[Congressional Record Volume 148, Number 122 (Tuesday, September 24, 2002)]
[Senate]
[Pages S9137-S9177]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA. 4699. Mr. KYL submitted an amendment intended to be proposed by 
him to the bill H.R. 5005, to establish the Department of Homeland 
Security, and for other purposes; which was ordered to lie on the 
table; as follows:

       At the appropriate place, insert the following:

     SEC. __. EXCLUSION OF UNITED STATES PERSONS FROM DEFINITION 
                   OF FOREIGN POWER IN FOREIGN INTELLIGENCE 
                   SURVEILLANCE ACT OF 1978 RELATING TO 
                   INTERNATIONAL TERRORISM.

       Paragraph (4) of section 101(a) of the Foreign Intelligence 
     Surveillance Act of 1978 (50 U.S.C. 1801(a)) is amended to 
     read as follows:
       ``(4) any person, other than a United States person, or 
     group that is engaged in international terrorism or 
     activities in preparation therefor;''.
                                 ______
                                 
  SA 4700. Mr. FEINGOLD submitted an amendment intended to be proposed 
to amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, 
to establish the Department of Homeland Security, and for other 
purposes; which was ordered to lie on the table; as follows:

       On page 103, strike line 17 and all that follows through 
     page 112, line 4, and insert the following:

     SEC. 137. OFFICE FOR STATE AND LOCAL GOVERNMENT COORDINATION.

       (a) Establishment.--There is established within the Office 
     of the Secretary the Office for State and Local Government 
     Coordination, to be headed by a director, which shall oversee 
     and coordinate departmental programs for and relationships 
     with State and local governments.
       (b) Responsibilities.--The Office established under 
     subsection (a) shall--
       (1) coordinate the activities of the Department relating to 
     State and local government;
       (2) assess, and advocate for, the resources needed by State 
     and local government to implement the national strategy for 
     combating terrorism;
       (3) provide State and local government with regular 
     information, research, and technical support to assist local 
     efforts at securing the homeland;
       (4) develop a process for receiving meaningful input from 
     State and local government to assist the development of the 
     Strategy and other homeland security activities; and
       (5) prepare an annual report, that contains--
       (A) a description of the State and local priorities in each 
     of the 50 States based on discovered needs of first responder 
     organizations, including law enforcement agencies, fire and 
     rescue agencies, medical providers, emergency service 
     providers, and relief agencies;
       (B) a needs assessment that identifies homeland security 
     functions in which the Federal role is duplicative of the 
     State or local role, and recommendations to decrease or 
     eliminate inefficiencies between the Federal Government and 
     State and local entities;
       (C) recommendations to Congress regarding the creation, 
     expansion, or elimination of any program to assist State and 
     local entities to carry out their respective functions under 
     the Department; and
       (D) proposals to increase the coordination of Department 
     priorities within each State and between the States.
       (c) Homeland Security Liaison Officers.--
       (1) Designation.--The Secretary shall designate in each 
     State and the District of Columbia not less than 1 employee 
     of the Department to serve as the Homeland Security Liaison 
     Officer in that State or District.
       (2) Duties.--Each Homeland Security Liaison Officer 
     designated under paragraph (1) shall--
       (A) provide State and local government officials with 
     regular information, research, and technical support to 
     assist local efforts at securing the homeland;
       (B) provide coordination between the Department and State 
     and local first responders, including--
       (i) law enforcement agencies;
       (ii) fire and rescue agencies;
       (iii) medical providers;
       (iv) emergency service providers; and
       (v) relief agencies;
       (C) notify the Department of the State and local areas 
     requiring additional information, training, resources, and 
     security;
       (D) provide training, information, and education regarding 
     homeland security for State and local entities;
       (E) identify homeland security functions in which the 
     Federal role is duplicative of the State or local role, and 
     recommend ways to decrease or eliminate inefficiencies;
       (F) assist State and local entities in priority setting 
     based on discovered needs of first responder organizations, 
     including law enforcement agencies, fire and rescue agencies, 
     medical providers, emergency service providers, and relief 
     agencies;
       (G) assist the Department to identify and implement State 
     and local homeland security objectives in an efficient and 
     productive manner;
       (H) serve as a liaison to the Department in representing 
     State and local priorities and concerns regarding homeland 
     security;
       (I) consult with State and local government officials, 
     including emergency managers, to coordinate efforts and avoid 
     duplication; and
       (J) coordinate with Homeland Security Liaison Officers in 
     neighboring States to--
       (i) address shared vulnerabilities; and
       (ii) identify opportunities to achieve efficiencies through 
     interstate activities .
       (d) Federal Interagency Committee on First Responders and 
     State, Local, and Cross-jurisdictional issues.--
       (1) In general.--There is established an Interagency 
     Committee on First Responders and State, Local, and Cross-
     jurisdictional Issues (in this section referred to as the 
     ``Interagency Committee'', that shall--
       (A) ensure coordination, with respect to homeland security 
     functions, among the Federal agencies involved with--
       (i) State, local, and regional governments;
       (ii) State, local, and community-based law enforcement;
       (iii) fire and rescue operations; and
       (iv) medical and emergency relief services;
       (B) identify community-based law enforcement, fire and 
     rescue, and medical and emergency relief services needs;
       (C) recommend new or expanded grant programs to improve 
     community-based law enforcement, fire and rescue, and medical 
     and emergency relief services;
       (D) identify ways to streamline the process through which 
     Federal agencies support community-based law enforcement, 
     fire and rescue, and medical and emergency relief services; 
     and
       (E) assist in priority setting based on discovered needs.
       (2) Membership.--The Interagency Committee shall be 
     composed of--
       (A) a representative of the Office for State and Local 
     Government Coordination;
       (B) a representative of the Health Resources and Services 
     Administration of the Department of Health and Human 
     Services;
       (C) a representative of the Centers for Disease Control and 
     Prevention of the Department of Health and Human Services;
       (D) a representative of the Federal Emergency Management 
     Agency of the Department;
       (E) a representative of the United States Coast Guard of 
     the Department;

[[Page S9138]]

       (F) a representative of the Department of Defense;
       (G) a representative of the Office of Domestic Preparedness 
     of the Department;
       (H) a representative of the Directorate of Immigration 
     Affairs of the Department;
       (I) a representative of the Transportation Security Agency 
     of the Department;
       (J) a representative of the Federal Bureau of Investigation 
     of the Department of Justice; and
       (K) representatives of any other Federal agency identified 
     by the President as having a significant role in the purposes 
     of the Interagency Committee.
       (3) Administration.--The Department shall provide 
     administrative support to the Interagency Committee and the 
     Advisory Council, which shall include--
       (A) scheduling meetings;
       (B) preparing agenda;
       (C) maintaining minutes and records;
       (D) producing reports; and
       (E) reimbursing Advisory Council members.
       (4) Leadership.--The members of the Interagency Committee 
     shall select annually a chairperson.
       (5) Meetings.--The Interagency Committee shall meet--
       (A) at the call of the Secretary; or
       (B) not less frequently than once every 3 months.
       (e) Advisory Council for the Interagency Committee.--
       (1) Establishment.--There is established an Advisory 
     Council for the Interagency Committee (in this section 
     referred to as the ``Advisory Council'').
       (2) Membership.--
       (A) In general.--The Advisory Council shall be composed of 
     not more than 13 members, selected by the Interagency 
     Committee.
       (B) Duties.--The Advisory Council shall--
       (i) develop a plan to disseminate information on first 
     response best practices;
       (ii) identify and educate the Secretary on the latest 
     technological advances in the field of first response;
       (iii) identify probable emerging threats to first 
     responders;
       (iv) identify needed improvements to first response 
     techniques and training;
       (v) identify efficient means of communication and 
     coordination between first responders and Federal, State, and 
     local officials;
       (vi) identify areas in which the Department can assist 
     first responders; and
       (vii) evaluate the adequacy and timeliness of resources 
     being made available to local first responders.
       (C) Representation.--The Interagency Committee shall ensure 
     that the membership of the Advisory Council represents--
       (i) the law enforcement community;
       (ii) fire and rescue organizations;
       (iii) medical and emergency relief services; and
       (iv) both urban and rural communities.
       (3) Chairperson.--The Advisory Council shall select 
     annually a chairperson from among its members.
       (4) Compensation of members.--The members of the Advisory 
     Council shall serve without compensation, but shall be 
     eligible for reimbursement of necessary expenses connected 
     with their service to the Advisory Council.
       (5) Meetings.--The Advisory Council shall meet with the 
     Interagency Committee not less frequently than once every 3 
     months.
                                 ______
                                 
  SA 4701. Mr. McCAIN submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 131, between lines 2 and 3, insert the following:
       (d) Reduction of Authorizations.--Each amount authorized by 
     subsection (a)(1) shall be reduced by any appropriated amount 
     used by Amtrak for the activity for which the amount is 
     authorized.
                                 ______
                                 
  SA 4702. Mr. McCCAIN submitted an amendment intended to be proposed 
to amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, 
to establish the Department of Homeland Security, and for other 
purposes; which was ordered to lie on the table; as follows:

       On page 130, line 20, strike ``locomotives.'' and insert 
     ``locomotives, upon a determination by the Secretary of 
     Transportation that such emergency repairs are necessary for 
     safety and security purposes.''
                                 ______
                                 
  SA 4703. Mr. McCAIN submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 130, strike lines 18 through 20.
                                 ______
                                 
  SA 4704. Mr. McCAIN submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 130, beginning with line 3, strike through line 2 
     on page 131.
                                 ______
                                 
  SA 4705. Mr. McCAIN submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. LIEBERMAN to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC.  . RAILROAD SAFETY TO INCLUDE RAILROAD SECURITY.

       (a) Investigation and Surveillance Activities.--Section 
     20105 of title 49, United States Code, is amended--
       (1) by striking ``Secretary of Transportation'' in the 
     first sentence of subsection (a) an inserting ``Secretary 
     concerned'';
       (2) by striking ``Secretary'' each place it appears (except 
     the first sentence of subsection (a)) and inserting 
     ``Secretary concerned'';
       (3) by striking ``Secretary's duties under chapters 203-213 
     of this title'' in subsection (d) and inserting ``duties 
     under chapters 203-213 of this title (in the case of the 
     Secretary of Transportation ) and duties under section 114 of 
     this title (in the case of the Secretary of Homeland 
     Security)'';
       (4) by striking ``chapter.'' in subsection (f) and 
     inserting ``chapter (in the case of the Secretary of 
     Transportation) and duties under section 114 of this title 
     (in the case of the Secretary of Homeland Security)''; and
       (5) by adding at the end the following new subsection:
       ``(g) Definitions.--In this section--
       ``(1) the term `safety' includes security; and
       ``(2) the term `Secretary concerned' means--
       ``(A) the Secretary of Transportation, with respect to 
     railroad safety matters concerning such Secretary under laws 
     administered by that Secretary;' and
       ``(B) the Secretary of Homeland Security, with respect to 
     railroad safety matters concerning such Secretary under laws 
     administered by that Secretary.''.
       (b) Regulations and Orders.--Section 20103(a) of such title 
     is amended by inserting after ``1970,'' the following: ``When 
     prescribing a security regulation or issuing a security order 
     that affects the safety of railroad operations, the Secretary 
     of Homeland Security shall consult with the Secretary.''.
       (c) National Uniformity of Regulation.--Sction 20106 of 
     such title is amended--
       (1) by inserting ``and laws, regulations, and orders 
     related to railroad security'' after ``safety'' in the first 
     sentence;
       (2) by inserting ``or security'' after ``safety'' each 
     place it appears after the first sentence; and
       (3) by striking ``Transportation'' in the second sentence 
     and inserting ``Transportation (with respect to railroad 
     safety matters), or the Secretary of Homeland Security (with 
     respect to railroad security matters),''.

     SEC.  . HAZMAT SAFETY TO INCLUDE HAZMAT SECURITY.

       (a) General Regulatory Authority.--Section 5103 of title 
     49, United States Code, is amended--
       (1) by striking ``transportation'' the first place it 
     appears in subsection (b)(1) and inserting ``transportation, 
     including security,'';
       (2) by striking ``aspects'' in subsection (b)(1)(B) and 
     inserting ``aspects, including security,,''; and
       (3) by adding at the end the following:
       ``(c) Consultation with Secretary of Homeland Security.--
     When prescribing a security regulation or issuing a security 
     order that affects the safety of the transportation of 
     hazardous material, the Secretary of Homeland Security shall 
     consult with the Secretary.''.
       (b) Preemption.--Section 5125 of that title is ame4nded--
       (1) by striking ``chapter or a regulation prescribed under 
     this chapter'' in subsection (a)(1) and inserting ``chapter, 
     a regulation prescribed under this chapter, or a hazardous 
     materials transportation security regulation or directive 
     issue by the Secretary of Homeland Security'';
       (2) by striking `'chapter or a regulation prescribed under 
     this chapter.'' in subsection (a)(2) inserting ``chapter, a 
     regulation prescribed under this chapter, or a hazardous 
     materials transportation security regulation or directive 
     issued by the Secretary of Homeland Security.''; and
       (3) by striking ``chapter or a regulation prescribed under 
     this chapter,'' in subsection (b)(1) and inserting ``chapter, 
     a regulation prescribed under this chapter, or a hazardous 
     materials transportation security regulation or directive 
     issued by the Secretary of Homeland Security,''.
                                 ______
                                 
  SA 4706. Mr. McCAIN submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:
       On page 130, beginning with line 3, strike through line 2 
     on page 131, and insert the following:

[[Page S9139]]

     SEC. 168. RAIL SECURITY ENHANCEMENTS.

       (a) Emergency Amtrak Assistance.--
       (1) In General.--There are authorized to be appropriated to 
     the Secretary of Transportation for the use of Amtrak--
       (A) $375,000,000 for systemwide security upgrades, 
     including the reimbursement of extraordinary security-related 
     costs determined by the Secretary of Transportation to have 
     been incurred by Amtrak since September 11, 2001, and 
     including the hiring and training additional police officers, 
     canine-assisted security units, and surveillance equipment;
       (B) $778,000,000 to be used to complete New York tunnel 
     life safety projects and rehabilitate tunnels in Washington, 
     D.C., and Baltimore, Maryland; and
       (C) $55,000,000 for the emergency repair, and returning to 
     service, of Amtrak passenger cars and locomotives, upon a 
     determination by the Secretary of Transportation that such 
     emergency repairs are necessary for safety and security 
     purposes.
       (2) Availability of appropriated funds.--Amounts 
     appropriated pursuant to paragraph (1) shall remain available 
     until expended.
       (3) Plan required.--The Secretary of Transportation may not 
     make amounts available to Amtrak for obligation or 
     expenditure under paragraph (1)--
       (A) for implementing systemwide security upgrades, 
     including the emergency repair of passenger cars and 
     locomotives, until Amtrak has submitted to the Secretary of 
     Transportation, and the Secretary has approved, after 
     consultation with the Secretary of Homeland Security, a plan 
     for such upgrades;
       (B) for completing the tunnel life safety and 
     rehabilitation projects until Amtrak has submitted to the 
     Secretary of Transportation, and the Secretary has approved, 
     an engineering and financial plan for such projects; and
       (C) Amtrak has submitted to the Secretary of Transportation 
     such additional information as the Secretary may require in 
     order to ensure full accountability for the obligation or 
     expenditure of amounts made available to Amtrak for the 
     purpose for which the funds are provided.
       (4) Financial contribution from other tunnel users.--The 
     Secretary of Transportation shall, taking into account the 
     need for the timely completion of all life safety portions of 
     the tunnel projects described in paragraph (3)(B)--
       (A) consider the extent to which rail carriers other than 
     Amtrak use the tunnels;
       (B) consider the feasibility of seeking a financial 
     contribution from those other rail carriers toward the costs 
     of the projects; and
       (C) obtain financial contributions or commitments from such 
     other rail carriers if feasible.
       (5) 50-percent to be spent outside the northeast 
     corridor.--The Secretary of Transportation shall ensure that 
     up to 50 percent of the amounts appropriated pursuant to 
     paragraph (1)(A) is obligated or expended for projects 
     outside the Northeast Corridor.
       (6) Assessment by dot inspector general.--
       (A) Initial assessment.--Within 60 days after the date of 
     enactment of this Act, the Inspector General of the 
     Department of Transportation shall transmit to the Senate 
     Committee on Commerce, Science, and Transportation and the 
     House of Representatives Committee on Transportation and 
     Infrastructure a report--
       (i) identifying any overlap between capital projects for 
     which funds are provided under such funding documents, 
     procedures, or arrangements and capital projects included in 
     Amtrak's 20-year capital plan; and
       (ii) indicating any adjustments that need to be made in 
     that plan to exclude projects for which funds are 
     appropriated pursuant to paragraph (1).
       (B) Overlap review.--The Inspector General shall, as part 
     of the Department's annual assessment of Amtrak's financial 
     status and capital funding requirements review the obligation 
     and expenditure of funds under each such funding document, 
     procedure, or arrangement to ensure that the expenditure and 
     obligation of those funds are consistent with the purposes 
     for which they are proved under this Act.
       (7) Coordination with existing law.--Amounts made available 
     to Amtrak under this subsection shall not be considered to be 
     Federal assistance for purposes of part C of subtitle V of 
     title 49, United States Code.
       (8) Reduction of authorizations.--Each amount authorized by 
     paragraph (1) shall be reduced by any appropriated amount 
     used by Amtrak for the activity for which the amount is 
     authorized
                                 ______
                                 
  SA 4707. Mr. McCain submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:
       On page 130, beginning with line 8, strike through line 2 
     on page 131, and insert the following:

     SEC. 168. RAIL SECURITY ENHANCEMENTS.

       (a) Emergency Amtrak Assistance.--
       (1) In General.-- There are authorized to be appropriated 
     to the Secretary of Transportation for the use of Amtrak--
       (A) $375,000,000 for systemwide security upgrades, 
     including the reimbursement of extraordinary security-related 
     costs determined by the Secretary of Transportation to have 
     been incurred by Amtrak since September 11, 2001, and 
     including the hiring and training additional police officers, 
     canine-assisted security units, and surveillance equipment;
       (B) $778,000,000 to be used to complete New York tunnel 
     life safety projects and rehabilitate tunnels in Washington, 
     D.C., and Baltimore, Maryland; and
       (C) $55,000,000 for the emergency repair, and returning to 
     service, of Amtrak passenger cars and locomotives, upon a 
     determination by the Secretary of Transportation that such 
     emergency repairs are necessary for safety and security 
     purposes.
       (2) Availability of appropriated funds.--Amounts 
     appropriated pursuant to paragraph (1) shall remain available 
     until expended.
       (3) Plan required.--The Secretary of Transportation may not 
     make amounts available to Amtrak for obligation or 
     expenditure under paragraph (1)--
       (A) for implementing systemwide security upgrades, 
     including the emergency repair of passenger cars and 
     locomotives, until Amtrak has submitted to the Secretary of 
     Transportation, and the Secretary has approved, after 
     consultation with the Secretary of Homeland Security, a plan 
     for such upgrades;
       (B) for completing the tunnel life safety and 
     rehabilitation projects until Amtrak has submitted to the 
     Secretary of Transportation, and the Secretary has approved, 
     an engineering and financial plan for such projects; and
       (C) Amtrak has submitted to the Secretary of Transportation 
     such additional information as the Secretary may require in 
     order to ensure full accountability for the obligation or 
     expenditure of amounts made available to Amtrak for the 
     purpose for which the funds are provided.
       (4) Financial contribution from other tunnel users.--The 
     Secretary of Transportation shall, taking into account the 
     need for the timely completion of all life safety portions of 
     the tunnel projects described in paragraph (3)(B)--
       (A) consider the extent to which rail carriers other than 
     Amtrak use the tunnels;
       (B) consider the feasibility of seeking a financial 
     contribution from those other rail carriers toward the costs 
     of the projects; and
       (C) obtain financial contributions or commitments from such 
     other rail carriers if feasible.
       (5) Review of plan.--The Secretary of Transportation shall 
     complete the review of the plan required by paragraph (3) and 
     approve or disapprove the plan within 45 days after the date 
     on which the plan is submitted by Amtrak. If the Secretary 
     determines that the plan is incomplete or deficient, the 
     Secretary shall notify Amtrak of the incomplete items or 
     deficiencies and Amtrak shall, within 30 days after receiving 
     the Secretary's notification, submit a modified plan for the 
     Secretary's review. Within 15 days after receiving a modified 
     plan from Amtrak, the Secretary shall either approve the 
     modified plan, or, if the Secretary finds the plan is still 
     incomplete or deficient, the Secretary shall approve the 
     portions of the plan that are complete and sufficient, 
     release associated funds, and Amtrak shall execute an 
     agreement with the Secretary within 15 days thereafter on a 
     process for completing the remaining portions of the plan.
       (6) 50-percent to be spent outside the northeast 
     corridor.--The Secretary of Transportation shall ensure that 
     up to 50 percent of the amounts appropriated pursuant to 
     paragraph (1)(A) is obligated or expended for projects 
     outside the Northeast Corridor.
       (7) Assessments by dot inspector general.--
       (A) Initial assessment.--Within 60 days after the date of 
     enactment of this Act, the Inspector General of the 
     Department of Transportation shall transmit to the Senate 
     Committee on Commerce, Science, and Transportation and the 
     House of Representatives Committee on Transportation and 
     Infrastructure a report--
       (i) identifying any overlap between capital projects for 
     which funds are provided under such funding documents, 
     procedures, or arrangements and capital projects included in 
     Amtrak's 20-year capital plan; and
       (ii) indicating any adjustments that need to be made in 
     that plan to exclude projects for which funds are 
     appropriated pursuant to paragraph (1).
       (B) Overlap review.--The Inspector General shall, as part 
     of the Department's annual assessment of Amtrak's financial 
     status and capital funding requirements review the obligation 
     and expenditure of funds under each such funding document, 
     procedure, or arrangement to ensure that the expenditure and 
     obligation of those funds are consistent with the purposes 
     for which they are provided under this Act.
       (8) Coordination with existing law.--Amounts made available 
     to Amtrak under this subsection shall not be considered to be 
     Federal assistance for purposes of part C of subtitle V of 
     title 49, United States Code.
       (9) Reduction of authorizations.--Each amount authorized by 
     paragraph (1) shall be reduced by any appropriated amount 
     used by Amtrak for the activity for which the amount is 
     authorized.
  SA. 4708. Mr. SANTORUM submitted an amendment intended to be proposed

[[Page S9140]]

by him to the bill H.R. 5005, to establish the Department of Homeland 
Security, and for other purposes; which was ordered to lie on the 
table; as follows:

       At the appropriate place, insert the following:

                TITLE __--BAN ON PARTIAL-BIRTH ABORTIONS

     SEC. __01. SHORT TITLE.

       This title may be cited as the ``Partial-Birth Abortion Ban 
     Act of 2002''.

     SEC. __02. FINDINGS.

       Congress finds the following:
       (1) A moral, medical, and ethical consensus exists that the 
     practice of performing a partial-birth abortion--an abortion 
     in which a physician delivers an unborn child's body until 
     only the head remains inside the womb, punctures the back of 
     the child's skull with a sharp instrument, and sucks the 
     child's brains out before completing delivery of the dead 
     infant--is a gruesome and inhumane procedure that is never 
     medically necessary and should be prohibited.
       (2) Rather than being an abortion procedure that is 
     embraced by the medical community, particularly among 
     physicians who routinely perform other abortion procedures, 
     partial-birth abortion remains a disfavored procedure that is 
     not only unnecessary to preserve the health of the mother, 
     but in fact poses serious risks to the long-term health of 
     women, and, in some circumstances, their lives. As a result, 
     at least 27 States banned the procedure as did Congress, 
     which voted to ban the procedure during the 104th, 105th, and 
     106th Congresses.
       (3) In Stenberg v. Carhart, 530 U.S. 914, 932 (2000), the 
     Supreme Court opined ``that significant medical authority 
     supports the proposition that in some circumstances, [partial 
     birth abortion] would be the safest procedure'' for pregnant 
     women who wish to undergo an abortion. Thus, the Supreme 
     Court struck down Nebraska's ban on partial-birth abortion 
     procedures, concluding that it placed an ``undue burden'' on 
     women seeking abortions because it failed to include an 
     exception for partial-birth abortions deemed necessary to 
     preserve the ``health'' of the mother.
       (4) In reaching this conclusion, the Supreme Court deferred 
     to the Federal district court's findings that the partial-
     birth abortion procedure was statistically and medically as 
     safe as, and in many circumstances safer than, alternative 
     abortion procedures.
       (5) However, the great weight of evidence presented at the 
     Stenberg trial and other trials challenging partial-birth 
     abortion bans, as well as at extensive congressional 
     hearings, demonstrates that a partial-birth abortion is never 
     necessary to preserve the health of a woman, poses 
     significant health risks to a woman upon whom the procedure 
     is performed, and is outside of the standard of medical care.
       (6) Despite the dearth of evidence in the Stenberg trial 
     court record supporting the district court's findings, the 
     United States Court of Appeals for the Eighth Circuit and the 
     Supreme Court refused to set aside the district court's 
     findings because, under the applicable standard of appellate 
     review, they were not ``clearly erroneous''. A finding of 
     fact is clearly erroneous ``when although there is evidence 
     to support it, the reviewing court on the entire evidence is 
     left with the definite and firm conviction that a mistake has 
     been committed''. Anderson v. City of Bessemer City, North 
     Carolina, 470 U.S. 564, 573 (1985) (quoting United States v. 
     U.S. Gypsum Co. 333 U.S. 364, 395 (1948)). Under this 
     standard, ``if the district court's account of the evidence 
     is plausible in light of the record viewed in its entirety, 
     the court of appeals may not reverse it even though convinced 
     that had it been sitting as the trier of fact, it would have 
     weighed the evidence differently''. Id. at 573-74.
       (7) Thus, in Stenberg, the Supreme Court was required to 
     accept the very questionable findings issued by the district 
     court judge--the effect of which was to render null and void 
     the reasoned findings and policy determinations of Congress 
     and at least 27 State legislatures.
       (8) However, under well-settled Supreme Court 
     jurisprudence, Congress is not bound to accept the same 
     findings as the Supreme Court was bound to accept in Stenberg 
     under the ``clearly erroneous'' standard. Rather, Congress is 
     entitled to reach its own findings--findings that the Supreme 
     Court accords great deference--and to enact legislation based 
     upon these findings so long as it seeks to pursue a 
     legitimate interest that is within the scope of the 
     Constitution, and draws reasonable inferences based upon 
     substantial evidence.
       (9) In Katzenbach v. Morgan, 384 U.S. 641 (1966), the 
     Supreme Court articulated its highly deferential standard of 
     review of congressional findings when it addressed the 
     constitutionality of section 4(e) of the Voting Rights Act of 
     1965. Regarding Congress' finding that such section 4(e) 
     would assist the Puerto Rican community in ``gaining 
     nondiscriminatory treatment in public services'', the Supreme 
     Court stated that ``[i]t was for Congress, as the branch that 
     made this judgment, to assess and weigh the various 
     conflicting considerations . . . . It is not for us to review 
     the congressional resolution of these factors. It is enough 
     that we be able to perceive a basis upon which the Congress 
     might resolve the conflict as it did. There plainly was such 
     a basis to support section 4(e) in the application in 
     question in this case.''. Id. at 653.
       (10) Katzenbach's highly deferential standard of review of 
     Congress's findings was relied upon by the United States 
     District Court for the District of Columbia when it upheld 
     the ``bail-out'' provisions of the Voting Rights Act of 1965, 
     stating that ``congressional fact finding, to which we are 
     inclined to pay great deference, strengthens the inference 
     that, in those jurisdictions covered by the Act, state 
     actions discriminatory in effect are discriminatory in 
     purpose''. City of Rome, Georgia v. United States, 472 F. 
     Supp. 221 (D. D. C. 1979) aff'd City of Rome, Georgia v. 
     United States, 446 U.S. 156 (1980).
       (11) The Supreme Court continued its practice of deferring 
     to findings in reviewing the constitutionality of the must-
     carry provisions of the Cable Television Consumer Protection 
     and Competition Act of 1992. See Turner Broad. Sys., Inc. v. 
     Fed. Communications Comm'n, 512 U.S. 622 (1994) (referred to 
     in this section as ``Turner I'') and Turner Broad. Sys., Inc. 
     v. Fed. Communications Comm'n, 520 U.S. 180 (1997) (referred 
     to in this section as ``Turner II''). At issue in the Turner 
     cases was Congress' finding that, absent mandatory carriage 
     rules, the continued viability of local broadcast television 
     would be ``seriously jeopardized''. In Turner I, the Supreme 
     Court recognized that, as an institution, ``Congress is far 
     better equipped than the judiciary to `amass and evaluate the 
     vast amounts of data' bearing upon an issue as complex and 
     dynamic as that presented here''. 512 U.S. at 665-66. 
     Although the Supreme Court recognized that ``the deference 
     afforded to legislative findings does `not foreclose our 
     independent judgment of the facts bearing on an issue of 
     constitutional law' '', its ``obligation to exercise 
     independent judgment when First Amendment rights are 
     implicated is not a license to reweigh the evidence de novo, 
     or to replace Congress' factual predictions with our own. 
     Rather, it is to assure that, in formulating its judgments, 
     Congress has drawn reasonable inferences based on substantial 
     evidence.''. Id. at 666.
       (12) Three years later in Turner II, the Supreme Court 
     upheld the ``must-carry'' provisions based upon Congress' 
     findings, stating the Supreme Court's ``sole obligation is 
     `to assure that, in formulating its judgments, Congress has 
     drawn reasonable inferences based on substantial evidence.' 
     ''. 520 U.S. at 195. Citing its ruling in Turner I, the 
     Supreme Court reiterated that ``[w]e owe Congress' findings 
     deference in part because the institution `is far better 
     equipped than the judiciary to ``amass and evaluate the vast 
     amounts of data'' bearing upon' legislative questions'' Id. 
     at 195, and added that it ``owe[d] Congress' findings an 
     additional measure of deference out of respect for its 
     authority to exercise the legislative power''. Id. at 196.
       (13) There exists substantial record evidence upon which 
     Congress has reached its conclusion that a ban on partial-
     birth abortion is not required to contain a ``health'' 
     exception, because the facts indicate that a partial-birth 
     abortion is never necessary to preserve the health of a 
     woman, poses serious risks to a woman's health, and lies 
     outside the standard of medical care. Congress was informed 
     by extensive hearings held during the 104th and 105th 
     Congresses and passed a ban on partial-birth abortion in the 
     104th, 105th, and 106th Congresses. The findings of these 
     hearings reflect the very informed judgment of Congress that 
     a partial-birth abortion is never necessary to preserve the 
     health of a woman, poses serious risks to a woman's health, 
     lies outside the standard of medical care, and should, 
     therefore, be banned.
       (14) Pursuant to the testimony received during extensive 
     legislative hearings during the 104th and 105th Congresses, 
     Congress finds and declares that:
       (A)(i) Partial-birth abortion poses serious risks to the 
     health of a woman undergoing the procedure.
       (ii) Those risks include, among other things--
       (I) an increased risk of suffering from cervical 
     incompetence, a result of cervical dilation, making it 
     difficult or impossible for a woman successfully to carry a 
     subsequent pregnancy to term;
       (II) an increased risk of uterine rupture, abruption, 
     amniotic fluid embolus, and trauma to the uterus as a result 
     of converting a child to a footling breech position, a 
     procedure which, according to a leading obstetrics textbook, 
     ``there are very few, if any, indications for . . .  other 
     than for delivery of a second twin''; and
       (III) a risk of lacerations and secondary hemorrhaging due 
     to a doctor blindly forcing a sharp instrument into the base 
     of the unborn child's skull while the child is lodged in the 
     birth canal, an act that could result in severe bleeding, 
     brings with it the threat of shock, and could ultimately 
     result in maternal death.
       (B) There is no credible medical evidence that partial-
     birth abortions are safe or are safer than other abortion 
     procedures. No controlled studies of partial-birth abortion 
     have been conducted nor have any comparative studies been 
     conducted to demonstrate its safety and efficacy compared to 
     other abortion methods. Furthermore, there have been no 
     articles published in peer-reviewed journals that establish 
     that partial-birth abortion is superior in any way to 
     established abortion procedures. Indeed, there are

[[Page S9141]]

     currently no medical schools that provide instruction on 
     abortions that include instruction on partial-birth abortion 
     in their curriculum, unlike other more commonly used abortion 
     procedures.
       (C) A prominent medical association has concluded that 
     partial-birth abortion is ``not an accepted medical 
     practice'', that it has ``never been subject to even a 
     minimal amount of the normal medical practice development'', 
     that ``the relative advantages and disadvantages of the 
     procedure in specific circumstances remain unknown'', and 
     that ``there is no consensus among obstetricians about its 
     use''. The association has further noted that partial-birth 
     abortion is broadly disfavored by both medical experts and 
     the public, is ``ethically wrong'', and ``is never the only 
     appropriate procedure''.
       (D) Neither the plaintiff in Stenberg v. Carhart, nor the 
     experts who testified on his behalf, have identified a single 
     circumstance during which a partial-birth abortion was 
     necessary to preserve the health of a woman.
       (E) The physician credited with developing the partial-
     birth abortion procedure has testified that the physician has 
     never encountered a situation where a partial-birth abortion 
     was medically necessary to achieve the desired outcome and, 
     thus, that partial-birth abortion is never medically 
     necessary to preserve the health of a woman.
       (F) A ban on the partial-birth abortion procedure will 
     therefore advance the health interests of pregnant women 
     seeking to terminate a pregnancy.
       (G) In light of this overwhelming evidence, Congress and 
     the States have a compelling interest in prohibiting partial-
     birth abortions. In addition to promoting maternal health, 
     such a prohibition will draw a bright line that clearly 
     distinguishes abortion and infanticide, preserves the 
     integrity of the medical profession, and promotes respect for 
     human life.
       (H) Based upon Roe v. Wade, 410 U.S. 113 (1973) and Planned 
     Parenthood v. Casey, 505 U.S. 833 (1992), a governmental 
     interest in protecting the life of a child during the 
     delivery process arises by virtue of the fact that during a 
     partial-birth abortion, labor is induced and the birth 
     process has begun. This distinction was recognized in Roe 
     when the Supreme Court noted, without comment, that the Texas 
     parturition statute, which prohibited one from killing a 
     child ``in a state of being born and before actual birth'', 
     was not under attack. This interest becomes compelling as the 
     child emerges from the maternal body. A child that is 
     completely born is a full, legal person entitled to 
     constitutional protections afforded a ``person'' under the 
     Constitution. Partial-birth abortions involve the killing of 
     a child that is in the process, in fact mere inches away 
     from, becoming a ``person''. Thus, the government has a 
     heightened interest in protecting the life of the partially-
     born child.
       (I) This interest, too, has not gone unnoticed in the 
     medical community, where a prominent medical association has 
     recognized that partial-birth abortion is ``ethically 
     different from other destructive abortion techniques because 
     the fetus, normally twenty weeks or longer in gestation, is 
     killed outside of the womb''. According to this medical 
     association, the `` `partial birth' gives the fetus an 
     autonomy which separates it from the right of the woman to 
     choose treatments for her own body''.
       (J) Partial-birth abortion also causes confusion among the 
     medical, legal, and ethical duties of physicians to preserve 
     and promote life, as the physician acts directly against the 
     physical life of a child, whom the physician had just 
     delivered, all but the head, out of the womb, in order to end 
     that life. Partial-birth abortion thus appropriates the 
     terminology and techniques used by obstetricians in the 
     delivery of living children--obstetricians who preserve and 
     protect the life of the mother and the child--and instead 
     uses those techniques to end the life of the partially-born 
     child.
       (K) Thus, by aborting a child in a manner that purposefully 
     seeks to kill the child after a child has begun the process 
     of birth, partial-birth abortion undermines the public's 
     perception of the appropriate role of a physician during the 
     delivery process, and perverts a process during which life is 
     brought into the world, in order to destroy a partially-born 
     child.
       (L) The gruesome and inhumane nature of the partial-birth 
     abortion procedure and its disturbing similarity to the 
     killing of a newborn infant promotes a complete disregard for 
     infant human life that can only be countered by a prohibition 
     of the procedure.
       (M) The vast majority of babies killed during partial-birth 
     abortions are alive until the end of the procedure. It is a 
     medical fact, however, that unborn infants at this stage can 
     feel pain when subjected to painful stimuli and that their 
     perception of this pain is even more intense than that of 
     newborn infants and older children when subjected to the same 
     stimuli. Thus, during a partial-birth abortion procedure, a 
     child will fully experience the pain associated with piercing 
     the child's skull and sucking out the child's brain.
       (N) Implicitly approving such a brutal and inhumane 
     procedure by choosing not to prohibit it will further make 
     society indifferent to the humanity of not only newborns, but 
     all vulnerable and innocent human life, making it 
     increasingly difficult to protect such life. Thus, Congress 
     has a compelling interest in acting--indeed it must act--to 
     prohibit this inhumane procedure.
       (O) For these reasons, partial-birth abortion is never 
     medically indicated to preserve the health of the mother, is 
     in fact unrecognized as a valid abortion procedure by the 
     mainstream medical community, poses additional health risks 
     to the mother, blurs the line between abortion and 
     infanticide in the killing of a partially-born child just 
     inches from birth, causes confusion of the role of the 
     physician in childbirth, and should, therefore, be banned.

     SEC. __03. PROHIBITION ON PARTIAL-BIRTH ABORTIONS.

       (a) In General.--Title 18, United States Code, is amended 
     by inserting after chapter 73 the following:

                 ``CHAPTER 74--PARTIAL-BIRTH ABORTIONS

``Sec.
``1531. Partial-birth abortions prohibited.

     ``Sec. 1531. Partial-birth abortions prohibited

       ``(a) Any physician who, in or affecting interstate or 
     foreign commerce, knowingly performs a partial-birth abortion 
     and thereby kills a human fetus shall be fined under this 
     title or imprisoned not more than 2 years, or both. This 
     subsection does not apply to a partial-birth abortion that is 
     necessary to save the life of a mother whose life is 
     endangered by a physical disorder, physical illness, or 
     physical injury, including a life-endangering physical 
     condition caused by or arising from the pregnancy itself. 
     This subsection takes effect 1 day after the date of 
     enactment of the Partial-Birth Abortion Ban Act of 2002.
       ``(b) As used in this section--
       ``(1) the term `partial-birth abortion' means an abortion 
     in which--
       ``(A) the person performing the abortion deliberately and 
     intentionally vaginally delivers a living fetus until, in the 
     case of a head-first presentation, the entire fetal head is 
     outside the body of the mother, or, in the case of breech 
     presentation, any part of the fetal trunk past the navel is 
     outside the body of the mother for the purpose of performing 
     an overt act that the person knows will kill the partially 
     delivered living fetus; and
       ``(B) performs the overt act, other than completion of 
     delivery, that kills the partially delivered living fetus; 
     and
       ``(2) the term `physician' means a doctor of medicine or 
     osteopathy legally authorized to practice medicine and 
     surgery by the State in which the doctor performs such 
     activity, or any other individual legally authorized by the 
     State to perform abortions, except that any individual who is 
     not a physician or not otherwise legally authorized by the 
     State to perform abortions, but who nevertheless directly 
     performs a partial-birth abortion, shall be subject to the 
     provisions of this section.
       ``(c)(1) The father, if married to the mother at the time 
     she receives a partial-birth abortion procedure, and if the 
     mother has not attained the age of 18 years at the time of 
     the abortion, the maternal grandparents of the fetus, may in 
     a civil action obtain appropriate relief, unless the 
     pregnancy resulted from the plaintiff's criminal conduct or 
     the plaintiff consented to the abortion.
       ``(2) Such relief shall include--
       ``(A) money damages for all injuries, psychological and 
     physical, occasioned by the violation of this section; and
       ``(B) statutory damages equal to three times the cost of 
     the partial-birth abortion.
       ``(d)(1) A defendant accused of an offense under this 
     section may seek a hearing before the State Medical Board on 
     whether the physician's conduct was necessary to save the 
     life of the mother whose life was endangered by a physical 
     disorder, physical illness, or physical injury, including a 
     life-endangering physical condition caused by or arising from 
     the pregnancy itself.
       ``(2) The findings on that issue are admissible on that 
     issue at the trial of the defendant. Upon a motion of the 
     defendant, the court shall delay the beginning of the trial 
     for not more than 30 days to permit such a hearing to take 
     place.
       ``(e) A woman upon whom a partial-birth abortion is 
     performed may not be prosecuted under this section, for a 
     conspiracy to violate this section, or for an offense under 
     section 2, 3, or 4 of this title based on a violation of this 
     section.''.
       (b) Clerical Amendment.--The table of chapters for part I 
     of title 18, United States Code, is amended by inserting 
     after the item relating to chapter 73 the following new item:

``74. Partial-birth abortions...................................1531''.
  SA 4709. Mr. ENZI submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 137, between lines 8 and 9, insert the following:

     SEC. 172. REQUIREMENT TO BUY CERTAIN ARTICLES FROM AMERICAN 
                   SOURCES.

       (a) Requirement.--Except as provided in subsections (c) 
     through (g), funds appropriated or otherwise available to the 
     Department of Homeland Security may not be used for the 
     procurement of an item described in subsection (b) if the 
     item is not grown, reprocessed, reused, or produced in the 
     United States.
       (b) Covered Items.--An item referred to in subsection (a) 
     is any of the following:
       (1) An article or item of--

[[Page S9142]]

       (A) food;
       (B) clothing;
       (C) tents, tarpaulins, or covers;
       (D) cotton and other natural fiber products, woven silk or 
     woven silk blends, spun silk yarn for cartridge cloth, 
     synthetic fabric or coated synthetic fabric (including all 
     textile fibers and yarns that are for use in such fabrics), 
     canvas products, or wool (whether in the form of fiber or 
     yarn or contained in fabrics, materials, or manufactured 
     articles); or
       (E) any item of individual equipment manufactured from or 
     containing such fibers, yarns, fabrics, or materials.
       (2) Specialty metals, including stainless steel flatware.
       (3) Hand or measuring tools.
       (c) Availability Exception.--Subsection (a) does not apply 
     to the extent that the Secretary of Homeland Security 
     determines that satisfactory quality and sufficient quantity 
     of any such article or item described in subsection (b)(1) or 
     specialty metals (including stainless steel flatware) grown, 
     reprocessed, reused, or produced in the United States cannot 
     be procured as and when needed at United States market 
     prices.
       (d) Exception for Certain Procurements Outside the United 
     States.--Subsection (a) does not apply to the following:
       (1) Procurements outside the United States in support of 
     combat operations.
       (2) Procurements by vessels in foreign waters.
       (3) Emergency procurements or procurements of perishable 
     foods by an establishment located outside the United States 
     for the personnel attached to such establishment.
       (e) Exception for Specialty Metals and Chemical Warfare 
     Protective Clothing.--Subsection (a) does not preclude the 
     procurement of specialty metals or chemical warfare 
     protective clothing produced outside the United States if--
       (1) such procurement is necessary--
       (A) to comply with agreements with foreign governments 
     requiring the United States to purchase supplies from foreign 
     sources for the purposes of offsetting sales made by the 
     United States Government or United States firms under 
     approved programs serving defense requirements; or
       (B) in furtherance of agreements with foreign governments 
     in which both such governments agree to remove barriers to 
     purchases of supplies produced in the other country or 
     services performed by sources of the other country; and
       (2) any such agreement with a foreign government complies, 
     where applicable, with the requirements of section 36 of the 
     Arms Export Control Act (22 U.S.C. 2776) and with section 
     2457 of title 10, United States Code.
       (f) Exception for Certain Foods.--Subsection (a) does not 
     preclude the procurement of foods manufactured or processed 
     in the United States.
       (g) Exception for Small Purchases.--Subsection (a) does not 
     apply to purchases for amounts not greater than the 
     simplified acquisition threshold (as defined in section 4(11) 
     of the Office of Federal Procurement Policy Act (41 U.S.C. 
     403(11))).
       (h) Applicability to Contracts and Subcontracts for 
     Procurement of Commercial Items.--This section is applicable 
     to contracts and subcontracts for the procurement of 
     commercial items notwithstanding section 34 of the Office of 
     Federal Procurement Policy Act (41 U.S.C. 430).
       (i) Geographic Coverage.--In this section, the term 
     ``United States'' includes the possessions of the United 
     States.
  SA 4710. Mr. GREGG (for himself Mr. Hollings, Mr. Shelby, Mr. Harkin, 
Mr. Stevens, Mr. Inouye, Mr. Cochran, Mr. Helms, Mr. Johnson, Mr. 
Sessions, Mr. Bingaman, Mr. Grassley, Ms. Landrieu, Mrs. Feinstein, Mr. 
Allen, Mr. Domenici, Mrs. Hutchison, Mr. Kohl, and Mr. Burns) submitted 
an amendment intended to be proposed by him to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. DIRECTORATE OF EMERGENCY PREPAREDNESS AND RESPONSE.

       (a) Establishment.--
       (1) Directorate.--There is established within the 
     Department the Directorate of Emergency Preparedness and 
     Response.
       (2) Under secretary.--There shall be an Under Secretary for 
     Emergency Preparedness and Response, who shall be appointed 
     by the President, by and with the advice and consent of the 
     Senate.
       (b) Responsibilities.--The Directorate of Emergency 
     Preparedness and Response shall be responsible for the 
     following:
       (1) Carrying out all nonterrorism emergency preparedness 
     activities carried out by the Federal Emergency Management 
     Agency before the effective date of this division.
       (2) Carrying out all terrorism and other hazard response 
     activities carried out by the Federal Emergency Management 
     Agency before the effective date of this division.
       (3) Creating a National Crisis Action Center to act as the 
     focal point for--
       (A) monitoring emergencies;
       (B) notifying affected agencies and State and local 
     governments; and
       (C) coordinating Federal support for State and local 
     governments and the private sector in crises.
       (4) Managing and updating the Federal response plan to 
     ensure the appropriate integration of operational activities 
     of the Department of Defense, the National Guard, and other 
     agencies, to respond to acts of terrorism and other 
     disasters.
       (5) Coordinating activities among private sector entities, 
     including entities within the medical community, and animal 
     health and plant disease communities, with respect to 
     recovery, consequence management, and planning for continuity 
     of services.
       (6) Developing and managing a single response system for 
     national incidents in coordination with all appropriate 
     agencies.
       (7) Coordinating with other agencies necessary to carry out 
     the functions of the Office of Emergency Preparedness.
       (8) Collaborating with, and transferring funds to, the 
     Centers for Disease Control and Prevention or other agencies 
     for administration of the Strategic National Stockpile 
     transferred under subsection (c)(6).
       (9) Consulting with the Under Secretary for Science and 
     Technology, Secretary of Agriculture, and the Director of the 
     Centers for Disease Control and Prevention in establishing 
     and updating the list of potential threat agents or toxins 
     relating to the functions of the Select Agent Registration 
     Program transferred under subsection (c)(7).
       (10) Developing a plan to address the interface of medical 
     informatics and the medical response to terrorism that 
     address--
       (A) standards for interoperability;
       (B) real-time data collection;
       (C) ease of use for health care providers;
       (D) epidemiological surveillance of disease outbreaks in 
     human health and agriculture;
       (E) integration of telemedicine networks and standards;
       (F) patient confidentiality; and
       (G) other topics pertinent to the mission of the 
     Department.
       (11) Activate and coordinate the operations of the National 
     Disaster Medical System as defined under section 102 of the 
     Public Health Security and Bioterrorism Preparedness and 
     Response Act of 2002 (Public Law 107-188).
       (12) Performing such other duties as assigned by the 
     Secretary.
       (c) Transfer of Authorities, Functions, Personnel, and 
     Assets to the Department.--The authorities, functions, 
     personnel, and assets of the following entities are 
     transferred to the Department:
       (1) The Federal Emergency Management Agency, the 10 
     regional offices of which shall be maintained and 
     strengthened by the Department, which shall be maintained as 
     a distinct entity within the Department, except that those 
     elements of the Office of National Preparedness of the 
     Federal Emergency Management Agency that relate to terrorism 
     shall be transferred to the Office of Domestic Preparedness 
     established under this section.
       (2) The National Office of Domestic Preparedness of the 
     Federal Bureau of Investigation of the Department of Justice.
       (3) The Office of Domestic Preparedness of the Department 
     of Justice.
       (4) Those elements of the Office of National Preparedness 
     of the Federal Emergency Management Agency which relate to 
     terrorism, which shall be consolidated within the Department 
     in the Office for Domestic Preparedness established under 
     this section.
       (5) The Office of Emergency Preparedness within the Office 
     of the Assistant Secretary for Public Health Emergency 
     Preparedness of the Department of Health and Human Services, 
     including--
       (A) the Noble Training Center;
       (B) the Metropolitan Medical Response System;
       (C) the Department of Health and Human Services component 
     of the National Disaster Medical System;
       (D) the Disaster Medical Assistance Teams, the Veterinary 
     Medical Assistance Teams, and the Disaster Mortuary 
     Operational Response Teams;
       (E) the special events response; and
       (F) the citizen preparedness programs.
       (6) The Strategic National Stockpile of the Department of 
     Health and Human Services including all functions and assets 
     under sections 121 and 127 of the Public Health Security and 
     Bioterrorism Preparedness and Response Act of 2002 (Public 
     Law 107-188).
       (7) The functions of the Select Agent Registration Program 
     of the Department of Health and Human Services and the United 
     States Department of Agriculture, including all functions of 
     the Secretary of Health and Human Services and the Secretary 
     of Agriculture under sections 201 through 221 of the Public 
     Health Security and Bioterrorism Preparedness and Response 
     Act of 2002 (Public Law 107-188).
       (d) Office for Domestic Preparedness.--
       (1) Establishment.--There is established within the 
     Directorate of Emergency Preparedness and Response the Office 
     for Domestic Preparedness.
       (2) Director.--There shall be a Director of the Office for 
     Domestic Preparedness, who shall be appointed by the 
     President, by and with the advice and consent of the Senate. 
     The Director of the Office for Domestic Preparedness shall 
     report directly to the Under Secretary for Emergency 
     Preparedness and Response.
       (3) Responsibilities.--The Office for Domestic Preparedness 
     shall have the primary responsibility within the executive 
     branch of Government for the preparedness of the United 
     States for acts of terrorism, including--

[[Page S9143]]

       (A) coordinating preparedness efforts at the Federal level, 
     and working with all State, local, tribal, parish, and 
     private sector emergency response providers on all matters 
     pertaining to combating terrorism, including training, 
     exercises, and equipment support;
       (B) in keeping with intelligence estimates, working to 
     ensure adequate strategic and operational planning, 
     equipment, training, and exercise activities at all levels of 
     government;
       (C) coordinating or, as appropriate, consolidating 
     communications and systems of communications relating to 
     homeland security at all levels of government;
       (D) directing and supervising terrorism preparedness grant 
     programs of the Federal Government for all emergency response 
     providers;
       (E) incorporating the Strategy priorities into planning 
     guidance on an agency level for the preparedness efforts of 
     the Office for Domestic Preparedness;
       (F) providing agency-specific training for agents and 
     analysts within the Department, other agencies, and State and 
     local agencies and international entities;
       (G) as the lead executive branch agency for preparedness of 
     the United States for acts of terrorism, cooperating closely 
     with the Federal Emergency Management Agency, which shall 
     have the primary responsibility within the executive branch 
     to prepare for and mitigate the effects of nonterrorist-
     related disasters in the United States; and
       (H) assisting and supporting the Secretary, in coordination 
     with other Directorates and entities outside the Department, 
     in conducting appropriate risk analysis and risk management 
     activities consistent with the mission and functions of the 
     Directorate.
       (4) Fiscal years 2003 and 2004.--During fiscal year 2003 
     and fiscal year 2004, the Director of the Office for Domestic 
     Preparedness established under this section shall manage and 
     carry out those functions of the Office for Domestic 
     Preparedness of the Department of Justice (transferred under 
     this section) before September 11, 2001, under the same 
     terms, conditions, policies, and authorities, and with the 
     required level of personnel, assets, and budget before 
     September 11, 2001.
       (5) Report.--Not later than the submission of the fiscal 
     year 2005 budget request, the Secretary shall submit to 
     Congress a detailed report containing a comprehensive, 
     independent analysis, and recommendations addressing whether 
     there should be a single office within the Department 
     responsible for the domestic preparedness of the United 
     States for all hazards, including terrorism and natural 
     disasters. The analysis shall include an examination of the 
     advantages, disadvantages, costs, and benefits of creating a 
     single office for all hazards preparedness within the 
     Department.
       (e) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Under Secretary for Emergency 
     Preparedness and Response shall submit a report to Congress 
     on the status of a national medical informatics system and an 
     agricultural disease surveillance system, and the capacity of 
     such systems to meet the goals under subsection (b)(12) in 
     responding to a terrorist attack.
       (f) Preempted Provisions.--Notwithstanding any other 
     provision of this Act, including any effective date 
     provision, section 134 shall not take effect.
  SA 4711. Ms. COLLINS (for herself and Mr. Levin) submitted an 
amendment intended to be proposed to amendment SA 4471 proposed by Mr. 
Lieberman to the bill H.R. 5005, to establish the Department of 
Homeland Security, and for other purposes; which was ordered to lie on 
the table; as follows:

       On page 11, strike lines 9 through 13, and insert the 
     following:
     homeland threats;
       (D) minimize the damage, and assist in the recovery, from 
     terrorist attacks or other natural or man-made crises that 
     occur within the United States; and
       (E) to the extent practicable, ensure the speedy, orderly, 
     safe, and efficient flow of lawful traffic, travel, and 
     commerce.
  SA 4712. Ms. COLLINS (for herself and Mr. Levin) submitted an 
amendment intended to be proposed to amendment SA 4471 proposed by Mr. 
Lieberman to the bill H.R. 5005, to establish the Department of 
Homeland Security, and for other purposes; which was ordered to lie on 
the table; as follows:

       On page 25, between lines 11 and 12, insert the following:
       (e) Special Assistant to the Secretary.--
       (1) Responsibilities.--The Secretary shall appoint a 
     Special Assistant to the Secretary who shall be responsible 
     for--
       (A) creating and fostering strategic communications with 
     the private sector to enhance the primary mission of the 
     Department to protect the American homeland;
       (B) advising the Secretary on the impact of the 
     Department's policies, regulations, processes, and actions on 
     the private sector;
       (C) interfacing with other relevant Federal agencies with 
     homeland security missions to assess the impact of these 
     agencies' actions on the private sector;
       (D) creating and managing private sector advisory councils 
     composed of representatives of industries and associations 
     designated by the Secretary to advise the Secretary on 
     homeland security policies, regulations, processes, and 
     actions that affect the participating industries and 
     associations;
       (E) promoting existing public-private partnerships and 
     developing new public-private partnerships to provide for 
     collaboration and mutual support to address homeland security 
     challenges; and
       (F) assisting in the development and promotion of private 
     sector best practices to secure critical infrastructure.
       (2) Duplication of functions.--The Special Assistant to the 
     Secretary shall avoid duplication of functions performed by 
     the Directorate of Science of Technology in accordance with 
     section 135.
                                 ______
                                 
  SA 4713. Mr. JEFFORDS (for himself, Mr. Smith of New Hampshire, and 
Ms. Snowe) submitted an amendment intended to be proposed to amendment 
SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to establish 
the Department of Homeland Security, and for other purposes; which was 
ordered to lie on the table; as follows:

       At the end of title I, add the following:

           Subtitle G--First Responder Terrorism Preparedness

     SEC. 199A. SHORT TITLE.

       This subtitle may be cited as the ``First Responder 
     Terrorism Preparedness Act of 2002''.

     SEC. 199B. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) the Federal Government must enhance the ability of 
     first responders to respond to incidents of terrorism, 
     including incidents involving weapons of mass destruction; 
     and
       (2) as a result of the events of September 11, 2001, it is 
     necessary to clarify and consolidate the authority of the 
     Federal Emergency Management Agency to support first 
     responders.
       (b) Purposes.--The purposes of this subtitle are--
       (1) to establish within the Federal Emergency Management 
     Agency the Office of National Preparedness;
       (2) to establish a program to provide assistance to enhance 
     the ability of first responders to respond to incidents of 
     terrorism, including incidents involving weapons of mass 
     destruction; and
       (3) to address issues relating to urban search and rescue 
     task forces.

     SEC. 199C. DEFINITIONS.

       (a) Major Disaster.--Section 102(2) of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5122(2)) is amended by inserting ``incident of 
     terrorism,'' after ``drought),''.
       (b) Weapon of Mass Destruction.--Section 602(a) of the 
     Robert T. Stafford Disaster Relief and Emergency Assistance 
     Act (42 U.S.C. 5196(a)) is amended by adding at the end the 
     following:
       ``(11) Weapon of mass destruction.--The term `weapon of 
     mass destruction' has the meaning given the term in section 
     2302 of title 50, United States Code.''.

     SEC. 199D. ESTABLISHMENT OF OFFICE OF NATIONAL PREPAREDNESS.

       Subtitle A of title VI of the Robert T. Stafford Disaster 
     Relief and Emergency Assistance Act (42 U.S.C. 5196 et seq.) 
     is amended by adding at the end the following:

     ``SEC. 616. OFFICE OF NATIONAL PREPAREDNESS.

       ``(a) In General.--There is established in the Federal 
     Emergency Management Agency an office to be known as the 
     `Office of National Preparedness' (referred to in this 
     section as the `Office').
       ``(b) Appointment of Associate Director.--
       ``(1) In general.--The Office shall be headed by an 
     Associate Director, who shall be appointed by the President, 
     by and with the advice and consent of the Senate.
       ``(2) Compensation.--The Associate Director shall be 
     compensated at the annual rate of basic pay prescribed for 
     level IV of the Executive Schedule under section 5315 of 
     title 5, United States Code.
       ``(c) Duties.--The Office shall--
       ``(1) lead a coordinated and integrated overall effort to 
     build, exercise, and ensure viable terrorism preparedness and 
     response capability at all levels of government;
       ``(2) establish clearly defined standards and guidelines 
     for Federal, State, tribal, and local government terrorism 
     preparedness and response;
       ``(3) establish and coordinate an integrated capability for 
     Federal, State, tribal, and local governments and emergency 
     responders to plan for and address potential consequences of 
     terrorism;
       ``(4) coordinate provision of Federal terrorism 
     preparedness assistance to State, tribal, and local 
     governments;
       ``(5) establish standards for a national, interoperable 
     emergency communications and warning system;
       ``(6) establish standards for training of first responders 
     (as defined in section 630(a)), and for equipment to be used 
     by first responders, to respond to incidents of terrorism, 
     including incidents involving weapons of mass destruction; 
     and
       ``(7) carry out such other related activities as are 
     approved by the Director.
       ``(d) Designation of Regional Contacts.--The Associate 
     Director shall designate an officer or employee of the 
     Federal Emergency

[[Page S9144]]

     Management Agency in each of the 10 regions of the Agency to 
     serve as the Office contact for the States in that region.
       ``(e) Use of Existing Resources.--In carrying out this 
     section, the Associate Director shall--
       ``(1) to the maximum extent practicable, use existing 
     resources, including planning documents, equipment lists, and 
     program inventories; and
       ``(2) consult with and use--
       ``(A) existing Federal interagency boards and committees;
       ``(B) existing government agencies; and
       ``(C) nongovernmental organizations.''.

     SEC. 199E. PREPAREDNESS ASSISTANCE FOR FIRST RESPONDERS.

       (a) In General.--Subtitle B of title VI of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5197 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 630. PREPAREDNESS ASSISTANCE FOR FIRST RESPONDERS.

       ``(a) Definitions.--In this section:
       ``(1) First responder.--The term `first responder' means--
       ``(A) fire, emergency medical service, and law enforcement 
     personnel; and
       ``(B) such other personnel as are identified by the 
     Director.
       ``(2) Local entity.--The term `local entity' has the 
     meaning given the term by regulation promulgated by the 
     Director.
       ``(3) Program.--The term `program' means the program 
     established under subsection (b).
       ``(b) Program To Provide Assistance.--
       ``(1) In general.--The Director shall establish a program 
     to provide assistance to States to enhance the ability of 
     State and local first responders to respond to incidents of 
     terrorism, including incidents involving weapons of mass 
     destruction.
       ``(2) Federal share.--The Federal share of the costs 
     eligible to be paid using assistance provided under the 
     program shall be not less than 75 percent, as determined by 
     the Director.
       ``(3) Forms of assistance.--Assistance provided under 
     paragraph (1) may consist of--
       ``(A) grants; and
       ``(B) such other forms of assistance as the Director 
     determines to be appropriate.
       ``(c) Uses of Assistance.--Assistance provided under 
     subsection (b)--
       ``(1) shall be used--
       ``(A) to purchase, to the maximum extent practicable, 
     interoperable equipment that is necessary to respond to 
     incidents of terrorism, including incidents involving weapons 
     of mass destruction;
       ``(B) to train first responders, consistent with guidelines 
     and standards developed by the Director;
       ``(C) in consultation with the Director, to develop, 
     construct, or upgrade terrorism preparedness training 
     facilities;
       ``(D) to develop, construct, or upgrade emergency operating 
     centers;
       ``(E) to develop preparedness and response plans consistent 
     with Federal, State, and local strategies, as determined by 
     the Director;
       ``(F) to provide systems and equipment to meet 
     communication needs, such as emergency notification systems, 
     interoperable equipment, and secure communication equipment;
       ``(G) to conduct exercises; and
       ``(H) to carry out such other related activities as are 
     approved by the Director; and
       ``(2) shall not be used to provide compensation to first 
     responders (including payment for overtime).
       ``(d) Allocation of Funds.--For each fiscal year, in 
     providing assistance under subsection (b), the Director shall 
     make available--
       ``(1) to each of the District of Columbia, Puerto Rico, the 
     Virgin Islands, Guam, American Samoa, and the Commonwealth of 
     the Northern Mariana Islands, $3,000,000; and
       ``(2) to each State (other than a State specified in 
     paragraph (1))--
       ``(A) a base amount of $15,000,000; and
       ``(B) a percentage of the total remaining funds made 
     available for the fiscal year based on criteria established 
     by the Director, such as--
       ``(i) population;
       ``(ii) location of vital infrastructure, including--

       ``(I) military installations;
       ``(II) public buildings (as defined in section 13 of the 
     Public Buildings Act of 1959 (40 U.S.C. 612));
       ``(III) nuclear power plants;
       ``(IV) chemical plants; and
       ``(V) national landmarks; and

       ``(iii) proximity to international borders.
       ``(e) Provision of Funds to Local Governments and Local 
     Entities.--
       ``(1) In general.--For each fiscal year, not less than 75 
     percent of the assistance provided to each State under this 
     section shall be provided to local governments and local 
     entities within the State.
       ``(2) Allocation of funds.--Under paragraph (1), a State 
     shall allocate assistance to local governments and local 
     entities within the State in accordance with criteria 
     established by the Director, such as the criteria specified 
     in subsection (d)(2)(B).
       ``(3) Deadline for provision of funds.--Under paragraph 
     (1), a State shall provide all assistance to local government 
     and local entities not later than 45 days after the date on 
     which the State receives the assistance.
       ``(4) Coordination.--Each State shall coordinate with local 
     governments and local entities concerning the use of 
     assistance provided to local governments and local entities 
     under paragraph (1).
       ``(f) Administrative Expenses.--
       ``(1) Director.--For each fiscal year, the Director may use 
     to pay salaries and other administrative expenses incurred in 
     administering the program not more than the lesser of--
       ``(A) 5 percent of the funds made available to carry out 
     this section for the fiscal year; or
       ``(B)(i) for fiscal year 2003, $75,000,000; and
       ``(ii) for each of fiscal years 2004 through 2006, 
     $50,000,000.
       ``(2) Recipients of assistance.--For each fiscal year, not 
     more than 10 percent of the funds retained by a State after 
     application of subsection (e) may be used to pay salaries and 
     other administrative expenses incurred in administering the 
     program.
       ``(g) Maintenance of Expenditures.--The Director may 
     provide assistance to a State under this section only if the 
     State agrees to maintain, and to ensure that each local 
     government that receives funds from the State in accordance 
     with subsection (e) maintains, for the fiscal year for which 
     the assistance is provided, the aggregate expenditures by the 
     State or the local government, respectively, for the uses 
     described in subsection (c)(1) at a level that is at or above 
     the average annual level of those expenditures by the State 
     or local government, respectively, for the 2 fiscal years 
     preceding the fiscal year for which the assistance is 
     provided.
       ``(h) Reports.--
       ``(1) Annual report to the director.--As a condition of 
     receipt of assistance under this section for a fiscal year, a 
     State shall submit to the Director, not later than 60 days 
     after the end of the fiscal year, a report on the use of the 
     assistance in the fiscal year.
       ``(2) Exercise and report to congress.--As a condition of 
     receipt of assistance under this section, not later than 3 
     years after the date of enactment of this section, a State 
     shall--
       ``(A) conduct an exercise, or participate in a regional 
     exercise, approved by the Director, to measure the progress 
     of the State in enhancing the ability of State and local 
     first responders to respond to incidents of terrorism, 
     including incidents involving weapons of mass destruction; 
     and
       ``(B) submit a report on the results of the exercise to--
       ``(i) the Committee on Environment and Public Works and the 
     Committee on Appropriations of the Senate; and
       ``(ii) the Committee on Transportation and Infrastructure 
     and the Committee on Appropriations of the House of 
     Representatives.
       ``(i) Coordination.--
       ``(1) With federal agencies.--The Director shall, as 
     necessary, coordinate the provision of assistance under this 
     section with activities carried out by--
       ``(A) the Administrator of the United States Fire 
     Administration in connection with the implementation by the 
     Administrator of the assistance to firefighters grant program 
     established under section 33 of the Federal Fire Prevention 
     and Control Act of 1974 (15 U.S.C. 2229) (as added by section 
     1701(a) of the Floyd D. Spence National Defense Authorization 
     Act for Fiscal Year 2001 (114 Stat. 1654, 1654A-360));
       ``(B) the Attorney General, in connection with the 
     implementation of the Community Oriented Policing Services 
     (COPS) Program established under section 1701(a) of the 
     Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
     3796dd(a)); and
       ``(C) other appropriate Federal agencies.
       ``(2) With indian tribes.--In providing and using 
     assistance under this section, the Director and the States 
     shall, as appropriate, coordinate with--
       ``(A) Indian tribes (as defined in section 4 of the Indian 
     Self-Determination and Education Assistance Act (25 U.S.C. 
     450b)) and other tribal organizations; and
       ``(B) Native villages (as defined in section 3 of the 
     Alaska Native Claims Settlement Act (43 U.S.C. 1602)) and 
     other Alaska Native organizations.''.
       (b) Cost Sharing for Emergency Operating Centers.--Section 
     614 of the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act (42 U.S.C. 5196c) is amended--
       (1) by inserting ``(other than section 630)'' after ``carry 
     out this title''; and
       (2) by inserting ``(other than section 630)'' after ``under 
     this title''.

     SEC. 199F. PROTECTION OF HEALTH AND SAFETY OF FIRST 
                   RESPONDERS.

       Subtitle B of title VI of the Robert T. Stafford Disaster 
     Relief and Emergency Assistance Act (42 U.S.C. 5197 et seq.) 
     (as amended by section 199E(a)) is amended by adding at the 
     end the following:

     ``SEC. 631. PROTECTION OF HEALTH AND SAFETY OF FIRST 
                   RESPONDERS.

       ``(a) Definitions.--In this section:
       ``(1) First responder.--The term `first responder' has the 
     meaning given the term in section 630(a).
       ``(2) Harmful substance.--The term `harmful substance' 
     means a substance that the President determines may be 
     harmful to human health.
       ``(3) Program.--The term `program' means a program 
     described in subsection (b)(1).
       ``(b) Program.--
       ``(1) In general.--If the President determines that 1 or 
     more harmful substances are being, or have been, released in 
     an area that the President has declared to be a major 
     disaster area under this Act, the President shall

[[Page S9145]]

     carry out a program with respect to the area for the 
     protection, assessment, monitoring, and study of the health 
     and safety of first responders.
       ``(2) Activities.--A program shall include--
       ``(A) collection and analysis of environmental and exposure 
     data;
       ``(B) development and dissemination of educational 
     materials;
       ``(C) provision of information on releases of a harmful 
     substance;
       ``(D) identification of, performance of baseline health 
     assessments on, taking biological samples from, and 
     establishment of an exposure registry of first responders 
     exposed to a harmful substance;
       ``(E) study of the long-term health impacts of any 
     exposures of first responders to a harmful substance through 
     epidemiological studies; and
       ``(F) provision of assistance to participants in registries 
     and studies under subparagraphs (D) and (E) in determining 
     eligibility for health coverage and identifying appropriate 
     health services.
       ``(3) Participation in registries and studies.--
       ``(A) In general.--Participation in any registry or study 
     under subparagraph (D) or (E) of paragraph (2) shall be 
     voluntary.
       ``(B) Protection of privacy.--The President shall take 
     appropriate measures to protect the privacy of any 
     participant in a registry or study described in subparagraph 
     (A).
       ``(4) Cooperative agreements.--The President may carry out 
     a program through a cooperative agreement with a medical or 
     academic institution, or a consortium of such institutions, 
     that is--
       ``(A) located in close proximity to the major disaster area 
     with respect to which the program is carried out; and
       ``(B) experienced in the area of environmental or 
     occupational health and safety, including experience in--
       ``(i) conducting long-term epidemiological studies;
       ``(ii) conducting long-term mental health studies; and
       ``(iii) establishing and maintaining environmental exposure 
     or disease registries.
       ``(c) Reports and Responses to Studies.--
       ``(1) Reports.--Not later than 1 year after the date of 
     completion of a study under subsection (b)(2)(E), the 
     President, or the medical or academic institution or 
     consortium of such institutions that entered into the 
     cooperative agreement under subsection (b)(4), shall submit 
     to the Director, the Secretary of Health and Human Services, 
     the Secretary of Labor, and the Administrator of the 
     Environmental Protection Agency a report on the study.
       ``(2) Changes in procedures.--To protect the health and 
     safety of first responders, the President shall make such 
     changes in procedures as the President determines to be 
     necessary based on the findings of a report submitted under 
     paragraph (1).''.

     SEC. 199G. URBAN SEARCH AND RESCUE TASK FORCES.

       Subtitle B of title VI of the Robert T. Stafford Disaster 
     Relief and Emergency Assistance Act (42 U.S.C. 5197 et seq.) 
     (as amended by section 199F) is amended by adding at the end 
     the following:

     ``SEC. 632. URBAN SEARCH AND RESCUE TASK FORCES.

       ``(a) Definitions.--In this section:
       ``(1) Urban search and rescue equipment.--The term `urban 
     search and rescue equipment' means any equipment that the 
     Director determines to be necessary to respond to a major 
     disaster or emergency declared by the President under this 
     Act.
       ``(2) Urban search and rescue task force.--The term `urban 
     search and rescue task force' means any of the 28 urban 
     search and rescue task forces designated by the Director as 
     of the date of enactment of this section.
       ``(b) Assistance.--
       ``(1) Mandatory grants for costs of operations.--For each 
     fiscal year, of the amounts made available to carry out this 
     section, the Director shall provide to each urban search and 
     rescue task force a grant of not less than $1,500,000 to pay 
     the costs of operations of the urban search and rescue task 
     force (including costs of basic urban search and rescue 
     equipment).
       ``(2) Discretionary grants.--The Director may provide to 
     any urban search and rescue task force a grant, in such 
     amount as the Director determines to be appropriate, to pay 
     the costs of--
       ``(A) operations in excess of the funds provided under 
     paragraph (1);
       ``(B) urban search and rescue equipment;
       ``(C) equipment necessary for an urban search and rescue 
     task force to operate in an environment contaminated or 
     otherwise affected by a weapon of mass destruction;
       ``(D) training, including training for operating in an 
     environment described in subparagraph (C);
       ``(E) transportation;
       ``(F) expansion of the urban search and rescue task force; 
     and
       ``(G) incident support teams, including costs of conducting 
     appropriate evaluations of the readiness of the urban search 
     and rescue task force.
       ``(3) Priority for funding.--The Director shall distribute 
     funding under this subsection so as to ensure that each urban 
     search and rescue task force has the capacity to deploy 
     simultaneously at least 2 teams with all necessary equipment, 
     training, and transportation.
       ``(c) Grant Requirements.--The Director shall establish 
     such requirements as are necessary to provide grants under 
     this section.
       ``(d) Establishment of Additional Urban Search and Rescue 
     Task Forces.--
       ``(1) In general.--Subject to paragraph (2), the Director 
     may establish urban search and rescue task forces in addition 
     to the 28 urban search and rescue task forces in existence on 
     the date of enactment of this section.
       ``(2) Requirement of full funding of existing urban search 
     and rescue task forces.--Except in the case of an urban 
     search and rescue task force designated to replace any urban 
     search and rescue task force that withdraws or is otherwise 
     no longer considered to be an urban search and rescue task 
     force designated by the Director, no additional urban search 
     and rescue task forces may be designated or funded until the 
     28 urban search and rescue task forces are able to deploy 
     simultaneously at least 2 teams with all necessary equipment, 
     training, and transportation.''.

     SEC. 199H. AUTHORIZATION OF APPROPRIATIONS.

       Section 626 of the Robert T. Stafford Disaster Relief and 
     Emergency Assistance Act (42 U.S.C. 5197e) is amended by 
     striking subsection (a) and inserting the following:
       ``(a) Authorization of Appropriations.--
       ``(1) In general.--There are authorized to be appropriated 
     such sums as are necessary to carry out this title (other 
     than sections 630 and 632).
       ``(2) Preparedness assistance for first responders.--There 
     are authorized to be appropriated to carry out section 630--
       ``(A) $3,340,000,000 for fiscal year 2003; and
       ``(B) $3,458,000,000 for each of fiscal years 2004 through 
     2006.
       ``(3) Urban search and rescue task forces.--
       ``(A) In general.--There are authorized to be appropriated 
     to carry out section 632--
       ``(i) $160,000,000 for fiscal year 2003; and
       ``(ii) $42,000,000 for each of fiscal years 2004 through 
     2006.
       ``(B) Availability of amounts.--Amounts made available 
     under subparagraph (A) shall remain available until 
     expended.''.
                                 ______
                                 
  SA 4714. Mr. JEFFORDS (for himself and Mrs. Boxer) submitted an 
amendment intended to be proposed to amendment SA 4471 proposed by Mr. 
Lieberman to the bill H.R. 5005, to establish the Department of 
Homeland Security, and for other purposes; which was ordered to lie on 
the table; as follows:

       On page 11, line 8, strike ``terrorism, natural 
     disasters,'' and insert ``terrorism''.
       On page 11, strike lines 6 through 13 and insert the 
     following:

     homeland threats within the United States; and
       (C) reduce the vulnerability of the United States to 
     terrorism and other homeland threats.
       On page 12, line 23, strike ``emergency preparedness and 
     response,''.
       On page 13, strike lines 3 through 5 and insert the 
     following:

     transportation security and critical infrastructure 
     protection.
       On page 15, line 14, insert ``and the Director of the 
     Federal Emergency Management Agency'' after ``Defense''.
       On page 16, strike lines 13 through 16.
       On page 16, line 17, strike ``(15)'' and insert ``(14)''.
       On page 16, line 20, strike ``(16)'' and insert ``(15)''.
       On page 16, line 24, strike ``(17)'' and insert ``(16)''.
       On page 17, line 4, strike ``(18)'' and insert ``(17)''.
       On page 17, line 8, strike ``(19)'' and insert ``(18)''.
       Beginning on page 68, strike line 14 and all that follows 
     through page 75, line 3.
       On page 75, line 3, strike ``135'' and insert 134''.
       On page 103, line 13, strike ``136'' and insert 135''.
       On page 103, line 17, strike ``137'' and insert 136''.
       On page 109, line 10, strike ``of the Department''.
       On page 112, line 5, strike ``138'' and insert 137''.
       On page 112, line 10, strike ``139'' and insert 138''.
       On page 112, between lines 4 and 5, insert the following:
       (f) Coordination With Federal Emergency Management 
     Agency.--
       (1) In general.--In carrying out all responsibilities of 
     the Secretary under this section, the Secretary shall 
     coordinate with the Director of the Federal Emergency 
     Management Agency.
       (2) Conforming amendment.--Section 102(2) of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5122(2)) is amended by inserting ``incident of 
     terrorism,'' after ``drought),''.
       On page 114, line 6, strike ``140'' and insert 139''.
       On page 114, strike lines 13 and 14.
       On page 115, line 3, strike ``in the Department'' and 
     insert ``within the Federal Emergency Management Agency''.
       On page 116, line 21, strike ``Department'' and insert 
     ``Federal Emergency Management Agency''.
       Beginning on page 128, strike line 22 and all that follows 
     through page 129, line 5, and insert the following:
       (a) In General.--Full disclosure among relevant agencies 
     shall be made in accordance with this section.

[[Page S9146]]

       (b) Public Health Emergency.--During the
       On page 129, strike lines 15 and 16 and insert the 
     following:
       (c) Potential Public Health Emergency.--In cases involving, 
     or potentially involving,
       On page 186, line 25, and page 187, line 1, strike 
     ``emergency preparation and response,''.
       On page 187, insert ``emergency preparedness and 
     response,'' after ``assets,''.
       Beginning on page 161, strike line 19 and all that follows 
     through page 162, line 2, and insert the following:
       (b) Biennial Report.--Not later than 2 years after the date 
     of enactment of this Act, and biennially thereafter, the 
     Secretary shall submit to Congress a report assessing the 
     resources and requirements of executive agencies relating to 
     border security.
                                 ______
                                 
  SA 4715. Mr. JEFFORDS submitted an amendment intended to be proposed 
to amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, 
to establish the Department of Homeland Security, and for other 
purposes; which was ordered to lie on the table; as follows:

       On page 68, strike lines 14 through 23 and insert the 
     following:

     SEC. 134. FEDERAL EMERGENCY MANAGEMENT AGENCY.

       (a) Homeland Security Duties.--
       (1) In general.--The Federal Emergency Management Agency 
     shall be responsible for the emergency preparedness and 
     response functions of the Department.
       (2) Function.--Except as provided in paragraph (3) and 
     subsections (b) through (e), nothing in this Act affects the 
     administration or administrative jurisdiction of the Federal 
     Emergency Management Agency as in existence on the day before 
     the date of enactment of this Act.
       (3) Director.--In carrying out responsibilities of the 
     Federal Emergency Management Agency under all applicable law, 
     the Director of the Federal Emergency Management Agency shall 
     report--
       (A) to the President directly, with respect to all matters 
     relating to a major disaster declaration under the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5121 et seq.); and
       (B) to the Secretary, with respect to all other matters.
       On page 69, strike lines 1 through 7 and insert the 
     following:
       (b) Specific Responsibilities.--The Director of the Federal 
     Emergency Management Agency shall be responsible for the 
     following:
       (1) Carrying out all emergency preparedness and response 
     activities of the Department.
       On page 69, line 23, strike ``Creating a National Crisis 
     Action Center to act'' and inserting ``Acting''.
       On page 72, line 4, strike ``other''.
       On page 72, line 14, strike ``Department'' and insert 
     ``Federal Emergency Management Agency''.
       On page 72, strike lines 15 through 19.
       On page 72, line 20, strike ``(2)'' and insert ``(1)''.
       On page 72, line 23, strike ``(3)'' and insert ``(2)''.
       On page 73, line 1, strike ``(4)'' and insert ``(3)''.
       On page 73, line 17, strike ``(5)'' and insert ``(4)''.
       On page 73, line 23, strike ``(6)'' and insert ``(5)''.
       On page 74, strike lines 7 through 22 and insert the 
     following:
       (d) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Director of the Federal Emergency 
     Management Agency shall submit a report.
       On page 75, between lines 2 and 3, insert the following:
       (f) Conforming Amendment.--Section 102(2) of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5122(2)) is amended by inserting ``incident of 
     terrorism,'' after ``drought),''.
       On page 114, strike lines 13 and 14.
       On page 128, line 24, strike ``134(b)(7)'' and insert 
     ``134(b)''.
                                 ______
                                 
  SA 4716. Mr. HOLLINGS submitted an amendment intended to be proposed 
by him to the bill H.R. 5005, to establish the Department of Homeland 
Security, and for other purposes; which was ordered to lie on the 
table; as follows:

  [Data not available at time of printing.]
                                 ______
                                 
  SA 4717. Mr. LIEBERMAN submitted an amendment intended to be proposed 
to amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, 
to establish the Department of Homeland Security, and for other 
purposes; which was ordered to lie on the table; as follows:

       On page 156, line 8, strike all through page 158, line 18, 
     and insert the following:

     SEC. 189. USE OF APPROPRIATED FUNDS.

       (a) Applicability of This Section.--Notwithstanding any 
     other provision of this Act or any other law, this section 
     shall apply to the use of any funds, disposal of property, 
     and acceptance, use, and disposal of gifts, or donations of 
     services or property, of, for, or by the Department, 
     including any agencies, entities, or other organizations 
     transferred to the Department under this Act.
       (b) Authorization of Appropriations To Create Department.--
     There is authorized to be appropriated $160,000,000 for the 
     Office of Homeland Security in the Executive Office of the 
     President to be transferred without delay to the Department 
     upon its creation by enactment of this Act, notwithstanding 
     subsection (c)(1)(C) such funds shall be available only for 
     the payment of necessary salaries and expenses associated 
     with the initiation of operations of the Department.
       (c) Use of Transferred Funds.--
       (1) In general.--Except as may be provided in this 
     subsection or in an appropriations Act in accordance with 
     subsection (e), balances of appropriations and any other 
     funds or assets transferred under this Act--
       (A) shall be available only for the purposes for which they 
     were originally available;
       (B) shall remain subject to the same conditions and 
     limitations provided by the law originally appropriating or 
     otherwise making available the amount, including limitations 
     and notification requirements related to the reprogramming of 
     appropriated funds; and
       (C) shall not be used to fund any new position established 
     under this Act.
       (2) Transfer of funds.--
       (A) In general.--After the creation of the Department and 
     the swearing in of its Secretary, and upon determination by 
     the Secretary that such action is necessary in the national 
     interest, the Secretary is authorized to transfer, with the 
     approval of the Office of Management and Budget, not to 
     exceed $140,000,000 of unobligated funds from organizations 
     and entities transferred to the new Department by this Act.
       (B) Limitation.--Notwithstanding paragraph (1)(C), funds 
     authorized to be transferred by subparagraph (A) shall be 
     available only for payment of necessary costs, including 
     funding of new positions, for the initiation of operations of 
     the Department and may not be transferred unless the 
     Committees on Appropriations are notified at least 15 days in 
     advance of any proposed transfer and have approved such 
     transfer in advance.
       (C) Notification.--The notification required in 
     subparagraph (B) shall include a detailed justification of 
     the purposes for which the funds are to be used and a 
     detailed statement of the impact on the program or 
     organization that is the source of the funds, and shall be 
     submitted in accordance with reprogramming procedures to be 
     established by the Committees on Appropriations.
       (D) Use for other items.--The authority to transfer funds 
     established in this section may not be used unless for higher 
     priority items, based on demonstrated homeland security 
     requirements, than those for which funds originally were 
     appropriated and in no case where the item for which funds 
     are requested has been denied by Congress.
       (d) Notification Regarding Transfers.--The President shall 
     notify Congress not less than 15 days before any transfer of 
     appropriations balances, other funds, or assets under this 
     Act.
       (e) Additional Uses of Funds During Transition.--Subject to 
     subsections (c) and (d), amounts transferred to, or otherwise 
     made available to, the Department may be used during the 
     transition period, as defined in section 801(2), for purposes 
     in addition to those for which such amounts were originally 
     available (including by transfer among accounts of the 
     Department), but only to the extent such transfer or use is 
     specifically permitted in advance in an appropriations Act 
     and only under the conditions and for the purposes specified 
     in such appropriations Act.
       (f) Disposal of Property.--
       (1) Strict compliance.--If specifically authorized to 
     dispose of real property in this or any other Act, the 
     Secretary shall exercise this authority in strict compliance 
     with section 204 of the Federal Property and Administrative 
     Services Act of 1949 (40 U.S.C. 485).
       (2) Deposit of proceeds.--The Secretary shall deposit the 
     proceeds of any exercise of property disposal authority into 
     the miscellaneous receipts of the Treasury in accordance with 
     section 3302(b) of title 31, United States Code.
       (g) Gifts.--Gifts or donations of services or property of 
     or for the Department may not be accepted, used, or disposed 
     of unless specifically permitted in advance in an 
     appropriations Act and only under the conditions and for the 
     purposes specified in such appropriations Act.
       (h) Budget Request.--Under section 1105 of title 31, United 
     States Code, the President shall submit to Congress a 
     detailed budget request for the Department for fiscal year 
     2004, and for each subsequent fiscal year.
                                 ______
                                 
  SA 4718. Mr. SPECTER submitted an amendment intended to be proposed 
to amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, 
to establish the Department of Homeland Security, and for other 
purposes; which was ordered to lie on the table; as follows:

       On page 59, between lines 20 and 21, insert the following:
       (14) On behalf of the Secretary, subject to disapproval by 
     the President, directing the agencies described under 
     subsection (a)(1)(B) to provide intelligence information, 
     analyses of intelligence information, and such other 
     intelligence-related information as the Under Secretary for 
     Intelligence determines necessary.

[[Page S9147]]

                                 ______
                                 
  SA 4719. Mr. SANTORUM submitted an amendment intended to be proposed 
by him to the bill H.R. 5005, to establish the Department of Homeland 
Security, and for other purposes; which was orderd to lie on the table; 
as follows:

       At the end add the following:

                            DIVISION D--CARE

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This division may be cited as the ``CARE 
     Act of 2002''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this division an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this 
     division is as follows:

Sec. 1. Short title; etc.

                 TITLE I--CHARITABLE GIVING INCENTIVES

Sec. 101. Deduction for portion of charitable contributions to be 
              allowed to individuals who do not itemize deductions.
Sec. 102. Tax-free distributions from individual retirement accounts 
              for charitable purposes.
Sec. 103. Charitable deduction for contributions of food inventories.
Sec. 104. Charitable deduction for contributions of book inventories.
Sec. 105. Expansion of charitable contribution allowed for scientific 
              property used for research and for computer technology 
              and equipment used for educational purposes.
Sec. 106. Modifications to encourage contributions of capital gain real 
              property made for conservation purposes.
Sec. 107. Exclusion of 25 percent of gain on sales or exchanges of land 
              or water interests to eligible entities for conservation 
              purposes.
Sec. 108. Tax exclusion for cost-sharing payments under Partners for 
              Fish and Wildlife Program.
Sec. 109. Adjustment to basis of S corporation stock for certain 
              charitable contributions.
Sec. 110. Enhanced deduction for charitable contribution of literary, 
              musical, artistic, and scholarly compositions.
Sec. 111. Mileage reimbursements to charitable volunteers excluded from 
              gross income.

      TITLE II--DISCLOSURE OF INFORMATION RELATING TO TAX-EXEMPT 
                             ORGANIZATIONS

Sec. 201. Disclosure of written determinations.
Sec. 202. Disclosure of Internet web site and name under which 
              organization does business.
Sec. 203. Modification to reporting capital transactions.
Sec. 204. Disclosure that Form 990 is publicly available.
Sec. 205. Disclosure to State officials of proposed actions related to 
              section 501(c) organizations.

     TITLE III--OTHER CHARITABLE AND EXEMPT ORGANIZATION PROVISIONS

Sec. 301. Modification of excise tax on unrelated business taxable 
              income of charitable remainder trusts.
Sec. 302. Modifications to section 512(b)(13).
Sec. 303. Simplification of lobbying expenditure limitation.
Sec. 304. Expedited review process for certain tax-exemption 
              applications.
Sec. 305. Clarification of definition of church tax inquiry.
Sec. 306. Expansion of declaratory judgment remedy to tax-exempt 
              organizations.
Sec. 307. Definition of convention or association of churches.
Sec. 308. Charitable contribution deduction for certain expenses 
              incurred in support of Native Alaskan subsistence 
              whaling.
Sec. 309. Payments by charitable organizations to victims of war on 
              terrorism.
Sec. 310. Treatment of bonds issued to acquire standing timber on land 
              subject to conservation easement.
Sec. 311. Exemption from income tax for State-created organizations 
              providing property and casualty insurance for property 
              for which such coverage is otherwise unavailable.
Sec. 312. Modification of special arbitrage rule for certain funds.
Sec. 313. Matching grants to low-income taxpayer clinics for return 
              preparation.
Sec. 314. Modification of scholarship foundation rules.
Sec. 315. Treatment of certain hospital support organizations as 
              qualified organizations for purposes of determining 
              acquisition indebtedness.
Sec. 316. 10-year divestiture period for certain excess business 
              holdings of private foundations.

                 TITLE IV--SOCIAL SERVICES BLOCK GRANT

Sec. 401. Restoration of funds for the Social Services Block Grant.
Sec. 402. Restoration of authority to transfer up to 10 percent of TANF 
              funds to the Social Services Block Grant.
Sec. 403. Requirement to submit annual report on State activities.

                TITLE V--INDIVIDUAL DEVELOPMENT ACCOUNTS

Sec. 501. Short title.
Sec. 502. Purposes.
Sec. 503. Definitions.
Sec. 504. Structure and administration of qualified individual 
              development account programs.
Sec. 505. Procedures for opening and maintaining an individual 
              development account and qualifying for matching funds.
Sec. 506. Deposits by qualified individual development account 
              programs.
Sec. 507. Withdrawal procedures.
Sec. 508. Certification and termination of qualified individual 
              development account programs.
Sec. 509. Reporting, monitoring, and evaluation.
Sec. 510. Authorization of appropriations.
Sec. 511. Matching funds for individual development accounts provided 
              through a tax credit for qualified financial 
              institutions.
Sec. 512. Account funds disregarded for purposes of certain means-
              tested Federal programs.

                      TITLE VI--REVENUE PROVISIONS

           Subtitle A--Tax Shelter Transparency Requirements

                  Part I--Taxpayer-Related Provisions

Sec. 601. Penalty for failing to disclose reportable transaction.
Sec. 602. Accuracy-related penalties for listed transactions and other 
              reportable transactions having a significant tax 
              avoidance purpose.
Sec. 603. Modifications of substantial understatement penalty for 
              nonreportable transactions.
Sec. 604. Tax shelter exception to confidentiality privileges relating 
              to taxpayer communications.

           Part II--Promoter and Preparer Related Provisions


       SUBPART A--PROVISIONS RELATING TO REPORTABLE TRANSACTIONS

Sec. 611. Disclosure of reportable transactions.
Sec. 612. Modifications to penalty for failure to register tax 
              shelters.
Sec. 613. Modification of penalty for failure to maintain lists of 
              investors.
Sec. 614. Modification of actions to enjoin specified conduct related 
              to tax shelters and reportable transactions.


           SUBPART B--OTHER PROMOTER AND PREPARER PROVISIONS

Sec. 621. Understatement of taxpayer's liability by income tax return 
              preparer.
Sec. 622. Penalty on failure to report interests in foreign financial 
              accounts.
Sec. 623. Frivolous tax submissions.
Sec. 624. Regulation of individuals practicing before the Department of 
              Treasury.
Sec. 625. Penalty on promoters of tax shelters.

                       Part III--Other Provisions

Sec. 631. Affirmation of consolidated return regulation authority.

          Subtitle B--Tax Treatment of Inversion Transactions

Sec. 641. Tax treatment of inverted corporate entities.

                   Subtitle C--Reinsurance Agreements

Sec. 651. Reinsurance of United States risks in foreign jurisdictions.

      Subtitle D--Extension of Internal Revenue Service User Fees

Sec. 661. Extension of Internal Revenue Service user fees.

              Subtitle E--Imposition of Customs User Fees

Sec. 671. Customs user fees.

        TITLE VII--EQUAL TREATMENT FOR NONGOVERNMENTAL PROVIDERS

Sec. 701. Nongovernmental organizations.

                  TITLE VIII--COMPASSION CAPITAL FUND

Sec. 801. Support for nonprofit community-based organizations; 
              Department of Health and Human Services.
Sec. 802. Support for nonprofit community-based organizations; 
              Corporation for National and Community Service.
Sec. 803. Support for nonprofit community-based organizations; 
              Department of Justice.
Sec. 804. Support for nonprofit community-based organizations; 
              Department of Housing and Urban Development.
Sec. 805. Coordination.

                    TITLE IX--MATERNITY GROUP HOMES

Sec. 901. Maternity group homes.

             TITLE X--STATE AND LOCAL POLITICAL COMMITTEES

Sec. 1001. Exemption for certain State and local political committees 
              from notification requirements.

[[Page S9148]]

Sec. 1002. Exemption for certain State and local political committees 
              from reporting requirements.
Sec. 1003. Exemption from annual return requirements.
Sec. 1004. Notification of interaction of reporting requirements.
Sec. 1005. Waiver.
Sec. 1006. Modifications to section 527 organization disclosure 
              provisions.
Sec. 1007. Effect of amendments on existing disclosures.

                 TITLE I--CHARITABLE GIVING INCENTIVES

     SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS 
                   TO BE ALLOWED TO INDIVIDUALS WHO DO NOT ITEMIZE 
                   DEDUCTIONS.

       (a) In General.--Section 170 (relating to charitable, etc., 
     contributions and gifts) is amended by redesignating 
     subsection (m) as subsection (n) and by inserting after 
     subsection (l) the following new subsection:
       ``(m) Deduction for Individuals Not Itemizing Deductions.--
     In the case of an individual who does not itemize deductions 
     for any taxable year, there shall be taken into account as a 
     direct charitable deduction under section 63 an amount equal 
     to the amount allowable under subsection (a) for the taxable 
     year for cash contributions, but only with respect to such 
     contributions which exceed $250 ($500 in the case of a joint 
     return), but do not exceed $500 ($1,000 in the case of a 
     joint return).''.
       (b) Direct Charitable Deduction.--
       (1) In general.--Subsection (b) of section 63 (defining 
     taxable income) is amended by striking ``and'' at the end of 
     paragraph (1), by striking the period at the end of paragraph 
     (2) and inserting ``, and'', and by adding at the end the 
     following new paragraph:
       ``(3) the direct charitable deduction.''.
       (2) Definition.--Section 63 is amended by redesignating 
     subsection (g) as subsection (h) and by inserting after 
     subsection (f) the following new subsection:
       ``(g) Direct Charitable Deduction.--For purposes of this 
     section, the term `direct charitable deduction' means that 
     portion of the amount allowable under section 170(a) which is 
     taken as a direct charitable deduction for the taxable year 
     under section 170(m).''.
       (3) Conforming amendment.--Subsection (d) of section 63 is 
     amended by striking ``and'' at the end of paragraph (1), by 
     striking the period at the end of paragraph (2) and inserting 
     ``, and'', and by adding at the end the following new 
     paragraph:
       ``(3) the direct charitable deduction.''.
       (c) Study.--
       (1) In general.--The Secretary of the Treasury shall study 
     the effect of the amendments made by this section on 
     increased charitable giving and taxpayer compliance, 
     including a comparison of taxpayer compliance by those who 
     itemize their charitable contributions with those who claim a 
     direct charitable deduction.
       (2) Report.--By not later than December 31, 2003, the 
     Secretary of the Treasury shall report on the study required 
     under paragraph (1) to the Committee on Finance of the Senate 
     and the Committee on Ways and Means of the House of 
     Representatives.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001, and before January 1, 2004.

     SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT 
                   ACCOUNTS FOR CHARITABLE PURPOSES.

       (a) In General.--Subsection (d) of section 408 (relating to 
     individual retirement accounts) is amended by adding at the 
     end the following new paragraph:
       ``(8) Distributions for charitable purposes.--
       ``(A) In general.--No amount shall be includible in gross 
     income by reason of a qualified charitable distribution.
       ``(B) Qualified charitable distribution.--For purposes of 
     this paragraph, the term `qualified charitable distribution' 
     means any distribution from an individual retirement 
     account--
       ``(i) which is made directly by the trustee--

       ``(I) to an organization described in section 170(c), or

       ``(II) to a split-interest entity, and

       ``(ii) which is made on or after the date that the 
     individual for whose benefit the account is maintained has 
     attained--

       ``(I) in the case of any distribution described in clause 
     (i)(I), age 70\1/2\, and
       ``(II) in the case of any distribution described in clause 
     (i)(II), age 59\1/2\.

     A distribution shall be treated as a qualified charitable 
     distribution only to the extent that the distribution would 
     be includible in gross income without regard to subparagraph 
     (A) and, in the case of a distribution to a split-interest 
     entity, only if no person holds an income interest in the 
     amounts in the split-interest entity attributable to such 
     distribution other than one or more of the following: the 
     individual for whose benefit such account is maintained, the 
     spouse of such individual, or any organization described in 
     section 170(c).
       ``(C) Contributions must be otherwise deductible.--For 
     purposes of this paragraph--
       ``(i) Direct contributions.--A distribution to an 
     organization described in section 170(c) shall be treated as 
     a qualified charitable distribution only if a deduction for 
     the entire distribution would be allowable under section 170 
     (determined without regard to subsection (b) thereof and this 
     paragraph).
       ``(ii) Split-interest gifts.--A distribution to a split-
     interest entity shall be treated as a qualified charitable 
     distribution only if a deduction for the entire value of the 
     interest in the distribution for the use of an organization 
     described in section 170(c) would be allowable under section 
     170 (determined without regard to subsection (b) thereof and 
     this paragraph).
       ``(D) Application of section 72.--Notwithstanding section 
     72, in determining the extent to which a distribution is a 
     qualified charitable distribution, the entire amount of the 
     distribution shall be treated as includible in gross income 
     without regard to subparagraph (A) to the extent that such 
     amount does not exceed the aggregate amount which would be so 
     includible if all amounts were distributed from all 
     individual retirement accounts otherwise taken into account 
     in determining the inclusion on such distribution under 
     section 72. Proper adjustments shall be made in applying 
     section 72 to other distributions in such taxable year and 
     subsequent taxable years.
       ``(E) Special rules for split-interest entities.--
       ``(i) Charitable remainder trusts.--Notwithstanding section 
     664(b), distributions made from a trust described in 
     subparagraph (G)(i) shall be treated as ordinary income in 
     the hands of the beneficiary to whom is paid the annuity 
     described in section 664(d)(1)(A) or the payment described in 
     section 664(d)(2)(A).
       ``(ii) Pooled income funds.--No amount shall be includible 
     in the gross income of a pooled income fund (as defined in 
     subparagraph (G)(ii)) by reason of a qualified charitable 
     distribution to such fund, and all distributions from the 
     fund which are attributable to qualified charitable 
     distributions shall be treated as ordinary income to the 
     beneficiary.
       ``(iii) Charitable gift annuities.--Qualified charitable 
     distributions made for a charitable gift annuity shall not be 
     treated as an investment in the contract.
       ``(F) Denial of deduction.--Qualified charitable 
     distributions shall not be taken into account in determining 
     the deduction under section 170.
       ``(G) Split-interest entity defined.--For purposes of this 
     paragraph, the term `split-interest entity' means--
       ``(i) a charitable remainder annuity trust or a charitable 
     remainder unitrust (as such terms are defined in section 
     664(d)) which must be funded exclusively by qualified 
     charitable distributions,
       ``(ii) a pooled income fund (as defined in section 
     642(c)(5)), but only if the fund accounts separately for 
     amounts attributable to qualified charitable distributions, 
     and
       ``(iii) a charitable gift annuity (as defined in section 
     501(m)(5)).''.
       (b) Modifications Relating to Information Returns by 
     Certain Trusts.--
       (1) Returns.--Section 6034 (relating to returns by trusts 
     described in section 4947(a)(2) or claiming charitable 
     deductions under section 642(c)) is amended to read as 
     follows:

     ``SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 
                   4947(A)(2) OR CLAIMING CHARITABLE DEDUCTIONS 
                   UNDER SECTION 642(C).

       ``(a) Trusts Described in Section 4947(a)(2).--Every trust 
     described in section 4947(a)(2) shall furnish such 
     information with respect to the taxable year as the Secretary 
     may by forms or regulations require.
       ``(b) Trusts Claiming a Charitable Deduction Under Section 
     642(c).--
       ``(1) In general.--Every trust not required to file a 
     return under subsection (a) but claiming a charitable, etc., 
     deduction under section 642(c) for the taxable year shall 
     furnish such information with respect to such taxable year as 
     the Secretary may by forms or regulations prescribe, 
     including:
       ``(A) the amount of the charitable, etc., deduction taken 
     under section 642(c) within such year,
       ``(B) the amount paid out within such year which represents 
     amounts for which charitable, etc., deductions under section 
     642(c) have been taken in prior years,
       ``(C) the amount for which charitable, etc., deductions 
     have been taken in prior years but which has not been paid 
     out at the beginning of such year,
       ``(D) the amount paid out of principal in the current and 
     prior years for charitable, etc., purposes,
       ``(E) the total income of the trust within such year and 
     the expenses attributable thereto, and
       ``(F) a balance sheet showing the assets, liabilities, and 
     net worth of the trust as of the beginning of such year.
       ``(2) Exceptions.--Paragraph (1) shall not apply in the 
     case of a taxable year if all the net income for such year, 
     determined under the applicable principles of the law of 
     trusts, is required to be distributed currently to the 
     beneficiaries. Paragraph (1) shall not apply in the case of a 
     trust described in section 4947(a)(1).''.
       (2) Increase in penalty relating to filing of information 
     return by split-interest trusts.--Paragraph (2) of section 
     6652(c) (relating to returns by exempt organizations and by 
     certain trusts) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Split-interest trusts.--In the case of a trust which 
     is required to file a return under section 6034(a), 
     subparagraphs (A) and (B) of this paragraph shall not apply 
     and paragraph (1) shall apply in the same manner as if such 
     return were required under section 6033, except that--

[[Page S9149]]

       ``(i) the 5 percent limitation in the second sentence of 
     paragraph (1)(A) shall not apply,
       ``(ii) in the case of any trust with gross income in excess 
     of $250,000, the first sentence of paragraph (1)(A) shall be 
     applied by substituting `$100' for `$20', and the second 
     sentence thereof shall be applied by substituting `$50,000' 
     for `$10,000', and
       ``(iii) the third sentence of paragraph (1)(A) shall be 
     disregarded.
     In addition to any penalty imposed on the trust pursuant to 
     this subparagraph, if the person required to file such return 
     knowingly fails to file the return, such penalty shall also 
     be imposed on such person who shall be personally liable for 
     such penalty.''.
       (3) Confidentiality of noncharitable beneficiaries.--
     Subsection (b) of section 6104 (relating to inspection of 
     annual information returns) is amended by adding at the end 
     the following new sentence: ``In the case of a trust which is 
     required to file a return under section 6034(a), this 
     subsection shall not apply to information regarding 
     beneficiaries which are not organizations described in 
     section 170(c).''.
       (c) Effective Dates.--
       (1) Subsection (a).--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2002.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to returns for taxable years beginning after 
     December 31, 2002.

     SEC. 103. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD 
                   INVENTORIES.

       (a) In General.--Subsection (e) of section 170 (relating to 
     certain contributions of ordinary income and capital gain 
     property) is amended by adding at the end the following new 
     paragraph:
       ``(7) Application of paragraph (3) to certain contributions 
     of food inventory.--For purposes of this section--
       ``(A) Extension to individuals.--In the case of a 
     charitable contribution of apparently wholesome food--
       ``(i) paragraph (3)(A) shall be applied without regard to 
     whether the contribution is made by a C corporation, and
       ``(ii) in the case of a taxpayer other than a C 
     corporation, the aggregate amount of such contributions from 
     any trade or business (or interest therein) of the taxpayer 
     for any taxable year which may be taken into account under 
     this section shall not exceed 10 percent of the taxpayer's 
     net income from any such trade or business, computed without 
     regard to this section, for such taxable year.
       ``(B) Limitation on reduction.--
       ``(i) For taxable years 2009, 2010, and 2011.--With respect 
     to taxable years beginning after December 31, 2008, and 
     before January 1, 2012, in the case of a charitable 
     contribution of apparently wholesome food, notwithstanding 
     paragraph (3)(B), the amount of the reduction determined 
     under paragraph (1)(A) shall not exceed the greater of--

       ``(I) 25 percent of the fair market value of the 
     contributed property, or
       ``(II) the amount by which the fair market value of such 
     property exceeds twice the basis of such property.

       ``(ii) For taxable years after 2011.--With respect to 
     taxable years beginning after December 31, 2011, in the case 
     of a charitable contribution of apparently wholesome food, 
     notwithstanding paragraph (3)(B), the amount of the reduction 
     determined under paragraph (1)(A) shall not exceed the amount 
     by which the fair market value of such property exceeds twice 
     the basis of such property.
       ``(C) Determination of basis.--If a taxpayer--
       ``(i) does not account for inventories under section 471, 
     and
       ``(ii) is not required to capitalize indirect costs under 
     section 263A,
     the taxpayer may elect, solely for purposes of paragraph 
     (3)(B), to treat the basis of any apparently wholesome food 
     as being equal to 25 percent of the fair market value of such 
     food.
       ``(D) Determination of fair market value.--In the case of a 
     charitable contribution of apparently wholesome food which is 
     a qualified contribution (within the meaning of paragraph 
     (3), as modified by subparagraph (A) of this paragraph) and 
     which, solely by reason of internal standards of the taxpayer 
     or lack of market, cannot or will not be sold, the fair 
     market value of such contribution shall be determined--
       ``(i) without regard to such internal standards or such 
     lack of market and
       ``(ii) by taking into account the price at which the same 
     or substantially the same food items are sold by the taxpayer 
     at the time of the contribution (or, if not so sold at such 
     time, in the recent past).
       ``(E) Apparently wholesome food.--For purposes of this 
     paragraph, the term `apparently wholesome food' has the 
     meaning given such term by section 22(b)(2) of the Bill 
     Emerson Good Samaritan Food Donation Act (42 U.S.C. 
     1791(b)(2)), as in effect on the date of the enactment of 
     this paragraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK 
                   INVENTORIES.

       (a) In General.--Section 170(e)(3) (relating to certain 
     contributions of ordinary income and capital gain property) 
     is amended by redesignating subparagraph (C) as subparagraph 
     (D) and by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Special rule for contributions of book inventory for 
     educational purposes.--
       ``(i) Contributions of book inventory.--In determining 
     whether a qualified book contribution is a qualified 
     contribution, subparagraph (A) shall be applied without 
     regard to whether--

       ``(I) the donee is an organization described in the matter 
     preceding clause (i) of subparagraph (A), and
       ``(II) the property is to be used by the donee solely for 
     the care of the ill, the needy, or infants.

       ``(ii) Amount of reduction.--Notwithstanding subparagraph 
     (B), the amount of the reduction determined under paragraph 
     (1)(A) shall not exceed the amount by which the fair market 
     value of the contributed property (as determined by the 
     taxpayer using a bona fide published market price for such 
     book (using the same printing and edition) published within 7 
     years preceding the contribution) exceeds twice the basis of 
     such property.
       ``(iii) Qualified book contribution.--For purposes of this 
     paragraph, the term `qualified book contribution' means a 
     charitable contribution of books, but only if the 
     requirements of clauses (iv) and (v) are met.
       ``(iv) Identity of donee.--The requirement of this clause 
     is met if the contribution is to an organization--

       ``(I) described in subclause (I) or (III) of paragraph 
     (6)(B)(i), or
       ``(II) described in section 501(c)(3) and exempt from tax 
     under section 501(a) (other than a private foundation, as 
     defined in section 509(a), which is not an operating 
     foundation, as defined in section 4942(j)(3)), which is 
     organized primarily to make books available to the general 
     public at no cost or to operate a literacy program.

       ``(v) Certification by donee.--The requirement of this 
     clause is met if, in addition to the certifications required 
     by subparagraph (A) (as modified by this subparagraph), the 
     donee certifies in writing that--

       ``(I) the books are suitable, in terms of currency, 
     content, and quantity, for use in the donee's educational 
     programs, and
       ``(II) the donee will use the books in its educational 
     programs.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 105. EXPANSION OF CHARITABLE CONTRIBUTION ALLOWED FOR 
                   SCIENTIFIC PROPERTY USED FOR RESEARCH AND FOR 
                   COMPUTER TECHNOLOGY AND EQUIPMENT USED FOR 
                   EDUCATIONAL PURPOSES.

       (a) Scientific Property Used for Research.--
       (1) In general.--Clause (ii) of section 170(e)(4)(B) 
     (defining qualified research contributions) is amended by 
     inserting ``or assembled'' after ``constructed''.
       (2) Conforming amendment.--Clause (iii) of section 
     170(e)(4)(B) is amended by inserting ``or assembling'' after 
     ``construction''.
       (b) Computer Technology and Equipment for Educational 
     Purposes.--
       (1) In general.--Clause (ii) of section 170(e)(6)(B) is 
     amended by inserting ``or assembled'' after ``constructed'' 
     and ``or assembling'' after ``construction''.
       (2) Conforming amendments.--Subparagraph (D) of section 
     170(e)(6) is amended by inserting ``or assembled'' after 
     ``constructed'' and ``or assembling'' after ``construction''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 106. MODIFICATIONS TO ENCOURAGE CONTRIBUTIONS OF CAPITAL 
                   GAIN REAL PROPERTY MADE FOR CONSERVATION 
                   PURPOSES.

       (a) In General.--Section 170(h) (relating to qualified 
     conservation contribution) is amended by adding at the end 
     the following new paragraph:
       ``(7) Additional incentives for qualified conservation 
     contributions.--
       ``(A) In general.--In the case of any qualified 
     conservation contribution (as defined in paragraph (1)) made 
     by an individual--
       ``(i) subparagraph (C) of subsection (b)(1) shall not 
     apply,
       ``(ii) except as provided in subparagraph (B)(i), 
     subsections (b)(1)(A) and (d)(1) shall be applied separately 
     with respect to such contributions by treating references to 
     50 percent of the taxpayer's contribution base as references 
     to the amount of such percentage of such base reduced by the 
     amount of other contributions allowable under subsection 
     (b)(1)(A), and
       ``(iii) subparagraph (A) of subsection (d)(1) shall be 
     applied--

       ``(I) by substituting `15 succeeding taxable years' for `5 
     succeeding taxable years', and
       ``(II) by applying clause (ii) to each of the 15 succeeding 
     taxable years.

       ``(B) Special rules for eligible farmers and ranchers.--
       ``(i) In general.--In the case of any such contributions 
     made by an eligible farmer or rancher--

       ``(I) if the taxpayer is an individual, subsections 
     (b)(1)(A) and (d)(1) shall be applied separately with respect 
     to such contributions by substituting `the taxpayer's 
     contribution base reduced by the amount of other 
     contributions allowable under subsection (b)(1)(A)' for `50 
     percent of the taxpayer's contribution base' each place it 
     appears, and
       ``(II) if the taxpayer is a corporation, subsections (b)(2) 
     and (d)(2) shall be applied separately with respect to such 
     contributions,

[[Page S9150]]

     subsection (b)(2) shall be applied with respect to such 
     contributions as if such subsection did not contain the words 
     `10 percent of' and as if subparagraph (A) thereof read `the 
     deduction under this section for qualified conservation 
     contributions', and rules similar to the rules of 
     subparagraph (A)(iii) shall apply for purposes of subsection 
     (d)(2).

       ``(ii) Definition.--For purposes of clause (i), the term 
     `eligible farmer or rancher' means a taxpayer whose gross 
     income from the trade or business of farming (within the 
     meaning of section 2032A(e)(5)) is at least 51 percent of the 
     taxpayer's gross income for the taxable year, and, in the 
     case of a C corporation, the stock of which is not publicly 
     traded on a recognized exchange.''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2002.

     SEC. 107. EXCLUSION OF 25 PERCENT OF GAIN ON SALES OR 
                   EXCHANGES OF LAND OR WATER INTERESTS TO 
                   ELIGIBLE ENTITIES FOR CONSERVATION PURPOSES.

       (a) In General.--Part III of subchapter B of chapter 1 
     (relating to items specifically excluded from gross income) 
     is amended by inserting after section 121 the following new 
     section:

     ``SEC. 121A. 25-PERCENT EXCLUSION OF GAIN ON SALES OR 
                   EXCHANGES OF LAND OR WATER INTERESTS TO 
                   ELIGIBLE ENTITIES FOR CONSERVATION PURPOSES.

       ``(a) Exclusion.--Gross income shall not include 25 percent 
     of the qualifying gain from a conservation sale of a long-
     held qualifying land or water interest.
       ``(b) Qualifying Gain.--For purposes of this section--
       ``(1) In general.--The term `qualifying gain' means any 
     gain which would be recognized as long-term capital gain, 
     reduced by the amount of any long-term capital gain 
     attributable to disqualified improvements.
       ``(2) Disqualified improvement.--For purposes of paragraph 
     (1), the term `disqualified improvement' means any building, 
     structure, or other improvement, other than--
       ``(A) any improvement which is described in section 
     175(c)(1), determined--
       ``(i) without regard to the requirements that the taxpayer 
     be engaged in farming, and
       ``(ii) without taking into account subparagraphs (A) and 
     (B) thereof, or
       ``(B) any improvement which the Secretary determines 
     directly furthers conservation purposes.
       ``(3) Special rule for sales of stock.--If the long-held 
     qualifying land or water interest is 1 or more shares of 
     stock in a qualifying land or water corporation, the 
     qualifying gain is equal to the lesser of--
       ``(A) the qualifying gain determined under paragraph (1), 
     or
       ``(B) the product of--
       ``(i) the percentage of such corporation's stock which is 
     transferred by the taxpayer, times
       ``(ii) the amount which would have been the qualifying gain 
     (determined under paragraph (1)) if there had been a 
     conservation sale by such corporation of all of its interests 
     in the land and water for a price equal to the product of the 
     fair market value of such interests times the ratio of--

       ``(I) the proceeds of the conservation sale of the stock, 
     to
       ``(II) the fair market value of the stock which was the 
     subject of the conservation sale.

       ``(c) Conservation Sale.--For purposes of this section, the 
     term `conservation sale' means a sale or exchange which meets 
     the following requirements:
       ``(1) Transferee is an eligible entity.--The transferee of 
     the long-held qualifying land or water interest is an 
     eligible entity.
       ``(2) Qualifying letter of intent required.--At the time of 
     the sale or exchange, such transferee provides the taxpayer 
     with a qualifying letter of intent.
       ``(3) Nonapplication to certain sales.--The sale or 
     exchange is not made pursuant to an order of condemnation or 
     eminent domain.
       ``(4) Controlling interest in stock sale required.--In the 
     case of the sale or exchange of stock in a qualifying land or 
     water corporation, at the end of the taxpayer's taxable year 
     in which such sale or exchange occurs, the transferee's 
     ownership of stock in such corporation meets the requirements 
     of section 1504(a)(2) (determined by substituting `90 
     percent' for `80 percent' each place it appears).
       ``(d) Long-Held Qualifying Land or Water Interest.--For 
     purposes of this section--
       ``(1) In general.--The term `long-held qualifying land or 
     water interest' means any qualifying land or water interest 
     owned by the taxpayer or a member of the taxpayer's family 
     (as defined in section 2032A(e)(2)) at all times during the 
     5-year period ending on the date of the sale.
       ``(2) Qualifying land or water interest.--
       ``(A) In general.--The term `qualifying land or water 
     interest' means a real property interest which constitutes--
       ``(i) a taxpayer's entire interest in land,
       ``(ii) a taxpayer's entire interest in water rights,
       ``(iii) a qualified real property interest (as defined in 
     section 170(h)(2)), or
       ``(iv) stock in a qualifying land or water corporation.
       ``(B) Entire interest.--For purposes of clause (i) or (ii) 
     of subparagraph (A)--
       ``(i) a partial interest in land or water is not a 
     taxpayer's entire interest if an interest in land or water 
     was divided in order to create such partial interest in order 
     to avoid the requirements of such clause or section 
     170(f)(3)(A), and
       ``(ii) a taxpayer's entire interest in certain land does 
     not fail to satisfy subparagraph (A)(i) solely because the 
     taxpayer has retained an interest in other land, even if the 
     other land is contiguous with such certain land and was 
     acquired by the taxpayer along with such certain land in a 
     single conveyance.
       ``(e) Other Definitions.--For purposes of this section--
       ``(1) Eligible entity.--The term `eligible entity' means--
       ``(A) a governmental unit referred to in section 170(c)(1), 
     or an agency or department thereof operated primarily for 1 
     or more of the conservation purposes specified in clause (i), 
     (ii), or (iii) of section 170(h)(4)(A), or
       ``(B) an entity which is--
       ``(i) described in section 170(b)(1)(A)(vi) or section 
     170(h)(3)(B), and
       ``(ii) organized and at all times operated primarily for 1 
     or more of the conservation purposes specified in clause (i), 
     (ii), or (iii) of section 170(h)(4)(A).
       ``(2) Qualifying letter of intent.--The term `qualifying 
     letter of intent' means a written letter of intent which 
     includes the following statement: `The transferee's intent is 
     that this acquisition will serve 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, 
     that the transferee's use of the property so acquired will be 
     consistent with section 170(h)(5) of such Code, and that the 
     use of the property will continue to be consistent with such 
     section, even if ownership or possession of such property is 
     subsequently transferred to another person.'
       ``(3) Qualifying land or water corporation.--The term 
     `qualifying land or water corporation' means a C corporation 
     (as defined in section 1361(a)(2)) if, as of the date of the 
     conservation sale--
       ``(A) the fair market value of the corporation's interests 
     in land or water held by the corporation at all times during 
     the preceding 5 years equals or exceeds 90 percent of the 
     fair market value of all of such corporation's assets, and
       ``(B) not more than 50 percent of the total fair market 
     value of such corporation's assets consists of water rights 
     or infrastructure related to the delivery of water, or both.
       ``(f) Tax on Subsequent Transfers or Removals of 
     Conservation Restrictions.--
       ``(1) In general.--A tax is hereby imposed on any 
     subsequent--
       ``(A) transfer by an eligible entity of ownership or 
     possession, whether by sale, exchange, or lease, of property 
     acquired directly or indirectly in--
       ``(i) a conservation sale described in subsection (a), or
       ``(ii) a transfer described in clause (i), (ii), or (iii) 
     of paragraph (4)(A), or
       ``(B) removal of a conservation restriction contained in an 
     instrument of conveyance of such property.
       ``(2) Amount of tax.--The amount of tax imposed by 
     paragraph (1) on any transfer or removal shall be equal to 
     the sum of--
       ``(A) either--
       ``(i) 20 percent of the fair market value (determined at 
     the time of the transfer) of the property the ownership or 
     possession of which is transferred, or
       ``(ii) 20 percent of the fair market value (determined at 
     the time immediately after the removal) of the property upon 
     which the conservation restriction was removed, plus
       ``(B) the product of--
       ``(i) the highest rate of tax specified in section 11, 
     times
       ``(ii) any gain or income realized by the transferor or 
     person removing such restriction as a result of the transfer 
     or removal.
       ``(3) Liability.--The tax imposed by paragraph (1) shall be 
     paid--
       ``(A) on any transfer, by the transferor, and
       ``(B) on any removal of a conservation restriction 
     contained in an instrument of conveyance, by the person 
     removing such restriction.
       ``(4) Relief from liability.--The person (otherwise liable 
     for any tax imposed by paragraph (1)) shall be relieved of 
     liability for the tax imposed by paragraph (1)--
       ``(A) with respect to any transfer if--
       ``(i) the transferee is an eligible entity which provides 
     such person, at the time of transfer, a qualifying letter of 
     intent,
       ``(ii) the transferee is not an eligible entity, it is 
     established to the satisfaction of the Secretary, that the 
     transfer of ownership or possession, as the case may be, will 
     be consistent with section 170(h)(5), and the transferee 
     provides such person, at the time of transfer, a qualifying 
     letter of intent, or
       ``(iii) tax has previously been paid under this subsection 
     as a result of a prior transfer of ownership or possession of 
     the same property, or
       ``(B) with respect to any removal of a conservation 
     restriction contained in an instrument of conveyance, if it 
     is established to the satisfaction of the Secretary that the 
     retention of the restriction was impracticable or impossible 
     and the proceeds continue to be used in a manner consistent 
     with 1 or more of the conservation purposes specified in 
     clause (i), (ii), or (iii) of section 170(h)(4)(A).
       ``(5) Administrative provisions.--For purposes of subtitle 
     F, the taxes imposed by this

[[Page S9151]]

     subsection shall be treated as excise taxes with respect to 
     which the deficiency procedures of such subtitle apply.
       ``(6) Reporting.--The Secretary may require such reporting 
     as may be necessary or appropriate to further the purpose 
     under this section that any conservation use be in 
     perpetuity.''.
       (b) Clerical Amendment.--The table of sections for part III 
     of subchapter B of chapter 1 is amended by inserting after 
     the item relating to section 121 the following new item:

``Sec. 121A. 25-percent exclusion of gain on sales or exchanges of land 
              or water interests to eligible entities for conservation 
              purposes.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to sales or exchanges occurring after December 
     31, 2003, in taxable years ending after such date.

     SEC. 108. TAX EXCLUSION FOR COST-SHARING PAYMENTS UNDER 
                   PARTNERS FOR FISH AND WILDLIFE PROGRAM.

       (a) In General.--Section 126(a) (relating to certain cost-
     sharing payments) is amended by redesignating paragraph (10) 
     as paragraph (11) and by inserting after paragraph (9) the 
     following:
       ``(10) The Partners for Fish and Wildlife Program 
     authorized by the Fish and Wildlife Act of 1956 (16 U.S.C. 
     742a et seq.).''
       (b) Effective Date.--The amendments made by this section 
     shall apply to payments received in taxable years beginning 
     after December 31, 2002.

     SEC. 109. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR 
                   CERTAIN CHARITABLE CONTRIBUTIONS.

       (a) In General.--Paragraph (2) of section 1367(a) (relating 
     to adjustments to basis of stock of shareholders, etc.) is 
     amended by adding at the end the following new flush 
     sentence:
     ``The decrease under subparagraph (B) by reason of a 
     charitable contribution (as defined in section 170(c)) of 
     property shall be the amount equal to the shareholder's pro 
     rata share of the adjusted basis of such property.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2002.

     SEC. 110. ENHANCED DEDUCTION FOR CHARITABLE CONTRIBUTION OF 
                   LITERARY, MUSICAL, ARTISTIC, AND SCHOLARLY 
                   COMPOSITIONS.

       (a) In General.--Subsection (e) of section 170 (relating to 
     certain contributions of ordinary income and capital gain 
     property), as amended by this Act, is amended by adding at 
     the end the following new paragraph:
       ``(8) Special rule for certain contributions of literary, 
     musical, artistic, or scholarly compositions.--
       ``(A) In general.--In the case of a qualified artistic 
     charitable contribution--
       ``(i) the amount of such contribution taken into account 
     under this section shall be the fair market value of the 
     property contributed (determined at the time of such 
     contribution), and
       ``(ii) no reduction in the amount of such contribution 
     shall be made under paragraph (1).
       ``(B) Qualified artistic charitable contribution.--For 
     purposes of this paragraph, the term `qualified artistic 
     charitable contribution' means a charitable contribution of 
     any literary, musical, artistic, or scholarly composition, or 
     similar property, or the copyright thereon (or both), but 
     only if--
       ``(i) such property was created by the personal efforts of 
     the taxpayer making such contribution no less than 18 months 
     prior to such contribution,
       ``(ii) the taxpayer--

       ``(I) has received a qualified appraisal of the fair market 
     value of such property in accordance with the regulations 
     under this section, and
       ``(II) attaches to the taxpayer's income tax return for the 
     taxable year in which such contribution was made a copy of 
     such appraisal,

       ``(iii) the donee is an organization described in 
     subsection (b)(1)(A),
       ``(iv) the use of such property by the donee is related to 
     the purpose or function constituting the basis for the 
     donee's exemption under section 501 (or, in the case of a 
     governmental unit, to any purpose or function described under 
     section 501(c)),
       ``(v) the taxpayer receives from the donee a written 
     statement representing that the donee's use of the property 
     will be in accordance with the provisions of clause (iv), and
       ``(vi) the written appraisal referred to in clause (ii) 
     includes evidence of the extent (if any) to which property 
     created by the personal efforts of the taxpayer and of the 
     same type as the donated property is or has been--

       ``(I) owned, maintained, and displayed by organizations 
     described in subsection (b)(1)(A), and
       ``(II) sold to or exchanged by persons other than the 
     taxpayer, donee, or any related person (as defined in section 
     465(b)(3)(C)).

       ``(C) Maximum dollar limitation; no carryover of increased 
     deduction.--The increase in the deduction under this section 
     by reason of this paragraph for any taxable year--
       ``(i) shall not exceed the artistic adjusted gross income 
     of the taxpayer for such taxable year, and
       ``(ii) shall not be taken into account in determining the 
     amount which may be carried from such taxable year under 
     subsection (d).
       ``(D) Artistic adjusted gross income.--For purposes of this 
     paragraph, the term `artistic adjusted gross income' means 
     that portion of the adjusted gross income of the taxpayer for 
     the taxable year attributable to--
       ``(i) income from the sale or use of property created by 
     the personal efforts of the taxpayer which is of the same 
     type as the donated property, and
       ``(ii) income from teaching, lecturing, performing, or 
     similar activity with respect to property described in clause 
     (i).
       ``(E) Paragraph not to apply to certain contributions.--
     Subparagraph (A) shall not apply to any charitable 
     contribution of any letter, memorandum, or similar property 
     which was written, prepared, or produced by or for an 
     individual while the individual is an officer or employee of 
     any person (including any government agency or 
     instrumentality) unless such letter, memorandum, or similar 
     property is entirely personal.
       ``(F) Copyright treated as separate property for partial 
     interest rule.--In the case of a qualified artistic 
     charitable contribution, the tangible literary, musical, 
     artistic, or scholarly composition, or similar property and 
     the copyright on such work shall be treated as separate 
     properties for purposes of this paragraph and subsection 
     (f)(3).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after December 31, 2002, in 
     taxable years ending after such date.

     SEC. 111. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS 
                   EXCLUDED FROM GROSS INCOME.

       (a) In General.--Part III of subchapter B of chapter 1 is 
     amended by inserting after section 139 the following new 
     section:

     ``SEC. 139A. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS.

       ``(a) In General.--Gross income of an individual does not 
     include amounts received, from an organization described in 
     section 170(c), as reimbursement of operating expenses with 
     respect to use of a passenger automobile for the benefit of 
     such organization. The preceding sentence shall apply only to 
     the extent that such reimbursement would be deductible under 
     this chapter if section 274(d) were applied--
       ``(1) by using the standard business mileage rate 
     established under such section, and
       ``(2) as if the individual were an employee of an 
     organization not described in section 170(c).
       ``(b) Application to Volunteer Services Only.--Subsection 
     (a) shall not apply with respect to any expenses relating to 
     the performance of services for compensation.
       ``(c) No Double Benefit.--A taxpayer may not claim a 
     deduction or credit under any other provision of this title 
     with respect to the expenses under subsection (a).
       ``(d) Exemption From Reporting Requirements.--Section 6041 
     shall not apply with respect to reimbursements excluded from 
     income under subsection (a).''
       (b) Clerical Amendment.--The table of sections for part III 
     of subchapter B of chapter 1 is amended by inserting after 
     the item relating to section 139 and inserting the following 
     new item:

``Sec. 139A. Mileage reimbursements to charitable volunteers.''.

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

      TITLE II--DISCLOSURE OF INFORMATION RELATING TO TAX-EXEMPT 
                             ORGANIZATIONS

     SEC. 201. DISCLOSURE OF WRITTEN DETERMINATIONS.

       (a) In General.--Section 6110(l) (relating to section not 
     to apply) is amended by striking all matter before 
     subparagraph (A) of paragraph (2) and inserting the 
     following:
       ``(l) Section Not To Apply.--
       ``(1) In general.--This section shall not apply to any 
     matter to which section 6104 or 6105 applies, except that 
     this section shall apply to any written determination and 
     related background file document relating to the tax-exempt 
     status of an organization described under subsection (c) or 
     (d) of section 501 (including any organization that has 
     applied for tax-exempt status under such subsection) which is 
     not required to be disclosed by section 6104(a)(1)(A) but 
     which is within the scope of section 6104.
       ``(2) Additional matters.--This section shall not apply to 
     any--''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to written determinations issued after December 
     31, 2002.

     SEC. 202. DISCLOSURE OF INTERNET WEB SITE AND NAME UNDER 
                   WHICH ORGANIZATION DOES BUSINESS.

       (a) In General.--Section 6033 (relating to returns by 
     exempt organizations) is amended by redesignating subsection 
     (h) as subsection (i) and by inserting after subsection (g) 
     the following new subsection:
       ``(h) Disclosure of Name Under Which Organization Does 
     Business and Its Internet Web Site.--Any organization which 
     is subject to the requirements of subsection (a) shall 
     include on the return required under subsection (a)--
       ``(1) any name under which such organization operates or 
     does business, and
       ``(2) the Internet web site address (if any) of such 
     organization.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to returns filed after December 31, 2002.

[[Page S9152]]

     SEC. 203. MODIFICATION TO REPORTING CAPITAL TRANSACTIONS.

       (a) Requirement of Summary Report.--Section 6033(c) 
     (relating to additional provisions relating to private 
     foundations) is amended by adding at the end the following 
     new sentence: ``Any information included in an annual return 
     regarding the gain or loss from the sale or other disposition 
     of property which is required to be furnished in order to 
     calculate the tax on net investment income shall also be 
     reported in summary form with a notice that detailed 
     information is available upon request by the public.''.
       (b) Disclosure Requirement.--Section 6104(b) (relating to 
     inspection of annual information returns), as amended by this 
     Act, is amended by adding at the end the following new 
     sentences: ``With respect to any private foundation (as 
     defined in section 509(a)), any information regarding the 
     gain or loss from the sale or other disposition of property 
     which is required to be furnished in order to calculate the 
     tax on net investment income but which is not in summary form 
     is not required to be made available to the public under this 
     subsection except upon the explicit request by a member of 
     the public to the Secretary .''.
       (c) Public Inspection Requirement.--Section 6104(d) 
     (relating to public inspection of certain annual returns, 
     applications for exemptions, and notices of status) is 
     amended by adding at the end the following new paragraph:
       ``(9) Application to private foundation capital transaction 
     information.--With respect to any private foundation (as 
     defined in section 509(a)), any information regarding the 
     gain or loss from the sale or other disposition of property 
     which is required to be furnished in order to calculate the 
     tax on net investment income but which is not in summary form 
     is not required to be made available to the public under this 
     subsection except upon the explicit request by a member of 
     the public to the private foundation in the form and manner 
     of a request described in paragraph (1)(B).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to returns filed after December 31, 2002.

     SEC. 204. DISCLOSURE THAT FORM 990 IS PUBLICLY AVAILABLE.

       (a) In General.--The Commissioner of the Internal Revenue 
     shall notify the public in appropriate publications or other 
     materials of the extent to which an exempt organization's 
     Form 990, Form 990-EZ, or Form 990-PF is publicly available.
       (b) Effective Date.--The amendments made by this section 
     shall apply to publications or other materials issued or 
     revised after the date of the enactment of this Act.

     SEC. 205. DISCLOSURE TO STATE OFFICIALS OF PROPOSED ACTIONS 
                   RELATED TO SECTION 501(C) ORGANIZATIONS.

       (a) In General.--Subsection (c) of section 6104 is amended 
     by striking paragraph (2) and inserting the following new 
     paragraphs:
       ``(2) Disclosure of proposed actions related to charitable 
     organizations.--
       ``(A) Specific notifications.--In the case of an 
     organization to which paragraph (1) applies, the Secretary 
     may disclose to the appropriate State officer--
       ``(i) a notice of proposed refusal to recognize such 
     organization as an organization described in section 
     501(c)(3) or a notice of proposed revocation of such 
     organization's recognition as an organization exempt from 
     taxation,
       ``(ii) the issuance of a letter of proposed deficiency of 
     tax imposed under section 507 or chapter 41 or 42, and
       ``(iii) the names, addresses, and taxpayer identification 
     numbers of organizations which have applied for recognition 
     as organizations described in section 501(c)(3).
       ``(B) Additional disclosures.--Returns and return 
     information of organizations with respect to which 
     information is disclosed under subparagraph (A) may be made 
     available for inspection by or disclosed to an appropriate 
     State officer.
       ``(C) Procedures for disclosure.--Information may be 
     inspected or disclosed under subparagraph (A) or (B) only--
       ``(i) upon written request by an appropriate State officer, 
     and
       ``(ii) for the purpose of, and only to the extent necessary 
     in, the administration of State laws regulating such 
     organizations.

     Such information may only be inspected by or disclosed to 
     representatives of the appropriate State officer designated 
     as the individuals who are to inspect or to receive the 
     returns or return information under this paragraph on behalf 
     of such officer. Such representatives shall not include any 
     independent contractor.
       ``(D) Disclosures other than by request.--The Secretary may 
     make available for inspection or disclose returns and return 
     information of an organization to which paragraph (1) applies 
     to an appropriate State officer of any State if the Secretary 
     determines that such inspection or disclosure may facilitate 
     the resolution of Federal or State issues relating to the 
     tax-exempt status of such organization.
       ``(3) Disclosure with respect to certain other exempt 
     organizations.--Upon written request by an appropriate State 
     officer, the Secretary may make available for inspection or 
     disclosure returns and return information of an organization 
     described in paragraph (2), (4), (6), (7), (8), (10), or (13) 
     of section 501(c) for the purpose of, and to the extent 
     necessary in, the administration of State laws regulating the 
     solicitation or administration of the charitable funds or 
     charitable assets of such organizations. Such information may 
     be inspected only by or disclosed only to representatives of 
     the appropriate State officer designated as the individuals 
     who are to inspect or to receive the returns or return 
     information under this paragraph on behalf of such officer. 
     Such representatives shall not include any independent 
     contractor.
       ``(4) Use in judicial and administrative proceedings.--
     Returns and return information disclosed pursuant to this 
     subsection may be disclosed in civil administrative and 
     judicial proceedings pertaining to the enforcement of State 
     laws regulating such organizations in a manner prescribed by 
     the Secretary similar to that for tax administration 
     proceedings under section 6103(h)(4).
       ``(5) No disclosure if impairment.--Returns and return 
     information shall not be disclosed under this subsection, or 
     in any proceeding described in paragraph (4), to the extent 
     that the Secretary determines that such disclosure would 
     seriously impair Federal tax administration.
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Return and return information.--The terms `return' 
     and `return information' have the respective meanings given 
     to such terms by section 6103(b).
       ``(B) Appropriate state officer.--The term `appropriate 
     State officer' means--
       ``(i) the State attorney general,
       ``(ii) in the case of an organization to which paragraph 
     (1) applies, any other State official charged with overseeing 
     organizations of the type described in section 501(c)(3), and
       ``(iii) in the case of an organization to which paragraph 
     (3) applies, the head of an agency designated by the State 
     attorney general as having primary responsibility for 
     overseeing the tax-exempt status of such organizations.''.
       (b) Conforming Amendments.--
       (1) Subsection (a) of section 6103 is amended--
       (A) by inserting ``or section 6104(c)'' after ``this 
     section'' in paragraph (2), and
       (B) by striking ``or subsection (n)'' in paragraph (3) and 
     inserting ``subsection (n), or section 6104(c)''.
       (2) Subparagraph (A) of section 6103(p)(3) is amended by 
     inserting ``and section 6104(c)'' after ``section'' in the 
     first sentence.
       (3) Paragraph (4) of section 6103(p) is amended--
       (A) in the matter preceding subparagraph (A), by striking 
     ``(16) or any other person described in subsection (l)(16)'' 
     and inserting ``(16), any other person described in 
     subsection (l)(16), or any appropriate State officer (as 
     defined in section 6104(c))'', and
       (B) in subparagraph (F), by striking ``or any other person 
     described in subsection (l)(16)'' and inserting ``any other 
     person described in subsection (l)(16), or any appropriate 
     State officer (as defined in section 6104(c))''.
       (4) The heading for paragraph (1) of section 6104(c) is 
     amended by inserting ``for charitable organizations''.
       (5) Paragraph (2) of section 7213(a) is amended by 
     inserting ``or under section 6104(c)'' after ``6103''.
       (6) Paragraph (2) of section 7213A(a) is amended by 
     inserting ``or 6104(c)'' after ``6103''.
       (7) Paragraph (2) of section 7431(a) is amended by 
     inserting ``(including any disclosure in violation of section 
     6104(c))'' after ``6103''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act 
     but shall not apply to requests made before such date.

     TITLE III--OTHER CHARITABLE AND EXEMPT ORGANIZATION PROVISIONS

     SEC. 301. MODIFICATION OF EXCISE TAX ON UNRELATED BUSINESS 
                   TAXABLE INCOME OF CHARITABLE REMAINDER TRUSTS.

       (a) In General.--Subsection (c) of section 664 (relating to 
     exemption from income taxes) is amended to read as follows:
       ``(c) Taxation of Trusts.--
       ``(1) Income tax.--A charitable remainder annuity trust and 
     a charitable remainder unitrust shall, for any taxable year, 
     not be subject to any tax imposed by this subtitle.
       ``(2) Excise tax.--
       ``(A) In general.--In the case of a charitable remainder 
     annuity trust or a charitable remainder unitrust which has 
     unrelated business taxable income (within the meaning of 
     section 512, determined as if part III of subchapter F 
     applied to such trust) for a taxable year, there is hereby 
     imposed on such trust or unitrust an excise tax equal to the 
     amount of such unrelated business taxable income.
       ``(B) Certain rules to apply.--The tax imposed by 
     subparagraph (A) shall be treated as imposed by chapter 42 
     for purposes of this title other than subchapter E of chapter 
     42.
       ``(C) Tax court proceedings.--For purposes of this 
     paragraph, the references in section 6212(c)(1) to section 
     4940 shall be deemed to include references to this 
     paragraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 302. MODIFICATIONS TO SECTION 512(B)(13).

       (a) In General.--Paragraph (13) of section 512(b) (relating 
     to special rules for certain amounts received from controlled 
     entities) is amended by redesignating subparagraph (E) as 
     subparagraph (F) and by inserting after subparagraph (D) the 
     following new subparagraph:

[[Page S9153]]

       ``(E) Paragraph to apply only to excess payments.--
       ``(i) In general.--Subparagraph (A) shall apply only to the 
     portion of a specified payment received or accrued by the 
     controlling organization that exceeds the amount which would 
     have been paid or accrued if such payment met the 
     requirements prescribed under section 482.
       ``(ii) Addition to tax for valuation misstatements.--The 
     tax imposed by this chapter on the controlling organization 
     shall be increased by an amount equal to 20 percent of the 
     larger of--

       ``(I) such excess determined without regard to any 
     amendment or supplement to a return of tax, or
       ``(II) such excess determined with regard to all such 
     amendments and supplements.''.

       (b) Effective Date.--
       (1) In general.--The amendment made by this section shall 
     apply to payments received or accrued after December 31, 
     2000.
       (2) Payments subject to binding contract transition rule.--
     If the amendments made by section 1041 of the Taxpayer Relief 
     Act of 1997 did not apply to any amount received or accrued 
     in the first 2 taxable years beginning on or after the date 
     of the enactment of the Taxpayer Relief Act of 1997 under any 
     contract described in subsection (b)(2) of such section, such 
     amendments also shall not apply to amounts received or 
     accrued under such contract before January 1, 2001.

     SEC. 303. SIMPLIFICATION OF LOBBYING EXPENDITURE LIMITATION.

       (a) Repeal of Grassroots Expenditure Limit.--Paragraph (1) 
     of section 501(h) (relating to expenditures by public 
     charities to influence legislation) is amended to read as 
     follows:
       ``(1) General rule.--In the case of an organization to 
     which this subsection applies, exemption from taxation under 
     subsection (a) shall be denied because a substantial part of 
     the activities of such organization consists of carrying on 
     propaganda, or otherwise attempting, to influence 
     legislation, but only if such organization normally makes 
     lobbying expenditures in excess of the lobbying ceiling 
     amount for such organization for each taxable year.''.
       (b) Excess Lobbying Expenditures.--Section 4911(b) is 
     amended to read as follows:
       ``(b) Excess Lobbying Expenditures.--For purposes of this 
     section, the term `excess lobbying expenditures' means, for a 
     taxable year, the amount by which the lobbying expenditures 
     made by the organization during the taxable year exceed the 
     lobbying nontaxable amount for such organization for such 
     taxable year.''.
       (c) Conforming Amendments.--
       (1) Section 501(h)(2) is amended by striking subparagraphs 
     (C) and (D).
       (2) Section 4911(c) is amended by striking paragraphs (3) 
     and (4).
       (3) Paragraph (1)(A) of section 4911(f) is amended by 
     striking ``limits of section 501(h)(1) have'' and inserting 
     ``limit of section 501(h)(1) has''.
       (4) Paragraph (1)(C) of section 4911(f) is amended by 
     striking ``limits of section 501(h)(1) are'' and inserting 
     ``limit of section 501(h)(1) is''.
       (5) Paragraphs (4)(A) and (4)(B) of section 4911(f) are 
     each amended by striking ``limits of section 501(h)(1)'' and 
     inserting ``limit of section 501(h)(1)''.
       (6) Paragraph (8) of section 6033(b) (relating to certain 
     organizations described in section 501(c)(3)) is amended by 
     inserting ``and'' at the end of subparagraph (A) and by 
     striking subparagraphs (C) and (D).
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 304. EXPEDITED REVIEW PROCESS FOR CERTAIN TAX-EXEMPTION 
                   APPLICATIONS.

       (a) In General.--The Secretary of the Treasury or the 
     Secretary's delegate (in this section, referred to as the 
     ``Secretary'') shall adopt procedures to expedite the 
     consideration of applications for exempt status under section 
     501(c)(3) of the Internal Revenue Code of 1986 filed after 
     December 31, 2002, by any organization that--
       (1) is organized and operated for the primary purpose of 
     providing social services;
       (2) is seeking a contract or grant under a Federal, State, 
     or local program that provides funding for social services 
     programs;
       (3) establishes that, under the terms and conditions of the 
     contract or grant program, an organization is required to 
     obtain such exempt status before the organization is eligible 
     to apply for a contract or grant;
       (4) includes with its exemption application a copy of its 
     completed Federal, State, or local contract or grant 
     application; and
       (5) meets such other criteria as the Secretary deems 
     appropriate for expedited consideration.

     The Secretary may prescribe other similar circumstances in 
     which such organizations may be entitled to expedited 
     consideration.
       (b) Waiver of Application Fee for Exempt Status.--Any 
     organization that meets the conditions described in 
     subsection (a) (without regard to paragraph (3) of that 
     subsection) is entitled to a waiver of any fee for an 
     application for exempt status under section 501(c)(3) of the 
     Internal Revenue Code of 1986 if the organization certifies 
     that the organization has had (or expects to have) average 
     annual gross receipts of not more than $50,000 during the 
     preceding 4 years (or, in the case of an organization not in 
     existence throughout the preceding 4 years, during such 
     organization's first 4 years).
       (c) Social Services Defined.--For purposes of this 
     section--
       (1) In general.--The term ``social services'' means 
     services directed at helping people in need, reducing 
     poverty, improving outcomes of low-income children, 
     revitalizing low-income communities, and empowering low-
     income families and low-income individuals to become self-
     sufficient, including--
       (A) child care services, protective services for children 
     and adults, services for children and adults in foster care, 
     adoption services, services related to the management and 
     maintenance of the home, day care services for adults, and 
     services to meet the special needs of children, older 
     individuals, and individuals with disabilities (including 
     physical, mental, or emotional disabilities);
       (B) transportation services;
       (C) job training and related services, and employment 
     services;
       (D) information, referral, and counseling services;
       (E) the preparation and delivery of meals, and services 
     related to soup kitchens or food banks;
       (F) health support services;
       (G) literacy and mentoring programs;
       (H) services for the prevention and treatment of juvenile 
     delinquency and substance abuse, services for the prevention 
     of crime and the provision of assistance to the victims and 
     the families of criminal offenders, and services related to 
     the intervention in, and prevention of, domestic violence; 
     and
       (I) services related to the provision of assistance for 
     housing under Federal law.
       (2) Exclusions.--The term does not include a program having 
     the purpose of delivering educational assistance under the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6301 et seq.) or under the Higher Education Act of 1965 (20 
     U.S.C. 1001 et seq.).

     SEC. 305. CLARIFICATION OF DEFINITION OF CHURCH TAX INQUIRY.

       Subsection (i) of section 7611 (relating to section not to 
     apply to criminal investigations, etc.) is amended by 
     striking ``or'' at the end of paragraph (4), by striking the 
     period at the end of paragraph (5) and inserting ``, or'', 
     and by inserting after paragraph (5) the following:
       ``(6) information provided by the Secretary related to the 
     standards for exemption from tax under this title and the 
     requirements under this title relating to unrelated business 
     taxable income.''.

     SEC. 306. EXPANSION OF DECLARATORY JUDGMENT REMEDY TO TAX-
                   EXEMPT ORGANIZATIONS.

       (a) In General.--Paragraph (1) of section 7428(a) (relating 
     to creation of remedy) is amended--
       (1) in subparagraph (B) by inserting after ``509(a))'' the 
     following: ``or as a private operating foundation (as defined 
     in section 4942(j)(3))''; and
       (2) by amending subparagraph (C) to read as follows:
       ``(C) with respect to the initial qualification or 
     continuing qualification of an organization as an 
     organization described in section 501(c) (other than 
     paragraph (3)) which is exempt from tax under section 501(a), 
     or''.
       (b) Court Jurisdiction.--Subsection (a) of section 7428 is 
     amended in the material following paragraph (2) by striking 
     ``United States Tax Court, the United States Claims Court, or 
     the district court of the United States for the District of 
     Columbia'' and inserting the following: ``United States Tax 
     Court (in the case of any such determination or failure) or 
     the United States Claims Court or the district court of the 
     United States for the District of Columbia (in the case of a 
     determination or failure with respect to an issue referred to 
     in subparagraph (A) or (B) of paragraph (1)),''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to pleadings filed with respect to determinations 
     made after December 31, 2001.

     SEC. 307. DEFINITION OF CONVENTION OR ASSOCIATION OF 
                   CHURCHES.

       Section 7701 (relating to definitions) is amended by 
     redesignating subsection (n) as subsection (o) and by 
     inserting after subsection (m) the following new subsection:
       ``(n) Convention or association of churches.--For purposes 
     of this title, any organization which is otherwise a 
     convention or association of churches shall not fail to so 
     qualify merely because the membership of such organization 
     includes individuals as well as churches or because 
     individuals have voting rights in such organization.''.

     SEC. 308. CHARITABLE CONTRIBUTION DEDUCTION FOR CERTAIN 
                   EXPENSES INCURRED IN SUPPORT OF NATIVE ALASKAN 
                   SUBSISTENCE WHALING.

       (a) In General.--Section 170 (relating to charitable, etc., 
     contributions and gifts), as amended by this Act, is amended 
     by redesignating subsection (n) as subsection (o) and by 
     inserting after subsection (m) the following new subsection:
       ``(n) Expenses Paid by Certain Whaling Captains in Support 
     of Native Alaskan Subsistence Whaling.--
       ``(1) In general.--In the case of an individual who is 
     recognized by the Alaska Eskimo Whaling Commission as a 
     whaling captain charged with the responsibility of 
     maintaining and carrying out sanctioned whaling activities 
     and who engages in such activities during the taxable year, 
     the amount described in paragraph (2) (to the extent such 
     amount does not exceed $7,500 for the taxable year) shall be 
     treated for purposes of this section as a charitable 
     contribution.
       ``(2) Amount described.--

[[Page S9154]]

       ``(A) In general.--The amount described in this paragraph 
     is the aggregate of the reasonable and necessary whaling 
     expenses paid by the taxpayer during the taxable year in 
     carrying out sanctioned whaling activities.
       ``(B) Whaling expenses.--For purposes of subparagraph (A), 
     the term `whaling expenses' includes expenses for--
       ``(i) the acquisition and maintenance of whaling boats, 
     weapons, and gear used in sanctioned whaling activities,
       ``(ii) the supplying of food for the crew and other 
     provisions for carrying out such activities, and
       ``(iii) storage and distribution of the catch from such 
     activities.
       ``(3) Sanctioned whaling activities.--For purposes of this 
     subsection, the term `sanctioned whaling activities' means 
     subsistence bowhead whale hunting activities conducted 
     pursuant to the management plan of the Alaska Eskimo Whaling 
     Commission.''
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to expenses paid after December 31, 2002, in 
     taxable years ending after such date.

     SEC. 309. PAYMENTS BY CHARITABLE ORGANIZATIONS TO VICTIMS OF 
                   WAR ON TERRORISM.

       (a) In General.--For purposes of the Internal Revenue Code 
     of 1986--
       (1) payments made by an organization described in section 
     501(c)(3) of such Code to a member of the Armed Forces of the 
     United States, or to an individual of such member's immediate 
     family by reason of the death, injury, wounding, or illness 
     of such member incurred as the result of the military 
     response of the United States to the terrorist attacks 
     against the United States on September 11, 2001, shall be 
     treated as related to the purpose or function constituting 
     the basis for such organization's exemption under section 501 
     of such Code if such payments are made using an objective 
     formula which is consistently applied, and
       (2) in the case of a private foundation (as defined in 
     section 509 of such Code), any payment described in paragraph 
     (1) shall not be treated as made to a disqualified person for 
     purposes of section 4941 of such Code.
       (b) Effective Date.--This section shall apply to payments 
     made after the date of the enactment of this Act and before 
     September 11, 2003.

     SEC. 310. TREATMENT OF BONDS ISSUED TO ACQUIRE STANDING 
                   TIMBER ON LAND SUBJECT TO CONSERVATION 
                   EASEMENT.

       (a) In General.--Section 145 (defining qualified 501(c)(3) 
     bond) is amended by redesignating subsection (e) as 
     subsection (f) and by inserting after subsection (d) the 
     following new subsection:
       ``(e) Bonds Issued To Acquire Standing Timber on Land 
     Subject to Conservation Easement.--
       ``(1) In general.--A bond to which this subsection applies 
     shall not fail to be a qualified 501(c)(3) bond by reason of 
     the sale, lease, or other use of standing timber if--
       ``(A) such sale, lease, or other use does not constitute an 
     unrelated trade or business (determined by applying section 
     513(a)),
       ``(B) the bond is designated by the Secretary for purposes 
     of this subsection, and
       ``(C) the bond otherwise meets the requirements of this 
     subsection.
       ``(2) Bonds to which subsection applies.--This subsection 
     applies to bonds the proceeds of which are used to acquire 
     both land and any standing timber associated with such land 
     from an unrelated person if--
       ``(A) such land is subject to a conservation restriction 
     which--
       ``(i) is granted in perpetuity to an unrelated person which 
     is a qualified organization (as defined in section 
     170(h)(3)),
       ``(ii) meets the requirements of clause (ii) or (iii)(II) 
     of section 170(h)(4)(A), and
       ``(iii) obligates the owner of such land to pay the costs 
     incurred by the holder of the conservation restriction in 
     monitoring compliance with such restriction, and
       ``(B) the seller irrevocably elects not to exclude from 
     income any gain on the sale under section 121A.
       ``(3) Treatment of timber, etc.--
       ``(A) In general.--For purposes of subsection (a), the cost 
     of any standing timber acquired with proceeds of such bonds 
     shall be treated as a cost of acquiring the land associated 
     with the standing timber and such land shall not be treated 
     as used for a private business use because of the sale or 
     lease of the standing timber to, or other use of the standing 
     timber by, an unrelated person to the extent that such sale, 
     lease, or other use does not constitute an unrelated trade or 
     business, determined by applying section 513(a).
       ``(B) Application of bond maturity limitation.--For 
     purposes of section 147(b), the land or standing timber 
     acquired with proceeds of such bonds shall have an economic 
     life of 35 years.
       ``(C) Unrelated person.--For purposes of this subsection, a 
     person shall be treated as unrelated to--
       ``(i) an organization to which section 501 applies, if such 
     person (or, if such person is an individual, a member of such 
     person's family) controls directly or indirectly less than 20 
     percent of the governing body of such organization,
       ``(ii) a corporation, if such person owns directly or 
     indirectly less than 20 percent of the value of the 
     outstanding stock of such corporation, or
       ``(iii) a partnership, if such person owns directly or 
     indirectly less than 20 percent of the capital interests or 
     profit interests of such partnership.
       ``(4) Limitation on amount of bonds designated.--
       ``(A) In general.--The aggregate amount of bonds (including 
     any bond (or series of bonds) used to advance refund such 
     bonds) which may be designated for purposes of this 
     subsection under paragraph (1)(B) shall not exceed 
     $2,000,000,000.
       ``(B) No designation after 2005.--No bonds may be so 
     designated after 2005.
       ``(C) Allocation of limitation.--The limitation described 
     in subparagraph (A) shall be allocated by the Secretary among 
     501(c)(3) organizations based on criteria established by the 
     Secretary after consultation with appropriate Federal, State, 
     and local officials.
       ``(D) Treatment of current refunding bonds.--Any bond (or 
     series of bonds) issued to refund a bond designated and 
     issued before January 1, 2006, shall be treated as designated 
     for purposes of this subsection under paragraph (1)(B) and 
     shall not be taken into account in applying subparagraph (A) 
     or (B) of this paragraph if--
       ``(i) the amount of the refunding bond does not exceed the 
     outstanding amount of the refunded bond, and
       ``(ii) the net proceeds of the refunding bond are used to 
     redeem the refunded bond not later than 90 days after the 
     date of the issuance of the refunding bond.
       ``(5) Termination.--This subsection shall not apply to any 
     bond (other than a refunding bond described in paragraph 
     (4)(D)) issued after December 31, 2005.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to bonds issued after September 30, 2002.

     SEC. 311. EXEMPTION FROM INCOME TAX FOR STATE-CREATED 
                   ORGANIZATIONS PROVIDING PROPERTY AND CASUALTY 
                   INSURANCE FOR PROPERTY FOR WHICH SUCH COVERAGE 
                   IS OTHERWISE UNAVAILABLE.

       (a) In General.--Subsection (c) of section 501 (relating to 
     exemption from tax on corporations, certain trusts, etc.) is 
     amended by adding at the end the following new paragraph:
       ``(29)(A) Any association created before January 1, 1999, 
     by State law and organized and operated exclusively to 
     provide property and casualty insurance coverage for 
     windstorm, hail, and fire damage to property located within 
     the State for which the State determines, through appropriate 
     State action, that such coverage in the authorized insurance 
     market is not reasonably available to a substantial number of 
     insurable real properties (and any successor association) 
     if--
       ``(i) no part of the net earnings of which inures to the 
     benefit of any private shareholder or individual,
       ``(ii) except as provided in clause (v), no part of the 
     assets of which may be used for, or diverted to, any purpose 
     other than--
       ``(I) to satisfy, in whole or in part, the liability of the 
     association for, or with respect to, claims made on policies 
     written by the association,
       ``(II) to invest in investments authorized by applicable 
     law,
       ``(III) to pay reasonable and necessary administration 
     expenses in connection with the establishment and operation 
     of the association and the processing of claims against the 
     association, or
       ``(IV) to make remittances pursuant to State law to be used 
     by the State to provide for the payment of claims on policies 
     written by the association, purchase reinsurance covering 
     losses under such policies, or to support governmental 
     programs to prepare for or mitigate the effects of natural 
     catastrophic events,
       ``(iii) the State law governing the association permits the 
     association to levy assessments on insurance companies 
     authorized to sell property and casualty insurance in the 
     State, or on property and casualty insurance policyholders 
     with insurable interests in property located in the State to 
     fund deficits of the association, including the creation of 
     reserves,
       ``(iv) the plan of operation of the association is subject 
     to approval by the chief executive officer or other official 
     of the State, by the State legislature, or both, and
       ``(v) the assets of the association revert upon dissolution 
     to the State, the State's designee, or an entity designated 
     by the State law governing the association, or State law does 
     not permit the dissolution of the association.
       ``(B)(i) An entity described in clause (ii) (and any 
     successor entity) shall be disregarded as a separate entity 
     and treated as part of the association described in 
     subparagraph (A) from which it receives remittances described 
     in clause (ii) if an election is made within 30 days after 
     the date that such association is determined to be exempt 
     from tax.
       ``(ii) An entity is described in this clause if it is an 
     entity or fund created before January 1, 1999, pursuant to 
     State law and organized and operated exclusively to receive, 
     hold, and invest remittances from an association described in 
     subparagraph (A) and exempt from tax under subsection (a), to 
     make disbursements to pay claims on insurance contracts 
     issued by such association, and to make disbursements to 
     support governmental programs to prepare for or mitigate the 
     effects of natural catastrophic events.''.
       (b) Unrelated Business Taxable Income.--Subsection (a) of 
     section 512 (relating

[[Page S9155]]

     to unrelated business taxable income) is amended by adding at 
     the end the following new paragraph:
       ``(6) Special rule applicable to organizations described in 
     section 501(c)(29)--In the case of an organization described 
     in section 501(c)(29), the term `unrelated business taxable 
     income' means taxable income for a taxable year computed 
     without the application of section 501(c)(29) if at the end 
     of the immediately preceding taxable year the organization's 
     net equity exceeded 15 percent of the total coverage in force 
     under insurance contracts issued by the organization and 
     outstanding at the end of such preceding year.''.
       (c) Transitional Rule.--No income or gain shall be 
     recognized by an association as a result of a change in 
     status to that of an association described by section 
     501(c)(29) of the Internal Revenue Code of 1986, as amended 
     by subsection (a).
       (d) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 312. MODIFICATION OF SPECIAL ARBITRAGE RULE FOR CERTAIN 
                   FUNDS.

       (a) In General.--Paragraph (1) of section 648 of the 
     Deficit Reduction Act of 1984 is amended to read as follows:
       ``(1) such securities or obligations are held in a fund--
       ``(A) which, except to the extent of the investment 
     earnings on such securities or obligations, cannot be used, 
     under State constitutional or statutory restrictions 
     continuously in effect since October 9, 1969, through the 
     date of issue of the bond issue, to pay debt service on the 
     bond issue or to finance the facilities that are to be 
     financed with the proceeds of the bonds, or
       ``(B) the annual distributions from which cannot exceed 7 
     percent of the average fair market value of the assets held 
     in such fund except to the extent distributions are necessary 
     to pay debt service on the bond issue,''.
       (b) Conforming Amendment.--Section 648(3) of such Act is 
     amended by striking ``the investment earnings of'' and 
     inserting ``distributions from''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 313. MATCHING GRANTS TO LOW-INCOME TAXPAYER CLINICS FOR 
                   RETURN PREPARATION.

       (a) In General.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     section:

     ``SEC. 7527. ASSISTANCE FOR RETURN PREPARATION FOR LOW-INCOME 
                   TAXPAYERS.

       ``(a) In General.--The Secretary may, subject to the 
     availability of appropriated funds, make grants to provide 
     matching funds to not-for-profit organizations described in 
     section 501(c) and exempt from taxation under section 501(a) 
     which assist low-income taxpayers in tax return preparation.
       ``(b) Aggregate Limitation.--Unless otherwise provided by 
     specific appropriation, the Secretary shall not allocate more 
     than $10,000,000 per year (exclusive of costs of 
     administering the program) to grants under this section.
       ``(c) Requirement of Matching Funds.--A not-for-profit 
     organization must provide matching funds on a dollar-for-
     dollar basis for all grants provided under this section. 
     Matching funds may include--
       ``(1) the salary (including fringe benefits) of individuals 
     performing tax return preparation services for the 
     organization; and
       ``(2) the cost of equipment used by the organization.

     Indirect expenses, including general overhead of the 
     organization, shall not be counted as matching funds.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 is amended by adding at the end the following new item:

``Sec. 7527. Assistance for return preparation for low-income 
              taxpayers.''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 314. MODIFICATION OF SCHOLARSHIP FOUNDATION RULES.

       In applying the limitations on the percentage of 
     scholarship grants which may be awarded after December 31, 
     2002, to children of employees under Revenue Procedure 76-47, 
     such percentage shall be increased to 35 percent of the 
     eligible applicants to be considered by the selection 
     committee and to 20 percent of individuals eligible for the 
     grants, but only if the foundation awarding the grants 
     demonstrates that, in addition to meeting the other 
     requirements of Revenue Procedure 76-47, it provides a 
     comparable number and aggregate amount of grants during the 
     same program year to children who are not children of current 
     or former employees.

     SEC. 315. TREATMENT OF CERTAIN HOSPITAL SUPPORT ORGANIZATIONS 
                   AS QUALIFIED ORGANIZATIONS FOR PURPOSES OF 
                   DETERMINING ACQUISITION INDEBTEDNESS.

       (a) In General.--Subparagraph (C) of section 514(c)(9) 
     (relating to real property acquired by a qualified 
     organization) is amended by striking ``or'' at the end of 
     clause (ii), by striking the period at the end of clause 
     (iii) and inserting ``; or'', and by adding at the end the 
     following new clause:

       ``(iv) a qualified hospital support organization (as 
     defined in subparagraph (I)).''.

       (b) Qualified Hospital Support Organizations.--Paragraph 
     (9) of section 514(c) is amended by adding at the end the 
     following new subparagraph:
       ``(I) Qualified hospital support organizations.--For 
     purposes of subparagraph (C)(iv), the term `qualified 
     hospital support organization' means, with respect to any 
     eligible indebtedness (including any qualified refinancing of 
     such eligible indebtedness), a support organization (as 
     defined in section 509(a)(3)) which supports a hospital 
     described in section 119(d)(4)(B) and with respect to which--

       ``(i) more than half of its assets (by value) at any time 
     since its organization--

       ``(I) were acquired, directly or indirectly, by 
     testamentary gift or devise, and
       ``(II) consisted of real property, and

       ``(ii) the fair market value of the organization's real 
     estate acquired, directly or indirectly, by gift or devise, 
     exceeded 25 percent of the fair market value of all 
     investment assets held by the organization immediately prior 
     to the time that the eligible indebtedness was incurred.

     For purposes of this subparagraph, the term `eligible 
     indebtedness' means indebtedness secured by real property 
     acquired by the organization, directly or indirectly, by gift 
     or devise, the proceeds of which are used exclusively to 
     acquire any leasehold interest in such real property or for 
     improvements on, or repairs to, such real property. A 
     determination under clauses (i) and (ii) of this subparagraph 
     shall be made each time such an eligible indebtedness (or the 
     qualified refinancing of such an eligible indebtedness) is 
     incurred. For purposes of this subparagraph, a refinancing of 
     such an eligible indebtedness shall be considered qualified 
     if such refinancing does not exceed the amount of the 
     refinanced eligible indebtedness immediately before the 
     refinancing.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to indebtedness incurred after December 31, 2003.

     SEC. 316. 10-YEAR DIVESTITURE PERIOD FOR CERTAIN EXCESS 
                   BUSINESS HOLDINGS OF PRIVATE FOUNDATIONS.

       (a) In General.--Section 4943(c) (relating to excess 
     business holdings) is amended by redesignating paragraph (7) 
     as paragraph (8) and by inserting after paragraph (6) the 
     following new paragraph:
       ``(7) 10-year period to dispose of certain large gifts and 
     bequests.--
       ``(A) In General.--Upon the election of a private 
     foundation (at such time and in such form and manner as the 
     Secretary may prescribe), paragraph (6) shall be applied by 
     substituting `10-year period' for `5-year period' if--
       ``(i) it is established to the satisfaction of the 
     Secretary that--

       ``(I) the excess business holdings (or increase in excess 
     business holdings) in a business enterprise by the private 
     foundation is the result of a gift or bequest the value of 
     which exceeds $1,000,000,000, and
       ``(II) after such gift or bequest, the private foundation 
     does not have effective control of such business enterprise 
     to which such gift or bequest relates, and

       ``(ii) not later than the end of the taxable year following 
     the taxable year during which such gift or bequest was made, 
     the private foundation submits to the Secretary a reasonable 
     plan for disposing of all of the excess business holdings 
     related to such gift or bequest.
       ``(B) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2003, the 
     $1,000,000,000 amount under subparagraph (A)(i)(I) shall be 
     increased by an amount equal to such dollar amount, 
     multiplied by the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, determined by 
     substituting `2002' for `1992' in subparagraph (B) thereof. 
     If the $1,000,000,000 amount as increased under this 
     subparagraph is not a multiple of $100,000,000, such amount 
     shall be rounded to the next lowest multiple of 
     $100,000,000.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to gifts and bequests made after the date of the 
     enactment of this Act.

                 TITLE IV--SOCIAL SERVICES BLOCK GRANT

     SEC. 401. RESTORATION OF FUNDS FOR THE SOCIAL SERVICES BLOCK 
                   GRANT.

       (a) Findings.--Congress makes the following findings:
       (1) On August 22, 1996, the Personal Responsibility and 
     Work Opportunity Reconciliation Act of 1996 (Public Law 104-
     193; 110 Stat. 2105) was signed into law.
       (2) In enacting that law, Congress authorized 
     $2,800,000,000 for fiscal year 2003 and each fiscal year 
     thereafter to carry out the Social Services Block Grant 
     program established under title XX of the Social Security Act 
     (42 U.S.C. 1397 et seq.).
       (b) Restoration of Funds.--Section 2003(c)(11) of the 
     Social Security Act (42 U.S.C. 1397b(c)(11)) is amended by 
     inserting ``, except that, with respect to fiscal year 2003, 
     the amount shall be $1,975,000,000, and with respect to 
     fiscal year 2004, the amount shall be $2,800,000,000'' after 
     ``thereafter.''.

     SEC. 402. RESTORATION OF AUTHORITY TO TRANSFER UP TO 10 
                   PERCENT OF TANF FUNDS TO THE SOCIAL SERVICES 
                   BLOCK GRANT.

       (a) In General.--Section 404(d)(2) of the Social Security 
     Act (42 U.S.C. 604(d)(2)) is amended to read as follows:
       ``(2) Limitation on amount transferable to title xx 
     programs.--A State may use not more than 10 percent of the 
     amount of any grant made to the State under section 403(a) 
     for a fiscal year to carry out State programs pursuant to 
     title XX.''.

[[Page S9156]]

       (b) Effective Date.--The amendment made by subsection (a) 
     applies to amounts made available for fiscal year 2003 and 
     each fiscal year thereafter.

     SEC. 403. REQUIREMENT TO SUBMIT ANNUAL REPORT ON STATE 
                   ACTIVITIES.

       (a) In General.--Section 2006(c) of the Social Security Act 
     (42 U.S.C. 1397e(c)) is amended by adding at the end the 
     following: ``The Secretary shall compile the information 
     submitted by the States and submit that information to 
     Congress on an annual basis.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     applies to information submitted by States under section 2006 
     of the Social Security Act (42 U.S.C. 1397e) with respect to 
     fiscal year 2002 and each fiscal year thereafter.

                TITLE V--INDIVIDUAL DEVELOPMENT ACCOUNTS

     SEC. 501. SHORT TITLE.

       This title may be cited as the ``Savings for Working 
     Families Act of 2002''.

     SEC. 502. PURPOSES.

       The purposes of this title are to provide for the 
     establishment of individual development account programs that 
     will--
       (1) provide individuals and families with limited means an 
     opportunity to accumulate assets and to enter the financial 
     mainstream,
       (2) promote education, homeownership, and the development 
     of small businesses,
       (3) stabilize families and build communities, and
       (4) support continued United States economic expansion.

     SEC. 503. DEFINITIONS.

       As used in this title:
       (1) Eligible individual.--
       (A) In general.--The term ``eligible individual'' means, 
     with respect to any taxable year, an individual who--
       (i) has attained the age of 18 but not the age of 61 as of 
     the last day of such taxable year,
       (ii) is a citizen or lawful permanent resident (within the 
     meaning of section 7701(b)(6) of the Internal Revenue Code of 
     1986) of the United States as of the last day of such taxable 
     year,
       (iii) was not a student (as defined in section 151(c)(4) of 
     such Code) for the immediately preceding taxable year,
       (iv) is not an individual with respect to whom a deduction 
     under section 151 of such Code is allowable to another 
     taxpayer for a taxable year of the other taxpayer ending 
     during the immediately preceding taxable year of the 
     individual,
       (v) is not a taxpayer described in subsection (c), (d), or 
     (e) of section 6402 of such Code for the immediately 
     preceding taxable year,
       (vi) is not a taxpayer described in section 1(d) of such 
     Code for the immediately preceding taxable year, and
       (vii) is a taxpayer the modified adjusted gross income of 
     whom for the immediately preceding taxable year does not 
     exceed--

       (I) $18,000, in the case of a taxpayer described in section 
     1(c) of such Code,
       (II) $30,000, in the case of a taxpayer described in 
     section 1(b) of such Code, and
       (III) $38,000, in the case of a taxpayer described in 
     section 1(a) of such Code.

       (B) Inflation adjustment.--
       (i) In general.--In the case of any taxable year beginning 
     after 2004, each dollar amount referred to in subparagraph 
     (A)(vii) shall be increased by an amount equal to--

       (I) such dollar amount, multiplied by
       (II) the cost-of-living adjustment determined under section 
     (1)(f)(3) of the Internal Revenue Code of 1986 for the 
     calendar year in which the taxable year begins, by 
     substituting ``2003'' for ``1992''.

       (ii) Rounding.--If any amount as adjusted under clause (i) 
     is not a multiple of $50, such amount shall be rounded to the 
     nearest multiple of $50.
       (C) Modified adjusted gross income.--For purposes of 
     subparagraph (A)(v), the term ``modified adjusted gross 
     income'' means adjusted gross income--
       (i) determined without regard to sections 86, 893, 911, 
     931, and 933 of the Internal Revenue Code of 1986, and
       (ii) increased by the amount of interest received or 
     accrued by the taxpayer during the taxable year which is 
     exempt from tax.
       (2) Individual development account.--The term ``Individual 
     Development Account'' means an account established for an 
     eligible individual as part of a qualified individual 
     development account program, but only if the written 
     governing instrument creating the account meets the following 
     requirements:
       (A) The owner of the account is the individual for whom the 
     account was established.
       (B) No contribution will be accepted unless it is in cash, 
     and, except in the case of any qualified rollover, 
     contributions will not be accepted for the taxable year in 
     excess of $1,500 on behalf of any individual.
       (C) The trustee of the account is a qualified financial 
     institution.
       (D) The assets of the account will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       (E) Except as provided in section 507(b), any amount in the 
     account may be paid out only for the purpose of paying the 
     qualified expenses of the account owner.
       (3) Parallel account.--The term ``parallel account'' means 
     a separate, parallel individual or pooled account for all 
     matching funds and earnings dedicated to an Individual 
     Development Account owner as part of a qualified individual 
     development account program, the trustee of which is a 
     qualified financial institution.
       (4) Qualified financial institution.--The term ``qualified 
     financial institution'' means any person authorized to be a 
     trustee of any individual retirement account under section 
     408(a)(2) of the Internal Revenue Code of 1986.
       (5) Qualified individual development account program.--The 
     term ``qualified individual development account program'' 
     means a program established upon approval of the Secretary 
     under section 504 after December 31, 2002, under which--
       (A) Individual Development Accounts and parallel accounts 
     are held in trust by a qualified financial institution, and
       (B) additional activities determined by the Secretary, in 
     consultation with the Secretary of Health and Human Services, 
     as necessary to responsibly develop and administer accounts, 
     including recruiting, providing financial education and other 
     training to Account owners, and regular program monitoring, 
     are carried out by the qualified financial institution.
       (6) Qualified expense distribution.--
       (A) In general.--The term ``qualified expense 
     distribution'' means any amount paid (including through 
     electronic payments) or distributed out of an Individual 
     Development Account or a parallel account established for an 
     eligible individual if such amount--
       (i) is used exclusively to pay the qualified expenses of 
     the Individual Development Account owner or such owner's 
     spouse or dependents,
       (ii) is paid by the qualified financial institution--

       (I) except as otherwise provided in this clause, directly 
     to the unrelated third party to whom the amount is due,
       (II) in the case of any qualified rollover, directly to 
     another Individual Development Account and parallel account, 
     or
       (III) in the case of a qualified final distribution, 
     directly to the spouse, dependent, or other named beneficiary 
     of the deceased Account owner, and

       (iii) is paid after the Account owner has completed a 
     financial education course if required under section 505(b).
       (B) Qualified expenses.--
       (i) In general.--The term ``qualified expenses'' means any 
     of the following expenses approved by the qualified financial 
     institution:

       (I) Qualified higher education expenses.
       (II) Qualified first-time homebuyer costs.
       (III) Qualified business capitalization or expansion costs.
       (IV) Qualified rollovers.
       (V) Qualified final distribution.

       (ii) Qualified higher education expenses.--

       (I) In general.--The term ``qualified higher education 
     expenses'' has the meaning given such term by section 
     529(e)(3) of the Internal Revenue Code of 1986, determined by 
     treating the Account owner, the owner's spouse, or one or 
     more of the owner's dependents as a designated beneficiary, 
     and reduced as provided in section 25A(g)(2) of such Code.
       (II) Coordination with other benefits.--The amount of 
     expenses which may be taken into account for purposes of 
     section 135, 529, or 530 of such Code for any taxable year 
     shall be reduced by the amount of any qualified higher 
     education expenses taken into account as qualified expense 
     distributions during such taxable year.

       (iii) Qualified first-time homebuyer costs.--The term 
     ``qualified first-time homebuyer costs'' means qualified 
     acquisition costs (as defined in section 72(t)(8)(C) of the 
     Internal Revenue Code of 1986) with respect to a principal 
     residence (within the meaning of section 121 of such Code) 
     for a qualified first-time homebuyer (as defined in section 
     72(t)(8)(D)(i) of such Code).
       (iv) Qualified business capitalization or expansion 
     costs.--

       (I) In general.--The term ``qualified business 
     capitalization or expansion costs'' means qualified 
     expenditures for the capitalization or expansion of a 
     qualified business pursuant to a qualified business plan.
       (II) Qualified expenditures.--The term ``qualified 
     expenditures'' means expenditures normally associated with 
     starting or expanding a business and included in a qualified 
     business plan, including costs for capital, plant, and 
     equipment, inventory expenses, and attorney and accounting 
     fees.
       (III) Qualified business.--The term ``qualified business'' 
     means any business that does not contravene any law.
       (IV) Qualified business plan.--The term ``qualified 
     business plan'' means a business plan which has been approved 
     by the qualified financial institution and which meets such 
     requirements as the Secretary may specify.

       (v) Qualified rollovers.--The term ``qualified rollover'' 
     means the complete distribution of the amounts in an 
     Individual Development Account and parallel account to 
     another Individual Development Account and parallel account 
     established in another qualified financial institution for 
     the benefit of the Account owner.
       (vi) Qualified final distribution.--The term ``qualified 
     final distribution'' means, in the case of a deceased Account 
     owner, the complete distribution of the amounts in the

[[Page S9157]]

     Individual Development Account and parallel account directly 
     to the spouse, any dependent, or other named beneficiary of 
     the deceased.
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.

     SEC. 504. STRUCTURE AND ADMINISTRATION OF QUALIFIED 
                   INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAMS.

       (a) Establishment of Qualified Individual Development 
     Account Programs.--Any qualified financial institution may 
     apply to the Secretary for approval to establish 1 or more 
     qualified individual development account programs which meet 
     the requirements of this title and for an allocation of the 
     Individual Development Account limitation under section 
     45G(i)(3) of the Internal Revenue Code of 1986 with respect 
     to such programs.
       (b) Basic Program Structure.--
       (1) In general.--All qualified individual development 
     account programs shall consist of the following 2 components 
     for each participant:
       (A) An Individual Development Account to which an eligible 
     individual may contribute cash in accordance with section 
     505.
       (B) A parallel account to which all matching funds shall be 
     deposited in accordance with section 506.
       (2) Tailored ida programs.--A qualified financial 
     institution may tailor its qualified individual development 
     account program to allow matching funds to be spent on 1 or 
     more of the categories of qualified expenses.
       (3) No fees may be charged to idas.--A qualified financial 
     institution may not charge any fees to any Individual 
     Development Account or parallel account under a qualified 
     individual development account program.
       (c) Coordination With Public Housing Agency Individual 
     Savings Accounts.--Section 3(e)(2) of the United States 
     Housing Act of 1937 (42 U.S.C. 1437a(e)(2)) is amended by 
     inserting ``or in any Individual Development Account 
     established under the Savings for Working Families Act of 
     2002'' after ``subsection''.
       (d) Tax Treatment of Parallel Accounts.--
       (1) In general.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     section:

     ``SEC. 7525. TAX INCENTIVES FOR INDIVIDUAL DEVELOPMENT 
                   PARALLEL ACCOUNTS.

       ``For purposes of this title--
       ``(1) any account described in section 504(b)(1)(B) of the 
     Savings for Working Families Act of 2002 shall be exempt from 
     taxation,
       ``(2) except as provided in section 45G, no item of income, 
     expense, basis, gain, or loss with respect to such an account 
     may be taken into account, and
       ``(3) any amount withdrawn from such an account shall not 
     be includible in gross income.''.
       (2) Conforming amendment.--The table of sections for 
     chapter 77 is amended by adding at the end the following new 
     item:

``Sec. 7525. Tax incentives for individual development parallel 
              accounts.''.

       (e) Coordination of certain expenses.--Section 25A(g)(2) is 
     amended by striking ``and'' at the end of subparagraph (C), 
     by striking the period at the end of subparagraph (D) and 
     inserting ``, and'', and by adding at the end the following 
     new subparagraph:
       ``(D) a qualified expense distribution with respect to 
     qualified higher education expenses from an Individual 
     Development Account or a parallel account under section 
     507(a) of the Savings for Working Families Act of 2002.

     SEC. 505. PROCEDURES FOR OPENING AND MAINTAINING AN 
                   INDIVIDUAL DEVELOPMENT ACCOUNT AND QUALIFYING 
                   FOR MATCHING FUNDS.

       (a) Opening an Account.--An eligible individual may open an 
     Individual Development Account with a qualified financial 
     institution upon certification that such individual has never 
     maintained any other Individual Development Account (other 
     than an Individual Development Account to be terminated by a 
     qualified rollover).
       (b) Required Completion of Financial Education Course.--
       (1) In general.--Before becoming eligible to withdraw funds 
     to pay for qualified expenses, owners of Individual 
     Development Accounts must complete 1 or more financial 
     education courses specified in the qualified individual 
     development account program.
       (2) Standard and applicability of course.--The Secretary, 
     in consultation with representatives of qualified individual 
     development account programs and financial educators, shall 
     not later than January 1, 2004, establish minimum quality 
     standards for the contents of financial education courses and 
     providers of such courses described in paragraph (1) and a 
     protocol to exempt individuals from the requirement under 
     paragraph (1) in the case of hardship, lack of need, the 
     attainment of age 65, or a qualified final distribution.
       (c) Proof of Status as an Eligible Individual.--Federal 
     income tax forms for the immediately preceding taxable year 
     and any other evidence of eligibility which may be required 
     by a qualified financial institution shall be presented to 
     such institution at the time of the establishment of the 
     Individual Development Account and in any taxable year in 
     which contributions are made to the Account to qualify for 
     matching funds under section 506(b)(1)(A).
       (d) Special Rule in the Case of Married Individuals.--For 
     purposes of this title, if, with respect to any taxable year, 
     2 married individuals file a Federal joint income tax return, 
     then not more than 1 of such individuals may be treated as an 
     eligible individual with respect to the succeeding taxable 
     year.

     SEC. 506. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT 
                   ACCOUNT PROGRAMS.

       (a) Parallel Accounts.--The qualified financial institution 
     shall deposit all matching funds for each Individual 
     Development Account into a parallel account at a qualified 
     financial institution.
       (b) Regular Deposits of Matching Funds.--
       (1) In general.--Subject to paragraph (2), the qualified 
     financial institution shall deposit into the parallel account 
     with respect to each eligible individual the following 
     amounts:
       (A) A dollar-for-dollar match for the first $500 
     contributed by the eligible individual into an Individual 
     Development Account with respect to any taxable year of such 
     individual.
       (B) Any matching funds provided by State, local, or private 
     sources in accordance with the matching ratio set by those 
     sources.
       (2) Timing of deposits.--A deposit of the amounts described 
     in paragraph (1) shall be made into a parallel account--
       (A) in the case of amounts described in paragraph (1)(A), 
     not later than 30 days after the end of the calendar quarter 
     during which the contribution described in such paragraph was 
     made, and
       (B) in the case of amounts described in paragraph (1)(B), 
     not later than 2 business days after such amounts were 
     provided.
       (3) Cross reference.--

  For allowance of tax credit for Individual Development Account 
subsidies, including matching funds, see section 45G of the Internal 
Revenue Code of 1986.

       (c) Deposit of Matching Funds Into Individual Development 
     Account of Individual Who Has Attained Age 65.--In the case 
     of an Individual Development Account owner who attains the 
     age of 65, the qualified financial institution shall deposit 
     the funds in the parallel account with respect to such 
     individual into the Individual Development Account of such 
     individual on the later of--
       (1) the day which is the 1-year anniversary of the deposit 
     of such funds in the parallel account, or
       (2) the first business day of the taxable year of such 
     individual following the taxable year in which such 
     individual attained age 65.
       (d) Uniform Accounting Regulations.--To ensure proper 
     recordkeeping and determination of the tax credit under 
     section 45G of the Internal Revenue Code of 1986, the 
     Secretary shall prescribe regulations with respect to 
     accounting for matching funds in the parallel accounts.
       (e) Regular Reporting of Accounts.--Any qualified financial 
     institution shall report the balances in any Individual 
     Development Account and parallel account of an individual on 
     not less than an annual basis to such individual.

     SEC. 507. WITHDRAWAL PROCEDURES.

       (a) Withdrawals for Qualified Expenses.--
       (1) In general.--An Individual Development Account owner 
     may withdraw funds in order to pay qualified expense 
     distributions from such individual's--
       (A) Individual Development Account, but only from funds 
     which have been on deposit in such Account for at least 1 
     year, and
       (B) parallel account, but only--
       (i) from matching funds which have been on deposit in such 
     parallel account for at least 1 year,
       (ii) from earnings in such parallel account, after all 
     matching funds described in clause (i) have been withdrawn, 
     and
       (iii) to the extent such withdrawal does not result in a 
     remaining balance in such parallel account which is less than 
     the remaining balance in the Individual Development Account 
     after such withdrawal.
       (2) Procedure.--Upon receipt of a withdrawal request which 
     meets the requirements of paragraph (1), the qualified 
     financial institution shall directly transfer the funds 
     electronically to the distributees described in section 
     503(6)(A)(ii). If a distributee is not equipped to receive 
     funds electronically, the qualified financial institution may 
     issue such funds by paper check to the distributee.
       (b) Withdrawals for Nonqualified Expenses.--An Individual 
     Development Account owner may withdraw any amount of funds 
     from the Individual Development Account for purposes other 
     than to pay qualified expense distributions, but if, after 
     such withdrawal, the amount in the parallel account of such 
     owner (excluding earnings on matching funds) exceeds the 
     amount remaining in such Individual Development Account, then 
     such owner shall forfeit from the parallel account the lesser 
     of such excess or the amount withdrawn.
       (c) Withdrawals From Accounts of Noneligible Individuals.--
     If the individual for whose benefit an Individual Development 
     Account is established ceases to be an eligible individual, 
     such account shall remain an Individual Development Account, 
     but such individual shall not be eligible for any further 
     matching funds under section 506(b)(1)(A) for

[[Page S9158]]

     contributions which are made to the Account during any 
     taxable year when such individual is not an eligible 
     individual.
       (d) Effect of Pledging Account as Security.--If, during any 
     taxable year of the individual for whose benefit an 
     Individual Development Account is established, that 
     individual uses the Account, the individual's parallel 
     account, or any portion thereof as security for a loan, the 
     portion so used shall be treated as a withdrawal of such 
     portion from the Individual Development Account for purposes 
     other than to pay qualified expenses.

     SEC. 508. CERTIFICATION AND TERMINATION OF QUALIFIED 
                   INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAMS.

       (a) Certification Procedures.--Upon establishing a 
     qualified individual development account program under 
     section 504, a qualified financial institution shall certify 
     to the Secretary at such time and in such manner as may be 
     prescribed by the Secretary and accompanied by any 
     documentation required by the Secretary, that--
       (1) the accounts described in subparagraphs (A) and (B) of 
     section 504(b)(1) are operating pursuant to all the 
     provisions of this title, and
       (2) the qualified financial institution agrees to implement 
     an information system necessary to monitor the cost and 
     outcomes of the qualified individual development account 
     program.
       (b) Authority To Terminate Qualified IDA Program.--If the 
     Secretary determines that a qualified financial institution 
     under this title is not operating a qualified individual 
     development account program in accordance with the 
     requirements of this title (and has not implemented any 
     corrective recommendations directed by the Secretary), the 
     Secretary shall terminate such institution's authority to 
     conduct the program. If the Secretary is unable to identify a 
     qualified financial institution to assume the authority to 
     conduct such program, then any funds in a parallel account 
     established for the benefit of any individual under such 
     program shall be deposited into the Individual Development 
     Account of such individual as of the first day of such 
     termination.

     SEC. 509. REPORTING, MONITORING, AND EVALUATION.

       (a) Responsibilities of Qualified Financial Institutions.--
       (1) In general.--Each qualified financial institution that 
     operates a qualified individual development account program 
     under section 504 shall report annually to the Secretary 
     within 90 days after the end of each calendar year on--
       (A) the number of individuals making contributions into 
     Individual Development Accounts and the amounts contributed,
       (B) the amounts contributed into Individual Development 
     Accounts by eligible individuals and the amounts deposited 
     into parallel accounts for matching funds,
       (C) the amounts withdrawn from Individual Development 
     Accounts and parallel accounts, and the purposes for which 
     such amounts were withdrawn,
       (D) the balances remaining in Individual Development 
     Accounts and parallel accounts, and
       (E) such other information needed to help the Secretary 
     monitor the effectiveness of the qualified individual 
     development account program (provided in a non-individually-
     identifiable manner).
       (2) Additional reporting requirements.--Each qualified 
     financial institution that operates a qualified individual 
     development account program under section 504 shall report at 
     such time and in such manner as the Secretary may prescribe 
     any additional information that the Secretary requires to be 
     provided for purposes of administering and supervising the 
     qualified individual development account program. This 
     additional data may include, without limitation, identifying 
     information about Individual Development Account owners, 
     their Accounts, additions to the Accounts, and withdrawals 
     from the Accounts.
       (b) Responsibilities of the Secretary.--
       (1) Monitoring protocol.--Not later than 12 months after 
     the date of the enactment of this Act, the Secretary, in 
     consultation with the Secretary of Health and Human Services, 
     shall develop and implement a protocol and process to monitor 
     the cost and outcomes of the qualified individual development 
     account programs established under section 504.
       (2) Annual reports.--For each year after 2003, the 
     Secretary shall submit a progress report to Congress on the 
     status of such qualified individual development account 
     programs. Such report shall, to the extent data are 
     available, include from a representative sample of qualified 
     individual development account programs information on--
       (A) the characteristics of participants, including age, 
     gender, race or ethnicity, marital status, number of 
     children, employment status, and monthly income,
       (B) deposits, withdrawals, balances, uses of Individual 
     Development Accounts, and participant characteristics,
       (C) the characteristics of qualified individual development 
     account programs, including match rate, economic education 
     requirements, permissible uses of accounts, staffing of 
     programs in full time employees, and the total costs of 
     programs, and
       (D) process information on program implementation and 
     administration, especially on problems encountered and how 
     problems were solved.
       (3) Reauthorization report on cost and outcomes of idas.--
       (A) In general.--Not later than July 1, 2008, the Secretary 
     of the Treasury shall submit a report to Congress and the 
     chairmen and ranking members of the Committee on Finance, the 
     Committee on Banking, Housing, and Urban Affairs, and the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate and the Committee on Ways and Means, the Committee on 
     Banking and Financial Services, and the Committee on 
     Education and the Workforce of the House of Representatives, 
     in which the Secretary shall--
       (i) summarize the previously submitted annual reports 
     required under paragraph (2),
       (ii) from a representative sample of qualified individual 
     development account programs, include an analysis of--

       (I) the economic, social, and behavioral outcomes,
       (II) the changes in savings rates, asset holdings, and 
     household debt, and overall changes in economic stability,
       (III) the changes in outlooks, attitudes, and behavior 
     regarding savings strategies, investment, education, and 
     family,
       (IV) the integration into the financial mainstream, 
     including decreased reliance on alternative financial 
     services, and increase in acquisition of mainstream financial 
     products, and
       (V) the involvement in civic affairs, including 
     neighborhood schools and associations,

     associated with participation in qualified individual 
     development account programs,
       (iii) from a representative sample of qualified individual 
     development account programs, include a comparison of 
     outcomes associated with such programs with outcomes 
     associated with other Federal Government social and economic 
     development programs, including asset building programs, and
       (iv) make recommendations regarding the reauthorization of 
     the qualified individual development account programs, 
     including--

       (I) recommendations regarding reforms that will improve the 
     cost and outcomes of the such programs, including the ability 
     to help low income families save and accumulate productive 
     assets,
       (II) recommendations regarding the appropriate levels of 
     subsidies to provide effective incentives to financial 
     institutions and Account owners under such programs, and
       (III) recommendations regarding how such programs should be 
     integrated into other Federal poverty reduction, asset 
     building, and community development policies and programs.

       (B) Authorization.--There is authorized to be appropriated 
     $2,500,000, for carrying out the purposes of this paragraph.
       (4) Use of accounts in rural areas encouraged.--The 
     Secretary shall develop methods to encourage the use of 
     Individual Development Accounts in rural areas.

     SEC. 510. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated to the Secretary 
     $1,000,000 for fiscal year 2003 and for each fiscal year 
     through 2010, for the purposes of implementing this title, 
     including the reporting, monitoring, and evaluation required 
     under section 509, to remain available until expended.

     SEC. 511. MATCHING FUNDS FOR INDIVIDUAL DEVELOPMENT ACCOUNTS 
                   PROVIDED THROUGH A TAX CREDIT FOR QUALIFIED 
                   FINANCIAL INSTITUTIONS.

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

     ``SEC. 45G. INDIVIDUAL DEVELOPMENT ACCOUNT INVESTMENT CREDIT.

       ``(a) Determination of Amount.--For purposes of section 38, 
     the individual development account investment credit 
     determined under this section with respect to any eligible 
     entity for any taxable year is an amount equal to the 
     individual development account investment provided by such 
     eligible entity during the taxable year under an individual 
     development account program established under section 504 of 
     the Savings for Working Families Act of 2002.
       ``(b) Applicable Tax.--For the purposes of this section, 
     the term `applicable tax' means the excess (if any) of--
       ``(1) the tax imposed under this chapter (other than the 
     taxes imposed under the provisions described in subparagraphs 
     (C) through (Q) of section 26(b)(2)), over
       ``(2) the credits allowable under subpart B (other than 
     this section) and subpart D of this part.
       ``(c) Individual Development Account Investment.--For 
     purposes of this section, the term `individual development 
     account investment' means, with respect to an individual 
     development account program in any taxable year, an amount 
     equal to the sum of--
       ``(1) the aggregate amount of dollar-for-dollar matches 
     under such program under section 506(b)(1)(A) of the Savings 
     for Working Families Act of 2002 for such taxable year, plus
       ``(2) $50 with respect to each Individual Development 
     Account maintained--
       ``(A) as of the end of such taxable year, but only if such 
     taxable year is within the 7-taxable-year period beginning 
     with the taxable year in which such Account is opened, and
       ``(B) with a balance of not less than $100 (other than the 
     taxable year in which such Account is opened).
       ``(d) Eligible Entity.--For purposes of this section, 
     except as provided in regulations, the term `eligible entity' 
     means a qualified financial institution.

[[Page S9159]]

       ``(e) Other Definitions.--For purposes of this section, any 
     term used in this section and also in the Savings for Working 
     Families Act of 2002 shall have the meaning given such term 
     by such Act.
       ``(f) Denial of Double Benefit.--
       ``(1) In general.--No deduction or credit (other than under 
     this section) shall be allowed under this chapter with 
     respect to any expense which--
       ``(A) is taken into account under subsection (c)(1)(A) in 
     determining the credit under this section, or
       ``(B) is attributable to the maintenance of an Individual 
     Development Account.
       ``(2) Determination of amount.--Solely for purposes of 
     paragraph (1)(B), the amount attributable to the maintenance 
     of an Individual Development Account shall be deemed to be 
     the dollar amount of the credit allowed under subsection 
     (c)(l)(B) for each taxable year such Individual Development 
     Account is maintained.
       ``(g) Credit May Be Transferred.--
       ``(1) In general.--An eligible entity may transfer any 
     credit allowable to the eligible entity under subsection (a) 
     to any person other than to another eligible entity which is 
     exempt from tax under this title. The determination as to 
     whether a credit is allowable shall be made without regard to 
     the tax-exempt status of the eligible entity.
       ``(2) Consent required for revocation.--Any transfer under 
     paragraph (1) may be revoked only with the consent of the 
     Secretary.
       ``(h) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including
       ``(1) such regulations as necessary to insure that any 
     credit described in subsection (g)(1) is claimed once and not 
     retransferred by a transferee, and
       ``(2) regulations providing for a recapture of the credit 
     allowed under this section (notwithstanding any termination 
     date described in subsection (i)) in cases where there is a 
     forfeiture under section 507(b) of the Savings for Working 
     Families Act of 2002 in a subsequent taxable year of any 
     amount which was taken into account in determining the amount 
     of such credit.
       ``(i) Application of Section.--
       ``(1) In general.--This section shall apply to any 
     expenditure made in any taxable year ending after December 
     31, 2003, and beginning on or before January 1, 2011, with 
     respect to any Individual Development Account which--
       ``(A) is opened before January 1, 2011, and
       ``(B) as determined by the Secretary, when added to all of 
     the previously opened Individual Development Accounts, does 
     not exceed--
       ``(i) 100,000 Accounts if opened after December 31, 2003, 
     and before January 1, 2007,
       ``(ii) an additional 100,000 Accounts if opened after 
     December 31, 2006, and before January 1, 2009, but only if, 
     except as provided in paragraph (4), the total number of 
     Accounts described in clause (i) are opened and the Secretary 
     determines that such Accounts are being reasonably and 
     responsibly administered, and
       ``(iii) an additional 100,000 Accounts if opened after 
     December 31, 2008, and before January 1, 2011, but only if 
     the total number of Accounts described in clauses (i) and 
     (ii) are opened and the Secretary makes a determination 
     described in paragraph (2).

     Notwithstanding the preceding sentence, this section shall 
     apply to amounts which are described in subsection (c)(1)(A) 
     and which are timely deposited into a parallel account during 
     the 30-day period following the end of last taxable year 
     beginning before January 1, 2011.
       ``(2) Determination with respect to third group of 
     accounts.--A determination is described in this paragraph if 
     the Secretary determines that--
       ``(A) substantially all of the previously opened Accounts 
     have been reasonably and responsibly administered prior to 
     the date of the determination,
       ``(B) the individual development account programs have 
     increased net savings of participants in the programs,
       ``(C) participants in the individual development account 
     programs have increased Federal income tax liability and 
     decreased utilization of Federal assistance programs relative 
     to similarly situated individuals that did not participate in 
     the individual development account programs, and
       ``(D) the sum of the estimated increased Federal tax 
     liability and reduction of Federal assistance program 
     benefits to participants in the individual development 
     account programs is greater than the cost of the individual 
     development account programs to the Federal government.
       ``(3) Determination of limitation.--The limitation on the 
     number of Individual Development Accounts under paragraph 
     (1)(B) shall be allocated by the Secretary among qualified 
     individual development account programs selected by the 
     Secretary and, in the case of the limitation under clause 
     (iii) of such paragraph, shall be equally divided among the 
     States.
       ``(4) Special rule if smaller number of accounts are 
     opened.--For purposes of paragraph (1)(B)(ii)--
       ``(i) In general.--If less than 100,000 Accounts are opened 
     before January 1, 2007, such paragraph shall be applied by 
     substituting ``applicable number of Accounts' for `100,000 
     Accounts'.
       ``(ii) Applicable number.--For purposes of clause (i), the 
     applicable number equals the lesser of--

       ``(I) 75,000, or
       ``(II) 3 times the number of Accounts opened before January 
     1, 2007.''.

       (b) Credit Treated as Business Credit.--Section 38(b) 
     (relating to current year business credit) is amended by 
     striking ``plus'' at the end of paragraph (14), by striking 
     the period at the end of paragraph (15) and inserting ``, 
     plus'', and by adding at the end the following new paragraph:
       ``(16) the individual development account investment credit 
     determined under section 45G(a).''.
       (c) No Carrybacks.--Subsection (d) of section 39 (relating 
     to carryback and carryforward of unused credits) is amended 
     by adding at the end the following:
       ``(11) No carryback of section 45g credit before effective 
     date.--No portion of the unused business credit for any 
     taxable year which is attributable to the individual 
     development account investment credit determined under 
     section 45G may be carried back to a taxable year ending 
     before January 1, 2004.''.
       (d) Conforming Amendment.--The table of sections for 
     subpart C of part IV of subchapter A of chapter 1 is amended 
     by adding at the end the following new item:

``Sec. 45G. Individual development account investment credit.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 2003.

     SEC. 512. ACCOUNT FUNDS DISREGARDED FOR PURPOSES OF CERTAIN 
                   MEANS-TESTED FEDERAL PROGRAMS.

       Notwithstanding any other provision of Federal law (other 
     than the Internal Revenue Code of 1986) that requires 
     consideration of 1 or more financial circumstances of an 
     individual, for the purpose of determining eligibility to 
     receive, or the amount of, any assistance or benefit 
     authorized by such provision to be provided to or for the 
     benefit of such individual, any amount (including earnings 
     thereon) in any Individual Development Account of such 
     individual and any matching deposit made on behalf of such 
     individual (including earnings thereon) in any parallel 
     account shall be disregarded for such purpose with respect to 
     any period during which such individual maintains or makes 
     contributions into such Individual Development Account.

                      TITLE VI--REVENUE PROVISIONS

           Subtitle A--Tax Shelter Transparency Requirements

                  PART I--TAXPAYER-RELATED PROVISIONS

     SEC. 601. PENALTY FOR FAILING TO DISCLOSE REPORTABLE 
                   TRANSACTION.

       (a) In General.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6707 the following new section:

     ``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORTABLE 
                   TRANSACTION INFORMATION WITH RETURN OR 
                   STATEMENT.

       ``(a) Imposition of Penalty.--Any person who fails to 
     include on any return or statement any information with 
     respect to a reportable transaction which is required under 
     section 6011 to be included with such return or statement 
     shall pay a penalty in the amount determined under subsection 
     (b).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the amount of the penalty under subsection (a) shall be 
     $50,000.
       ``(2) Listed transaction.--The amount of the penalty under 
     subsection (a) with respect to a listed transaction shall be 
     $100,000.
       ``(3) Increase in penalty for large entities and high net 
     worth individuals.--
       ``(A) In general.--In the case of a failure under 
     subsection (a) by--
       ``(i) a large entity, or
       ``(ii) a high net worth individual,
     the penalty under paragraph (1) or (2) shall be twice the 
     amount determined without regard to this paragraph.
       ``(B) Large entity.--For purposes of subparagraph (A), the 
     term `large entity' means, with respect to any taxable year, 
     a person (other than a natural person) with gross receipts in 
     excess of $10,000,000 for the taxable year in which the 
     reportable transaction occurs or the preceding taxable year. 
     Rules similar to the rules of paragraph (2) and subparagraphs 
     (B), (C), and (D) of paragraph (3) of section 448(c) shall 
     apply for purposes of this subparagraph.
       ``(C) High net worth individual.--The term `high net worth 
     individual' means, with respect to a reportable transaction, 
     a natural person whose net worth exceeds $2,000,000 
     immediately before the transaction.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Reportable transaction.--The term `reportable 
     transaction' means any transaction with respect to which 
     information is required to be included with a return or 
     statement because, as determined under regulations prescribed 
     under section 6011, such transaction is of a type which the 
     Secretary determines as having a potential for tax avoidance 
     or evasion.
       ``(2) Listed transaction.--Except as provided in 
     regulations, the term `listed transaction' means a reportable 
     transaction which is the same as, or similar to, a 
     transaction specifically identified by the Secretary as a tax 
     avoidance transaction for purposes of section 6011.
       ``(d) Authority to Rescind Penalty.--

[[Page S9160]]

       ``(1) In general.--The Commissioner of Internal Revenue may 
     rescind all or any portion of any penalty imposed by this 
     section with respect to any violation if--
       ``(A) the violation is with respect to a reportable 
     transaction other than a listed transaction,
       ``(B) the person on whom the penalty is imposed has a 
     history of complying with the requirements of this title,
       ``(C) it is shown that the violation is due to an 
     unintentional mistake of fact;
       ``(D) imposing the penalty would be against equity and good 
     conscience, and
       ``(E) rescinding the penalty would promote compliance with 
     the requirements of this title and effective tax 
     administration.
       ``(2) Discretion.--The exercise of authority under 
     paragraph (1) shall be at the sole discretion of the 
     Commissioner and may be delegated only to the head of the 
     Office of Tax Shelter Analysis. The Commissioner, in his sole 
     discretion, may establish a procedure to determine if a 
     penalty should be referred to the Commissioner or the head of 
     such Office for a determination under paragraph (1).
       ``(3) No appeal.--Notwithstanding any other provision of 
     law, any determination under this subsection may not be 
     reviewed in any administrative or judicial proceeding.
       ``(4) Records.--If a penalty is rescinded under paragraph 
     (1), the Commissioner shall place in the file in the Office 
     of the Commissioner the opinion of the Commissioner or the 
     head of the Office of Tax Shelter Analysis with respect to 
     the determination, including--
       ``(A) the reasons for the rescission, and
       ``(B) the amount of the penalty rescinded.
       ``(5) Report.--The Commissioner shall each year report to 
     the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate--
       ``(A) a summary of the total number and aggregate amount of 
     penalties imposed, and rescinded, under this section, and
       ``(B) a description of each penalty rescinded under this 
     subsection and the reasons therefor.
       ``(e) Penalty Reported to SEC.--In the case of a person--
       ``(1) which is required to file periodic reports under 
     section 13 or 15(d) of the Securities Exchange Act of 1934 or 
     is required to be consolidated with another person for 
     purposes of such reports, and
       ``(2) which--
       ``(A) is required to pay a penalty under this section with 
     respect to a listed transaction, or
       ``(B) is required to pay a penalty under section 6662A with 
     respect to any reportable transaction at a rate prescribed 
     under section 6662A(c),

     the requirement to pay such penalty shall be disclosed in 
     such reports filed by such person for such periods as the 
     Secretary shall specify. Failure to make a disclosure in 
     accordance with the preceding sentence shall be treated as a 
     failure to which the penalty under subsection (b)(2) applies.
       ``(f) Coordination With Other Penalties.--The penalty 
     imposed by this section is in addition to any penalty imposed 
     under section 6662.''
       (b) Conforming Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 is amended by inserting after 
     the item relating to section 6707 the following:

``Sec. 6707A. Penalty for failure to include reportable transaction 
              information with return or statement.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to returns and statements the due date for which 
     is after the date of the enactment of this Act.

     SEC. 602. ACCURACY-RELATED PENALTY FOR LISTED TRANSACTIONS 
                   AND OTHER REPORTABLE TRANSACTIONS HAVING A 
                   SIGNIFICANT TAX AVOIDANCE PURPOSE.

       (a) In General.--Subchapter A of chapter 68 is amended by 
     inserting after section 6662 the following new section:

     ``SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PENALTY ON 
                   UNDERSTATEMENTS WITH RESPECT TO REPORTABLE 
                   TRANSACTIONS.

       ``(a) Imposition of Penalty.--If a taxpayer has a 
     reportable transaction understatement for any taxable year, 
     there shall be added to the tax an amount equal to 20 percent 
     of the amount of such understatement.
       ``(b) Reportable Transaction Understatement.--For purposes 
     of this section--
       ``(1) In general.--The term `reportable transaction 
     understatement' means the sum of--
       ``(A) the product of--
       ``(i) the amount of the increase (if any) in taxable income 
     which results from a difference between the proper tax 
     treatment of an item to which this section applies and the 
     taxpayer's treatment of such item (as shown on the taxpayer's 
     return of tax), and
       ``(ii) the highest rate of tax imposed by section 1 
     (section 11 in the case of a taxpayer which is a 
     corporation), and
       ``(B) the amount of the decrease (if any) in the aggregate 
     amount of credits determined under subtitle A which results 
     from a difference between the taxpayer's treatment of an item 
     to which this section applies (as shown on the taxpayer's 
     return of tax) and the proper tax treatment of such item.

     For purposes of subparagraph (A), any reduction of the excess 
     of deductions allowed for the taxable year over gross income 
     for such year, and any reduction in the amount of capital 
     losses which would (without regard to section 1211) be 
     allowed for such year, shall be treated as an increase in 
     taxable income.
       ``(2) Items to which section applies.--This section shall 
     apply to any item which is attributable to--
       ``(A) any listed transaction, and
       ``(B) any reportable transaction (other than a listed 
     transaction) if a significant purpose of such transaction is 
     the avoidance or evasion of Federal income tax.
       ``(c) Higher Penalties for Nondisclosed Listed and Other 
     Avoidance Transactions.--If the requirement of section 
     6664(d)(2)(A) is not met with respect to any portion of any 
     reportable transaction understatement, then subsection (a) 
     shall be applied by substituting--
       ``(1) `30 percent' for `20 percent' if such understatement 
     is attributable to a listed transaction, and
       ``(2) `25 percent' for `20 percent' in the case of any 
     other understatement.
       ``(d) Definitions of Reportable and Listed Transactions.--
     For purposes of this section, the terms `reportable 
     transaction' and `listed transaction' have the respective 
     meanings given to such terms by section 6707A(c).
       ``(e) Special rules.--
       ``(1) Coordination with penalties, etc., on other 
     understatements.--In the case of an understatement (as 
     defined in section 6662(d)(2))--
       ``(A) the amount of such understatement (determined without 
     regard to this paragraph) shall be increased by the aggregate 
     amount of reportable transaction understatements for purposes 
     of determining whether such understatement is a substantial 
     understatement under section 6662(d)(1), but
       ``(B) the addition to tax under section 6662(a) shall apply 
     only to the excess of the amount of the substantial 
     understatement (if any) after the application of subparagraph 
     (A) over the aggregate amount of reportable transaction 
     understatements.
       ``(2) Coordination with fraud penalty.--
       ``(A) In general.--References to an underpayment in section 
     6663 shall be treated as including references to a reportable 
     transaction understatement.
       ``(B) No double penalty.--This section shall not apply to 
     any portion of an understatement on which a penalty is 
     imposed under section 6663.
       ``(3) Special rule for amended returns.--Except as provided 
     in regulations, in no event shall any tax treatment included 
     with an amendment or supplement to a return of tax be taken 
     into account in determining the amount of any reportable 
     transaction understatement if the amendment or supplement is 
     filed after the earlier of the date the taxpayer is first 
     contacted by the Secretary regarding the examination of the 
     return or such other date as is specified by the Secretary.''
       (b) Determination of Other Understatements.--Subparagraph 
     (A) of section 6662(d)(2) is amended by adding at the end the 
     following flush sentence:

     ``The excess under the preceding sentence shall be determined 
     without regard to items to which section 6662A applies.''
       (c) Reasonable Cause Exception.--
       (1) In general.--Section 6664 is amended by adding at the 
     end the following new subsection:
       ``(d) Reasonable Cause Exception for Reportable Transaction 
     Understatements.--
       ``(1) In general.--No penalty shall be imposed under 
     section 6662A with respect to any portion of a reportable 
     transaction understatement if it is shown that there was a 
     reasonable cause for such portion and that the taxpayer acted 
     in good faith with respect to such portion.
       ``(2) Special rules.--Paragraph (1) shall not apply to any 
     reportable transaction understatement unless--
       ``(A) the relevant facts affecting the tax treatment of the 
     item are adequately disclosed in accordance with the 
     regulations prescribed under section 6011,
       ``(B) there is or was substantial authority for such 
     treatment, and
       ``(C) the taxpayer reasonably believed that such treatment 
     was more likely than not the proper treatment.

     A taxpayer failing to adequately disclose in accordance with 
     section 6011 shall be treated as meeting the requirements of 
     subparagraph (A) if the penalty for such failure was 
     rescinded under section 6707A(d).
       ``(3) Rules relating to reasonable belief.--For purposes of 
     paragraph (2)(C)--
       ``(A) In general.--A taxpayer shall be treated as having a 
     reasonable belief with respect to the tax treatment of an 
     item only if such belief--
       ``(i) is based on the facts and law that exist at the time 
     the return of tax which includes such tax treatment is filed, 
     and
       ``(ii) relates solely to the taxpayer's chances of success 
     on the merits of such treatment and does not take into 
     account the possibility that a return will not be audited, 
     such treatment will not be raised on audit, or such treatment 
     will be resolved through settlement if it is raised.
       ``(B) Certain opinions may not be relied upon.--
       ``(i) In general.--An opinion of a tax advisor may not be 
     relied upon to establish the reasonable belief of a taxpayer 
     if--

       ``(I) the tax advisor is described in clause (ii), or
       ``(II) the opinion is described in clause (iii).

       ``(ii) Disqualified tax advisors.--A tax advisor is 
     described in this clause if the tax

[[Page S9161]]

     advisor is a material advisor (within the meaning of section 
     6111(b)(1)) who--

       ``(I) participates in the organization, management, 
     promotion, or sale of the transaction or is related (within 
     the meaning of section 267 or 707) to any person who so 
     participates,
       ``(II) is compensated by another material advisor with 
     respect to the transaction,
       ``(III) has a fee arrangement with respect to the 
     transaction which is contingent on all or part of the 
     intended tax benefits from the transaction being sustained, 
     or
       ``(IV) as determined under regulations prescribed by the 
     Secretary, has a continuing financial interest with respect 
     to the transaction.

       ``(iii) Disqualified opinions.--For purposes of clause (i), 
     an opinion is disqualified if the opinion--

       ``(I) is based on unreasonable factual or legal assumptions 
     (including assumptions as to future events),
       ``(II) unreasonably relies on representations, statements, 
     findings, or agreements of the taxpayer or any other person,
       ``(III) does not identify and consider all relevant facts, 
     or
       ``(IV) fails to meet any other requirement as the Secretary 
     may prescribe.''

       (2) Conforming amendment.--The heading for subsection (c) 
     of section 6664 is amended by inserting ``for Underpayments'' 
     after ``Exception''.
       (d) Conforming Amendments.--
       (1) Subparagraph (C) of section 461(i)(3) is amended by 
     striking ``section 6662(d)(2)(C)(iii)'' and inserting 
     ``section 1274(b)(3)(C)''.
       (2) Paragraph (3) of section 1274(b) is amended--
       (A) by striking ``(as defined in section 
     6662(d)(2)(C)(iii))'' in subparagraph (B)(i), and
       (B) by adding at the end the following new subparagraph:
       ``(C) Tax shelter.--For purposes of subparagraph (B), the 
     term `tax shelter' means--
       ``(i) a partnership or other entity,
       ``(ii) any investment plan or arrangement, or
       ``(iii) any other plan or arrangement,
     if a significant purpose of such partnership, entity, plan, 
     or arrangement is the avoidance or evasion of Federal income 
     tax.''
       (3) Section 6662(d)(2) is amended by striking subparagraphs 
     (C) and (D).
       (4) Section 6664(c)(1) is amended by striking ``part'' and 
     inserting ``section 6662 or 6663''.
       (5) Subsection (b) of section 7525 is amended by striking 
     ``section 6662(d)(2)(C)(iii)'' and inserting ``section 
     1274(b)(3)(C)''.
       (6)(A) The heading for section 6662 is amended to read as 
     follows:

     ``SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY ON 
                   UNDERPAYMENTS.''

       (B) The table of sections for part II of subchapter A of 
     chapter 68 is amended by striking the item relating to 
     section 6662 and inserting the following new items:

``Sec. 6662. Imposition of accuracy-related penalty on underpayments.
``Sec. 6662A. Imposition of accuracy-related penalty on understatements 
              with respect to reportable transactions.''

       (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. 603. MODIFICATIONS OF SUBSTANTIAL UNDERSTATEMENT PENALTY 
                   FOR NONREPORTABLE TRANSACTIONS.

       (a) Substantial Understatement of Corporations.--Section 
     6662(d)(1)(B) (relating to special rule for corporations) is 
     amended to read as follows:
       ``(B) Special rule for corporations.--In the case of a 
     corporation other than an S corporation or a personal holding 
     company (as defined in section 542), there is a substantial 
     understatement of income tax for any taxable year if the 
     amount of the understatement for the taxable year exceeds the 
     lesser of--
       ``(i) 10 percent of the tax required to be shown on the 
     return for the taxable year (or, if greater, $10,000), or
       ``(ii) $10,000,000.''
       (b) Reduction for Understatement of Taxpayer Due to 
     Position of Taxpayer or Disclosed Item.--
       (1) In general.--Section 6662(d)(2)(B)(i) (relating to 
     substantial authority) is amended to read as follows:
       ``(i) the tax treatment of any item by the taxpayer if the 
     taxpayer had reasonable belief that the tax treatment was 
     more likely than not the proper treatment, or''.
       (2) Conforming amendment.--Section 6662(d) is amended by 
     adding at the end the following new paragraph:
       ``(3) Secretarial list.--For purposes of this subsection, 
     section 6664(d)(2), and section 6694(a)(1), the Secretary may 
     prescribe a list of positions for which the Secretary 
     believes there is not substantial authority or there is no 
     reasonable belief that the tax treatment is more likely than 
     not the proper tax treatment. Such list (and any revisions 
     thereof) shall be published in the Federal Register or the 
     Internal Revenue Bulletin.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 604. TAX SHELTER EXCEPTION TO CONFIDENTIALITY PRIVILEGES 
                   RELATING TO TAXPAYER COMMUNICATIONS.

       (a) In General.--Section 7525(b) (relating to section not 
     to apply to communications regarding corporate tax shelters) 
     is amended to read as follows:
       ``(b) Section Not To Apply to Communications Regarding Tax 
     Shelters.--The privilege under subsection (a) shall not apply 
     to any written communication which is--
       ``(1) between a federally authorized tax practitioner and--
       ``(A) any person,
       ``(B) any director, officer, employee, agent, or 
     representative of the person, or
       ``(C) any other person holding a capital or profits 
     interest in the person, and
       ``(2) in connection with the promotion of the direct or 
     indirect participation of the person in any tax shelter (as 
     defined in section 1274(b)(3)(C)).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to communications made on or after the date of 
     the enactment of this Act.

           PART II--PROMOTER AND PREPARER RELATED PROVISIONS

       Subpart A--Provisions Relating to Reportable Transactions

     SEC. 611. DISCLOSURE OF REPORTABLE TRANSACTIONS.

       (a) In General.--Section 6111 (relating to registration of 
     tax shelters) is amended to read as follows:

     ``SEC. 6111. DISCLOSURE OF REPORTABLE TRANSACTIONS.

       ``(a) In General.--Each material advisor with respect to 
     any reportable transaction shall make a return (in such form 
     as the Secretary may prescribe) setting forth--
       ``(1) information identifying and describing the 
     transaction,
       ``(2) information describing any potential tax benefits 
     expected to result from the transaction, and
       ``(3) such other information as the Secretary may 
     prescribe.

     Such return shall be filed not later than the date specified 
     by the Secretary.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Material advisor.--
       ``(A) In general.--The term `material advisor' means any 
     person--
       ``(i) who provides any material aid, assistance, or advice 
     with respect to organizing, promoting, selling, implementing, 
     or carrying out any reportable transaction, and
       ``(ii) who directly or indirectly derives gross income in 
     excess of the threshold amount for such advice or assistance.
       ``(B) Threshold amount.--For purposes of subparagraph (A), 
     the threshold amount is--
       ``(i) $50,000 in the case of a reportable transaction 
     substantially all of the tax benefits from which are provided 
     to natural persons, and
       ``(ii) $250,000 in any other case.
       ``(2) Reportable transaction.--The term `reportable 
     transaction' has the meaning given to such term by section 
     6707A(c).
       ``(c) Regulations.--The Secretary may prescribe regulations 
     which provide--
       ``(1) that only 1 person shall be required to meet the 
     requirements of subsection (a) in cases in which 2 or more 
     persons would otherwise be required to meet such 
     requirements,
       ``(2) exemptions from the requirements of this section, and
       ``(3) such rules as may be necessary or appropriate to 
     carry out the purposes of this section.''
       (b) Conforming Amendments.--
       (1) The item relating to section 6111 in the table of 
     sections for subchapter B of chapter 61 is amended to read as 
     follows:

``Sec. 6111. Disclosure of reportable transactions.''

       (2)(A) So much of section 6112 as precedes subsection (c) 
     thereof is amended to read as follows:

     ``SEC. 6112. MATERIAL ADVISORS OF REPORTABLE TRANSACTIONS 
                   MUST KEEP LISTS OF ADVISEES.

       ``(a) In General.--Each material advisor (as defined in 
     section 6111) with respect to any reportable transaction (as 
     defined in section 6707A(c)) shall maintain, in such manner 
     as the Secretary may by regulations prescribe, a list--
       ``(1) identifying each person with respect to whom such 
     advisor acted as such a material advisor with respect to such 
     transaction, and
       ``(2) containing such other information as the Secretary 
     may by regulations require.
     This section shall apply without regard to whether a material 
     advisor is required to file a return under section 6111 with 
     regard to such transaction.''
       (B) Section 6112 is amended by redesignating subsection (c) 
     as subsection (b).
       (C) Section 6112(b), as redesignated by subparagraph (B), 
     is amended--
       (i) by inserting ``written'' before ``request'' in 
     paragraph (1)(A), and
       (ii) by striking ``shall prescribe'' in paragraph (2) and 
     inserting ``may prescribe''.
       (D) The item relating to section 6112 in the table of 
     sections for subchapter B of chapter 61 is amended to read as 
     follows:

``Sec. 6112. Material advisors of reportable transactions must keep 
              lists of advisees.''

       (3)(A) The heading for section 6708 is amended to read as 
     follows:

     ``SEC. 6708. FAILURE TO MAINTAIN LISTS OF ADVISEES WITH 
                   RESPECT TO REPORTABLE TRANSACTIONS.''

       (B) The item relating to section 6708 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     to read as follows:


[[Page S9162]]


``Sec. 6708. Failure to maintain lists of advisees with respect to 
              reportable transactions.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to transactions with respect to which material 
     aid, assistance, or advice referred to in section 
     6111(b)(1)(A)(i) of the Internal Revenue Code of 1986 (as 
     added by this section) is provided after the date of the 
     enactment of this Act.

     SEC. 612. MODIFICATIONS TO PENALTY FOR FAILURE TO REGISTER 
                   TAX SHELTERS.

       (a) In General.--Section 6707 (relating to failure to 
     furnish information regarding tax shelters) is amended to 
     read as follows:

     ``SEC. 6707. FAILURE TO FURNISH INFORMATION REGARDING 
                   REPORTABLE TRANSACTIONS.

       ``(a) In General.--If a person who is required to file a 
     return under section 6111(a) with respect to any reportable 
     transaction--
       ``(1) fails to file such return on or before the date 
     prescribed therefor, or
       ``(2) files false or incomplete information with the 
     Secretary with respect to such transaction,

     such person shall pay a penalty with respect to such return 
     in the amount determined under subsection (b).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     penalty imposed under subsection (a) with respect to any 
     failure shall be $50,000.
       ``(2) Listed transactions.--The penalty imposed under 
     subsection (a) with respect to any listed transaction shall 
     be an amount equal to the greater of--
       ``(A) $200,000, or
       ``(B) 50 percent of the gross income derived by such person 
     with respect to aid, assistance, or advice which is provided 
     with respect to the reportable transaction before the date 
     the return including the transaction is filed under section 
     6111.

     Subparagraph (B) shall be applied by substituting `75 
     percent' for `50 percent' in the case of an intentional 
     failure or act described in subsection (a).
       ``(c) Reportable and Listed Transactions.--The terms 
     `reportable transaction' and `listed transaction' have the 
     respective meanings given to such terms by section 6707A(c).
       ``(d) Rescission Authority.--The provisions of section 
     6707A(d) (relating to authority of Commissioner to rescind 
     penalty) shall apply to any penalty imposed under this 
     section.''
       (b) Clerical Amendment.--The item relating to section 6707 
     in the table of sections for part I of subchapter B of 
     chapter 68 is amended by striking ``tax shelters'' and 
     inserting ``reportable transactions''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns the due date for which is after the 
     date of the enactment of this Act.

     SEC. 613. MODIFICATION OF PENALTY FOR FAILURE TO MAINTAIN 
                   LISTS OF INVESTORS.

       (a) In General.--Subsection (a) of section 6708 is amended 
     to read as follows:
       ``(a) Imposition of Penalty.--
       ``(1) In general.--If any person who is required to 
     maintain a list under section 6112(a) fails to make such list 
     available to the Secretary in accordance with section 
     6112(b)(1)(A) within 20 business days after the date of the 
     Secretary's request, such person shall pay a penalty of 
     $10,000 for each day of such failure after such 20th day.
       ``(2) Reasonable cause exception.--No penalty shall be 
     imposed by paragraph (1) with respect to the failure on any 
     day if such failure is due to reasonable cause.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to requests made after the date of the enactment 
     of this Act.

     SEC. 614. MODIFICATION OF ACTIONS TO ENJOIN CERTAIN CONDUCT 
                   RELATED TO TAX SHELTERS AND REPORTABLE 
                   TRANSACTIONS.

       (a) In General.--Section 7408 (relating to action to enjoin 
     promoters of abusive tax shelters, etc.) is amended by 
     redesignating subsection (c) as subsection (d) and by 
     striking subsections (a) and (b) and inserting the following 
     new subsections:
       ``(a) Authority To Seek Injunction.--A civil action in the 
     name of the United States to enjoin any person from further 
     engaging in specified conduct may be commenced at the request 
     of the Secretary. Any action under this section shall be 
     brought in the district court of the United States for the 
     district in which such person resides, has his principal 
     place of business, or has engaged in specified conduct. The 
     court may exercise its jurisdiction over such action (as 
     provided in section 7402(a)) separate and apart from any 
     other action brought by the United States against such 
     person.
       ``(b) Adjudication and Decree.--In any action under 
     subsection (a), if the court finds--
       ``(1) that the person has engaged in any specified conduct, 
     and
       ``(2) that injunctive relief is appropriate to prevent 
     recurrence of such conduct,
     the court may enjoin such person from engaging in such 
     conduct or in any other activity subject to penalty under 
     this title.
       ``(c) Specified Conduct.--For purposes of this section, the 
     term `specified conduct' means any action, or failure to take 
     action, subject to penalty under section 6700, 6701, 6707, or 
     6708.''
       (b) Conforming Amendments.--
       (1) The heading for section 7408 is amended to read as 
     follows:

     ``SEC. 7408. ACTIONS TO ENJOIN SPECIFIED CONDUCT RELATED TO 
                   TAX SHELTERS AND REPORTABLE TRANSACTIONS.''

       (2) The table of sections for subchapter A of chapter 67 is 
     amended by striking the item relating to section 7408 and 
     inserting the following new item:

``Sec. 7408. Actions to enjoin specified conduct related to tax 
              shelters and reportable transactions.''

       (c) Effective Date.--The amendment made by this section 
     shall take effect on the day after the date of the enactment 
     of this Act.

           Subpart B--Other Promoter and Preparer Provisions

     SEC. 621. UNDERSTATEMENT OF TAXPAYER'S LIABILITY BY INCOME 
                   TAX RETURN PREPARER.

       (a) Standards Conformed to Taxpayer Standards.--Section 
     6694(a) (relating to understatements due to unrealistic 
     positions) is amended--
       (1) by striking ``realistic possibility of being sustained 
     on its merits'' in paragraph (1) and inserting ``reasonable 
     belief that the tax treatment in such position was more 
     likely than not the proper treatment'',
       (2) by striking ``or was frivolous'' in paragraph (3) and 
     inserting ``or there was no reasonable basis for the tax 
     treatment of such position'', and
       (3) by striking ``Unrealistic'' in the heading and 
     inserting ``Improper''.
       (b) Amount of Penalty.--Section 6694 is amended--
       (1) by striking ``$250'' in subsection (a) and inserting 
     ``$1,000'', and
       (2) by striking ``$1,000'' in subsection (b) and inserting 
     ``$5,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to documents prepared after the date of the 
     enactment of this Act.

     SEC. 622. PENALTY ON FAILURE TO REPORT INTERESTS IN FOREIGN 
                   FINANCIAL ACCOUNTS.

       (a) In General.--Section 5321(a)(5) of title 31, United 
     States Code, is amended to read as follows:
       ``(5) Foreign financial agency transaction violation.--
       ``(A) Penalty authorized.--The Secretary of the Treasury 
     may impose a civil money penalty on any person who violates, 
     or causes any violation of, any provision of section 5314.
       ``(B) Amount of penalty.--
       ``(i) In general.--Except as provided in subparagraph (C), 
     the amount of any civil penalty imposed under subparagraph 
     (A) shall not exceed $5,000.
       ``(ii) Reasonable cause exception.--No penalty shall be 
     imposed under subparagraph (A) with respect to any violation 
     if--

       ``(I) such violation was due to reasonable cause, and
       ``(II) the amount of the transaction or the balance in the 
     account at the time of the transaction was properly reported.

       ``(C) Willful violations.--In the case of any person 
     willfully violating, or willfully causing any violation of, 
     any provision of section 5314--
       ``(i) the maximum penalty under subparagraph (B)(i) shall 
     be increased to the greater of--

       ``(I) $25,000, or
       ``(II) the amount (not exceeding $100,000) determined under 
     subparagraph (D), and

       ``(ii) subparagraph (B)(ii) shall not apply.
       ``(D) Amount.--The amount determined under this 
     subparagraph is--
       ``(i) in the case of a violation involving a transaction, 
     the amount of the transaction, or
       ``(ii) in the case of a violation involving a failure to 
     report the existence of an account or any identifying 
     information required to be provided with respect to an 
     account, the balance in the account at the time of the 
     violation.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to violations occurring after the date of the 
     enactment of this Act.

     SEC. 623. FRIVOLOUS TAX SUBMISSIONS.

       (a) Civil Penalties.--Section 6702 is amended to read as 
     follows:

     ``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.

       ``(a) Civil Penalty for Frivolous Tax Returns.--A person 
     shall pay a penalty of $5,000 if--
       ``(1) such person files what purports to be a return of a 
     tax imposed by this title but which--
       ``(A) does not contain information on which the substantial 
     correctness of the self-assessment may be judged, or
       ``(B) contains information that on its face indicates that 
     the self-assessment is substantially incorrect; and
       ``(2) the conduct referred to in paragraph (1)--
       ``(A) is based on a position which the Secretary has 
     identified as frivolous under subsection (c), or
       ``(B) reflects a desire to delay or impede the 
     administration of Federal tax laws.
       ``(b) Civil Penalty for Specified Frivolous Submissions.--
       ``(1) Imposition of penalty.--Except as provided in 
     paragraph (3), any person who submits a specified frivolous 
     submission shall pay a penalty of $5,000.
       ``(2) Specified frivolous submission.--For purposes of this 
     section--
       ``(A) Specified frivolous submission.--The term `specified 
     frivolous submission' means a specified submission if any 
     portion of such submission--

[[Page S9163]]

       ``(i) is based on a position which the Secretary has 
     identified as frivolous under subsection (c), or
       ``(ii) reflects a desire to delay or impede the 
     administration of Federal tax laws.
       ``(B) Specified submission.--The term `specified 
     submission' means--
       ``(i) a request for a hearing under--

       ``(I) section 6320 (relating to notice and opportunity for 
     hearing upon filing of notice of lien), or
       ``(II) section 6330 (relating to notice and opportunity for 
     hearing before levy), and

       ``(ii) an application under--

       ``(I) section 6159 (relating to agreements for payment of 
     tax liability in installments),
       ``(II) section 7122 (relating to compromises), or
       ``(III) section 7811 (relating to taxpayer assistance 
     orders).

       ``(3) Opportunity to withdraw submission.--If the Secretary 
     provides a person with notice that a submission is a 
     specified frivolous submission and such person withdraws such 
     submission within 30 days after such notice, the penalty 
     imposed under paragraph (1) shall not apply with respect to 
     such submission.
       ``(c) Listing of Frivolous Positions.--The Secretary shall 
     prescribe (and periodically revise) a list of positions which 
     the Secretary has identified as being frivolous for purposes 
     of this subsection. The Secretary shall not include in such 
     list any position that the Secretary determines meets the 
     requirement of section 6662(d)(2)(B)(ii)(II).
       ``(d) Reduction of Penalty.--The Secretary may reduce the 
     amount of any penalty imposed under this section if the 
     Secretary determines that such reduction would promote 
     compliance with and administration of the Federal tax laws.
       ``(e) Penalties in Addition to Other Penalties.--The 
     penalties imposed by this section shall be in addition to any 
     other penalty provided by law.''
       (b) Treatment of Frivolous Requests for Hearings Before 
     Levy.--
       (1) Frivolous requests disregarded.--Section 6330 (relating 
     to notice and opportunity for hearing before levy) is amended 
     by adding at the end the following new subsection:
       ``(g) Frivolous Requests for Hearing, Etc.--Notwithstanding 
     any other provision of this section, if the Secretary 
     determines that any portion of a request for a hearing under 
     this section or section 6320 meets the requirement of clause 
     (i) or (ii) of section 6702(b)(2)(A), then the Secretary may 
     treat such portion as if it were never submitted and such 
     portion shall not be subject to any further administrative or 
     judicial review.''
       (2) Preclusion from raising frivolous issues at hearing.--
     Section 6330(c)(4) is amended--
       (A) by striking ``(A)'' and inserting ``(A)(i)'';
       (B) by striking ``(B)'' and inserting ``(ii)'';
       (C) by striking the period at the end of the first sentence 
     and inserting ``; or''; and
       (D) by inserting after subparagraph (A)(ii) (as so 
     redesignated) the following:
       ``(B) the issue meets the requirement of clause (i) or (ii) 
     of section 6702(b)(2)(A).''
       (3) Statement of grounds.--Section 6330(b)(1) is amended by 
     striking ``under subsection (a)(3)(B)'' and inserting ``in 
     writing under subsection (a)(3)(B) and states the grounds for 
     the requested hearing''.
       (c) Treatment of Frivolous Requests for Hearings Upon 
     Filing of Notice of Lien.--Section 6320 is amended--
       (1) in subsection (b)(1), by striking ``under subsection 
     (a)(3)(B)'' and inserting ``in writing under subsection 
     (a)(3)(B) and states the grounds for the requested hearing'', 
     and
       (2) in subsection (c), by striking ``and (e)'' and 
     inserting ``(e), and (g)''.
       (d) Treatment of Frivolous Applications for Offers-in-
     Compromise and Installment Agreements.--Section 7122 is 
     amended by adding at the end the following new subsection:
       ``(e) Frivolous Submissions, Etc.--Notwithstanding any 
     other provision of this section, if the Secretary determines 
     that any portion of an application for an offer-in-compromise 
     or installment agreement submitted under this section or 
     section 6159 meets the requirement of clause (i) or (ii) of 
     section 6702(b)(2)(A), then the Secretary may treat such 
     portion as if it were never submitted and such portion shall 
     not be subject to any further administrative or judicial 
     review.''
       (e) Clerical Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 is amended by striking the item 
     relating to section 6702 and inserting the following new 
     item:

``Sec. 6702. Frivolous tax submissions.''

       (f) Effective Date.--The amendments made by this section 
     shall apply to submissions made and issues raised after the 
     date on which the Secretary first prescribes a list under 
     section 6702(c) of the Internal Revenue Code of 1986, as 
     amended by subsection (a).

     SEC. 624. REGULATION OF INDIVIDUALS PRACTICING BEFORE THE 
                   DEPARTMENT OF TREASURY.

       (a) Censure; Imposition of Penalty.--
       (1) In general.--Section 330(b) of title 31, United States 
     Code, is amended--
       (A) by inserting ``, or censure,'' after ``Department'', 
     and
       (B) by adding at the end the following new flush sentence:

     ``The Secretary may impose a monetary penalty on any 
     representative described in the preceding sentence. If the 
     representative was acting on behalf of an employer or any 
     firm or other entity in connection with the conduct giving 
     rise to such penalty, the Secretary may impose a monetary 
     penalty on such employer, firm, or entity if it knew, or 
     reasonably should have known, of such conduct. Such penalty 
     shall not exceed the gross income derived (or to be derived) 
     from the conduct giving rise to the penalty and may be in 
     addition to, or in lieu of, any suspension, disbarment, or 
     censure.''
       (2) Effective date.--The amendments made by this subsection 
     shall apply to actions taken after the date of the enactment 
     of this Act.
       (b) Tax Shelter Opinions, Etc.--Section 330 of such title 
     31 is amended by adding at the end the following new 
     subsection:
       ``(d) Nothing in this section or in any other provision of 
     law shall be construed to limit the authority of the 
     Secretary of the Treasury to impose standards applicable to 
     the rendering of written advice with respect to any entity, 
     transaction plan or arrangement, or other plan or 
     arrangement, which is of a type which the Secretary 
     determines as having a potential for tax avoidance or 
     evasion.''

     SEC. 625. PENALTY ON PROMOTERS OF TAX SHELTERS.

       (a) Penalty on Promoting Abusive Tax Shelters.--Section 
     6700(a) is amended by adding at the end the following new 
     sentence: ``Notwithstanding the first sentence, if an 
     activity with respect to which a penalty imposed under this 
     subsection involves a statement described in paragraph 
     (2)(A), the amount of the penalty shall be equal to 50 
     percent of the gross income derived (or to be derived) from 
     such activity by the person on which the penalty is 
     imposed.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.

                       PART III--OTHER PROVISIONS

     SEC. 631. AFFIRMATION OF CONSOLIDATED RETURN REGULATION 
                   AUTHORITY.

       (a) In General.--Section 1502 (relating to consolidated 
     return regulations) is amended by adding at the end the 
     following new sentence: ``In prescribing such regulations, 
     the Secretary may prescribe rules applicable to corporations 
     filing consolidated returns under section 1501 that are 
     different from other provisions of this title that would 
     apply if such corporations filed separate returns.''
       (b) Result Not Overturned.--Notwithstanding subsection (a), 
     the Internal Revenue Code of 1986 shall be construed by 
     treating Treasury regulation Sec. 1.1502-20(c)(1)(iii) (as in 
     effect on January 1, 2001) as being inapplicable to the type 
     of factual situation in Rite Aid Corporation v. United 
     States, 255 F.3d 1357 (Fed. Cir. 2001).
       (c) Effective Date.--The provisions of this section shall 
     apply to taxable years beginning before, on, or after the 
     date of the enactment of this Act.

          Subtitle B--Tax Treatment of Inversion Transactions

     SEC. 641. TAX TREATMENT OF INVERTED CORPORATE ENTITIES.

       (a) In General.--Subchapter C of chapter 80 (relating to 
     provisions affecting more than one subtitle) is amended by 
     adding at the end the following new section:

     ``SEC. 7874. RULES RELATING TO INVERTED CORPORATE ENTITIES.

       ``(a) Inverted Corporations Treated as Domestic 
     Corporations.--
       ``(1) In general.--If a foreign incorporated entity is 
     treated as an inverted domestic corporation, then, 
     notwithstanding section 7701(a)(4), such entity shall be 
     treated for purposes of this title as a domestic corporation.
       ``(2) Inverted domestic corporation.--For purposes of this 
     section, a foreign incorporated entity shall be treated as an 
     inverted domestic corporation if, pursuant to a plan (or a 
     series of related transactions)--
       ``(A) the entity completes after March 20, 2002, the direct 
     or indirect acquisition of substantially all of the 
     properties held directly or indirectly by a domestic 
     corporation or substantially all of the properties 
     constituting a trade or business of a domestic partnership,
       ``(B) after the acquisition at least 80 percent of the 
     stock (by vote or value) of the entity is held--
       ``(i) in the case of an acquisition with respect to a 
     domestic corporation, by former shareholders of the domestic 
     corporation by reason of holding stock in the domestic 
     corporation, or
       ``(ii) in the case of an acquisition with respect to a 
     domestic partnership, by former partners of the domestic 
     partnership by reason of holding a capital or profits 
     interest in the domestic partnership, and
       ``(C) the expanded affiliated group which after the 
     acquisition includes the entity does not have substantial 
     business activities in the foreign country in which or under 
     the law of which the entity is created or organized when 
     compared to the total business activities of such expanded 
     affiliated group.
       ``(b) Preservation of Domestic Tax Base In Certain 
     Inversion Transactions To Which Subsection (a) Does Not 
     Apply.--
       ``(1) In general.--If a foreign incorporated entity would 
     be treated as an inverted domestic corporation with respect 
     to an acquired entity if either--
       ``(A) subsection (a)(2)(A) were applied by substituting 
     `after December 31, 1996, and on or before March 20, 2002' 
     for `after March 20, 2002' and subsection (a)(2)(B) were 
     applied by substituting `more than 50 percent' for `at least 
     80 percent', or

[[Page S9164]]

       ``(B) subsection (a)(2)(B) were applied by substituting 
     `more than 50 percent' for `at least 80 percent',

     then the rules of subsection (c) shall apply to any inversion 
     gain of the acquired entity during the applicable period and 
     the rules of subsection (d) shall apply to any related party 
     transaction of the acquired entity during the applicable 
     period. This subsection shall not apply for any taxable year 
     if subsection (a) applies to such foreign incorporated entity 
     for such taxable year.
       ``(2) Acquired entity.--For purposes of this section--
       ``(A) In general.--The term `acquired entity' means the 
     domestic corporation or partnership substantially all of the 
     properties of which are directly or indirectly acquired in an 
     acquisition described in subsection (a)(2)(A) to which this 
     subsection applies.
       ``(B) Aggregation rules.--Any domestic person bearing a 
     relationship described in section 267(b) or 707(b) to an 
     acquired entity shall be treated as an acquired entity with 
     respect to the acquisition described in subparagraph (A).
       ``(3) Applicable period.--For purposes of this section--
       ``(A) In general.--The term `applicable period' means the 
     period--
       ``(i) beginning on the first date properties are acquired 
     as part of the acquisition described in subsection (a)(2)(A) 
     to which this subsection applies, and
       ``(ii) ending on the date which is 10 years after the last 
     date properties are acquired as part of such acquisition.
       ``(B) Special rule for inversions occurring before march 
     21, 2002.--In the case of any acquired entity to which 
     paragraph (1)(A) applies, the applicable period shall be the 
     10-year period beginning on January 1, 2002.
       ``(c) Tax on Inversion Gains May Not Be Offset.--If 
     subsection (b) applies--
       ``(1) In general.--The taxable income of an acquired entity 
     (or any expanded affiliated group which includes such entity) 
     for any taxable year which includes any portion of the 
     applicable period shall in no event be less than the 
     inversion gain of the entity for the taxable year.
       ``(2) Credits not allowed against tax on inversion gain.--
     Credits shall be allowed against the tax imposed by this 
     chapter on an acquired entity for any taxable year described 
     in paragraph (1) only to the extent such tax exceeds the 
     product of--
       ``(A) the amount of the inversion gain for the taxable 
     year, and
       ``(B) the highest rate of tax specified in section 
     11(b)(1).

     The credit allowed by section 901 may be taken into account 
     under the preceding sentence only to the extent of the 
     product of such highest rate and the amount of taxable income 
     from sources without the United States that is not inversion 
     gain.
       ``(3) Special rules for partnerships.--In the case of an 
     acquired entity which is a partnership--
       ``(A) the limitations of this subsection shall apply at the 
     partner rather than the partnership level,
       ``(B) the inversion gain of any partner for any taxable 
     year shall be equal to the sum of--
       ``(i) the partner's distributive share of inversion gain of 
     the partnership for such taxable year, plus
       ``(ii) income or gain required to be recognized for the 
     taxable year by the partner under section 367(a), 741, or 
     1001, or under any other provision of chapter 1, by reason of 
     the transfer during the applicable period of any partnership 
     interest of the partner in such partnership to the foreign 
     incorporated entity, and
       ``(C) the highest rate of tax specified in the rate 
     schedule applicable to the partner under chapter 1 shall be 
     substituted for the rate of tax under paragraph (2)(B).
       ``(4) Inversion gain.--For purposes of this section, the 
     term `inversion gain' means any income or gain required to be 
     recognized under section 304, 311(b), 367, 1001, or 1248, or 
     under any other provision of chapter 1, by reason of the 
     transfer during the applicable period of stock or other 
     properties by an acquired entity--
       ``(A) as part of the acquisition described in subsection 
     (a)(2)(A) to which subsection (b) applies, or
       ``(B) after such acquisition to a foreign related person.

     The Secretary may provide that income or gain from the sale 
     of inventories or other transactions in the ordinary course 
     of a trade or business shall not be treated as inversion gain 
     under subparagraph (B) to the extent the Secretary determines 
     such treatment would not be inconsistent with the purposes of 
     this section.
       ``(5) Coordination with section 172 and minimum tax.--Rules 
     similar to the rules of paragraphs (3) and (4) of section 
     860E(a) shall apply for purposes of this section.
       ``(6) Statute of limitations.--
       ``(A) In general.--The statutory period for the assessment 
     of any deficiency attributable to the inversion gain of any 
     taxpayer for any pre-inversion year shall not expire before 
     the expiration of 3 years from the date the Secretary is 
     notified by the taxpayer (in such manner as the Secretary may 
     prescribe) of the acquisition described in subsection 
     (a)(2)(A) to which such gain relates and such deficiency may 
     be assessed before the expiration of such 3-year period 
     notwithstanding the provisions of any other law or rule of 
     law which would otherwise prevent such assessment.
       ``(B) Pre-inversion year.--For purposes of subparagraph 
     (A), the term `pre-inversion year' means any taxable year 
     if--
       ``(i) any portion of the applicable period is included in 
     such taxable year, and
       ``(ii) such year ends before the taxable year in which the 
     acquisition described in subsection (a)(2)(A) is completed.
       ``(d) Special Rules Applicable to Related Party 
     Transactions.--
       ``(1) Annual application for agreements on return 
     positions.--
       ``(A) In general.--Each acquired entity to which subsection 
     (b) applies shall file with the Secretary an application for 
     an approval agreement under subparagraph (D) for each taxable 
     year which includes a portion of the applicable period. Such 
     application shall be filed at such time and manner, and shall 
     contain such information, as the Secretary may prescribe.
       ``(B) Secretarial action.--Within 90 days of receipt of an 
     application under subparagraph (A) (or such longer period as 
     the Secretary and entity may agree upon), the Secretary 
     shall--
       ``(i) enter into an agreement described in subparagraph (D) 
     for the taxable year covered by the application,
       ``(ii) notify the entity that the Secretary has determined 
     that the application was filed in good faith and 
     substantially complies with the requirements for the 
     application under subparagraph (A), or
       ``(iii) notify the entity that the Secretary has determined 
     that the application was not filed in good faith or does not 
     substantially comply with such requirements.

     If the Secretary fails to act within the time prescribed 
     under the preceding sentence, the entity shall be treated for 
     purposes of this paragraph as having received notice under 
     clause (ii).
       ``(C) Failures to comply.--If an acquired entity fails to 
     file an application under subparagraph (A), or the acquired 
     entity receives a notice under subparagraph (B)(iii), for any 
     taxable year, then for such taxable year--
       ``(i) there shall not be allowed any deduction, or addition 
     to basis or cost of goods sold, for amounts paid or incurred, 
     or losses incurred, by reason of a transaction between the 
     acquired entity and a foreign related person,
       ``(ii) any transfer or license of intangible property (as 
     defined in section 936(h)(3)(B)) between the acquired entity 
     and a foreign related person shall be disregarded, and
       ``(iii) any cost-sharing arrangement between the acquired 
     entity and a foreign related person shall be disregarded.
       ``(D) Approval agreement.--For purposes of subparagraph 
     (A), the term `approval agreement' means a prefiling, advance 
     pricing, or other agreement specified by the Secretary which 
     contains such provisions as the Secretary determines 
     necessary to ensure that the requirements of sections 163(j), 
     267(a)(3), 482, and 845, and any other provision of this 
     title applicable to transactions between related persons and 
     specified by the Secretary, are met.
       ``(2) Modifications of limitation on interest deduction.--
     In the case of an acquired entity to which subsection (b) 
     applies, section 163(j) shall be applied--
       ``(A) without regard to paragraph (2)(A)(ii) thereof, and
       ``(B) by substituting `25 percent' for `50 percent' each 
     place it appears in paragraph (2)(B) thereof.
       ``(e) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Rules for application of subsection (a)(2).--In 
     applying subsection (a)(2) for purposes of subsections (a) 
     and (b), the following rules shall apply:
       ``(A) Certain stock disregarded.--There shall not be taken 
     into account in determining ownership for purposes of 
     subsection (a)(2)(B)--
       ``(i) stock held by members of the expanded affiliated 
     group which includes the foreign incorporated entity, or
       ``(ii) stock of such entity which is sold in a public 
     offering related to the acquisition described in subsection 
     (a)(2)(A).
       ``(B) Plan deemed in certain cases.--If a foreign 
     incorporated entity acquires directly or indirectly 
     substantially all of the properties of a domestic corporation 
     or partnership during the 4-year period beginning on the date 
     which is 2 years before the ownership requirements of 
     subsection (a)(2)(B) are met, such actions shall be treated 
     as pursuant to a plan.
       ``(C) Certain transfers disregarded.--The transfer of 
     properties or liabilities (including by contribution or 
     distribution) shall be disregarded if such transfers are part 
     of a plan a principal purpose of which is to avoid the 
     purposes of this section.
       ``(D) Special rule for related partnerships.--For purposes 
     of applying subsection (a)(2) to the acquisition of a 
     domestic partnership, except as provided in regulations, all 
     partnerships which are under common control (within the 
     meaning of section 482) shall be treated as 1 partnership.
       ``(E) Treatment of certain rights.--The Secretary shall 
     prescribe such regulations as may be necessary--
       ``(i) to treat warrants, options, contracts to acquire 
     stock, convertible debt instruments, and other similar 
     interests as stock, and
       ``(ii) to treat stock as not stock.

[[Page S9165]]

       ``(2) Expanded affiliated group.--The term `expanded 
     affiliated group' means an affiliated group as defined in 
     section 1504(a) but without regard to section 1504(b), except 
     that section 1504(a) shall be applied by substituting `more 
     than 50 percent' for `at least 80 percent' each place it 
     appears.
       ``(3) Foreign incorporated entity.--The term `foreign 
     incorporated entity' means any entity which is, or but for 
     subsection (a)(1) would be, treated as a foreign corporation 
     for purposes of this title.
       ``(4) Foreign related person.--The term `foreign related 
     person' means, with respect to any acquired entity, a foreign 
     person which--
       ``(A) bears a relationship to such entity described in 
     section 267(b) or 707(b), or
       ``(B) is under the same common control (within the meaning 
     of section 482) as such entity.
       ``(5) Subsequent acquisitions by unrelated domestic 
     corporations.--Subject to such conditions, limitations, and 
     exceptions as the Secretary may prescribe, if, after an 
     acquisition described in subsection (a)(2)(A) to which 
     subsection (b) applies--
       ``(A) a domestic corporation stock of which is traded on an 
     established securities market acquires directly or indirectly 
     substantially all of the properties of an acquired entity,
       ``(B) before such acquisition such domestic corporation did 
     not have a relationship described in section 267(b) or 
     707(b), and was not under common control (within the meaning 
     of section 482), with such entity, or any member of an 
     expanded affiliated group including such entity, and
       ``(C) after such acquisition such acquired entity does not 
     have such a relationship and was not under such common 
     control with any member of the expanded affiliated group 
     which before such acquisition included such entity,

     then this section shall cease to apply to such entity.
       ``(f) Regulations.--The Secretary shall provide such 
     regulations as are necessary to carry out this section, 
     including regulations providing for such adjustments to the 
     application of this section as are necessary to prevent the 
     avoidance of the purposes of this section, including the 
     avoidance of such purposes through--
       ``(1) the use of related persons, pass-through or other 
     noncorporate entities, or other intermediaries, or
       ``(2) transactions designed to have persons cease to be (or 
     not become) members of expanded affiliated groups or related 
     persons.''
       (b) Treatment of Agreements.--
       (1) Confidentiality.--
       (A) Treatment as return information.--Section 6103(b)(2) 
     (relating to return information) is amended by striking 
     ``and'' at the end of subparagraph (C), by inserting ``and'' 
     at the end of subparagraph (D), and by inserting after 
     subparagraph (D) the following new subparagraph:
       ``(E) any approval agreement under section 7874(d)(1) to 
     which any preceding subparagraph does not apply and any 
     background information related to the agreement or any 
     application for the agreement,''.
       (B) Exception from public inspection as written 
     determination.--Section 6110(b)(1)(B) is amended by striking 
     ``or (D)'' and inserting ``, (D), or (E)''.
       (2) Reporting.--The Secretary of the Treasury shall include 
     with any report on advance pricing agreements required to be 
     submitted after the date of the enactment of this Act under 
     section 521(b) of the Ticket to Work and Work Incentives 
     Improvement Act of 1999 (Public Law 106-170) a report 
     regarding approval agreements under section 7874(d)(1) of the 
     Internal Revenue Code of 1986. Such report shall include 
     information similar to the information required with respect 
     to advance pricing agreements and shall be treated for 
     confidentiality purposes in the same manner as the reports on 
     advance pricing agreements are treated under section 
     521(b)(3) of such Act.
       (c) Information Reporting.--The Secretary of the Treasury 
     shall exercise the Secretary's authority under the Internal 
     Revenue Code of 1986 to require entities involved in 
     transactions to which section 7874 of such Code (as added by 
     subsection (a)) applies to report to the Secretary, 
     shareholders, partners, and such other persons as the 
     Secretary may prescribe such information as is necessary to 
     ensure the proper tax treatment of such transactions.
       (d) Conforming Amendment.--The table of sections for 
     subchapter C of chapter 80 is amended by adding at the end 
     the following new item:

``Sec. 7874. Rules relating to inverted corporate entities.''

                   Subtitle C--Reinsurance Agreements

     SEC. 651. REINSURANCE OF UNITED STATES RISKS IN FOREIGN 
                   JURISDICTIONS.

       (a) In General.--Section 845(a) (relating to allocation in 
     case of reinsurance agreement involving tax avoidance or 
     evasion) is amended by striking ``source and character'' and 
     inserting ``amount, source, or character''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to any risk reinsured after April 11, 2002.

      Subtitle D--Extension of Internal Revenue Service User Fees

     SEC. 661. EXTENSION OF INTERNAL REVENUE SERVICE USER FEES.

       (a) In General.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     section:

     ``SEC. 7527. INTERNAL REVENUE SERVICE USER FEES.

       ``(a) General Rule.--The Secretary shall establish a 
     program requiring the payment of user fees for--
       ``(1) requests to the Internal Revenue Service for ruling 
     letters, opinion letters, and determination letters, and
       ``(2) other similar requests.
       ``(b) Program Criteria.--
       ``(1) In general.--The fees charged under the program 
     required by subsection (a)--
       ``(A) shall vary according to categories (or subcategories) 
     established by the Secretary,
       ``(B) shall be determined after taking into account the 
     average time for (and difficulty of) complying with requests 
     in each category (and subcategory), and
       ``(C) shall be payable in advance.
       ``(2) Exemptions, etc.--
       ``(A) In general.--The Secretary shall provide for such 
     exemptions (and reduced fees) under such program as the 
     Secretary determines to be appropriate.
       ``(B) Exemption for certain requests regarding pension 
     plans.--The Secretary shall not require payment of user fees 
     under such program for requests for determination letters 
     with respect to the qualified status of a pension benefit 
     plan maintained solely by 1 or more eligible employers or any 
     trust which is part of the plan. The preceding sentence shall 
     not apply to any request--
       ``(i) made after the later of--

       ``(I) the fifth plan year the pension benefit plan is in 
     existence, or
       ``(II) the end of any remedial amendment period with 
     respect to the plan beginning within the first 5 plan years, 
     or

       ``(ii) made by the sponsor of any prototype or similar plan 
     which the sponsor intends to market to participating 
     employers.
       ``(C) Definitions and special rules.--For purposes of 
     subparagraph (B)--
       ``(i) Pension benefit plan.--The term `pension benefit 
     plan' means a pension, profit-sharing, stock bonus, annuity, 
     or employee stock ownership plan.
       ``(ii) Eligible employer.--The term `eligible employer' 
     means an eligible employer (as defined in section 
     408(p)(2)(C)(i)(I)) which has at least 1 employee who is not 
     a highly compensated employee (as defined in section 414(q)) 
     and is participating in the plan. The determination of 
     whether an employer is an eligible employer under 
     subparagraph (B) shall be made as of the date of the request 
     described in such subparagraph.
       ``(iii) Determination of average fees charged.--For 
     purposes of any determination of average fees charged, any 
     request to which subparagraph (B) applies shall not be taken 
     into account.
       ``(3) Average fee requirement.--The average fee charged 
     under the program required by subsection (a) shall not be 
     less than the amount determined under the following table:

                                                                Average
``Category                                                          Fee
  Employee plan ruling and opinion............................$250 ....

  Exempt organization ruling..................................$350 ....

  Employee plan determination.................................$300 ....

  Exempt organization determination...........................$275 ....

  Chief counsel ruling........................................$200.....

       ``(c) Termination.--No fee shall be imposed under this 
     section with respect to requests made after June 30, 2008.''
       (b) Conforming Amendments.--
       (1) The table of sections for chapter 77 is amended by 
     adding at the end the following new item:

``Sec. 7527. Internal Revenue Service user fees.''.

       (2) Section 10511 of the Revenue Act of 1987 is repealed.
       (3) Section 620 of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001 is repealed.
       (c) Limitations.--Notwithstanding any other provision of 
     law, any fees collected pursuant to section 7527 of the 
     Internal Revenue Code of 1986, as added by subsection (a), 
     shall not be expended by the Internal Revenue Service unless 
     provided by an appropriations Act.
       (d) Effective Date.--The amendments made by this section 
     shall apply to requests made after the date of the enactment 
     of this Act.

              Subtitle E--Imposition of Customs User Fees

     SEC. 671. CUSTOMS USER FEES.

       Section 13031(j)(3) of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended 
     by striking ``September 30, 2003'' and inserting ``October 
     31, 2008''.

        TITLE VII--EQUAL TREATMENT FOR NONGOVERNMENTAL PROVIDERS

     SEC. 701. NONGOVERNMENTAL ORGANIZATIONS.

       (a) General Authority.--For any social service program, a 
     nongovernmental organization that is (or is applying to be) 
     involved in the delivery of social services for the program 
     shall not be required--
       (1) to alter or remove art, icons, scripture, or other 
     symbols, or to alter its name, because the symbols or name 
     are religious;
       (2) to alter or remove provisions in its chartering 
     documents because the provisions are religious, except that 
     no such charter provisions shall affect the application to a 
     nongovernmental organization of any law that would 
     (notwithstanding this paragraph) apply to the nongovernmental 
     organization; or
       (3) to alter or remove religious qualifications for 
     membership on its governing boards.

[[Page S9166]]

       (b) Prior Experience.--A nongovernmental organization that 
     has not previously been awarded a contract, grant, or 
     cooperative agreement from an agency shall not, for that 
     reason, be disadvantaged in a competition to secure a 
     contract, grant, or cooperative agreement to deliver services 
     under a social service program from the agency administering 
     the program.
       (c) Intermediate Grantors.--
       (1) In general.--An agency that administers a social 
     service program, and that is authorized to award grants or 
     cooperative agreements to nongovernmental organizations under 
     the program, may award to a nongovernmental organization 
     (referred to in this subsection as an ``intermediate 
     grantor'') a grant or cooperative agreement, the terms of 
     which authorize the intermediate grantor--
       (A) to provide subgrants or subagreements to 
     nongovernmental providers (referred to individually in this 
     subsection as a ``subrecipient''), to deliver social services 
     for the program; and
       (B) to manage the subgrants or subagreements.
       (2) Responsibilities and rights of subrecipients.--
       (A) Responsibilities.--Except for those administrative 
     responsibilities that the intermediate grantor fully performs 
     on behalf of the subrecipient, the subrecipient shall have 
     the same responsibilities or duties with respect to the 
     program as the subrecipient would have if it were the 
     intermediate grantor.
       (B) Rights.--The subrecipient shall have the same rights or 
     authorities under this section as the subrecipient would have 
     if it were the intermediate grantor.
       (3) Responsibilities and rights of agencies.--
       (A) Responsibilities.--Nothing in this subsection shall 
     alter any of an agency's responsibilities or duties with 
     respect to the program, the intermediate grantor, or the 
     subrecipient.
       (B) Rights.--Nothing in this subsection shall alter any of 
     an agency's rights or authorities with respect to the 
     program, the intermediate grantor, or the subrecipient.
       (d) Compliance.--To enforce the provisions of this section 
     against a Federal agency or official, a nongovernmental 
     organization may bring an action for injunctive relief in an 
     appropriate United States district court. To enforce the 
     provisions of this section against a State or local agency or 
     official, a nongovernmental organization may bring an action 
     for injunctive relief in an appropriate State court of 
     general jurisdiction.
       (e) Definitions.--In this section:
       (1) Federal financial assistance.--The term ``Federal 
     financial assistance'' does not include a tax credit, 
     deduction, or exemption.
       (2) Social service program.--
       (A) In general.--The term ``social service program'' means 
     a program that--
       (i) is administered by the Federal Government, or by a 
     State or local government using Federal financial assistance; 
     and
       (ii) provides services directed at helping people in need, 
     reducing poverty, improving outcomes of low-income children, 
     revitalizing low-income communities, and empowering low-
     income families and low-income individuals to become self-
     sufficient, including--

       (I) child care services, protective services for children 
     and adults, services for children and adults in foster care, 
     adoption services, services related to the management and 
     maintenance of the home, day care services for adults, and 
     services to meet the special needs of children, older 
     individuals, and individuals with disabilities (including 
     physical, mental, or emotional disabilities);
       (II) transportation services;
       (III) job training and related services, and employment 
     services;
       (IV) information, referral, and counseling services;
       (V) the preparation and delivery of meals, and services 
     related to soup kitchens or food banks;
       (VI) health support services;
       (VII) literacy and mentoring programs;
       (VIII) services for the prevention and treatment of 
     juvenile delinquency and substance abuse, services for the 
     prevention of crime and the provision of assistance to the 
     victims and the families of criminal offenders, and services 
     related to the intervention in, and prevention of, domestic 
     violence; and
       (IX) services related to the provision of assistance for 
     housing under Federal law.

       (B) Exclusions.--The term does not include a program having 
     the purpose of delivering educational assistance under the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6301 et seq.) or under the Higher Education Act of 1965 (20 
     U.S.C. 1001 et seq.).

                  TITLE VIII--COMPASSION CAPITAL FUND

     SEC. 801. SUPPORT FOR NONPROFIT COMMUNITY-BASED 
                   ORGANIZATIONS; DEPARTMENT OF HEALTH AND HUMAN 
                   SERVICES.

       (a) Support for Nongovernmental Organizations.--The 
     Secretary of Health and Human Services (referred to in this 
     section as ``the Secretary'') may award grants to and enter 
     into cooperative agreements with nongovernmental 
     organizations, to--
       (1) provide technical assistance for community-based 
     organizations, which may include--
       (A) grant writing and grant management assistance, which 
     may include assistance provided through workshops and other 
     guidance;
       (B) legal assistance with incorporation;
       (C) legal assistance to obtain tax-exempt status; and
       (D) information on, and referrals to, other nongovernmental 
     organizations that provide expertise in accounting, on legal 
     issues, on tax issues, in program development, and on a 
     variety of other organizational topics;
       (2) provide information and assistance for community-based 
     organizations on capacity building;
       (3) provide for community-based organizations information 
     on and assistance in identifying and using best practices for 
     delivering assistance to persons, families, and communities 
     in need;
       (4) provide information on and assistance in utilizing 
     regional intermediary organizations to increase and 
     strengthen the capabilities of nonprofit community-based 
     organizations;
       (5) assist community-based organizations in replicating 
     social service programs of demonstrated effectiveness; and
       (6) encourage research on the best practices of social 
     service organizations.
       (b) Support for States.--The Secretary--
       (1) may award grants to and enter into cooperative 
     agreements with States and political subdivisions of States 
     to provide seed money to establish State and local offices of 
     faith-based and community initiatives; and
       (2) shall provide technical assistance to States and 
     political subdivisions of States in administering the 
     provisions of this Act.
       (c) Applications.--To be eligible to receive a grant or 
     enter into a cooperative agreement under this section, a 
     nongovernmental organization, State, or political subdivision 
     shall submit an application to the Secretary at such time, in 
     such manner, and containing such information as the Secretary 
     may require.
       (d) Limitation.--In order to widely disburse limited 
     resources, no community-based organization (other than a 
     direct recipient of a grant or cooperative agreement from the 
     Secretary) may receive more than 1 grant or cooperative 
     agreement under this section for the same purpose.
       (e) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $85,000,000 for 
     fiscal year 2003, and such sums as may be necessary for each 
     of fiscal years 2004 through 2007.
       (f) Definition.--In this section, the term ``community-
     based organization'' means a nonprofit corporation or 
     association that has--
       (1) not more than 6 full-time equivalent employees who are 
     engaged in the provision of social services; or
       (2) a current annual budget (current as of the date the 
     entity seeks assistance under this section) for the provision 
     of social services, compiled and adopted in good faith, of 
     less than $450,000.

     SEC. 802. SUPPORT FOR NONPROFIT COMMUNITY-BASED 
                   ORGANIZATIONS; CORPORATION FOR NATIONAL AND 
                   COMMUNITY SERVICE.

       (a) Support for Nongovernmental Organizations.--The 
     Corporation for National and Community Service (referred to 
     in this section as ``the Corporation'') may award grants to 
     and enter into cooperative agreements with nongovernmental 
     organizations and State Commissions on National and Community 
     Service established under section 178 of the National and 
     Community Service Act of 1990 (42 U.S.C. 12638), to--
       (1) provide technical assistance for community-based 
     organizations, which may include--
       (A) grant writing and grant management assistance, which 
     may include assistance provided through workshops and other 
     guidance;
       (B) legal assistance with incorporation;
       (C) legal assistance to obtain tax-exempt status; and
       (D) information on, and referrals to, other nongovernmental 
     organizations that provide expertise in accounting, on legal 
     issues, on tax issues, in program development, and on a 
     variety of other organizational topics;
       (2) provide information and assistance for community-based 
     organizations on capacity building;
       (3) provide for community-based organizations information 
     on and assistance in identifying and using best practices for 
     delivering assistance to persons, families, and communities 
     in need;
       (4) provide information on and assistance in utilizing 
     regional intermediary organizations to increase and 
     strengthen the capabilities of community-based organizations;
       (5) assist community-based organizations in replicating 
     social service programs of demonstrated effectiveness; and
       (6) encourage research on the best practices of social 
     service organizations.
       (b) Applications.--To be eligible to receive a grant or 
     enter into a cooperative agreement under this section, a 
     nongovernmental organization, State Commission, State, or 
     political subdivision shall submit an application to the 
     Corporation at such time, in such manner, and containing such 
     information as the Corporation may require.
       (c) Limitation.--In order to widely disburse limited 
     resources, no community-based organization (other than a 
     direct recipient of a grant or cooperative agreement from the 
     Secretary) may receive more than 1 grant or cooperative 
     agreement under this section for the same purpose.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to

[[Page S9167]]

     carry out this section $15,000,000 for fiscal year 2003, and 
     such sums as may be necessary for each of fiscal years 2004 
     through 2007.
       (e) Definition.--In this section, the term ``community-
     based organization'' means a nonprofit corporation or 
     association that has--
       (1) not more than 6 full-time equivalent employees who are 
     engaged in the provision of social services; or
       (2) a current annual budget (current as of the date the 
     entity seeks assistance under this section) for the provision 
     of social services, compiled and adopted in good faith, of 
     less than $450,000.

     SEC. 803. SUPPORT FOR NONPROFIT COMMUNITY-BASED 
                   ORGANIZATIONS; DEPARTMENT OF JUSTICE.

       (a) Support for Nongovernmental Organizations.--The 
     Attorney General may award grants to and enter into 
     cooperative agreements with nongovernmental organizations, 
     to--
       (1) provide technical assistance for community-based 
     organizations, which may include--
       (A) grant writing and grant management assistance, which 
     may include assistance provided through workshops and other 
     guidance;
       (B) legal assistance with incorporation;
       (C) legal assistance to obtain tax-exempt status; and
       (D) information on, and referrals to, other nongovernmental 
     organizations that provide expertise in accounting, on legal 
     issues, on tax issues, in program development, and on a 
     variety of other organizational topics;
       (2) provide information and assistance for community-based 
     organizations on capacity building;
       (3) provide for community-based organizations information 
     on and assistance in identifying and using best practices for 
     delivering assistance to persons, families, and communities 
     in need;
       (4) provide information on and assistance in utilizing 
     regional intermediary organizations to increase and 
     strengthen the capabilities of nonprofit community-based 
     organizations;
       (5) assist community-based organizations in replicating 
     social service programs of demonstrated effectiveness; and
       (6) encourage research on the best practices of social 
     service organizations.
       (b) Applications.--To be eligible to receive a grant or 
     enter into a cooperative agreement under this section, a 
     nongovernmental organization, State, or political subdivision 
     shall submit an application to the Attorney General at such 
     time, in such manner, and containing such information as the 
     Attorney General may require.
       (c) Limitation.--In order to widely disburse limited 
     resources, no community-based organization (other than a 
     direct recipient of a grant or cooperative agreement from the 
     Attorney General) may receive more than 1 grant or 
     cooperative agreement under this section for the same 
     purpose.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $35,000,000 for 
     fiscal year 2003, and such sums as may be necessary for each 
     of fiscal years 2004 through 2007.
       (e) Definition.--In this section, the term ``community-
     based organization'' means a nonprofit corporation or 
     association that has--
       (1) not more than 6 full-time equivalent employees who are 
     engaged in the provision of social services; or
       (2) a current annual budget (current as of the date the 
     entity seeks assistance under this section) for the provision 
     of social services, compiled and adopted in good faith, of 
     less than $450,000.

     SEC. 804. SUPPORT FOR NONPROFIT COMMUNITY-BASED 
                   ORGANIZATIONS; DEPARTMENT OF HOUSING AND URBAN 
                   DEVELOPMENT.

       (a) Support for Nongovernmental Organizations.--The 
     Secretary of Housing and Urban Development (referred to in 
     this section ``the Secretary'') may award grants to and enter 
     into cooperative agreements with nongovernmental 
     organizations, to--
       (1) provide technical assistance for community-based 
     organizations, which may include--
       (A) grant writing and grant management assistance, which 
     may include assistance provided through workshops and other 
     guidance;
       (B) legal assistance with incorporation;
       (C) legal assistance to obtain tax-exempt status; and
       (D) information on, and referrals to, other nongovernmental 
     organizations that provide expertise in accounting, on legal 
     issues, on tax issues, in program development, and on a 
     variety of other organizational topics;
       (2) provide information and assistance for community-based 
     organizations on capacity building;
       (3) provide for community-based organizations information 
     on and assistance in identifying and using best practices for 
     delivering assistance to persons, families, and communities 
     in need;
       (4) provide information on and assistance in utilizing 
     regional intermediary organizations to increase and 
     strengthen the capabilities of community-based organizations;
       (5) assist community-based organizations in replicating 
     social service programs of demonstrated effectiveness; and
       (6) encourage research on the best practices of social 
     service organizations.
       (b) Applications.--To be eligible to receive a grant or 
     enter into a cooperative agreement under this section, a 
     nongovernmental organization, State, or political subdivision 
     shall submit an application to the Secretary at such time, in 
     such manner, and containing such information as the Secretary 
     may require.
       (c) Limitation.--In order to widely disburse limited 
     resources, no community-based organization (other than a 
     direct recipient of a grant or cooperative agreement from the 
     Secretary) may receive more than 1 grant or cooperative 
     agreement under this section for the same purpose.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $15,000,000 for 
     fiscal year 2003, and such sums as may be necessary for each 
     of fiscal years 2004 through 2007.
       (e) Definition.--In this section, the term ``community-
     based organization'' means a nonprofit corporation or 
     association that has--
       (1) not more than 6 full-time equivalent employees who are 
     engaged in the provision of social services; or
       (2) a current annual budget (current as of the date the 
     entity seeks assistance under this section) for the provision 
     of social services, compiled and adopted in good faith, of 
     less than $450,000.

     SEC. 805. COORDINATION.

       The Secretary of Health and Human Services, the Corporation 
     for National and Community Service, the Attorney General, and 
     the Secretary of Housing and Urban Development shall 
     coordinate their activities under this title to ensure--
       (1) nonduplication of activities under this title; and
       (2) an equitable distribution of resources under this 
     title.

                    TITLE IX--MATERNITY GROUP HOMES

     SEC. 901. MATERNITY GROUP HOMES.

       (a) Permissible Use of Funds.--Section 322 of the Runaway 
     and Homeless Youth Act (42 U.S.C. 5714-2) is amended--
       (1) in subsection (a)(1), by inserting ``(including 
     maternity group homes)'' after ``group homes''; and
       (2) by adding at the end the following:
       ``(c) Maternity Group Home.--In this part, the term 
     `maternity group home' means a community-based, adult-
     supervised group home that provides young mothers and their 
     children with a supportive and supervised living arrangement 
     in which such mothers are required to learn parenting skills, 
     including child development, family budgeting, health and 
     nutrition, and other skills to promote their long-term 
     economic independence and the well-being of their 
     children.''.
       (b) Contract for Evaluation.--Part B of the Runaway and 
     Homeless Youth Act (42 U.S.C. 5701 et seq.) is amended by 
     adding at the end the following:

     ``SEC. 323. CONTRACT FOR EVALUATION.

       ``(a) In General.--The Secretary shall enter into a 
     contract with a public or private entity for an evaluation of 
     the maternity group homes that are supported by grant funds 
     under this Act.
       ``(b) Information.--The evaluation described in subsection 
     (a) shall include the collection of information about the 
     relevant characteristics of individuals who benefit from 
     maternity group homes such as those that are supported by 
     grant funds under this Act and what services provided by 
     those maternity group homes are most beneficial to such 
     individuals.
       ``(c) Report.--Not later than 2 years after the date on 
     which the Secretary enters into a contract for an evaluation 
     under subsection (a), and biennially thereafter, the entity 
     conducting the evaluation under this section shall submit to 
     Congress a report on the status, activities, and 
     accomplishments of maternity group homes that are supported 
     by grant funds under this Act.''.
       (c) Authorization of Appropriations.--Section 388 of the 
     Runaway and Homeless Youth Act (42 U.S.C. 5751) is amended--
       (1) in subsection(a)(1)--
       (A) by striking ``There'' and inserting the following:
       ``(A) In general.--There'';
       (B) in subparagraph (A), as redesignated, by inserting 
     ``and the purpose described in subparagraph (B)'' after 
     ``other than part E''; and
       (C) by adding at the end the following:
       ``(B) Maternity group homes.--There is authorized to be 
     appropriated, for maternity group homes eligible for 
     assistance under section 322(a)(1)--
       ``(i) $33,000,000 for fiscal year 2003; and
       ``(ii) such sums as may be necessary for fiscal year 
     2004.''; and
       (2) in subsection (a)(2)(A), by striking ``paragraph (1)'' 
     and inserting ``paragraph (1)(A)''.

             TITLE X--STATE AND LOCAL POLITICAL COMMITTEES

     SEC. 1001. EXEMPTION FOR CERTAIN STATE AND LOCAL POLITICAL 
                   COMMITTEES FROM NOTIFICATION REQUIREMENTS.

       (a) Exemption From Notification Requirements.--Paragraph 
     (5) of section 527(i) (relating to organizations must notify 
     Secretary that they are section 527 organizations) is amended 
     by striking ``or'' at the end of subparagraph (A), by 
     striking the period at the end of subparagraph (B) and 
     inserting ``, or'', and by adding at the end the following:
       ``(C) which is a political committee of a State or local 
     candidate or which is a State or local committee of a 
     political party.''.

[[Page S9168]]

       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if included in the amendments made by 
     Public Law 106-230.

     SEC. 1002. EXEMPTION FOR CERTAIN STATE AND LOCAL POLITICAL 
                   COMMITTEES FROM REPORTING REQUIREMENTS.

       (a) In General.--Section 527(j)(5) (relating to 
     coordination with other requirements) is amended by 
     redesignating subparagraphs (C), (D), and (E) as 
     subparagraphs (D), (E), and (F), respectively, and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) to any organization which is a qualified State or 
     local political organization,''.
       (b) Qualified State or Local Political Organization.--
     Subsection (e) of section 527 (relating to other definitions) 
     is amended by adding at the end the following new paragraph:
       ``(5) Qualified state or local political organization.--
       ``(A) In general.--The term `qualified State or local 
     political organization' means a political organization 
     which--
       ``(i) does not engage in any exempt function other than 
     solely for the purposes of influencing or attempting to 
     influence the selection, nomination, election, or appointment 
     of any individual to any State or local public office or 
     office in a State or local political organization,
       ``(ii) is subject to State law which requires the 
     organization to report (and it so reports)--

       ``(I) information regarding each separate expenditure from 
     and contribution to such organization, and
       ``(II) information regarding the person who makes such 
     contribution or receives such expenditure,

     which would otherwise be required to be reported under this 
     section, and
       ``(iii) with respect to which the reports referred to in 
     clause (ii) are made public by the agency with which such 
     reports are filed and are publicly available for inspection 
     in a manner similar to that required by section 6104(d)(1).
       ``(B) Certain differences disregarded.--An organization 
     shall not be treated as failing to meet the requirements of 
     subparagraph (A)(ii) solely by reason of 1 or more of the 
     following:
       ``(i) The minimum amount of any expenditure or contribution 
     required to be reported under State law is not more than $300 
     greater than the minimum amount required to be reported under 
     subsection (j).
       ``(ii) The State law does not require the organization to 
     identify 1 or more of the following:

       ``(I) The employer of any person who makes contributions to 
     the organization.

       ``(II) The occupation of any person who makes contributions 
     to the organization.
       ``(III) The employer of any person who receives 
     expenditures from the organization.
       ``(IV) The occupation of any person who receives 
     expenditures from the organization.
       ``(V) The purpose of any expenditure of the organization.
       ``(VI) The date any contribution was made to the 
     organization.
       ``(VII) The date of any expenditure of the organization.

       ``(iii) The organization makes de minimis errors in 
     complying with State law requirements as long as the 
     organization corrects the errors within a reasonable period 
     after becoming aware of such errors.
       ``(C) Participation of federal candidate or office 
     holder.--The term `qualified State or local political 
     organization' shall not include any organization otherwise 
     described in subparagraph (A) if a candidate for nomination 
     or election to Federal elective public office or an 
     individual who holds such office--
       ``(i) controls or materially participates in the direction 
     of the organization,
       ``(ii) solicits contributions to the organization (unless 
     the Secretary determines that such solicitations resulted in 
     de minimis contributions and were made without the prior 
     knowledge and consent, whether explicit or implicit, of the 
     organization or its officers, directors, agents, or 
     employees), or
       ``(iii) directs, in whole or in part, disbursements by the 
     organization.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     Public Law 106-230.

     SEC. 1003. EXEMPTION FROM ANNUAL RETURN REQUIREMENTS.

       (a) Income Tax Returns Required Only for Political 
     Organization Taxable Income.--Paragraph (6) of section 
     6012(a) (relating to persons required to make returns of 
     income) is amended by striking ``or which has'' and all that 
     follows through ``section)''.
       (b) Information Returns.--Subsection (g) of section 6033 
     (relating to returns required by political organizations) is 
     amended to read as follows:
       ``(g) Returns Required by Political Organizations.--
       ``(1) In general.--This section shall apply to a political 
     organization--
       ``(A) as defined by section 527(e)(1) which has gross 
     receipts of $25,000 or more for the taxable year, or
       ``(B) as defined by section 527(e)(5) which has gross 
     receipts of $100,000 or more for the taxable year.
       ``(2) Annual returns.--Political organizations described in 
     paragraph (1) shall file an annual return--
       ``(A) containing the information required, and complying 
     with the other requirements, under subsection (a)(1) for 
     organizations exempt from taxation under section 501(a), with 
     such modifications as the Secretary considers appropriate so 
     that only information which is necessary to carry out the 
     purposes of section 527 is required, and
       ``(B) containing such other information as the Secretary 
     deems necessary to carry out the provisions of this 
     subsection.
       ``(3) Mandatory exceptions from filing.--Paragraph (2) 
     shall not apply to an organization--
       ``(A) which is a State or local committee of a political 
     party, or political committee of a State or local candidate,
       ``(B) which is a caucus or association of State or local 
     officials,
       ``(C) which is an authorized committee (as defined in 
     section 301(6) of the Federal Election Campaign Act of 1971) 
     of a candidate for Federal office,
       ``(D) which is a national committee (as defined in section 
     301(14) of the Federal Election Campaign Act of 1971) of a 
     political party,
       ``(E) which is a United States House of Representatives or 
     United States Senate campaign committee of a political party 
     committee,
       ``(F) which is required to report under the Federal 
     Election Campaign Act of 1971 as a political committee, or
       ``(G) to which section 527 applies for the taxable year 
     solely by reason of subsection (f)(1) of such section.
       ``(4) Discretionary exception.--The Secretary may relieve 
     any organization required under paragraph (2) to file an 
     information return from filing such a return where the 
     Secretary determines that such filing is not necessary to the 
     efficient administration of the internal revenue laws.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     Public Law 106-230.

     SEC. 1004. NOTIFICATION OF INTERACTION OF REPORTING 
                   REQUIREMENTS.

       (a) In General.--The Secretary of the Treasury, in 
     consultation with the Federal Election Commission, shall 
     publicize--
       (1) the effect of the amendments made by this Act, and
       (2) the interaction of requirements to file a notification 
     or report under section 527 of the Internal Revenue Code of 
     1986 and reports under the Federal Election Campaign Act of 
     1971.
       (b) Information.--Information provided under subsection (a) 
     shall be included in any appropriate form, instruction, 
     notice, or other guidance issued to the public by the 
     Secretary of the Treasury or the Federal Election Commission 
     regarding reporting requirements of political organizations 
     (as defined in section 527 of the Internal Revenue Code of 
     1986) or reporting requirements under the Federal Election 
     Campaign Act of 1971.

     SEC. 1005. WAIVER.

       (a) In General.--Section 527 is amended by adding at the 
     end the following:
       ``(k) Authority To Waive.--The Secretary may waive all or 
     any portion of the--
       ``(1) tax assessed on an organization by reason of the 
     failure to comply with the requirements imposed by subsection 
     (i), or
       ``(2) amount imposed under subsection (j) for the failure 
     to comply with the requirements imposed by such subsection,
     on a showing that such failure was due to reasonable cause 
     and not due to willful neglect.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to any tax assessed or amount imposed after June 
     30, 2000.

     SEC. 1006. MODIFICATIONS TO SECTION 527 ORGANIZATION 
                   DISCLOSURE PROVISIONS.

       (a) Unsegregated Funds Not To Avoid Tax.--Paragraph (4) of 
     section 527(i) (relating to failure to notify) is amended by 
     adding at the end the following new sentence: ``For purposes 
     of the preceding sentence, the term `exempt function income' 
     means any amount described in a subparagraph of subsection 
     (c)(3), whether or not segregated for use for an exempt 
     function.''.
       (b) Procedures for Assessment and Collection.--Paragraph 
     (1) of section 527(j) (relating to required disclosure of 
     expenditures and contributions) is amended by adding at the 
     end the following new sentence: ``For purposes of subtitle F, 
     the amount imposed by this paragraph shall be assessed and 
     collected in the same manner as penalties imposed by section 
     6652(c).''.
       (c) Duplicate Written Filings Not Required.--Subparagraph 
     (A) of section 527(i)(1) is amended by striking ``, 
     electronically and in writing,'' and inserting 
     ``electronically''.
       (d) Application of Fraud Penalty.--Section 7207 (relating 
     to fraudulent returns, statements, and other documents) is 
     amended by striking ``pursuant to subsection (b) of section 
     6047 or pursuant to subsection (d) of section 6104'' and 
     inserting ``pursuant to section 6047(b), section 6104(d), or 
     subsection (i) or (j) of section 527''.
       (e) Contents and Filing of Report.--
       (1) Contents.--Section 527(j)(3) (relating to contents of 
     report) is amended--
       (A) by inserting ``, date, and purpose'' after ``The 
     amount'' in subparagraph (A), and
       (B) by inserting ``and date'' after ``the amount'' in 
     subparagraph (B).
       (2) Electronic filing required.--Section 527(j) is amended 
     by adding at the end the following new paragraph:

[[Page S9169]]

       ``(7) Electronic filing.--Any report required under 
     paragraph (2) with respect to any calendar year shall be 
     filed in electronic form if the organization has, or has 
     reason to expect to have, contributions or expenditures 
     exceeding $50,000 in such calendar year.''.
       (3) Electronic filing and access of required disclosures.--
     Section 527, as amended by section 1005(a), is amended by 
     redesignating subsection (k) as subsection (l) and by 
     inserting after subsection (j) the following new subsection:
       ``(k) Public Accessibility to Notices and Reports.--
       ``(1) In general.--The Secretary shall make any notice 
     described in subsection (i)(1) or report described in 
     subsection (j)(7) available for public inspection on the 
     Internet not later than 48 hours after such notice or report 
     has been filed (in addition to such public availability as 
     may be made under section 6104(d)(7)).
       ``(2) Access to notices and reports.--The Secretary shall 
     make all notices and reports which are made available to the 
     public under paragraph (1) searchable by the following items, 
     to the extent such an item is required to be included in such 
     notices or reports:
       ``(A) Name, State, zip code, custodian of records, 
     directors, and general purpose of the organizations.
       ``(B) Entities related to the organizations.
       ``(C) Contributors to the organizations.
       ``(D) Employers of such contributors.
       ``(E) Recipients of expenditures by the organizations.
       ``(F) Ranges of contributions and expenditures.
       ``(G) Time period of the notices or reports.''.
       (f) Contents of Notice.--Section 527(i)(3) (relating to 
     contents of notice) is amended by striking ``and'' at the end 
     of subparagraph (D), by redesignating subparagraph (E) as 
     subparagraph (F), and by inserting after subparagraph (D) the 
     following new subparagraph:
       ``(E) whether the organization intends to claim an 
     exemption from the requirements of subsection (j) or section 
     6033, and''.
       (g) Timing of Notice.--Section 527(i)(2) (relating to time 
     to give notice) is amended by inserting ``or, in the case of 
     any material change in the information required under 
     paragraph (3), not later than 30 days after such material 
     change'' after ``established''.
       (h) Effective Dates.--
       (1) Subsections (a) and (b).--The amendments made by 
     subsections (a) and (b) shall apply to failures occurring on 
     or after the date of the enactment of this Act.
       (2) Subsection (c).--The amendments made by subsection (c) 
     shall take effect as if included in the amendments made by 
     Public Law 106-230.
       (3) Subsections (d), (e)(1), and (f).--The amendments made 
     by subsections (d), (e)(1), and (f) shall apply to reports or 
     notices filed on or after the date of the enactment of this 
     Act.
       (4) Subsections (e)(2) and (e)(3).--The amendments made by 
     subsections (e)(2) and (e)(3) shall apply to reports filed on 
     or after 60 days after the date of the enactment of this Act.
       (5) Subsection (g).--The amendments made by subsection (g) 
     shall apply to material changes on or after the date of the 
     enactment of this Act.

     SEC. 1007. EFFECT OF AMENDMENTS ON EXISTING DISCLOSURES.

       Notices, reports, or returns that were required to be filed 
     with the Secretary of the Treasury before the date of the 
     enactment of the amendments made by this title and that were 
     disclosed by the Secretary of the Treasury consistent with 
     the law in effect at the time of disclosure shall remain 
     subject on and after such date to the disclosure provisions 
     of section 6104 of the Internal Revenue Code of 1986.
                                 ______
                                 
  SA 4720. Mr. EDWARDS (for himself, Mr. Schumer, and Mr. Hatch) 
submitted an amendment intended to be proposed to amendment SA 4471 
proposed by Mr. Lieberman to the bill H.R. 5005, to establish the 
Department of Homeland Security, and for other purposes; which was 
ordered to lie on the table; as follows:

       On page 210, between lines 9 and 10, insert the following:

   TITLE VI--COMMISSION ON ENHANCING SECURITY AND PRESERVING FREEDOM

     SEC. 601. FINDINGS.

       Congress makes the following findings:
       (1) The terrorist attacks of September 11, 2001, and the 
     continuing threat of further attacks, are an assault on the 
     safety and security of all Americans.
       (2) The threat of further acts of terrorism has 
     necessitated an expansion of the authority of government to 
     conduct surveillance and collect data.
       (3) While recognizing the need for additional security 
     measures, Americans remain deeply committed to the individual 
     dignity, liberty, and privacy rooted in United States history 
     and protected by the Constitution of the United States.
       (4) Different investigative technologies and methods can 
     achieve the same security goals in ways that have 
     substantially different impacts on individual rights.
       (5) The government should conduct investigations and 
     surveillance in a manner that fully addresses law enforcement 
     and national security needs in the manner that best preserves 
     the personal dignity, liberty, and privacy of individuals 
     within the United States.

     SEC. 602. ESTABLISHMENT OF COMMISSION.

       (a) Establishment.--There is established the Commission on 
     Enhancing Security and Preserving Freedom (in this title 
     referred to as the ``Commission'').
       (b) Membership.--
       (1) Composition.--The Commission shall be composed of 17 
     members of whom--
       (A) five shall be representatives of the Federal 
     Government, including--
       (i) the Attorney General, or the Attorney General's 
     designee;
       (ii) the Secretary of the Treasury, or the Secretary's 
     designee;
       (iii) the Secretary of Commerce, or the Secretary's 
     designee;
       (iv) the Director of Central Intelligence, or the 
     Director's designee; and
       (v) the Secretary of Homeland Security, or the Secretary's 
     designee;
       (B) four shall be appointed by the Majority Leader of the 
     Senate;
       (C) two shall be appointed by the Minority Leader of the 
     Senate;
       (D) four shall be appointed by the Speaker of the House of 
     Representatives; and
       (E) two shall be appointed by the Minority Leader of the 
     House of Representatives.
       (2) Limitation on designees.--An individual may not be 
     designated for membership on the Commission under paragraph 
     (1)(A) unless the individual holds a position in the United 
     States Government by appointment of the President, by and 
     with the advice and consent of the Senate.
       (3) Appointments by congressional leadership.--
       (A) Requirements.--(i) One of the individuals appointed 
     under subparagraph (B) of paragraph (1) shall be an officer 
     or employee of a State law enforcement agency.
       (ii) One of the individuals appointed under subparagraph 
     (D) of paragraph (1) shall be an officer or employee of a 
     local law enforcement agency.
       (B) Limitation.--No individual may be appointed under 
     subparagraphs (B) through (E) of paragraph (1) if the 
     individual is an officer or employee of the Federal 
     Government or an active member of the uniformed services.
       (C) Sense of congress.--It is the sense of Congress that in 
     making appointments to the Commission under subparagraphs (B) 
     through (E) of paragraph (1) the Members of Congress referred 
     to in such subparagraphs should seek to appoint individuals 
     with varying viewpoints on and areas of expertise in the 
     matters to be covered by the Commission, including 
     individuals from the technology industry, non-profit 
     entities, and academia.
       (c) Period of Appointment; Vacancies.--Members of the 
     Commission shall be appointed for the life of the Commission. 
     Any vacancy in the Commission shall not affect its powers, 
     but shall be filled in the same manner as the original 
     appointment.
       (d) Security Clearances.--
       (1) In general.--Each individual appointed to the 
     Commission under subparagraphs (B) through (E) of subsection 
     (b)(1) shall possess a security clearance appropriate for the 
     work of the Commission under this title.
       (2) Failure to secure clearance.--
       (A) Initial appointments.--If an individual initially 
     appointed under subparagraphs (B) through (E) of subsection 
     (b)(1) without a security clearance does not secure a 
     security clearance by the commencement of the work of the 
     Commission, the appointment shall be deemed vacant.
       (B) Appointments to vacancies.--If an individual appointed 
     to a vacancy in a position under subparagraphs (B) through 
     (E) of subsection (b)(1) without a security clearance does 
     not secure a security clearance within a reasonable period 
     (as determined by the Commission), the appointment shall be 
     deemed vacant.
       (3) Processing of clearances.--The Attorney General shall 
     seek to ensure the timely processing of any applications for 
     security clearances for purposes of this subsection.
       (e) Chairman.--The Commission shall select a Chairman from 
     among its members.
       (f) Initial Meeting.--Not later than 30 days after the date 
     on which nine members of the Commission have been appointed, 
     the Commission shall hold its first meeting.
       (g) Meetings.--The Commission shall meet at the call of the 
     Chairman.
       (h) Quorum.--A majority of the members of the Commission 
     shall constitute a quorum, but a lesser number of members may 
     hold hearings.

     SEC. 603. DUTIES OF COMMISSION.

       (a) Investigation.--The Commission shall conduct a thorough 
     investigation of the following:
       (1) Standards for using, selecting, and operating 
     investigative and surveillance technologies to meet law 
     enforcement and national security needs in the manner that 
     best preserves the personal dignity, liberty, and privacy of 
     individuals within the United States.
       (2) The advisability of establishing within the Government 
     one or more entities or procedures to ensure that the 
     Government uses investigative and surveillance technologies 
     to meet law enforcement and national security needs in the 
     manner that best preserves the personal dignity, liberty, and 
     privacy of individuals within the United States.
       (b) Report.--
       (1) In general.--Not later than 18 months after the date of 
     the initial meeting of the Commission, the Commission shall 
     submit to the President and Congress a report which shall 
     contain a detailed statement of the

[[Page S9170]]

     findings and conclusions of the Commission, together with its 
     recommendations for such legislation and administrative 
     actions as it considers appropriate.
       (2) Form of report.--The report under paragraph (1) shall 
     be submitted in unclassified form, but may include a 
     classified annex.
       (c) Investigative and Surveillance Technologies Defined.--
     In this section, the term ``investigative and surveillance 
     technologies'' means technologies that may be used by the 
     Federal Government, and by State and local governments, to 
     monitor and collect information about individuals in the 
     absence of reasonable, articulable suspicion of criminal 
     activity, including--
       (1) Internet surveillance technologies;
       (2) data mining technologies;
       (3) surveillance camera technologies;
       (4) x-ray body scan technologies;
       (5) biometric technologies; and
       (6) other technologies identified by the Commission for 
     purposes of this title.

     SEC. 604. POWERS OF COMMISSION.

       (a) Hearings.--
       (1) In general.--The Commission or, at its direction, any 
     subcommittee or member of the Commission, may, for the 
     purpose of carrying out this title--
       (A) hold such hearings, sit and act at such times and 
     places, take such testimony, receive such evidence, 
     administer such oaths; and
       (B) require, by subpoena or otherwise, the attendance and 
     testimony of such witnesses and the production of such books, 
     records, correspondence, memoranda, papers, documents, tapes, 
     and materials,

     as the Commission or such subcommittee or member considers 
     advisable.
       (2) Public meetings.--To the maximum extent practicable, 
     the meetings of the Commission shall be open to the public.
       (3) Closed meetings.--
       (A) In general.--Meetings of the Commission may be closed 
     to the public under section 10(d) of the Federal Advisory 
     Committee Act (5 U.S.C. App.) or other applicable law.
       (B) Additional authority.--In addition to the authority 
     under subparagraph (A), paragraphs (1) and (3) of section 
     10(a) of the Federal Advisory Committee Act shall not apply 
     to any portion of a Commission meeting if the President 
     determines that such portion or portions of that meeting is 
     likely to disclose matters that could endanger national 
     security. If the President makes such determination, the 
     requirements relating to a determination under section 10(d) 
     of that Act shall apply.
       (4) Public summary of closed proceedings.--Whenever 
     practicable, the Commission shall maintain and make available 
     for public inspection an unclassified summary of any 
     classified information considered by the Commission and of 
     any classified meeting or proceeding conducted by the 
     Commission.
       (b) Issuance and Enforcement of Subpoenas.--
       (1) Issuance.--Subpoenas issued under subsection (a) shall 
     bear the signature of the Chairman of the Commission and 
     shall be served by any person or class of persons designated 
     by the Chairman for that purpose.
       (2) Enforcement.--In the case of contumacy or failure to 
     obey a subpoena issued under subsection (a), the United 
     States district court for the judicial district in which the 
     subpoenaed person resides, is served, or may be found may 
     issue an order requiring such person to appear at any 
     designated place to testify or to produce documentary or 
     other evidence. Any failure to obey the order of the court 
     may be punished by the court as a contempt of court.
       (c) Witness Allowances and Fees.--Section 1821 of title 28, 
     United States Code, shall apply to witnesses requested or 
     subpoenaed to appear at any hearing of the Commission. The 
     per diem and mileage allowances for witnesses shall be paid 
     from funds available to pay the expenses of the Commission.
       (d) Procedures.--The Commission may adopt procedures for 
     the work of the Commission under this title. Any portion of 
     such procedures relating to the treatment of confidential or 
     classified information shall not go into effect until jointly 
     approved by the Attorney General and the Director of Central 
     Intelligence.
       (e) Information From Federal Agencies.--The Commission may 
     secure directly from any Federal department or agency such 
     information as the Commission considers necessary to carry 
     out this title. Upon request of the Chairman of the 
     Commission, the head of such department or agency shall 
     furnish such information to the Commission.
       (f) Postal Services.--The Commission may use the United 
     States mails in the same manner and under the same conditions 
     as other departments and agencies of the Federal Government.
       (g) Gifts.--The Commission may accept, use, and dispose of 
     gifts or donations of services or property.

     SEC. 605. COMMISSION PERSONNEL MATTERS.

       (a) Compensation of Members.--Members of the Commission 
     shall serve without compensation for their service as members 
     of the Commission. All members of the Commission who are 
     officers or employees of the United States shall serve 
     without compensation in addition to that received for their 
     services as officers or employees of the United States.
       (b) Travel Expenses.--The members of the Commission shall 
     be allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Commission.
       (c) Staff.--
       (1) In general.--The Chairman of the Commission may, 
     without regard to the civil service laws and regulations, 
     appoint and terminate an executive director and such other 
     additional personnel as may be necessary to enable the 
     Commission to perform its duties. The employment of an 
     executive director shall be subject to confirmation by the 
     Commission.
       (2) Compensation.--The Chairman of the Commission may fix 
     the compensation of the executive director and other 
     personnel without regard to chapter 51 and subchapter III of 
     chapter 53 of title 5, United States Code, relating to 
     classification of positions and General Schedule pay rates, 
     except that the rate of pay for the executive director and 
     other personnel may not exceed the rate payable for level V 
     of the Executive Schedule under section 5316 of such title.
       (3) Security clearances.--The executive director and any 
     other personnel of the Commission shall possess security 
     clearances appropriate for the work of the Commission.
       (d) Detail of Government Employees.--Any Federal Government 
     employee may be detailed to the Commission without 
     reimbursement, and such detail shall be without interruption 
     or loss of civil service status or privilege.
       (e) Procurement of Temporary and Intermittent Services.--
     The Chairman of the Commission may procure temporary and 
     intermittent services under section 3109(b) of title 5, 
     United States Code, at rates for individuals which do not 
     exceed the daily equivalent of the annual rate of basic pay 
     prescribed for level V of the Executive Schedule under 
     section 5316 of such title.

     SEC. 606. TERMINATION OF COMMISSION.

       The Commission shall terminate 60 days after the date on 
     which the Commission submits its report under section 603(b).

     SEC. 607. FUNDING.

       (a) Authorization of Appropriations.--There are authorized 
     to be appropriated for each of fiscal years 2003, 2004, and 
     2005 such sums as may be necessary for the Commission to 
     carry out this title in such fiscal year.
       (b) Transfer of Funds.--If no funds are appropriated to the 
     Commission by the end of the session of Congress ending in a 
     fiscal year specified in subsection (a), the Secretary of 
     Commerce shall, from amounts appropriated or otherwise 
     available to the Secretary for such fiscal year, transfer to 
     the Commission an amount necessary to permit the Commission 
     to carry out this title in such fiscal year.
       (c) Availability.--Any amounts appropriated to the 
     Commission under subsection (a), or transferred to the 
     Commission under subsection (b), shall remain available, 
     without fiscal year limitation, until expended.
                                 ______
                                 
  SA 4721. Mr. KOHL submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

 TITLE __. TRANSFER OF THE BUREAU OF ALCOHOL, TOBACCO, AND FIREARMS TO 
                       THE DEPARTMENT OF JUSTICE

     SEC. __01. BUREAU OF ALCOHOL, TOBACCO, AND FIREARMS.

       (a) Establishment.--
       (1) In general.--There is established within the Department 
     of Justice the Bureau of Alcohol, Tobacco, and Firearms (in 
     this title referred to as the ``Bureau'').
       (2) Director.--The Bureau shall be headed by the Director, 
     Bureau of Alcohol, Tobacco, and Firearms (in this title 
     referred to as the ``Director''), who shall perform such 
     duties as assigned by the Attorney General. The Director 
     shall occupy a career-reserved position within the Senior 
     Executive Service.
       (3) Chief counsel.--The Bureau shall have as its chief 
     legal officer a Chief Counsel, who shall occupy a career-
     reserved position within the Senior Executive Service.
       (b) Responsibilities.--Subject to the direction of the 
     Attorney General, the Bureau shall be the primary agency 
     within the Department of Justice for--
       (1) the criminal enforcement of the Federal firearms, 
     explosives, arson, alcohol, and tobacco laws;
       (2) the regulatory enforcement and revenue collections 
     functions of the firearms, explosives, alcohol, and tobacco 
     laws;
       (3) the functions transferred by subsection (c); any
       (4) any other function related to the investigation of 
     violent crime that is delegated to the Bureau by the Attorney 
     General.
       (c) Transfer of Authorities, Functions, Personnel, and 
     Assets to the Department of Justice.--Notwithstanding any 
     other provision of law, there are transferred to the 
     Department of Justice the authorities, functions, personnel 
     (including all Senior Executive Positions), and assets of the 
     Bureau of Alcohol, Tobacco, and Firearms of the Department of 
     the Treasury, which shall be maintained as a distinct entity 
     within the Department of Justice, including the related 
     functions of the Secretary of the Treasury.

[[Page S9171]]

     SEC. __02. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Chapter 40 of title 18, United States Code, is 
     amended--
       (1) by striking section 841(k) and inserting the following:
       ``(k) `Attorney General' means the Attorney General of the 
     United States.''; and
       (2) by striking ``Secretary'' each place it appears and 
     inserting ``Attorney General''.
       (b) Chapter 44 of title 18, United States Code, is 
     amended--
       (1) in section 921(a)(4)(B), by striking ``Secretary'' and 
     inserting ``Attorney General'';
       (2) in the undesignated clause following section 
     921(a)(4)(C), by striking ``Secretary of the Treasury'' and 
     inserting ``Attorney General'';
       (3) in section 921(a)(18), by striking ``The term 
     `Secretary' or `Secretary of the Treasury' means the 
     Secretary of the Treasury or his delegate'' and inserting 
     ``The term `Attorney General' means the Attorney General of 
     the United States'';
       (4) in section 923(1), by striking ``Secretary of the 
     Treasury'' and inserting ``Attorney General''; and
       (5) except in sections 921(a)(4) and 922(p)(5), by striking 
     the term ``Secretary'' each place it appears, and inserting 
     the term ``Attorney General''.
       (c) Section 1261(a) of title 18, United States Code, is 
     amended to read as follows:
       ``(a) The Attorney General--
       ``(1) shall enforce the provisions of this chapter; and
       ``(2) has the authority to issue regulations to carry out 
     the provisions of this chapter.''.
       (d) Section 1952(c) of title 18, United States Code, is 
     amended by striking ``Secretary of the Treasury'' and 
     inserting ``Attorney General''.
       (e) Chapter 114 of title 18, United States Code, is 
     amended--
       (1) by striking section 2341(5), and inserting the 
     following:
       ``(5) the term `Attorney General' means the Attorney 
     General of the United States''; and
       (2) by striking ``Secretary'' each place it appears and 
     inserting ``Attorney General''.
       (f) Section 7801(a) of the Internal Revenue Code of 1986 
     (relating to the authority of the Department of the Treasury) 
     is amended--
       (1) by striking ``Secretary.--Except'' and inserting 
     ``Secretary.--
       ``(1) In general.--Except''; and
       (2) by adding at the end the following:
       ``(2) Administration and enforcement of certain provisions 
     by attorney general.--
       ``(A) In general.--The administration and enforcement of 
     the following provisions of this title shall be performed by 
     or under the supervision of the Attorney General; and the 
     term `Secretary' or `Secretary of the Treasury' shall, when 
     applied to those provisions, means the Attorney General; and 
     the term `internal revenue officer' shall, when applied to 
     those provisions, means any officer of the Bureau of Alcohol, 
     Tobacco, and Firearms so designated by the Attorney General:
       ``(i) Sections 4181 and 4182.
       ``(ii) Subchapters F and G of chapter 32, to the extent 
     such subchapters relate to sections 4181 and 4182.
       ``(iii) Chapters 51, 52, and 53.
       ``(iv) Chapters 61 through 80, to the extent such chapters 
     relate to the enforcement and administration of the 
     provisions referred to in clauses (i), (ii), and (iii).
       ``(B) Use of existing rulings and interpretations.--The 
     Attorney General shall adopt all rulings and interpretations 
     of the Bureau of Alcohol, Tobacco, and Firearms in effect on 
     the effective date of the Homeland Security Act of 2002 which 
     concern the provisions of this title referred to in 
     subparagraph (A) and shall consult with the Secretary to 
     achieve uniformity and consistency in administering such 
     provisions.
       (g) Chapter 1 of title 27, United States Code, is amended 
     by adding a new section 1 to read as follows:

     ``Sec. 1. Administration

       ``The administration and enforcement of this title shall be 
     performed by or under the supervision of the Attorney 
     General; and the term ``Secretary'' or ``Secretary of the 
     Treasury'' shall, when applied to those provisions, mean the 
     Attorney General.''.
       (h) Section 2006 of title 28, United States Code, is 
     amended by inserting ``, the Attorney General,'' after ``the 
     Secretary of the Treasury''.
       (i) Section 9703 of title 31, United States Code, is 
     amended--
       (1) in subsection (a)(2)(B)--
       (A) in clause (iii)(III), by inserting ``and'' before the 
     semicolon;
       (B) in clause (iv), by striking ``; and'' and inserting a 
     period; and
       (C) by striking clause (v);
       (2) by striking subsection (o);
       (3) by redesignating existing subsection (p) as subsection 
     (o); and
       (4) in subsection (o)(1), as redesignated by paragraph (3), 
     by striking ``, the Bureau of Alcohol, Tobacco, and 
     Firearms''.
       (j) Section 32401(a) of the Violent Crime Control and Law 
     Enforcement Act of 1994 (42 U.S.C. 13921(a)) is amended by 
     striking ``Secretary of the Treasury'' each place it appears 
     and inserting ``Attorney General''.
       (k) Section 80303 of title 49, United States Code, is 
     amended--
       (1) by inserting ``or, when the violation of this chapter 
     involves contraband described in paragraph (2) or (5) of 
     section 80302(a), the Attorney General'' after section 80304 
     of this title.''; and
       (2) by inserting ``, the Attorney General,'' after ``by the 
     Secretary''.
       (l) Section 80304 of title 49, United States Code, is 
     amended--
       (1) in subsection (a), by striking ``(b) and (c)'' and 
     inserting ``(b), (c), and (d)'';
       (2) by redesignating subsection (d) as subsection (e); and
       (3) by inserting after subsection (c), the following:
       ``(d) Attorney General.--The Attorney General, or officers, 
     employees, or agents of the Bureau of Alcohol, Tobacco, and 
     Firearms, Department of Justice designated by the Attorney 
     General, shall carry out the laws referred to in section 
     80306(b) of this title to the extent that the violation of 
     this chapter involves contraband described in section 80302 
     (a)(2) or (a)(5).''.
       (m) Section 103 of the Gun Control Act of 1968 (Public Law 
     90-618; 82 Stat. 1226) is amended by striking ``Secretary of 
     the Treasury'' and inserting ``Attorney General''.

     SEC. __03. POWERS OF AGENTS OF THE BUREAU OF ALCOHOL, 
                   TOBACCO, AND FIREARMS.

       Chapter 203 of title 18, United States Code, is amended by 
     adding the following new section:

     ``Sec. 3051. Powers of Agents of the Bureau of Alcohol, 
       Tobacco, and Firearms.

       ``(a) Special agents of the Bureau of Alcohol, Tobacco, and 
     Firearms whom the Attorney General charges with the duty of 
     enforcing any of the criminal, seizure, or forfeiture 
     provisions of the laws of the United States, may carry 
     firearms, serve warrants and subpoenas issued under the 
     authority of the United States and make attests without 
     warrant for any offense against the United States committed 
     in their presence, or for any felony cognizable under the 
     laws of the United States if they have reasonable grounds to 
     believe that the person to be arrested has committed or is 
     committing such felony.
       ``(b) Any special agent of the Bureau of Alcohol, Tobacco, 
     and Firearms may, in respect to the performance of his or her 
     duties, make seizures of property subject to forfeiture to 
     the United States.
       ``(c)(1) Except as provided in paragraphs (2) and (3), and 
     except to the extent that such provisions conflict with the 
     provisions of section 983 of title 18, United States Code, 
     insofar as section 983 applies, the provisions of the Customs 
     laws relating to--
       ``(A) the seizure, summary and judicial forfeiture, and 
     condemnation of property;
       ``(B) the disposition of such property;
       ``(C) the remission or mitigation of such forfeiture; and
       ``(D) the compromise of claims, shall apply to seizures and 
     forfeitures incurred, or alleged to have been incurred, under 
     any applicable provision of law enforced or administered by 
     the Bureau of Alcohol, Tobacco, and Firearms.
       ``(2) For purposes of paragraph (1), duties that are 
     imposed upon a customs officer or any other person with 
     respect to the seizure and forfeiture of property under the 
     customs laws of the United States shall be performed with 
     respect to seizures and forfeitures of property under this 
     section by such officers, agents, or any other person as may 
     be authorized or designated for that purpose by the Attorney 
     General.
       ``(3) Notwithstanding any other provision of law, the 
     disposition of firearms forfeited by reason of a violation of 
     any law of the United States shall be governed by the 
     provisions of section 5872(b) of the Internal Revenue Code of 
     1986.''.

     SEC. __04. EXPLOSIVES TRAINING AND RESEARCH FACILITY.

       (a) Establishment.--There is established within the Bureau 
     an Explosives Training and Research Facility at Fort AP Hill, 
     Fredericksburg, Virginia.
       (b) Purpose.--The facility established under subsection (a) 
     shall be utilized to train Federal, State, and local law 
     enforcement officers to--
       (1) investigate bombings and arsons;
       (2) properly handle, utilize, and dispose of explosive 
     materials and devices;
       (3) train canines on explosive detection; and
       (4) conduct research on explosives and arson.
       (c) Authorization of Appropriations.--
       (1) In general.--There are authorized to be appropriated 
     such sums as may be necessary to establish and maintain the 
     facility established under subsection (a).
       (2) Availability of funds.--Any amounts appropriated 
     pursuant to paragraph (1) shall remain available until 
     expended.

     SEC. __05. PERSONAL PAY MANAGEMENT SYSTEM.

       Notwithstanding any other provision of law, the Personal 
     Pay Management System Program established under section 102 
     of the Omnibus Consolidated and Emergency Supplemental 
     Appropriations Act for Fiscal Year 1999 (Public Law 105-277; 
     122 Stat. 2681) shall be transferred to the Attorney General 
     of the United States for the Bureau of Alcohol, Tobacco, and 
     Firearms.

                          TITLE __--EXPLOSIVES

     SEC. __01. SHORT TITLE.

       This title may be referred to as the ``Safe Explosives 
     Act''.

      SEC. __02. PERMITS FOR PURCHASERS OF EXPLOSIVES.

       (a) Definitions.--Section 841 of title 18, United States 
     Code, is amended--
       (1) by striking subsection (j) and inserting the following:
       ``(j) `Permittee' means any user of explosives for a lawful 
     purpose, who has obtained either a user permit or a limited 
     user permit under the provisions of this chapter.''; and

[[Page S9172]]

       (2) by adding at the end the following:
       ``(r) `Alien' means any person who is not a citizen or 
     national of the United States.
       ``(s) `Intimate partner' means, with respect to a person, 
     the spouse of the person, a former spouse of the person, an 
     individual who is a parent of a child of the person, and an 
     individual who cohabits or has cohabited with the person.
       ``(t)(1) Except as provided in paragraph (2), `misdemeanor 
     crime of domestic violence' means an offense that--
       ``(A) is a misdemeanor under Federal or State law; and
       ``(B) has, as an element, the use or attempted use of 
     physical force, or the threatened use of a deadly weapon, 
     committed by a current or former spouse, parent, or guardian 
     of the victim, by a person with whom the victim shares a 
     child in common, by a person who is cohabiting with or has 
     cohabited with the victim as a spouse, parent, or guardian, 
     or by a person similarly situated to a spouse, parent, or 
     guardian of the victim.
       ``(2) A person shall not be considered to have been 
     convicted of such an offense for purposes of this chapter, 
     unless--
       ``(A) the person was represented by counsel in the case, or 
     knowingly and intelligently waived the right to counsel in 
     the case; and
       ``(B) in the case of a prosecution for an offense described 
     in this subsection for which a person was entitled to a jury 
     trial in the jurisdiction in which the case was tried, 
     either--
       ``(i) the case was tried by a jury; or
       ``(ii) the person knowingly and intelligently waived the 
     right to have the case tried by a jury, by guilty plea or 
     otherwise.
       ``(u) `Responsible person' means an individual who has the 
     power to direct the management and policies of the applicant 
     pertaining to explosive materials.''.
       (b) Permits for Purchase of Explosives.--Section 842 of 
     title 18, United States Code, is amended--
       (1) in subsection (a)(2), by striking ``and'' at the end;
       (2) by striking subsection (a)(3) and inserting the 
     following:
       ``(3) other than a licensee or permittee knowingly--
       ``(A) to transport, ship, cause to be transported, or 
     receive any explosive materials; or
       ``(B) to distribute explosive materials to any person other 
     than a licensee or permittee; or
       ``(4) who is a holder of a limited user permit--
       ``(A) to transport, ship, cause to be transported, or 
     receive in interstate or foreign commerce any explosive 
     materials; or
       ``(B) to receive explosive materials from a licensee or 
     permittee, whose premises are located outside the State of 
     residence of the limited user permit holder, or on more than 
     6 separate occasions, during the period of the permit, to 
     receive explosive materials from 1 or more licensees or 
     permittees whose premises are located within the State of 
     residence of the limited user permit holder.''; and
       (3) by striking subsection (b) and inserting the following:
       ``(b) It shall be unlawful for any licensee or permittee 
     knowingly to distribute any explosive materials to any person 
     other than--
       ``(1) a licensee;
       ``(2) a holder of a user permit; or
       ``(3) a holder of a limited user permit who is a resident 
     of the State where distribution is made and in which the 
     premises of the transferor are located.''.
       (c) Licenses and User Permits.--Section 843(a) of title 18, 
     United States Code, is amended--
       (1) in the first sentence--
       (A) by inserting ``or limited user permit'' after ``user 
     permit''; and
       (B) by inserting before the period at the end the 
     following: ``, including the names of and appropriate 
     identifying information regarding all employees who will be 
     authorized by the applicant to possess explosive materials, 
     as well as fingerprints and a photograph of each responsible 
     person'';
       (2) in the second sentence, by striking ``$200'' and 
     inserting $50''; and
       (3) by striking the third sentence and inserting ``Each 
     license or user permit shall be valid for no longer than 3 
     years from the date of issuance and each limited user permit 
     shall be valid for no longer than 1 year from the date of 
     issuance. Each license or permit shall be renewable upon the 
     same conditions and subject to the same restrictions as the 
     original license or permit, and upon payment of a renewal fee 
     not to exceed one-half of the original fee.''.
       (d) Criteria for Approving Licenses and Permits.--Section 
     843(b) of title 18, United States Code, is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1) the applicant (or, if the applicant is a corporation, 
     partnership, or association, each responsible person with 
     respect to the applicant) is not a person who is prohibited 
     from receiving, distributing, transporting, or possessing 
     explosive materials under subsection (d) or (i) of section 
     842;'';
       (2) by striking paragraph (4) and inserting the following:
       ``(4) the applicant has a place of storage for explosive 
     materials that meets such standards of public safety and 
     security against theft as the Secretary shall prescribe by 
     regulations, which the Secretary may verify by inspection or 
     such other means as the Secretary determines to be 
     appropriate, and no license or permit shall remain valid for 
     more than 3 years without an inspection;''
       (3) in paragraph (5), by striking the period at the end; 
     and
       (4) by adding at the end the following:
       ``(6) none of the employees of the applicant who will be 
     authorized by the applicant to possess explosive materials is 
     a person whose possession of explosives would be unlawful 
     under section 842(i); and
       ``(7) in the case of a limited user permit, the applicant 
     has certified in writing that the applicant will not receive 
     explosive materials on more than 6 separate occasions during 
     the 12-month period for which the limited user permit is 
     valid.''.
       (e) Application Approval.--Section 843(c) of title 18, 
     United States Code, is amended by striking ``forty-five 
     days'' and inserting ``45 days for limited user permits and 
     90 days for licenses and user permits,''.
       (f) Inspection Authority.--Section 843(f) of title 18, 
     United States Code, is amended in the second sentence, by 
     striking ``permittee'' the first time it appears and 
     inserting ``holder of a user permit''.
       (g) Posting of Permits.--Section 843(g) of title 18, United 
     States Code, is amended by inserting ``user'' before 
     ``permits''.
       (h) Background Checks; Clearances.--Section 843 of title 
     18, United States Code, is amended by adding at the end the 
     following:
       ``(h)(1) If the Secretary receives from an employer the 
     name and other identifying information with respect to a 
     responsible person or an employee who will be authorized by 
     the employer to possess explosive materials in the course of 
     employment with the employer, the Secretary shall determine 
     whether possession of explosives by the responsible person or 
     the employee, as the case may be, would be unlawful under 
     section 842(i). In making the determination, the Secretary 
     may take into account a letter or document issued under 
     paragraph (2).
       ``(2)(A) If the Secretary determines that possession of 
     explosives by the responsible person or the employee would 
     not be unlawful under section 842(i), the Secretary shall 
     notify the employer in writing or electronically of the 
     determination and issue to the responsible person or the 
     employee, as the case may be, a letter of clearance which 
     confirms the determination.
       ``(B) If the Secretary determines that possession of 
     explosives by the responsible person or the employee would be 
     unlawful under section 842(i), the Secretary shall notify the 
     employer in writing or electronically of the determination 
     and issue to the responsible person or the employee, as the 
     case may be, a document that--
       ``(i) confirms the determination;
       ``(ii) explains the grounds for the determination;
       ``(iii) provides information on how the disability may be 
     relieved; and
       ``(iv) explains how the determination may be appealed.''.
       (i) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     take effect 180 days after the date of enactment of this Act.
       (2) Exception.--Notwithstanding any provision of this 
     title, a license or permit issued under section 843 of title 
     18, United States Code, before the date of enactment of this 
     Act, shall remain valid until that license or permit is 
     revoked under section 843(d) or expires, or until a timely 
     application for renewal is acted upon.

     SEC. __03. PERSONS PROHIBITED FROM RECEIVING OR POSSESSING 
                   EXPLOSIVE MATERIALS.

       (a) Distribution of Explosives.--Section 842(d) of title 
     18, United States Code, is amended--
       (1) in paragraph (5), by striking ``or'' at the end;
       (2) in paragraph (6), by striking the period at the end and 
     inserting ``or who has been committed to a mental 
     institution;''; and
       (3) by adding at the end the following:
       ``(7) is an alien, other than an alien who--
       ``(A) is lawfully admitted for permanent residence (as 
     defined in section 101 (a)(20) of the Immigration and 
     Nationality Act); or
       ``(B) is in lawful nonimmigrant status, is a refugee 
     admitted under section 207 of the Immigration and Nationality 
     Act (8 U.S.C. 1157), or is in asylum status under section 208 
     of the Immigration and Nationality Act (8 U.S.C. 1158), and--
       ``(i) is a foreign law enforcement officer of a friendly 
     foreign government entering the United States on official law 
     enforcement business, and the shipping, transporting, 
     possession, or receipt of explosive materials is in 
     furtherance of this official law enforcement;
       ``(ii) is a person having the power to direct or cause the 
     direction of the management and policies of a corporation, 
     partnership, or association licensed pursuant to section 
     843(a), and the shipping, transporting, possession, or 
     receipt of explosive materials is in furtherance of such 
     power;
       ``(iii) is a member of a North Atlantic Treaty Organization 
     (NATO) or other friendly foreign military force (whether or 
     not admitted in a nonimmigrant status) who is present in the 
     United States under military orders for training or other 
     military purpose authorized by the United States, and the 
     shipping, transporting, possession, or receipt of explosive 
     materials is in furtherance of the military purpose; or
       ``(iv) is lawfully present in the United States in 
     cooperation with the Director of Central Intelligence;
       ``(8) has been discharged from the armed forces under 
     dishonorable conditions;
       ``(9) having been a citizen of the United States, has 
     renounced the citizenship of that person;

[[Page S9173]]

       ``(10) is subject to a court order that--
       ``(A) was issued after a hearing of which such person 
     received actual notice, and at which such person had an 
     opportunity to participate;
       ``(B) restrains such person from harassing, stalking, or 
     threatening an intimate partner of such person or child of 
     such intimate partner or person, or engaging in other conduct 
     that would place an intimate partner in reasonable fear of 
     bodily injury to the partner or child; and
       ``(C)(i) includes a finding that such person represents a 
     credible threat to the physical safety of such intimate 
     partner or child; or
       ``(ii) by its terms explicitly prohibits the use, attempted 
     use, or threatened use of physical force against such 
     intimate partner or child that would reasonably be expected 
     to cause bodily injury; or
       ``(11) has been convicted in any court of a misdemeanor 
     crime of domestic violence.''.
       (b) Possession of Explosive Materials.--Section 842(i) of 
     title 18, United States Code, is amended--
       (1) in paragraph (3), by striking ``or'' at the end;
       (2) by inserting after paragraph (4) the following:
       ``(5) who is an alien, other than an alien who--
       ``(A) is lawfully admitted for permanent residence (as that 
     term is defined in section 101(a)(20) of the Immigration and 
     Nationality Act); or
       ``(B) is in lawful nonimmigrant status, is a refugee 
     admitted under section 207 of the Immigration and Nationality 
     Act (8 U.S.C. 1157), or is in asylum status under section 208 
     of the Immigration and Nationality Act (8 U.S.C. 1158), and--
       ``(i) is a foreign law enforcement officer of a friendly 
     foreign government entering the United States on official law 
     enforcement business, and the shipping, transporting, 
     possession, or receipt of explosive materials is in 
     furtherance of this official law enforcement;
       ``(ii) is a person having the power to direct or cause the 
     direction of the management and policies of a corporation, 
     partnership, or association licensed pursuant to section 
     843(a), and the shipping, transporting, possession, or 
     receipt of explosive materials is in furtherance of such 
     power;
       ``(iii) is a member of a North Atlantic Treaty Organization 
     (NATO) or other friendly foreign military force (whether or 
     not admitted in a nonimmigrant status) who is present in the 
     United States under military orders for training or other 
     military purpose authorized by the United States, and the 
     shipping, transporting, possession, or receipt of explosive 
     materials is in furtherance of the military purpose; or
       ``(iv) is lawfully present in the United States in 
     cooperation with the Director of Central Intelligence;
       ``(6) who has been discharged from the armed forces under 
     dishonorable conditions;
       ``(7) who, having been a citizen of the United States, has 
     renounced the citizenship of that person;
       ``(8) who is subject to a court order that--
       ``(A) was issued after a hearing of which such person 
     received actual notice, and at which such person had an 
     opportunity to participate;
       ``(B) restrains such person from harassing, stalking, or 
     threatening an intimate partner of such person or child of 
     such intimate partner or person, or engaging in other conduct 
     that would place an intimate partner in reasonable fear of 
     bodily injury to the partner or child; and
       ``(C)(i) includes a finding that such person represents a 
     credible threat to the physical safety of such intimate 
     partner or child; or
       ``(ii) by its terms explicitly prohibits the use, attempted 
     use, or threatened use of physical force against such 
     intimate partner or child that would reasonably be expected 
     to cause bodily injury; or
       ``(9) who has been convicted in any court of a misdemeanor 
     crime of domestic violence.''; and
       (3) by inserting ``or affecting'' before ``interstate'' 
     each place that term appears..

     SEC. __04. REQUIREMENT TO PROVIDE SAMPLES OF EXPLOSIVE 
                   MATERIALS AND AMMONIUM NITRATE.

       Section 843 of title 18, United States Code, as amended by 
     this Act, is amended by adding at the end the following:
       ``(i) Furnishing of Samples.--
       ``(1) In general.--Licensed manufacturers and licensed 
     importers and persons who manufacture or import explosive 
     materials or ammonium nitrate shall, when required by letter 
     issued by the Secretary, furnish--
       ``(A) samples of such explosive materials or ammonium 
     nitrate;
       ``(B) information on chemical composition of those 
     products; and
       ``(C) any other information that the Secretary determines 
     is relevant to the identification of the explosive materials 
     or to identification of the ammonium nitrate.
       ``(2) Reimbursement.--The Secretary may, by regulation, 
     authorize reimbursement of the fair market value of samples 
     furnished pursuant to this subsection, as well as the 
     reasonable costs of shipment.''.

     SEC. __05. DESTRUCTION OF PROPERTY OF INSTITUTIONS RECEIVING 
                   FEDERAL FINANCIAL ASSISTANCE.

       Section 844(f)(1) of title 18, United States Code, is 
     amended by inserting before the word ``shall'' the following: 
     ``or any institution or organization receiving Federal 
     financial assistance,''.

     SEC. __06. RELIEF FROM DISABILITIES.

       Section 845(b) of title 18, United States Code, is amended 
     to read as follows:
       ``(b) Relief From Disabilities.--
       ``(1) Prohibited persons.--
       ``(A) In general.--Except as provided in paragraph (2), a 
     person who is prohibited from engaging in activity under 
     section 842 may make application to the Secretary for relief 
     from the disabilities imposed by Federal law with respect to 
     a violation of that section, and the Secretary may grant that 
     relief, if the Secretary determines that--
       ``(i) the circumstances regarding the disability, and the 
     record and reputation of the applicant are such that the 
     applicant will not be likely to act in a manner dangerous to 
     public safety; and
       ``(ii) that the granting of the relief will not be contrary 
     to the public interest.
       ``(B) Petition for judicial review.--Any person whose 
     application for relief from disabilities under this section 
     is denied by the Secretary may file a petition with the 
     United States district court for the district in which that 
     person resides for a judicial review of the denial.
       ``(C) Additional evidence.--The court may, in its 
     discretion, admit additional evidence where failure to do so 
     would result in a miscarriage of justice.
       ``(D) Further operations.--A licensee or permittee who 
     conducts operations under this chapter and makes application 
     for relief from the disabilities under this chapter, shall 
     not be barred by that disability from further operations 
     under the license or permit of that person pending final 
     action on an application for relief filed pursuant to this 
     section.
       ``(E) Notice.--Whenever the Secretary grants relief to any 
     person pursuant to this section, the Secretary shall promptly 
     publish in the Federal Register, notice of that action, 
     together with reasons for that action.
       ``(2) Waiver for lawful nonimmigrants.--
       ``(A) Conditions for waiver.--Any individual who has been 
     admitted to the United States in a lawful nonimmigrant status 
     may receive a waiver from the requirements of subsection 
     (d)(7) or (i)(5) of section 842, if--
       ``(i) the individual submits to the Secretary a petition 
     that meets the requirements of subparagraph (C); and
       ``(ii) the Secretary approves the petition.
       ``(B) Petition.--Each petition submitted in accordance with 
     this subsection shall--
       ``(i) demonstrate that the petitioner has resided in the 
     United States for a continuous period of not less than 180 
     days before the date on which the petition is submitted under 
     this paragraph; and
       ``(ii) include a written statement from the embassy or 
     consulate of the petitioner, authorizing the petitioner to 
     acquire explosives and certifying that the alien would not, 
     absent the application of subsection (d)(7) or (i)(5) of 
     section 842, otherwise be prohibited from such an acquisition 
     under that subsection (d) or (i).
       ``(C) Approval of petition.--The Secretary may approve a 
     petition submitted in accordance with this paragraph if the 
     Secretary determines that waiving the requirements of 
     subsection (d)(7) or (i)(5) of section 842 with respect to 
     the petitioner--
       ``(i) would not jeopardize the public safety; and
       ``(ii) will not be contrary to the public interest.''.

     SEC. __07. THEFT REPORTING REQUIREMENT.

       Section 844 of title 18, United States Code, is amended by 
     adding at the end the following:
       ``(p) Theft Reporting Requirement.--
       ``(1) In general.--A holder of a license or permit who 
     knows that explosive materials have been stolen from that 
     licensee, user permittee, or limited user permittee, shall 
     report the theft to the Secretary not later than 24 hours 
     after the discovery of the theft.
       ``(2) Penalty.--A holder of a license or permit who does 
     not report a theft in accordance with paragraph (1), shall be 
     fined not more than $10,000, imprisoned not more than 5 
     years, or both.''.

     SEC. __08. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated such sums as 
     necessary to carry out this title and the amendments made by 
     this title.
                                 ______
                                 
  SA. 4722. Mr. LEAHY submitted an amendment intended to be proposed by 
him to the bill H.R. 5005, to establish the Department of Homeland 
Security, and for other purposes; which was ordered to lie on the 
table; as follows:

       At the appropriate place, insert the following:

     SEC. __. CONGRESSIONAL APPROVAL REQUIREMENT FOR TIPS.

       Any and all activities of the Federal Government to 
     implement the proposed component program of the Citizens 
     Corps known as Operation TIPS (Terrorism Information and 
     Prevention System) are hereby prohibited, unless expressly 
     authorized by statute.
  SA 4723. Mr. LEAHY submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 211, strike lines 10 and 11 and insert the 
     following:

[[Page S9174]]

         TITLE VI--LAW ENFORCEMENT OFFICERS SAFETY ACT OF 2002

     SEC. 601. SHORT TITLE.

       This title may be cited as the ``Law Enforcement Officers 
     Safety Act of 2002''.

     SEC. 602. EXEMPTION OF QUALIFIED LAW ENFORCEMENT OFFICERS 
                   FROM STATE LAWS PROHIBITING THE CARRYING OF 
                   CONCEALED FIREARMS.

       (a) In General.--Chapter 44 of title 18, United States 
     Code, is amended by inserting after section 926A the 
     following:

     ``Sec. 926B. Carrying of concealed firearms by qualified law 
       enforcement officers

       ``(a) Notwithstanding any other provision of the law of any 
     State or any political subdivision thereof, an individual who 
     is a qualified law enforcement officer and who is carrying 
     the identification required by subsection (d) may carry a 
     concealed firearm that has been shipped or transported in 
     interstate or foreign commerce, subject to subsection (b).
       ``(b) This section shall not be construed to supersede or 
     limit the laws of any State that--
       ``(1) permit private persons or entities to prohibit or 
     restrict the possession of concealed firearms on their 
     property; or
       ``(2) prohibit or restrict the possession of firearms on 
     any State or local government property, installation, 
     building, base, or park.
       ``(c) As used in this section, the term `qualified law 
     enforcement officer' means an employee of a governmental 
     agency who--
       ``(1) is authorized by law to engage in or supervise the 
     prevention, detection, investigation, or prosecution of, or 
     the incarceration of any person for, any violation of law, 
     and has statutory powers of arrest;
       ``(2) is authorized by the agency to carry a firearm;
       ``(3) is not the subject of any disciplinary action by the 
     agency;
       ``(4) meets standards, if any, established by the agency 
     which require the employee to regularly qualify in the use of 
     a firearm; and
       ``(5) is not prohibited by Federal law from receiving a 
     firearm.
       ``(d) The identification required by this subsection is the 
     photographic identification issued by the governmental agency 
     for which the individual is, or was, employed as a law 
     enforcement officer.''.
       (b) Clerical Amendment.--The table of sections for such 
     chapter is amended by inserting after the item relating to 
     section 926A the following:

``926B. Carrying of concealed firearms by qualified law enforcement 
              officers.''.

     SEC. 603. EXEMPTION OF QUALIFIED RETIRED LAW ENFORCEMENT 
                   OFFICERS FROM STATE LAWS PROHIBITING THE 
                   CARRYING OF CONCEALED FIREARMS.

       (a) In General.--Chapter 44 of title 18, United States 
     Code, is further amended by inserting after section 926B the 
     following:

     ``Sec. 926C. Carrying of concealed firearms by qualified 
       retired law enforcement officers

       ``(a) Notwithstanding any other provision of the law of any 
     State or any political subdivision thereof, an individual who 
     is a qualified retired law enforcement officer and who is 
     carrying the identification required by subsection (d) may 
     carry a concealed firearm that has been shipped or 
     transported in interstate or foreign commerce, subject to 
     subsection (b).
       ``(b) This section shall not be construed to supersede or 
     limit the laws of any State that--
       ``(1) permit private persons or entities to prohibit or 
     restrict the possession of concealed firearms on their 
     property; or
       ``(2) prohibit or restrict the possession of firearms on 
     any State or local government property, installation, 
     building, base, or park.
       ``(c) As used in this section, the term `qualified retired 
     law enforcement officer' means an individual who--
       ``(1) retired in good standing from service with a public 
     agency as a law enforcement officer, other than for reasons 
     of mental instability;
       ``(2) before such retirement, was authorized by law to 
     engage in or supervise the prevention, detection, 
     investigation, or prosecution of, or the incarceration of any 
     person for, any violation of law, and had statutory powers of 
     arrest;
       ``(3)(A) before such retirement, was regularly employed as 
     a law enforcement officer for an aggregate of 15 years or 
     more; or
       ``(B) retired from service with such agency, after 
     completing any applicable probationary period of such 
     service, due to a service-connected disability, as determined 
     by such agency;
       ``(4) has a nonforfeitable right to benefits under the 
     retirement plan of the agency;
       ``(5) during the most recent 12-month period, has met, at 
     the expense of the individual, the State's standards for 
     training and qualification for active law enforcement 
     officers to carry firearms; and
       ``(6) is not prohibited by Federal law from receiving a 
     firearm.
       ``(d) The identification required by this subsection is 
     photographic identification issued by the agency for which 
     the individual was employed as a law enforcement officer.''.
       (b) Clerical Amendment.--The table of sections for such 
     chapter is further amended by inserting after the item 
     relating to section 926B the following:

``926C. Carrying of concealed firearms by qualified retired law 
              enforcement officers.''.
  SA 4724. Mr. BUNNING submitted an amendment intended to be proposed 
to amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, 
to establish the Department of Homeland Security, and for other 
purposes; which was ordered to lie on the table; as follows:
       On page 137, between lines 13 and 14, insert the following:

     SEC. 173. JOINT INTERAGENCY TASK FORCE.

       (a) Establishment..--The Secretary may establish and 
     operate a permanent Joint Interagency Homeland Security Task 
     Force composed of representatives from military and civilian 
     agencies of the United States Government for the purposes of 
     anticipating terrorist threats against the United States and 
     taking appropriate actions to prevent harm to the United 
     States.
       (b) Structure.--It is the sense of Congress that the 
     Secretary should model the Joint Interagency Homeland 
     Security Task Force on the approach taken by the Joint 
     Interagency Task Forces for drug interdiction at Key West, 
     Florida, and Alameda, California, to the maximum extent 
     feasible and appropriate.
                                 ______
                                 
  SA 4725. Mr. DAYTON submitted an amendment intended to be proposed by 
him to the bill H.R. 5005, to establish the Department of Homeland 
Security, and for other purposes; which was ordered to lie on the 
table; as follows:

       At the appropriate place insert the following:

     SEC. __. EXCLUSION OF CERTAIN OVERSEAS PAY OF MEMBERS OF THE 
                   ARMED FORCES.

       (a) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to items 
     specifically excluded from gross income) is amended by 
     inserting after section 112 the following new section:

     ``SEC. 113. CERTAIN OVERSEAS PAY OF MEMBERS OF THE ARMED 
                   FORCES.

       ``(a) In General.--Gross income does not include 
     compensation received for covered service as a member in the 
     Armed Forces of the United States.
       ``(b) Covered Service.--For purposes of this section--
       ``(1) In general.--The term `covered service', with respect 
     to a member, means service outside the United States in an 
     assignment that is a permanent change of station for which 
     travel, transportation, and housing of dependents at 
     Government expense would generally not be authorized under 
     policies of the Secretary concerned that are applicable to 
     that assignment, except in the case of service in such an 
     assignment for which such travel, transportation, and housing 
     is actually authorized as an exception to the applicable 
     policy.
       ``(2) Secretary concerned.--The term `Secretary concerned' 
     has the meaning given the term in section 101(a)(9) of title 
     10, United States Code.''
       (b) Conforming Amendment.--Section 3401(a) of the Internal 
     Revenue Code of 1986 is amended by striking ``or'' at the end 
     of paragraph (20), by striking the period at the end of 
     paragraph (21) and inserting ``; or'', and by adding at the 
     end the following new paragraph:
       ``(22) as compensation described in section 113.''
       (c) Clerical Amendment.--The table of sections for part III 
     of subchapter B of chapter 1 of the Internal Revenue Code of 
     1986 is amended by inserting after the item relating to 
     section 112 the following new item:

``Sec. 113. Certain overseas pay of members of the Armed Forces.''

       (d) Customs User Fees.--Section 13031(j)(3) of the 
     Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
     U.S.C. 58c(j)(3)) is amended by striking ``September 30, 
     2003'' and inserting ``October 31, 2008''.
       (e) Effective Date.--The amendments made by this section 
     (other than subsection (d)) shall apply to remuneration paid 
     in taxable years beginning after the date of the enactment of 
     this Act.
                                 ______
                                 
  SA 4726. Mr. DeWINE submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of subtitle D of title I, add the following:

     SEC. 173. REPORT ON ESTABLISHMENT OF CIVILIAN LINGUIST 
                   RESERVE CORPS.

       (a) Report.--
       (1) Preparation.--The Secretary of Defense, acting through 
     the Director of the National Security Education Program, 
     shall prepare a report on the feasibility of various methods 
     for improving the foreign language capability of the Federal 
     Government, including the establishment of a Civilian 
     Linguist Reserve Corps comprised of individuals with advanced 
     levels of proficiency in foreign languages who are United 
     States citizens who would be available upon a call of the 
     President to perform such service or duties with respect to 
     such foreign languages in the Federal Government as the 
     President may specify.

[[Page S9175]]

       (2) Consultation.--In preparing the report, the Secretary 
     shall consult with such organizations having expertise in 
     training in foreign languages as the Secretary determines 
     appropriate.
       (b) Matters considered.--
       (1) In general.--In conducting the study, the Secretary 
     shall develop a proposal for the structure and operations of 
     the Civilian Linguist Reserve Corps. The proposal shall 
     establish requirements for performance of duties and levels 
     of proficiency in foreign languages of the members of the 
     Civilian Linguist Reserve Corps, including maintenance of 
     language skills and specific training required for 
     performance of duties as a linguist of the Federal 
     Government, and shall include recommendations on such other 
     matters as the Secretary determines appropriate.
       (2) Consideration of use of defense language institute and 
     language registries.--In developing the proposal under 
     paragraph (1), the Secretary shall consider the 
     appropriateness of using--
       (A) the Defense Language Institute to conduct testing for 
     language skills proficiency and performance, and to provide 
     language refresher courses; and
       (B) foreign language skill registries of the Department of 
     Defense or of other agencies or departments of the United 
     States to identify individuals with sufficient proficiency in 
     foreign languages.
       (3) Consideration of reserve components of armed forces as 
     model.--In developing the proposal under paragraph (1), the 
     Secretary shall consider the provisions of title 10, United 
     States Code, establishing and governing service in the 
     Reserve Components of the Armed Forces, as a model for the 
     Civilian Linguist Reserve Corps.
       (c) Completion of Report.--Not later than 6 months after 
     the date of the enactment of this Act, the Secretary shall 
     submit to Congress the report prepared under subsection (a).
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Defense $300,000 to 
     carry out this section.
                                 ______
                                 
  SA 4728. Mrs. CARNAHAN submitted an amendment intended to be proposed 
to amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, 
to establish the Department of Homeland Security, and for other 
purposes; which was ordered to lie on the table; as follows:

       Strike line 3, p. 131 thru line 25, p. 132.
       At line 3, p. 131, insert the following:

     SEC. __. GRANTS FOR FIREFIGHTING PERSONNEL.

       (a) Section 33 of the Federal Fire Prevention and Control 
     Act of 1974 (15 U.S.C. 2229) is amended--
       (1) by redesignating subsections (c), (d), and (e) as 
     subsections (d), (e), and (f), respectively;
       (2) by inserting after subsection (b) the following:
       ``(c) Personnel Grants.--
       ``(1) In general.--In addition to the grants authorized 
     under subsection (b)(1), the Director may award grants to 
     fire departments of a State for the purpose of hiring 
     `employees engaged in fire protection' as that term is 
     defined in section 3 of the Fair Labor Standards Act (29 
     U.S.C. 203).
       ``(2) Duration.--Grants awarded under this subsection shall 
     be for a 3-year period.
       ``(3) Maximum amount.--The total amount of grants awarded 
     under this subsection shall not exceed $100,000 per 
     firefighter, indexed for inflation, over the 3-year grant 
     period.
       ``(4) Federal share.--
       ``(A) In general.--The Federal share of a grant under this 
     subsection shall not exceed 75 percent of the total salary 
     and benefits cost for additional firefighters hired.
       ``(B) Waiver.--The Director may waive the 25 percent non-
     Federal match under subparagraph (A) for a jurisdiction of 
     50,000 or fewer residents or in cases of extreme hardship.
       ``(5) Application.--An application for a grant under this 
     subsection, shall--
       ``(A) meet the requirements under subsection (b)(5);
       ``(B) include an explanation for the applicant's need for 
     Federal assistance; and
       ``(C) contain specific plans for obtaining necessary 
     support to retain the position following the conclusion of 
     Federal support.
       ``(6) Maintenance of effort.--Grants awarded under this 
     subsection shall only be used to pay the salaries and 
     benefits of additional firefighting personnel, and shall not 
     be used to supplant funding allocated for personnel from 
     State and local sources.''; and
       (3) in subsection (f) (as redesignated by paragraph (1)), 
     by adding at the end the following:
       ``(3) $1,000,000,000 for each of fiscal years 2003 and 
     2004, to be used only for grants under subsection (c).''.
                                 ______
                                 
  SA 4728. Mr. GREGG submitted an amendment intended to be proposed to 
amendment SA 4471 proposed by Mr. Lieberman to the bill H.R. 5005, to 
establish the Department of Homeland Security, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. SENSE OF THE SENATE CONCERNING THE AVAILABILITY OF 
                   THE SMALLPOX VACCINE.

       (a) Findings.--The Senate finds that--
       (1) the smallpox virus has killed more people than any 
     other infectious disease in human history, and is estimated 
     to have killed approximately 400,000,000 people in the 20th 
     century;
       (2) Congress and the Administration have determined that a 
     bioterrorist attack utilizing the smallpox virus is a present 
     threat to the nation's public health and safety;
       (3) the Secretary of Health and Human Services has 
     contracted with private manufacturers to purchase 
     approximately 300,000,000 doses of smallpox vaccine, of which 
     100,000,000 doses have already been delivered;
       (4) the Smallpox Response Plan and Guidelines released by 
     the Centers for Disease Control and Prevention on September 
     23, 2002, calls for vaccinating the entire population of the 
     United States against smallpox within 5 days of an outbreak 
     of the disease;
       (5) the plan would make the vaccine available to the 
     general public only in the event of an outbreak of the 
     disease;
       (6) the strategy adopted by the Centers for Disease Control 
     and Prevention is an important step forward but it is short 
     of what is needed to adequately protect and defend against a 
     possible attack using the disease;
       (7) because the initial symptoms of smallpox are flu-like, 
     the disease may go undetected or undiagnosed for up to 2 
     weeks, and could spread to and kill thousands before the 
     first vaccinations could be administered;
       (8) the more people who receive prompt vaccination against 
     smallpox, the lower the rate of transmission of the disease 
     and the greater the likelihood that such an outbreak could be 
     contained; and
       (9) because there are known health risks associated with 
     the smallpox vaccine, the decision to be vaccinated should be 
     made by the individual, or parent or guardian, in 
     consultation with a doctor, and not the Federal Government.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) the Secretary of Health and Human Services, at the 
     request of any individual, or such individual's parent or 
     guardian, and in consultation with such individual's 
     physician, should make available to that individual vaccine 
     sufficient to inoculate such individual from the smallpox 
     virus;
       (2) such vaccine should be provided at no cost or at 
     nominal cost to the individual;
       (3) such vaccine should be provided to the individual if 
     the individual resides in the United States or any 
     commonwealth, possession, or territory of the United States 
     or the individual is an American citizen who resides outside 
     of the United States; and
       (4) such vaccine should be provided only if it is Federally 
     licensed.
                                 ______
                                 
  SA 4729. Mr. HOLLINGS submitted an amendment intended to be proposed 
by him to the bill S. 2995, to improve economic opportunity and 
development in communities that are dependent on tobacco production, 
and for other purposes; which was referred to the Committee on 
Agriculture, Nutrition, and Forestry; as follows:

       At the end of subtitle B of title I, add the following new 
     section:

     SEC. __. TAX TREATMENT OF PAYMENTS UNDER TOBACCO EQUITY 
                   REDUCTION PROGRAM.

       (a) In General.--Part II of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to items 
     specifically included in gross income) is amended by adding 
     at the end the following:

     ``SEC. 91. TOBACCO EQUITY REDUCTION PROGRAM PAYMENTS.

       ``(a) General Rule.--Gross income includes amounts received 
     under section 380j of the Agricultural Adjustment Act of 
     1938.
       ``(b) Exception for Amounts Transferred During Reinvestment 
     period.--
       ``(1) In general.--Subsection (a) shall not apply to any 
     amount if during reinvestment period such amount is--
       ``(A) used to make a qualified debt repayment, or
       ``(B) transferred to a tobacco farmer individual retirement 
     account established under section 522.
       ``(2) Qualified debt repayment.--For purposes of paragraph 
     (1), the term `qualified debt repayment' means the payment of 
     debt incurred directly by the taxpayer to produce tobacco 
     before the marketing year for the 2004 crop of each kind of 
     tobacco.
       ``(c) Character of Income.--For purposes of this subtitle, 
     any amount received under section 380j of the Agricultural 
     Adjustment Act of 1938 and included in gross income under 
     this section shall be treated as long-term capital gain.''.
       (b) Tobacco Farmer Individual Retirement Accounts.--Part IV 
     of subchapter F of chapter 1 of the Internal Revenue Code of 
     1986 (relating to farmers' cooperatives) is amended by adding 
     at the end the following:

     ``SEC. 522. TOBACCO FARMER INDIVIDUAL RETIREMENT ACCOUNTS.

       ``(a) General Rule.--Except as provided in this section, a 
     tobacco farmer individual retirement account shall be treated 
     for purposes of this title in the same manner as an 
     individual retirement plan.
       ``(b) Definitions and Special Rules.--For purposes of this 
     title--
       ``(1) Tobacco farmer individual retirement account.--The 
     term `tobacco farmer individual retirement account' means an 
     individual retirement plan (as defined in section 
     7701(a)(37)) other than a Roth IRA which

[[Page S9176]]

     is designated (in such manner as the Secretary may prescribe) 
     at the time of establishment of the plan as a tobacco farmer 
     individual retirement account.
       ``(2) Treatment of contributions.--
       ``(A) Cash only.--No contribution will be accepted unless 
     it is in cash.
       ``(B) Source of contributions.--The only contributions 
     which will be accepted are--
       ``(i) payments under section 380j of the Agricultural 
     Adjustment Act of 1938, and
       ``(ii) trustee-to-trustee transfers to such trust from 
     another tobacco farmer individual retirement account of the 
     account beneficiary.
       ``(C) No deduction allowed.--No deduction shall be allowed 
     under section 219 for a contribution to a tobacco farmer 
     individual retirement account.
       ``(D) No rollover contributions allowed.--No rollover 
     contribution may be made to or from a tobacco farmer 
     individual retirement account.
       ``(3) Tax treatment of distributions.--Any amount 
     distributed from a tobacco farmer individual retirement 
     account attributable to payments made under section 380j of 
     the Agricultural Adjustment Act of 1938 (including earnings 
     thereon) shall be includible in the gross income of the 
     distributee under the rules described in section 91(c).
       ``(4) Coordination with individual retirement accounts.--
     Section 408(d)(2) shall be applied separately with respect to 
     tobacco farmer individual retirement accounts and other 
     individual retirement plans.''.
       (c) Conforming Amendments.--
       (1) The table of sections for part II of subchapter B of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following:

``Sec. 91. Tobacco equity reduction program payments.''.

       (2) The table of sections for part IV of subchapter F of 
     chapter 1 of such Code is amended by adding at the end the 
     following:

``Sec. 522. Tobacco farmer individual retirement accounts.''.

       (3) The heading for part IV of subchapter F of chapter 1 of 
     such code is amended by striking ``FARMERS' COOPERATIVES'' 
     and inserting ``CERTAIN FARMER ENTITIES''.
       (4) The table of parts for subchapter F of chapter 1 of 
     such Code is amended by striking ``farmers' cooperatives'' 
     and inserting ``certain farmer entities''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.
                                 ______
                                 
  SA 4730. Mr. KYL submitted an amendment intended to be proposed by 
him to the bill H.R. 5005, to establish the Department of Homeland 
Security, and for other purposes; which was ordered to lie on the 
table; as follows:

       On page 17, between lines 14 and 15, insert the following:
       (20) To provide for border and transportation security.  
       On page 25, after line 25, add the following new 
     subsection:
       (c) Chief of Immigration Policy.--
       (1) In general.--There shall be within the office of the 
     Deputy Secretary of Homeland Security a Chief of Immigration 
     Policy, who, under the authority of the Secretary, shall be 
     responsible for--
       (A) establishing national immigration policy and 
     priorities; and
       (B) coordinating immigration policy between the Directorate 
     of Immigration Affairs and the Directorate of Border and 
     Transportation security.
       (2) Within the senior executive service.--The position of 
     Chief of Immigration Policy shall be a Senior Executive 
     Service position under section 5382 of title 5, United States 
     Code.
       On page 43, between lines 2 and 3, insert the following:
       (7) Carrying out the border patrol function.
       (8) Administering and enforcing the functions of the 
     Department under the immigration laws of the United States 
     with respect to the inspection of aliens arriving at ports of 
     entry of the United States.
       On page 43, line 3, strike ``(7)'' and insert ``(9)''.
       On page 43, between lines 23 and 24, insert the following:
       (6) So much of the functions of the Immigration and 
     Naturalization Service as relate to the responsibilities 
     described in paragraphs (7) and (8) of subsection (b).
       On page 112, strike line 10 and all that follows through 
     page 114, line 5 and insert the following:

     SEC. 139. BORDER SECURITY AND IMMIGRATION WORKING GROUP.

       (a) Establishment.--The Secretary shall establish a border 
     security and immigration working group (in this section 
     referred to as the ``Working Group''), composed of the 
     Secretary or the designee of the Secretary, the Under 
     Secretary for Immigration Affairs, and the Under Secretary 
     for Border and Transportation Security.
       (b) Functions.--The Working Group shall meet not less 
     frequently than once every 3 months and shall--
       (1) with respect to border security functions, develop 
     coordinated budget requests, allocations of appropriations, 
     staffing requirements, communication, use of equipment, 
     transportation, facilities, and other infrastructure;
       (2) coordinate joint and cross-training programs for 
     personnel performing border security functions;
       (3) monitor, evaluate and make improvements in the coverage 
     and geographic distribution of border security programs and 
     personnel;
       (4) develop and implement policies and technologies to 
     ensure the speedy, orderly, and efficient flow of lawful 
     traffic, travel and commerce, and enhanced scrutiny for high-
     risk traffic, travel, and commerce;
       (5) identify systemic problems in coordination encountered 
     by border security agencies and programs and propose 
     administrative, regulatory, or statutory changes to mitigate 
     such problems; and
       (6) coordinate the enforcement of all immigration laws.
       (c) Relevant Agencies.--The Secretary shall consult with 
     representatives of relevant agencies with respect to 
     deliberations under subsection (b), and may include 
     representatives of such agencies in Working Group 
     deliberations, as appropriate.
       On page 215, lines 15 and 16, strike ``policy, 
     administration, and inspection'' and insert ``policy and 
     administration''.
       On page 215, line 20, before the period at the end of the 
     line insert the following: ``, but does not include the 
     functions described in paragraphs (7) and (8) of section 
     131(b).
       On page 219, line 18, insert ``with respect to any function 
     within the jurisdiction of the Directorate'' after 
     ``States''.
       On page 220, line 1, strike ``section 1111(c)'' and insert 
     ``section 111(c)''.
       On page 220, strike lines 8 through 14.
       On page 223, strike lines 9 through 25.
       On page 224, line 1, strike ``(f)'' and insert ``(e)''.
       On page 233, strike line 23.
       On page 233, line 24, strike ``(B)'' and insert ``(A)''.
       On page 234, line 1, strike ``(C)'' and insert ``(B)''.
       On page 234, line 2, strike ``(D)'' and insert ``(C)''.
       On page 234, line 3, strike ``(E)'' and insert ``(D)''.
       On page 243, line 10, strike ``All functions'' and insert 
     ``Except as provided in subsection (c), all functions''.
       On page 243, line 19, strike ``All functions'' and insert 
     ``Except as provided in subsection (c), all functions''.
       On page 244 between lines 18 and 19, insert the following:
       (c) Special Rule for Border Patrol and Inspection 
     Functions.--
       (1) In general.--Notwithstanding subsections (a) and (b), 
     the border patrol function, and primary and secondary 
     immigration inspection functions, vested by statute in, or 
     exercised by, the Attorney General, the Commissioner of 
     Immigration and Naturalization, or the Immigration and 
     Naturalization Service (or any officer, employee, or 
     component thereof), immediately prior to the effective date 
     of this title, are transferred to the Secretary on such 
     effective date for exercise by the Under Secretary for Border 
     and Transportation in accordance with paragraphs (7) and (8) 
     of section 131(b).
       (2) References.--With respect to the border patrol function 
     and primary and secondary immigration inspection functions, 
     references in this subtitle to--
       (A) the Directorate shall be deemed to be references to the 
     Directorate of Border and Transportation Security; and
       (B) the Under Secretary shall be deemed to be references to 
     the Under Secretary for Border and Transportation.
       On page 245, lines 13 and 14, strike ``Under the direction 
     of the Secretary, the Under Secretary'' and insert ``The 
     Secretary''.
       On page 245, strike lines 20 through 24 and insert the 
     following:
       (A) immigration policy and administration functions;
       (B) immigration service functions;
       (C) immigration enforcement functions (excluding the border 
     patrol function and primary and secondary immigration 
     inspection functions); and
       (D) the border patrol function and primary and secondary 
     immigration inspection functions; and
       Beginning on page 246, strike line 12 and all that follows 
     through line 20 on page 247 and insert the following:
       (a) Delegation to the Directorates.--The Secretary shall 
     delegate--
       (1) through the Under Secretary and subject to section 
     112(b)(1) of the Immigration and Nationality Act (as added by 
     section 1103)--
       (A) immigration service functions to the Assistant 
     Secretary for Immigration Services; and
       (B) immigration enforcement functions to the Assistant 
     Secretary for Immigration Enforcement; and
       (2) the border patrol function and primary and secondary 
     immigration inspection functions to the Under Secretary for 
     Border and Transportation.
       (b) Nonexclusive Delegations Authorized.--Delegations made 
     under subsection (a) may be made on a nonexclusive basis as 
     the Secretary may determine may be necessary to ensure the 
     faithful execution of the Secretary's responsibilities and 
     duties under law.
       (c) Effect of Delegations.--Except as otherwise expressly 
     prohibited by law or otherwise provided in this title, the 
     Secretary may make delegations under this subsection to such 
     officers and employees of the office of the Under Secretary 
     for Immigration Affairs, and the Enforcement Bureau of the 
     Directorate for Border and Transportation Security, 
     respectively, as the Secretary may

[[Page S9177]]

     designate, and may authorize successive redelegations of such 
     functions as may be necessary or appropriate. No delegation 
     of functions under this subsection or under any other 
     provision of this title shall relieve the official to whom a 
     function is transferred under this title of responsibility 
     for the administration of the function.
       On page 254, strike lines 14 through 19 and insert the 
     following:
     Border Affairs (except for the border patrol function and 
     primary and secondary immigration inspection functions);
       (iii) the transfer to the Directorate of Border and 
     Transportation Security of the border patrol function and 
     primary and secondary immigration inspection functions; and
       (iv) the transfer of such other functions as are required 
     to be made under this division; and
                                 ______
                                 
  SA 4731. Mr. ALLEN submitted an amendment intended to be proposed by 
him to the bill H.R. 5005, to establish the Department of Homeland 
Security, and for other purposes; which was ordered to lie on the 
table; as follows:

       On page 338, insert between lines 2 and 3 the following:

     SEC. 2205. ANNUITY COMPUTATION ADJUSTMENT FOR PERIODS OF 
                   DISABILITY.

       Section 8415 of title 5, United States Code, is amended--
       (1) by redesignating the second subsection (i) and 
     subsection (j) as subsections (j) and (k), respectively; and
       (2) by adding at the end the following:
       ``(l) In the case of any annuity computation under this 
     section that includes, in the aggregate, at least 1 year of 
     credit under section 8411(d) for any period while receiving 
     benefits under subchapter I of chapter 81, the percentage 
     otherwise applicable under this section for that period so 
     credited shall be increased by 1 percentage point.''

                          ____________________