFELLER. Mr. President, I am pleased to introduce legislation 
today that would make guide dogs more available to veterans in need.
  Service dogs, or ``guide dogs'', have traditionally been viewed as 
being helpful only to those who are visually impaired. However, in 
recent years, primarily as a result of the Americans With Disabilities 
Act, there has been a push to find alternative methods of providing 
assistance to people with various kinds of disabilities. While there 
have been many technological developments in this field, there still 
remains a need for long-term assistance that allows for the most 
possible independence on the part of the disabled individual.

[[Page S7430]]

  Specifically, my legislation would enable the Department of Veterans 
Affairs to provide hearing-impaired veterans and veterans with spinal 
cord injury or dysfunction, in addition to blind veterans, the ability 
to obtain service dogs to assist them with everyday activities.
  There are numerous ways in which service dogs can assist their 
owners. Tasks such as opening and closing doors, turning switches on 
and off, carrying bags, and dragging a person to safety in the case of 
an emergency are just a few of the standard duties for service dogs. 
Their ability to perform these types of duties makes them invaluable to 
those who require day-to-day aid. Having this sort of assistance can 
make a big difference in terms of offering not only physical support, 
but companionship as well.
  Various types of evidence illustrate the value of companion pets, not 
just to the disabled, but to everyone. The Journal of the American 
Medical Association published a trial study a few years ago that 
examined the impact of service dogs on the lives of people with 
disabilities--both in terms of economic and social impacts.
  With regard to social considerations, researchers found that all 
participants had increased levels of self-esteem, independence, and 
community integration. The economic benefit was exemplified through a 
sharp decrease in the number of paid assistance hours. Overall, the 
JAMA study concluded that service dogs can greatly improve the quality 
of life for the disabled.
  In closing, I extend my thanks to the Paralyzed Veterans Association, 
who assisted me invaluably in preparing this legislation. Their hard 
work and dedication to this issue have been a great help, and I am 
proud to have worked with them to develop this bill.
  I urge my Senate colleagues to join me in seeking to provide greater 
accessibility to assistance for disabled veterans. They have sacrificed 
for all of us, and deserve every effort we can make to restore their 
sense of independence.
  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. 1160

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

     SECTION. 1. MODIFICATION AND ENHANCEMENT OF AUTHORITY TO 
                   PROVIDE DOG-GUIDES AND SERVICE DOGS TO VETERANS 
                   WITH DISABILITIES.

       (a) Enhancement of Authority.--Subsection (b) of section 
     1714 of title 38, United States Code, is amended to read as 
     follows:
       ``(b)(1) The Secretary may provide any blind veteran who is 
     entitled to disability compensation with--
       ``(A) a dog-guide trained for the aid of the blind; and
       ``(B) mechanical or electronic equipment for aid in 
     overcoming the disability of blindness.
       ``(2) The Secretary may provide a service dog to the 
     following:
       ``(A) Any hearing-impaired veteran who is entitled to 
     disability compensation.
       ``(B) Any veteran with a spinal cord injury or dysfunction 
     who is entitled to disability compensation.
       ``(3) In providing a dog-guide or service dog to a veteran 
     under this subsection, the Secretary may pay travel and 
     incidental expenses (under the terms and conditions set forth 
     in section 111 of this title) of the veteran to and from the 
     veteran's home and incurred in becoming adjusted to the dog-
     guide or service dog, as the case may be.''.
       (b) Conforming and Clerical Amendments.--(1) The section 
     heading of that section is amended to read as follows:

     ``Sec. 1714. Fitting and training in use of prosthetic 
       appliances; dog-guides and service dogs''.

       (2) The table of section at the beginning of chapter 17 of 
     that title is amended by striking the item relating to 
     section 1714 and inserting the following new item:

``1714. Fitting and training in use of prosthetic appliances; dog-
              guides and service dogs.''.
                                 ______
                                 
      By Mr. CRAIG (for himself, Mr. McConnell, Mr. Cochran, Mr. Enzi, 
        Mr. Burns, Mr. Frist, and Mr. Hutchinson):
  S. 1161. A bill to amend the Immigration and Nationality Act to 
streamline procedures for the admission and extension of stay of 
nonimmigrant agricultural workers; to provide a stable, legal, 
agricultural work force; to extend basic legal protections and better 
working conditions to more workers; to provide for a system of one-time 
earned adjustment to legal status for certain agricultural workers; and 
for other purposes; to the Committee on the Judiciary.
  Mr. CRAIG. Mr. President, I am pleased to have joined several 
colleagues this week in introducing a new, improved version of the 
Agricultural Job Opportunity, Benefits, and Security Act, the 
``AgJOBS'' bill.
  We are facing a growing crisis, for both farm workers and growers.
  We want and need a stable, predictable, legal work force in American 
agriculture.
  Willing American workers deserve a system that puts them first in 
line for available jobs with fair, market wages. We want all workers to 
receive decent treatment and equal protection under the law.
  Consumers deserve a safe, stable, domestic food supply.
  American citizens and taxpayers deserve secure borders and a 
government that works.
  Yet Americans are being threatened on all these counts, because of a 
growing labor shortage in agriculture, while the only program currently 
in place to respond, the H-2A Guest Worker Program, is profoundly 
broken.
  The problem is only growing worse. Therefore, we are introducing a 
new, improved bill. The name of the bill says it all--``AgJOBS''.
  Our farm workers need this reform bill.
  There is no debate about whether many, or most, farm workers are 
aliens.
  They are. And they will be, for the foreseeable future. The question 
is whether they will be here legally or illegally.
  Immigrants not legally authorized to work in this country know they 
must work in hiding.
  They cannot even claim basic legal rights and protections. They are 
vulnerable to predation and exploitation. They sometimes have been 
stuffed inhumanly into dangerously enclosed truck trailers and car 
trunks, in order to be transported, hidden from the view of the law.
  In fact, they have been known to pay ``coyotes'', labor smugglers, 
$1,000 and more to be smuggled into this country.
  In contrast, legal workers have legal protections.
  They can assert wage, safety, and other legal protections. They can 
bargain openly and join unions. H-2A workers, in fact, are even 
guaranteed housing and transportation.
  Clearly, the status quo is broken.
  Domestic American workers simply are not being found to fill 
agricultural jobs.
  Our own government estimated that half of the total 1.6 million 
agricultural work force are not legally authorized to work in this 
country.
  That estimate is probably low; it's based on self-disclosure by 
illegal workers to government interviewers.
  Some actually have suggested that there is no labor shortage, because 
there are plenty of illegal workers. This is not an acceptable answer.
  Congress has shown its commitment over the past few years to improve 
the security of our borders, both in the 1996 immigration law and in 
subsequent appropriations.
  Between computerized checking by the Social Security Administration 
and audits and raids by the Immigration and Naturalization Service, 
more and more employers are discovering they have undocumented 
employees; and more and more workers here illegally are being 
discovered and evicted from their jobs.
  Outside of H-2A, employers have no reliable assurance that their 
employees are legal.
  It's worse than a Catch-22, the law actually punishes the employer 
who could be called ``too diligent'' in inquiring into the 
identification documents of prospective workers.
  The H-2A status quo is slow, bureaucratic, and inflexible. It does 
nothing to recognize the uncertainties farmers face, from changes in 
the weather to global market demands.
  The H-2A status quo is complicated and legalistic. DOL's compliance 
manual alone is 325 pages.
  The current H-2A process is so hard to use, it will place only about 
40,000 legal guest workers this year, 2 to 3 percent of the total 
agricultural work force.

[[Page S7431]]

  Finally, the grower can't even count on his or her government to do 
its job.
  A General Accounting Office study found that, in more than 40 percent 
of the cases in which employers filed H-2A applications at least 60 
days before the date of need, the DOL missed statutory deadlines in 
processing them.
  The solution we need is the AgJOBS Act of 2001.
  This is win-win legislation.
  It will elevate and protect the rights, working conditions, and 
safety of workers. It will help workers, first domestic American 
workers, then other workers already here, then foreign guest workers, 
find the jobs they want and need.
  It will assure growers of a stable, legal supply of workers, within a 
program that recognizes market realities. The adjusted-worker 
provisions also will give growers one-time assistance in adjusting to 
the new labor market realities of the 21st Century.
  It will assure all Americans of a safe, consistent, affordable food 
supply.
  The nation needs AgJOBS. I invite the rest of my colleagues to join 
us as cosponsors; and I urge the Senate and the House to act promptly 
to enact this legislation into law.
  I ask unanimous consent that a summary of this bill be included in 
the Record.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

  The Agricultural Job Opportunity, Benefits, & Security Act of 2001--
                                Summary

       AgJOBS II is legislation reforming the current, cumbersome 
     H-2A agricultural guest worker program and, for non-H-2A 
     agricultural workers, creating a program in which farmworkers 
     now in the U.S. without legal documentation could adjust to 
     legal status.
       This bill builds on the significant progress made last 
     year, in legislation, hearings, and extensive discussions 
     among Members of Congress, the Administration, and the 
     agriculture community. This new bill chooses from among the 
     best ideas in similar legislation introduced in the 106th 
     Congress (S. 1814, the original Agricultural Job Opportunity, 
     Benefits, and Security Act (AgJOBS)) and other proposals and 
     ideas discussed before and since.
       Enactment of H-2A reform and adjustment of status 
     legislation is critically important to the continued health 
     of American agriculture. Reform is needed to provide a 
     stable, legal workforce and to extend basic legal protections 
     and better conditions to more workers.
       According to the federal government's own estimates, about 
     half of our 1.6 million agriculture work force is not legally 
     authorized to work here. This is certain to be a low 
     estimate, because it is based upon self-disclosure by illegal 
     workers to government interviewers.
     Highlights of reforms to the H-2A program
       American workers should have the first opportunity to hold 
     American jobs. When enough domestic farmworkers are not 
     available for upcoming work, growers currently are required 
     to go through a lengthy and uncertain process of 
     demonstrating that fact to the satisfaction of the federal 
     government. A GAO study found that, under the current system, 
     the Department of Labor misses processing deadlines 40 
     percent of the time, which increases costly delays and 
     discourages use of the program.
       The new bill would replace the current quagmire with a 
     streamlined ``attestation'' process like the one now used for 
     H-1B high-tech workers, speeding up certification of H-2A 
     employers and the hiring of guest workers.
       The new bill sets the prevailing wage as the standard, 
     minimum wage for guest workers admitted under the H-2A 
     program, instead of the unrealistic ``premium'' wage 
     currently mandated on H-2A employers (called the Adverse 
     Economic Wage Rate), that often combines completely 
     dissimilar worker categories in computing one wage rate.
       Participating employers would continue to furnish housing 
     and transportation for H-2A workers. Other current H-2A labor 
     protections for both H-2A and domestic workers would be 
     continued.
     Highlights of the new status adjustment program
       To qualify for adjustment to legal status, an incumbent 
     worker must have worked in the United States in agriculture 
     for at least 150 days in any 12-month period in the last 18 
     months. (The average non-casual farm worker works 150 days a 
     year.) The bill creates a one-time adjustment opportunity, 
     only for experienced and valued workers who are already in 
     the United States by July 4, 2001.
       To earn adjustment of status and the right to stay and work 
     legally in the United States, a qualified worker must 
     continue to work in U.S. agriculture at least 150 days a 
     year, in each of 4 of the next 6 years.
       During this 4-6 year period, the adjusting worker would 
     have non-immigrant status and would be required to return to 
     his or her home country for at least 2 months a year, unless 
     he or she is the parent of a child born in the United States 
     (i.e., a U.S. citizen), gainfully employed, actively seeking 
     employment, or prevented by a serious medical condition from 
     returning home. The worker may also work in another industry, 
     as long as the agriculture work requirement is satisfied. The 
     worker would have to check in once a year with the INS to 
     verify compliance with the law and report his or her work 
     history.
       Upon completion of the status adjustment program, the 
     adjusted worker would be eligible for legal permanent 
     resident status. Considering the time elapsed from when a 
     worker first applies to enter the adjustment process, this 
     gives adjusting workers no advantage over regular immigrants 
     beginning the legal immigration process at the same time.
                                 ______
                                 
      By Mr. SARBANES (for himself, Mr. Biden, Mr. McCain, Mr. 
        Campbell, Ms. Mikulski, and Mr. Carper):
  S.J. Res. 18. A joint resolution memorializing fallen firefighters by 
lowering the United States flag to half-staff on the day of the 
National Fallen Firefighters Memorial Service in Emmitsburg, Maryland; 
to the Committee on the Judiciary.
  Mr. SARBANES. Mr. President, today I am introducing legislation, 
together with my colleagues Senators Biden, McCain, Campbell, Mikulski 
and Carper, to recognize the courage and commitment of America's fire 
service and to pay special tribute to those firefighters who have made 
the ultimate sacrifice in the line of duty. Specifically, this 
legislation requires that the United States flag be flown at half-staff 
at all Federal facilities on the occasion of the annual National Fallen 
Firefighters Memorial Service at Emmitsburg, MD.
  Our Nation's firefighters are among our most dedicated public 
servants. Indeed, few would question the fact that our fallen 
firefighters are heroes. Throughout our Nation's history, we have 
recognized the passing of our public servants by lowering our Nation's 
flag to half-staff in their honor. In the past, this list has included 
elected officials, members of the Armed Services and America's peace 
officers. In my view, our fallen firefighters are equally deserving of 
this high honor.
  For the past nineteen years, a memorial service has been held on the 
campus of the National Fire Academy in Emmitsburg, to honor those 
firefighters who have given their lives while protecting the lives and 
property of their fellow citizens. Since 1981, the names of 2,081 
fallen firefighters have been inscribed on plaques surrounding the 
National Fallen Firefighters Memorial, a Congressionally designated 
monument to these brave men and women. On October 7, at the 20th Annual 
National Fallen Firefighters Memorial Service, an additional 93 names 
will be added.
  Over the years, I have worked very closely with the National Fallen 
Firefighters Foundation to ensure that the National Fallen Firefighters 
Memorial Service is an occasion befitting the sacrifices that these 
individuals have made. In my view, lowering the United States flag to 
half-staff is an essential component of this ``Day of Remembrance.'' It 
will be a fitting tribute to the roughly 100 men and women who die each 
year performing their duties as our Nation's career and volunteer 
firefighters. It will also serve to remind us of the critical role 
played by the 1.2 million fire service personnel who risk their lives 
every day to ensure our safety and that of our communities.
  I ask unanimous consent that this joint resolution be printed in the 
Record and urge my colleagues to support its swift passage.
  There being no objection, the joint resolution was ordered to be 
printed in the Record, as follows:

                              S.J. Res. 18

       Whereas 1,200,000 men and women comprise the fire service 
     in the United States;
       Whereas the fire service is considered one of the most 
     dangerous jobs in the United States;
       Whereas fire service personnel selflessly respond to over 
     16,000,000 emergency calls annually, without reservation and 
     with an unwavering commitment to the safety of their fellow 
     citizens;
       Whereas fire service personnel are the first to respond to 
     an emergency, whether it involves a fire, medical emergency, 
     spill of hazardous materials, natural disaster, act of 
     terrorism, or transportation accident; and
       Whereas approximately 100 fire service personnel die 
     annually in the line of duty: Now, therefore, be it
       Resolved by the Senate and House of Representatives of the 
     United States of America in Congress assembled, That each 
     year, the

[[Page S7432]]

     United States flags on all Federal facilities will be lowered 
     to half-staff on the day of the National Fallen Firefighters 
     Memorial Service in Emmitsburg, Maryland.

                          ____________________