[Congressional Record Volume 149, Number 116 (Thursday, July 31, 2003)]
[Senate]
[Pages S10648-S10649]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CAMPBELL (for himself and Mr. Inouye):
  S. 1526. A bill to amend the Internal Revenue Code of 1986 to provide 
for the treatment of Indian tribal governments as State governments for 
purposes of issuing tax-exempt governmental bonds, and for other 
purposes; to the Committee on Finance.
  Mr. CAMPBELL. Mr. President, I am pleased to be join by Senator 
Inouye in introducing the Tribal Government Tax Exempt Bond Fairness 
Act of 2003.
  This bill will assist Indian tribes raise capital in the private 
markets for purposes of job creation and economic development. The bill 
complements the other economic development initiative I am introducing 
today to discipline Federal programs aimed to help tribes strengthen 
their economies.
  While making modest adjustments in current law, this bill will have 
far-reaching and positive effects for tribal governments and their 
members around the Nation.
  The fact is that like State governments, tribal governments are 
responsible for a host of services not only to their members but to 
non-members who live on or hear their lands. These services include 
fire, police and ambulance service, road and bridge maintenance, and a 
host of social services.
  Unlike State governments, however, tribal governments face severe 
restrictions in their ability to finance development through debt 
instruments.
  The law forbids tribes from issuing tax-exempt bonds for any project 
unless it can meet the so-called ``essential government function'' 
test.
  That is, in order for the holder of a tribal bond issue to receive 
income from that bond exempt from Federal tax, it must be issued for 
activities that are ``governmental'' in nature.
  Examples of the kinds of projects that have been ruled by the 
Internal Revenue Service as falling outside this test are tribal 
convention centers, hotels, and golf courses.
  State governments are not limited by the ``essential government 
function'' test when they issue tax-exempt debt. The bill I am 
introducing today will eliminate the disparate treatment tribes now 
receive.
  Armed with this bonding authority, tribal governments will strengthen 
their economies, provide for their members and others, and lessen their 
reliance on Federal programs and services.
  These are all worthy goals and I urge my colleagues to join me in 
supporting this bill.
  I ask unanimous consent that a copy of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1526

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

     SECTION 1. SHORT TITLE.

        This Act maybe cited as the ``Tribal Government Tax-Exempt 
     Bond Fairness Act of 2003''.

     SEC. 2. DECLARATIONS AND AFFIRMATIONS.

        Congress declares and affirms that--
       (1) The United States Constitution, United States Federal 
     court decisions, and United States statutes recognize that 
     Indian tribes are governments, retaining sovereign authority 
     over their lands.
       (2) Through treaties, statutes, and Executive orders, the 
     United States set aside Indian reservations to be used as 
     ``permanent homelands'' for Indian tribes.
       (3) As governments, Indian tribes have the responsibility 
     and authority to provide governmental services, develop 
     tribal economies, and build community infrastructure to

[[Page S10649]]

     ensure that Indian reservation lands serve as livable 
     ``permanent homelands''.
       (4) Congress is vested with the authority to regulate 
     commerce with Indian tribes, and hereby exercises that 
     authority and affirms the United States government-to-
     government relationship with Indian tribes.

     SEC. 3. MODIFICATIONS OF AUTHORITY OF INDIAN TRIBAL 
                   GOVERNMENTS TO ISSUE TAX-EXEMPT BONDS.

       (a) In General.--Subsection (c) of section 7871 of the 
     Internal Revenue Code of 1986 (relating to Indian tribal 
     governments treated as States for certain purposes) is 
     amended to read as follows:
       ``(c) Additional Requirements for Tax-Exempt Bonds.--
       ``(1) In general.--Subsection (a) of section 103 shall 
     apply to any obligation issued by an Indian tribal government 
     (or subdivision thereof) only if--
       ``(A) such obligation is part of an issue 95 percent or 
     more of the net proceeds of which are to be used to finance 
     any facility located on an Indian reservation, or
       ``(B) such obligation is part of an issue substantially all 
     of the proceeds of which are to be used in the exercise of 
     any essential governmental function.
       ``(2) Exclusion of gaming.--An obligation described in 
     subparagraph (A) or (B) of paragraph (1) may not be used to 
     finance any portion of a building in which class II or III 
     gaming (as defined in section 4 of the Indian Gaming 
     Regulatory Act (25 U.S.C. 2702)) is conducted or housed.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Indian tribe.--The term `Indian tribe' means any 
     Indian tribe, band, nation, pueblo, or other organized group 
     or community, including any Alaska Native village, or 
     regional or village corporation, as defined in or established 
     pursuant to the Alaska Native Claims Settlement Act (43 
     U.S.C. 1601 et seq.), which is recognized as eligible for the 
     special programs and services provided by the United States 
     to Indians because of their status as Indians.
       ``(B) Indian reservation.--The term `Indian reservation' 
     means--
       ``(i) a reservation, as defined in section 4(10) of the 
     Indian Child Welfare Act of 1978 (25 U.S.C. 1903(10)), and
       ``(ii) lands held under the provisions of the Alaska Native 
     Claims Settlement Act (43 U.S.C. 1601 et seq.) by a Native 
     corporation as defined in section 3(m) of such Act (43 U.S.C. 
     1602(m)).''.

     SEC. 4. EXEMPTION FROM REGISTRATION REQUIREMENTS.

       The first sentence of section 3(a)(2) of the Securities Act 
     of 1933 (15 U.S.C. 77c(a)(2)) is amended by inserting ``or by 
     any Indian tribal government or subdivision thereof (within 
     the meaning of section 7871 of the Internal Revenue Code of 
     1986),'' after ``or Territories,''.

     SEC. 5. EFFECTIVE DATE.

       The amendments made by this Act shall apply to obligations 
     issued after the date of the enactment of this Act.
                                 ______