[Congressional Record Volume 159, Number 156 (Tuesday, November 5, 2013)]
[Senate]
[Pages S7830-S7831]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. SCHATZ (for himself, Mr. Alexander, and Mr. Coats):
  S. 1652. A bill to amend the National Energy Conservation Policy Act 
to provide guidance on utility energy service contracts used by Federal 
agencies, and for other purposes; to the Committee on Energy and 
Natural Resources.
  Mr. SCHATZ. Mr. President, 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. 1652

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

[[Page S7831]]

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Utility Energy Service 
     Contracts Improvement Act of 2013''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) the Federal government is the largest consumer of 
     energy in the United States;
       (2) Federal agencies are expected to meet, by law, 
     Executive order, and mandate, stringent energy efficiency and 
     conservation targets;
       (3) the utility energy service contract (referred to in 
     this section as ``UESC'') was developed to provide Federal 
     agencies an effective means to implement energy efficiency, 
     renewable energy and water efficiency projects, and has been 
     used successfully to invest nearly $2,700,000,000 in property 
     at Federal facilities;
       (4) the General Services Administration, which manages more 
     than 9,600 Federal properties and is the lead agency for 
     procuring utility services for the Federal government, has 
     determined that UESCs may extend beyond a 10-year period 
     under the law;
       (5) the Federal Energy Management Program, which oversees 
     the UESC program and is a principal office guiding agencies 
     to use funding more effectively in meeting Federal and 
     agency-specific energy and resource management objectives, 
     has determined that UESCs may extend beyond a 10-year period 
     under the law;
       (6) extensive precedent exists for Federal agencies to 
     contract for energy saving services using contracts with term 
     limits of more than 10 years but not to exceed 25 years;
       (7) a number of Federal agencies, contrary to congressional 
     intent, have sought to limit UESC term limits to periods of 
     less than 10 years; and
       (8) greater flexibility with UESCs will help reduce the 
     operational cost of Federal agencies, ultimately saving money 
     for taxpayers.

     SEC. 3. UTILITY ENERGY SERVICE CONTRACTS.

       Part 3 of title V of the National Energy Conservation 
     Policy Act is amended by adding after section 553 (42 U.S.C. 
     8259b) the following:

     ``SEC. 554. UTILITY ENERGY SERVICE CONTRACTS.

       ``(a) In General.--Each Federal agency may use, to the 
     maximum extent practicable, measures provided by law to meet 
     energy efficiency and conservation mandates and laws, 
     including through utility energy service contracts.
       ``(b) Contract Period.--The term of a utility energy 
     service contract entered into by a Federal agency may have a 
     contract period that extends beyond 10 years, but not to 
     exceed 25 years.
       ``(c) Requirements.--The conditions of a utility energy 
     service contract entered into by a Federal agency shall 
     include requirements for measurement, verification, and 
     performance assurances or guarantees of the savings.''.
                                 ______
                                 
      By Mr. REED (for himself and Mr. Grassley)
  S. 1654. A bill to amend the Internal Revenue Code of 1986 to deny 
tax deductions for corporate regulatory violations; to the Committee on 
Finance.
  Mr. REED. Mr. President, today I am introducing, along with Senator 
Grassley, the Government Settlement Transparency and Reform Act. This 
bill closes a loophole that allows corporations to reap tax benefits 
from payments made to the government stemming from settling corporate 
misdeeds. So this bill aims to end the subsidization of illegal 
corporate behavior by taxpayers.
  Corporations accused of illegal activity routinely settle legal 
disputes with the government out of court because it allows both the 
company and the government to avoid the time, expense, and uncertainty 
of going to trial. Under Federal law, money paid to settle corporate 
civil or criminal penalties is not deductible. But under the tax code, 
offending companies may often write off any portion of a settlement 
that is not paid directly to the government as a penalty or fine for 
violation of the law. Corporations exploit this provision by later 
characterizing settlement penalties as restitution and a tax-deductible 
business expense.
  I think it is common sense that, for example, a corporation should 
not agree to pay the government $500 million in criminal or civil fines 
and then when they file their taxes count those fines as a business 
expense and take a tax windfall. Corporations that do this are 
effectively using taxpayer money to subsidize their illegal behavior. 
In 2005, the Government Accountability Office found that of the 34 
companies and $1 billion in settlements they examined, 20 companies 
took a tax deduction for some or all of the money it paid to the 
government. Those settlements were silent on whether that $1 billion to 
the government counted as penalties or restitution. According to GAO, 
in 2 of those settlements, company representatives said they made a 
mistake in deducting civil penalty payments totaling $1.9 million and 
said they would amend their tax returns.
  The Reed-Grassley bill would address these practices by amending 
162(f) of the tax code and requiring the government and the settling 
party to reach pre-filing agreements on how the settlement payments 
should be treated for tax purposes. The bill also clarifies the rules 
about what settlement payments are punitive and therefore non-
deductible. Furthermore, it increases transparency by requiring the 
government to file a return at the time of settlement to accurately 
reflect the tax treatment of the amounts that will be paid by the 
offending party.
  Over a 10 year budget window, this legislation is estimated to raise 
between $200 to $300 million in revenue.
  With this legislation we can close this tax loophole that flies in 
the face of sensible and fair tax policy. The tax code should not be 
used to subsidize illegal activity by corporations--when a fine is 
levied that fine should not be construed as a legitimate business 
expense. Instead, it should be paid in full, with no tax deduction 
taken.
  I want to thank Senator Grassley for working with me on this 
legislation. I would also thank Chairman Baucus who introduced similar 
legislation in previous Congresses. They have long championed closing 
this loophole. I urge our colleagues to join us by cosponsoring this 
legislation and seeking its passage.

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