[Congressional Record Volume 148, Number 15 (Friday, February 15, 2002)]
[Senate]
[Pages S907-S908]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WYDEN (for himself, Mrs. Murray, and Mr. Smith of Oregon):
  S. 1962. A bill to provide for qualified withdrawals from the Capital 
Construction Fund for fishermen leaving the industry for the rollover 
of Capital Construction Funds to individual retirement plans; to the 
Committee on Finance.
 Mr. WYDEN. Mr. President, today I am pleased to introduce, for 
myself, Mrs. Murray, and Mr. Smith of Oregon, the Capital Construction 
Fund Qualified Withdrawal Act of 2002.

[[Page S908]]

  The groundfish fishery in Oregon and adjoining States in the Pacific 
Northwest continues to face daunting challenges as a result of the 
groundfish fishery disaster, resulting in a more than 40-percent drop 
in the income of Oregon fishers since 1995. To assist in rebuilding 
healthy groundfish stocks, my goal remains to reduce overcapitalization 
in the groundfish fishery. We want to get the right number of fishers 
out there, at the right time, catching the right number of fish. This 
legislation supports this effort by reforming the Capital Construction 
Fund in a way that will ease the transition for groundfish fishers away 
from fishing.
  The Capital Construction Fund, CCF, was created by the Merchant 
Marine Act of 1936, as amended in 1969, 46 U.S.C. 1177. CCF has been a 
way for fishers to accumulate funds, free from taxes, for the purpose 
of buying or refitting fishing vessels. The program has been a success; 
however, the CCF's usefulness has not kept up with the times, and today 
the CCF is exacerbating the problems facing U.S. fisheries, including 
the West Coast groundfish fishery.
  CCF works like an Individual Retirement Account, IRA, in that 
deposits to the fund earn interest and are deducted from the 
fishermen's taxable income. But unlike IRAs, there is no limit on 
contributions to the CCF; so fishers are able to accumulate funds 
quickly. In Oregon, the amounts in the accounts range from $10,000 to 
over $200,000.
  The problem my legislation will address is that fishers lose up to 70 
percent of their funds in taxes and penalties if they withdraw funds 
from the CCF for purposes other than buying new vessels or upgrading 
current vessels. Because of the environmental problems plaguing 
commercial fishing, as well as the overcapitalization of the fishing 
fleet, fishermen who want to opt out of fishing are penalized for doing 
so.
  This bill takes a significant step towards helping fishermen and 
making the West Coast groundfish fishery and the commercial fishing 
industry sustainable by amending the CCF to allow non-fishing uses of 
investments. This bill amends the Merchant Marine Act of 1936 and the 
Internal Revenue Code to allow funds currently in the CCF to be rolled 
over into an IRA or other types of retirement accounts, or to be used 
for the payment of an industry fee authorized by the fishery capacity 
reduction program, without adverse tax consequences to the account 
holders.
  I look forward to working with my colleagues to pass this 
legislation, and I ask that the text of the bill be printed in the 
Record.
  The bill follows.

                                S. 1962

       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 Capital Construction Fund 
     Qualified Withdrawal Act of 2002''.

     SEC. 2. AMENDMENT OF THE MERCHANT MARINE ACT OF 1936 TO 
                   ENCOURAGE RETIREMENT OF CERTAIN FISHING VESSELS 
                   AND PERMITS.

       (a) In General.--Section 607(a) of the Merchant Marine Act, 
     1936 (46 U.S.C. App. 1177(a)) is amended by adding at the end 
     the following: ``Any agreement entered into under this 
     section may be modified for the purpose of encouraging the 
     sustainability of the fisheries of the United States by 
     making the termination and withdrawal of a capital 
     construction fund a qualified withdrawal if done in exchange 
     for the retirement of the related commercial fishing vessels 
     and related commercial fishing permits.''.
       (b) New Qualified Withdrawals.--
       (1) Amendments to merchant marine act, 1936.--Section 
     607(f)(1) of the Merchant Marine Act, 1936 (46 U.S.C. App. 
     1177(f)(1)) is amended--
       (A) by striking ``for:'' and inserting
     ``for--'';
       (B) by striking ``vessel'' in subparagraph (A) and 
     inserting ``vessel;'';
       (C) by striking ``vessel, or'' in subparagraph (B) and 
     inserting ``vessel;'';
       (D) by striking ``vessel.'' in subparagraph (C) and 
     inserting ``vessel;''; and
       (E) by inserting after subparagraph (C) the following:
       ``(D) the payment of an industry fee authorized by the 
     fishing capacity reduction program under section 312(b) of 
     the Magnuson-Stevens Fishery Conservation and Management Act 
     (16 U.S.C. 1861a(b));
       ``(E) in the case of any such person or shareholder for 
     whose benefit such fund was established or any shareholder of 
     such person, a rollover contribution (within the meaning of 
     section 408(d)(3) of the Internal Revenue Code of 1986) to 
     such person's or shareholder's individual retirement plan (as 
     defined in section 7701(a)(37) of such Code); or
       ``(F) the payment to a person or corporation terminating a 
     capital construction fund for whose benefit the fund was 
     established and retiring related commercial fishing vessels 
     and permits.''.
       (2) Secretary to ensure retirement of vessels and 
     permits.--The Secretary of Commerce by regulation shall 
     establish procedures to ensure that any person making a 
     qualified withdrawal authorized by section 607(f)(1)(F) of 
     the Merchant Marine Act, 1936 (46 U.S.C. App. 1177(f)(1)(F)) 
     retires the related commercial use of fishing vessels and 
     commercial fishery permits.
       (c) Conforming Amendments.--
       (1) In general.--Section 7518(e)(1) of the Internal Revenue 
     Code of 1986 (relating to purposes of qualified withdrawals) 
     is amended--
       (A) by striking ``for:'' and inserting
     ``for--'';
       (B) by striking ``vessel, or'' in subparagraph (B) and 
     inserting ``vessel;'';
       (C) by striking ``vessel.'' in subparagraph (C) and 
     inserting ``vessel;'';
       (D) by inserting after subparagraph (C) the following:
       ``(D) the payment of an industry fee authorized by the 
     fishing capacity reduction program under section 312 of the 
     Magnuson-Stevens Fishery Conservation and Management Act (16 
     U.S.C. 1861a);
       ``(E) in the case of any person or shareholder for whose 
     benefit such fund was established or any shareholder of such 
     person, a rollover contribution (within the meaning of 
     section 408(d)(3)) to such person's or shareholder's 
     individual retirement plan (as defined in section 
     7701(a)(37)); or
       ``(F) the payment to a person terminating a capital 
     construction fund for whose benefit the fund was established 
     and retiring related commercial fishing vessels and 
     permits.''.
       (2) Secretary to ensure retirement of vessels and 
     permits.--The Secretary of the Treasury by regulation shall 
     establish procedures to ensure that any person making a 
     qualified withdrawal authorized by section 7518(e)(1)(F) of 
     the Internal Revenue Code of 1986 retires the related 
     commercial use of fishing vessels and commercial fishery 
     permits referred to therein.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by this Act shall apply to withdrawals 
     made after the date of enactment of this Act.

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