[Congressional Record Volume 152, Number 70 (Tuesday, June 6, 2006)]
[Senate]
[Pages S5493-S5494]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. MURKOWSKI:
  S. 3422. A bill to provide for the tax treatment of income received 
in connection with the litigation concerning the Exxon Valdez oil 
spill; to the Committee on Finance.
  Ms. MURKOWSKI. Mr. President, I rise to introduce a bill that will 
help the commercial fishermen and others whose livelihoods were 
negatively impacted by the Exxon Valdez oilspill.
  As all of us know, the Exxon Valdez ran aground on March 23, 1989, 
spilling 11 million gallons of oil into Prince William Sound in Alaska. 
A class action jury trial was held in Federal court in Anchorage, AK, 
in 1994. The plaintiffs included 32,000 fishermen among others whose 
livelihoods were gravely affected by this disaster. The jury awarded $5 
billion in punitive

[[Page S5494]]

damages to the plaintiff class. The punitive damage award has been on 
repeated appeal by the Exxon Corporation since 1994. Many of the 
original plaintiffs, possibly more than 1,000 people, have already 
died.
  Once the punitive damage award of the Exxon Valdez litigation is 
settled, many fishermen will receive payments to reimburse them for 
fishing income lost due to the environmental consequences of the Exxon 
Valdez oilspill. It is estimated that the eventual settlement could be 
$6.75 billion or more.
  My bill gives the affected fishermen, as well as other plaintiffs in 
this case, a fair shake when it comes to contributions to retirement 
plans and averaging of income for tax purposes.
  With respect to retirement plan contributions, my bill increases the 
caps on both deductions and income for traditional IRAs to the extent 
of the income a plaintiff receives from the settlement or judgment. 
Also, it allows the plaintiffs to make contributions to Roth IRAs and 
other retirement plans to the extent of the income received from the 
settlement or judgment.
  Fishermen are currently allowed to average their income over a 
several year period due to the often inconsistent nature of the fishing 
business. The litigation stemming from the Exxon Valdez oilspill poses 
an even more unique situation since fishermen and other plaintiffs have 
been waiting to receive lost income--in the form of a settlement or 
judgment--for 12 years. My bill allows plaintiffs to average their 
income for the period of time between December 31 of the year they 
receive the settlement or judgment payment and January 1, 1994--the 
year of the original jury award in Federal court.
  It is imperative that we address this important issue soon. The Exxon 
Corporation has appealed this case and a decision is expected later 
this year.
  I ask unanimous consent that the text of the 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. 3422

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

     SECTION 1. TAX TREATMENT OF INCOME RECEIVED IN CONNECTION 
                   WITH THE EXXON VALDEZ LITIGATION.

       (a) Income Averaging of Amounts Received From the Exxon 
     Valdez Litigation.--
       (1) In general.--At the election of a qualified taxpayer 
     who receives qualified settlement income during a taxable 
     year, the tax imposed by chapter 1 of the Internal Revenue 
     Code of 1986 for such taxable year shall be equal to the sum 
     of--
       (A) the tax which would be imposed under such chapter if--
       (i) no amount of elected qualified settlement income were 
     included in gross income for such year, and
       (ii) no deduction were allowed for such year for expenses 
     (otherwise allowable as a deduction to the taxpayer for such 
     year) attributable to such elected qualified settlement 
     income, plus
       (B) the increase in tax under such chapter which would 
     result if taxable income for each of the years in the 
     applicable period were increased by an amount equal to the 
     applicable fraction of the elected qualified settlement 
     income reduced by any expenses (otherwise allowable as a 
     deduction to the taxpayer) attributable to such elected 
     qualified settlement income.

     Any adjustment under this section for any taxable year shall 
     be taken into account in applying this section for any 
     subsequent taxable year.
       (2) Coordination with farm income averaging.--If a 
     qualified taxpayer makes an election with respect to any 
     qualified settlement income under paragraph (1) for any 
     taxable year, such taxpayer may not elect to treat such 
     amount as elected farm income under section 1301 of the 
     Internal Revenue Code of 1986.
       (3) Definitions.--For purposes of this subsection--
       (A) Applicable period.--The term ``applicable period'' 
     means the period beginning on January 1, 1994, and ending on 
     December 31 of the year in which the elected qualified 
     settlement income is received.
       (B) Applicable fraction.--The term ``applicable fraction'' 
     means the fraction the numerator of which is one and the 
     denominator of which is the number of years in the applicable 
     period.
       (C) Elected qualified settlement income.--The term 
     ``elected qualified settlement income'' means so much of the 
     taxable income for the taxable year which is--
       (i) qualified settlement income, and
       (ii) specified under the election under paragraph (1).
       (b) Contributions of Amounts Received to Retirement 
     Accounts.--
       (1) In general.--Any qualified taxpayer who receives 
     qualified settlement income during the taxable year may, at 
     any time before the end of the taxable year in which such 
     income was received, make one or more contributions to an 
     eligible retirement plan of which such qualified taxpayer is 
     a beneficiary in an aggregate amount not to exceed the amount 
     of qualified settlement income received during such year.
       (2) Time when contributions deemed made.--For purposes of 
     paragraph (1), a qualified taxpayer shall be deemed to have 
     made a contribution to an eligible retirement plan on the 
     last day of the taxable year in which such income is received 
     if the contribution is made on account of such taxable year 
     and is made not later than the time prescribed by law for 
     filing the return for such taxable year (not including 
     extensions thereof).
       (3) Treatment of contributions to eligible retirement 
     plans.--For purposes of the Internal Revenue Code of 1986, if 
     a contribution is made pursuant to paragraph (1) with respect 
     to qualified settlement income, then--
       (A) except as provided in paragraph (4)--
       (i) to the extent of such contribution, the qualified 
     settlement income shall not be included in taxable income, 
     and
       (ii) for purposes of section 72 of such Code, such 
     contribution shall not be considered to be investment in the 
     contract, and
       (B) the qualified taxpayer shall, to the extent of the 
     amount of the contribution, be treated--
       (i) as having received the qualified settlement income--

       (I) in the case of a contribution to an individual 
     retirement plan (as defined under section 7701(a)(37) such 
     Code), in a distribution described in section 408(d)(3) of 
     such Code, and
       (II) in the case of any other eligible retirement plan, in 
     an eligible rollover distribution (as defined under section 
     402(f)(2) of such Code), and

       (ii) as having transferred the amount to the eligible 
     retirement plan in a direct trustee to trustee transfer 
     within 60 days of the distribution.
       (4) Special rule for roth iras and roth 401(k)s.--For 
     purposes of the Internal Revenue Code of 1986, if a 
     contribution is made pursuant to paragraph (1) with respect 
     to qualified settlement income to a Roth IRA (as defined 
     under section 408A(b) of such Code) or as a designated Roth 
     contribution to an applicable retirement plan (within the 
     meaning of section 402A of such Code), then--
       (A) the qualified settlement income shall be includible in 
     taxable income, and
       (B) for purposes of section 72 of such Code, such 
     contribution shall be considered to be investment in the 
     contract.
       (5) Eligible retirement plan.--For purpose of this 
     subsection, the term ``eligible retirement plan'' has the 
     meaning given such term under section 402(c)(8)(B) of the 
     Internal Revenue Code of 1986.
       (c) Qualified Settlement Income Not Included in SECA.--For 
     purposes of chapter 2 of the Internal Revenue Code of 1986 
     and section 211 of the Social Security Act, no portion of 
     qualified settlement income shall be treated as gross income 
     derived from a trade or business carried on by a qualified 
     taxpayer.
       (d) Qualified Taxpayer.--For purposes of this section, the 
     term ``qualified taxpayer'' means any plaintiff in the civil 
     action In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) 
     (D. Alaska).
       (e) Qualified Settlement Income.--For purposes of this 
     section, the term ``qualified settlement income'' means 
     income received (whether as lump sums or periodic payments) 
     in connection with the civil action In re Exxon Valdez, No. 
     89-095-CV (HRH) (Consolidated) (D. Alaska).
                                 ______