[Congressional Record Volume 150, Number 126 (Thursday, October 7, 2004)]
[Senate]
[Pages S10714-S10716]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself and Mr. Daschle):
  S. 2919. A bill to amend the Internal Revenue Code of 1986 to provide 
funding for Indian tribal prison facilities, and for other purposes; to 
the Committee on Finance.
  Mr. BAUCUS. Mr. President, I rise today to talk about a crisis 
occurring today in Indian country--and offer a solution. This crisis is 
not something new. It has been decades in the making. For too long we 
have neglected to adequately address this issue. This crisis is the 
condition of Indian jails.
  We held a hearing on the Finance Committee this fall to bring 
attention to the problem. We heard testimony from the Inspector General 
of the Interior Department, Mr. Earl Devaney. He issued a report that 
was absolutely shocking. Mr. Devaney said the conditions of Indian 
jails are comparable to conditions found in third-world countries. He 
said the jails are a natural disgrace.
  There are over seventy Indian jails in America. Almost all of them 
suffer from the same problems. They are highly understaffed and 
overpopulated. There are extremely high rates of suicides and escapes. 
Officers are undertrained or not trained at all. Many of these jails 
don't even have locking doors. We are talking about jails used to 
detain criminals and they don't have locking doors. These conditions 
are unacceptable. They must be fixed. It is our duty to address this 
problem.
  In my home State of Montana, we have eleven Indian jails. They are 
staffed with hardworking, good people. But they are not miracle 
workers. They cannot be faulted for the deplorable condition of their 
jails. Let me give you are example.
  On one day in June of 2002, nine of the eleven Montana Indian jails 
were overpopulated. The Crow Indian jail was 429 percent overcapacity. 
At the Blackfeet Indian jail, every single detention officer was 
assaulted last year.
  One major reason these jails are in such poor condition is they are 
terribly underfunded. Tribal officers don't have the money to address 
the problems. Their hands are tied. We can do something about this. We 
must provide adequate funding for Indian jails.
  Today I offer a proposal to the Senate to give tribes the authority 
to issue tax credit bonds for the construction, maintenance, and 
operation of their detention facilities. These bonds give off tax 
credits rather than interest to their investors, allowing tribes with 
little resources to earn interest off the proceeds. The bonds will 
provide a steady stream of income to the Tribal governments.
  The legislation will provide money that is so desperately needed to 
address the problems facing Indian jails. I urge my colleagues to 
support this legislation. I ask unanimous consent that the text of this 
bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2919

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

     SECTION 1. CREDIT TO HOLDERS OF INDIAN TRIBAL PRISON FACILITY 
                   BONDS.

       (a) In General.--Part IV of subchapter A of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to credits 
     against tax) is amended by adding at the end the following 
     new subpart:

 ``Subpart H--Nonrefundable Credit for Holders of Indian Tribal Prison 
                             Facility Bonds

``Sec. 54. Credit to holders of Indian tribal prison facility bonds.

     ``SEC. 54. CREDIT TO HOLDERS OF INDIAN TRIBAL PRISON FACILITY 
                   BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds an Indian tribal prison

[[Page S10715]]

     facility bond on a credit allowance date of such bond which 
     occurs during the taxable year, there shall be allowed as a 
     credit against the tax imposed by this chapter for such 
     taxable year an amount equal to the sum of the credits 
     determined under subsection (b) with respect to credit 
     allowance dates during such year on which the taxpayer holds 
     such bond.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any Indian tribal 
     prison facility bond is the amount equal to the product of--
       ``(A) the credit rate determined by the Secretary under 
     paragraph (2) for the month in which such bond was issued, 
     multiplied by
       ``(B) the face amount of the bond held by the taxpayer on 
     the credit allowance date.
       ``(2) Determination.--During each calendar month, the 
     Secretary shall determine a credit rate which shall apply to 
     bonds issued during the following calendar month. The credit 
     rate for any month is the percentage which the Secretary 
     estimates will permit the issuance of Indian tribal prison 
     facility bonds without discount and without interest cost to 
     the issuer.
       ``(c) Limitation Based on Amount of Tax.--The credit 
     allowed under subsection (a) for any taxable year shall not 
     exceed the excess of--
       ``(1) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(2) the sum of the credits allowable under this part 
     (other than this subpart and subpart C).
       ``(d) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section (determined without regard to subsection 
     (c)) and the amount so included shall be treated as interest 
     income.
       ``(e) Indian Tribal Prison Facility Bond.--For purposes of 
     this part, the term `Indian tribal prison facility bond' 
     means any bond issued as part of an issue if--
       ``(1) 95 percent or more of the proceeds of such issue are 
     to be invested in investment grade obligations and the 
     proceeds from such investment are used for the construction, 
     acquisition, rehabilitation, expansion, or operating expanses 
     of a qualified Indian tribal prison facility,
       ``(2) the bond is issued by the Indian tribe within the 
     jurisdiction of which such facility is located,
       ``(3) the bond is issued pursuant to a plan developed by 
     the Indian tribe,
       ``(4) the issuer designates such bond for purposes of this 
     section,
       ``(5) the term of each bond which is part of such issue 
     does not exceed 10 years, and
       ``(6) no amount of proceeds of such issue (including 
     proceeds from any investment under paragraph (1)) may be used 
     to pay the costs of issuance to the extent such amount 
     exceeds 2 percent of the sale proceeds of such issue.
       ``(f) Qualified Indian Tribal Prison Facility.--For 
     purposes of this section, the term `qualified Indian tribal 
     prison facility' means any residential correctional or 
     detention facility located on the qualified Indian land of 
     the issuing Indian tribe substantially all of the inmates of 
     which are adult or juvenile members of such Indian tribe.
       ``(g) Limitation on Amount of Bonds Designated; Allocation 
     of Bonds.--
       ``(1) National limitation.--There is an Indian tribal 
     prison facility bond limitation for each calendar year. Such 
     limitation is--
       ``(A) $200,000,000 for 2005,
       ``(B) $200,000,000 for 2006,
       ``(C) $200,000,000 for 2007, and
       ``(D) except as provided in paragraph (3), zero thereafter.
       ``(2) Allocation of bonds.--
       ``(A) In general.--The Secretary, after consultation with 
     the Secretary of the Interior, shall allocate the Indian 
     tribal prison facility bond limitation among those Indian 
     tribes which submit a plan which contains a description of 
     the proposed use of investment proceeds, assurances that such 
     proceeds will be used only for such use, a proposed 
     expenditure schedule, information relevant to the criteria 
     described in subparagraph (B), and any other information 
     determined appropriate by the Secretary.
       ``(B) Approval criteria.--In allocating the limitation 
     among plan requests of Indian tribes under subparagraph (A), 
     the Secretary shall consider--
       ``(i) the percentage of prison overcrowding in excess of 
     the facility occupancy level as determined by the Bureau of 
     Indian Affairs,
       ``(ii) the condition of existing facilities,
       ``(iii) the health and safety of both inmates and prison 
     employees,
       ``(iv) the type of offenders incarcerated, and
       ``(v) other financial resources available to the Indian 
     tribe.
       ``(3) Carryover of unused issuance limitation.--If for any 
     calendar year the limitation amount imposed by paragraph (1) 
     exceeds the amount of Indian tribal prison facility bonds 
     issued during such year, such excess shall be carried forward 
     to one or more succeeding calendar years as an addition to 
     the limitation imposed by paragraph (1) and until used by 
     issuance of such bonds.
       ``(h) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Credit allowance date.--The term `credit allowance 
     date' means, with respect to any issue, the last day of the 
     1-year period beginning on the date of the issuance of such 
     issue and the last day of each successive 1-year period 
     thereafter.
       ``(2) Bond.--The term `bond' includes any obligation.
       ``(3) Indian tribe.--The term `Indian tribe' has the 
     meaning given such term by section 7871(c)(3)(E)(ii).
       ``(4) Qualified Indian lands.--The term `qualified Indian 
     lands' has the meaning given such term by section 
     7871(c)(3)(E)(i).
       ``(5) Partnership; s corporation; and other pass-thru 
     entities.--In the case of a partnership, trust, S 
     corporation, or other pass-thru entity, rules similar to the 
     rules of section 41(g) shall apply with respect to the credit 
     allowable under subsection (a).
       ``(6) Bonds held by regulated investment companies.--If any 
     Indian tribal prison facility bond is held by a regulated 
     investment company, the credit determined under subsection 
     (a) shall be allowed to shareholders of such company under 
     procedures prescribed by the Secretary.
       ``(7) Reporting.--Each Indian tribe with an allocation of 
     Indian tribal prison facility bonds under an approved plan 
     shall submit reports similar to the reports required under 
     section 149(e).''.
       (b) Conforming Amendments.--
       (1) Reporting.--Subsection (d) of section 6049 of the 
     Internal Revenue Code of 1986 (relating to returns regarding 
     payments of interest) is amended by adding at the end the 
     following new paragraph:
       ``(8) Reporting of credit on indian tribal prison facility 
     bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 54(d) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 54(h)(1)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A), subsection (b)(4) shall be 
     applied without regard to subparagraphs (A), (H), (I), (J), 
     (K), and (L)(i) of such subsection.
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''.
       (2) Treatment for estimated tax purposes.--
       (A) Individual.--Section 6654 of such Code (relating to 
     failure by individual to pay estimated income tax) is amended 
     by redesignating subsection (m) as subsection (n) and by 
     inserting after subsection (l) the following new subsection:
       ``(m) Special Rule for Holders of Indian Tribal Prison 
     Facility Bonds.--For purposes of this section, the credit 
     allowed by section 54 to a taxpayer by reason of holding an 
     Indian tribal prison facility bond on a credit allowance date 
     shall be treated as if it were a payment of estimated tax 
     made by the taxpayer on such date.''.
       (B) Corporate.--Subsection (g) of section 6655 of such Code 
     (relating to failure by corporation to pay estimated income 
     tax) is amended by adding at the end the following new 
     paragraph:
       ``(5) Special rule for holders of indian tribal prison 
     facility bonds.--For purposes of this section, the credit 
     allowed by section 54 to a taxpayer by reason of holding an 
     Indian tribal prison facility bond on a credit allowance date 
     shall be treated as if it were a payment of estimated tax 
     made by the taxpayer on such date.''.
       (c) Clerical Amendments.--
       (1) The table of subparts for part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new item:

``Subpart H. Nonrefundable Credit for Holders of Indian Tribal Prison 
              Facility Bonds.''.

       (2) Section 6401(b)(1) of such Code is amended by striking 
     ``and G'' and inserting ``G, and H''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after December 31, 2004.

  Mr. DASCHLE. Mr. President, today I am pleased to join Senator Max 
Baucus in introducing legislation that addresses the longstanding 
problem of dilapidated tribal detention facilities on Indian 
reservations. There is a tremendous need for replacement construction 
of Bureau of Indian Affairs (BIA) operated and funded facilities, and I 
am pleased that this legislation offers a creative and innovative 
bonding approach to address the construction backlog.
  USA Today reported that Federal investigators have uncovered evidence 
of abuse, neglect and inhumane conditions in Native American prisons 
and jails. This troubling report suggests that the conditions in Indian 
detention facilities are not improving and, in fact, appear to be 
getting worse. It is my hope that this hearing will help shed 
additional light on these allegations, and lead to solutions to improve 
conditions in facilities across Indian country.
  According to recent statistics from the Department of Justice report 
on Indian jails and prisons, there are 70 detention facilities in 
Indian country, supervising approximately 2,100 inmates. Many of these 
facilities are in

[[Page S10716]]

an appalling state of disrepair, and face problems that range from 
overcrowding and understaffing to sheer neglect and abuse.
  According to the most recent statistics from the Department of 
Justice, over half of all detention facilities in Indian country were 
operating at 100-percent capacity in 2002, and nineteen were operating 
at 150-percent or higher capacity. Of those nineteen, three are located 
in my state of South Dakota: Pine Ridge's Medicine Root Detention 
Center, operating at 250-percent capacity; Crow Creek's Fort Thompson 
Jail, operating at 242-percent capacity; and the Pine Ridge 
Correctional Facility, which is operating at a staggering 400 percent 
of its capacity.
  Inmates in South Dakota's BIA facilities are housed in dilapidated 
buildings and are forced to endure extraordinarily harsh conditions. 
Even though the Lower Brule tribal detention facility was condemned by 
the BIA in 1987, it was still being used to house inmates as recently 
as two years ago. Because the new facility is still under construction, 
Lower Brule prisoners are sent 13 miles away, across the Missouri 
River, to the Crow Creek facility in Fort Thompson. Because there 
aren't enough BIA officers to transport them back to Lower Brule, 
detainees released from Crow Creek are often forced to make the return 
trip to Lower Brule on foot. It is shocking that this is allowed to 
happen at all, but especially in South Dakota where harsh winters and 
sub-zero temperatures are routine. Moreover, the Fort Thompson facility 
is equally understaffed. One person serves as both police dispatcher 
and detention officer in a facility that houses up to 30 prisoners.
  These conditions have a devastating impact on prisoners. Nationally, 
between July 1, 2001, and June 30, 2002, 282 inmates in tribal jails 
attempted suicide, up from 169 the previous year. In the last 
five years, the number of admissions rose 32 percent, and the annual 
number of attempted suicides more than doubled, from 133 to 282. On 
Crow Creek, which is located in one of the most impoverished counties 
in the U.S. and experiences inordinate suicide rates among its general 
population, several suicides have occurred in the local jail.

  Even more troubling, inadequate detention facilities pose a serious 
threat to the surrounding communities. With a limited number of 
officers responsible for large inmate populations, the risk of prisoner 
violence--against both prison staff and, in the event of an escape, 
local citizens--is much greater. Moreover, the culture of neglect and 
abuse found in many of our Indian jails is indicative of broader trends 
within the communities. The Lower Brule jail doubles as a suicide-watch 
center for troubled teens, since there is nowhere else in the community 
to take them. Several Emergency Medical Technicians (EMTs) have either 
resigned, or are on the brink of resigning, due to the stress of the 
situation. Law enforcement officials are at a loss about how to address 
this disturbing pattern, and are overwhelmed by the feelings of 
hopelessness that accompany it.
  Clearly, the impact that overcrowding, dilapidated conditions, and 
neglect are having on inmates in these facilities, as well as local 
communities, is reaching a critical mass--both in South Dakota and 
across the Nation--and we must act now to reverse the trend. While 
addressing the problems that exist in jails and prisons clearly isn't 
the whole answer, such an approach will meet a critical need in Indian 
country, and will represent an important step toward increasing public 
safety and reducing incidences of abuse and neglect.
  We can start by increasing funding for BIA facilities. Unfortunately, 
this Administration has demonstrated a complete unwillingness to give 
Indian detention facilities the resources they need, and has actually 
reduced funding for jails and prisons in Indian country. It wasn't 
always so bad. Under the Clinton Administration, then-Attorney General 
Janet Reno created the Department of Justice--Department of Interior 
Indian Law Enforcement initiative with the objective of creating an 
effective way to address law enforcement, facilities, juvenile justice, 
and rehabilitation efforts in Indian country. Although funding for 
these programs, which increased under the Clinton administration and 
was consistent until the FY2002 appropriations cycle, was not enough to 
meet all of Indian country's needs, the initiative represented an 
unprecedented step toward addressing some of these problems.
  Unfortunately, the current Administration, while budgeting hundreds 
of millions of dollars for Federal prison construction, has proposed 
eliminating the tribal facility program for the second year in a row. 
While Congress appropriated $35 million per year for construction of 
BIA detention facilities between 2000 and 2002, we appropriated only $2 
million in FY2004. Now, with an even tighter budget to work with, the 
outlook for this year is especially bleak, and conditions at BIA 
facilities are likely to get even worse.
  For too long, we have neglected our obligations to Native Americans. 
We are seeing the effects of that neglect in South Dakota. These are 
once again examples of the abrogration of the trust responsibility by 
the Federal Government to the tribes and its people.
  We need to do a better job of funding Indian detention centers, and 
we need to do more to address public safety, tribal courts, and 
rehabilitation efforts. We cannot ask tribes to choose between funding 
crisis intervention and law enforcement. We cannot force tribes to make 
the choice between funding education and after school programs for 
their children, and repairing cracked walls and inoperable surveillance 
cameras in their jails.
  While national rates are the lowest in years, crime on Indian lands 
continues to rise. Particularly disturbing is the violent nature of 
this crime; violence against women, juvenile and gang crime, and child 
abuse remain serious problems. The Bureau of Justice Statistics reports 
that American Indians experience the highest crime victimization rates 
in the nation--almost twice the national average.
  The law enforcement, public safety, and tribal detention facility 
issues are of critical importance to Indian country and surrounding 
communities. If this were happening in any other part of the country, 
it would be met with public outrage and swift government action. 
However, in Indian country, it is met with silence and reduced funding. 
For the safety of our Indian people and the well-being of their 
communities, we must take action.
  I am pleased that on September 21, 2004, the Senate Finance Committee 
held an oversight hearing on these issues, and that this legislation 
has emerged as a step in the right direction to address the 
construction backlog of much-needed facilities in rural, tribal 
communities.
  I support this legislation which authorizes eligible Indian tribes to 
issue tax-exempt bonds to finance tribal prison facilities, ``tribal 
prison facility bonds''. I look forward to working with my colleagues 
to address these important issues and to advance this legislation.
                                 ______