[Congressional Record (Bound Edition), Volume 145 (1999), Part 10]
[Senate]
[Pages 14570-14577]
[From the U.S. Government Publishing Office, www.gpo.gov]



          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. WARNER:
  S. 1298. A bill to provide for professional liability insurance 
coverage for Federal employees, and for other purposes; to the 
Committee on Governmental Affairs.


                the federal employees equity act of 1999

  Mr. WARNER. Mr. President, I rise today to introduce the Federal 
Employees Equity Act of 1999.
  My legislation expands a provision included in the omnibus 
appropriations bill for fiscal year 1997 (P.L. 104-208) to allow 
federal agencies to contribute to the costs of professional liability 
insurance for their senior executives, managers and law enforcement 
officials. While this important benefit contained in the Omnibus 
Appropriation bill was indeed enacted, it has not been made available 
on as wide a basis to federal employees as we had hoped.
  The Federal Employees Equity Act would ensure that federal agencies 
reimburse one-half the premiums for Professional Liability Insurance 
for employees covered by this bill. Federal managers, supervisors, and 
law enforcement officials should not have to fear the excessive costs 
of legal representation when unwarranted allegations are made against 
them for investigations of these allegations are conducted.
  I was a strong supporter of the provision in 1996 because federal 
officials often found themselves to be the target of unfounded 
allegations of wrongdoing. Sometimes allegations were made by citizens, 
against whom federal officials were enforcing the law and by employees 
who had performance or conduct problems. Although many allegations have 
proven to be specious, these federal officials were often subject to 
lengthy investigations and had to pay for their own legal 
representation when their agencies could not provide it.
  The affected federal managers, supervisors, and law enforcement 
officials are generally prohibited from being represented by unions. 
For employees who are in bargaining units represented by unions, 
Congress allows federal agencies to subsidize the time and expenses of 
union representatives when they are needed by such employees, whether 
or not they are dues paying members of the union.
  Because these federal officials are denied union representation, they 
have found it necessary to purchase professional liability insurance in 
order to protect themselves when allegations are made against them to 
the inspector general of their agency, to the Office of Special 
Counsel, or to the EEO office. The insurance provides coverage for 
legal representation for the employees when they are accused, and will 
pay judgements against the employee up to a maximum dollar amount if 
the employee is found to have made a mistake while carrying out his 
official duties. Currently, these managers must hire their own lawyers 
in order to defend their reputation and careers when they are the 
subject of a grievance, regardless of whether the complaint has merit.
  The current law has had some success and has been implemented by 
several federal departments including: Departments of Agriculture, 
Education, Interior, Labor, and such agencies as the Social Security 
Administration, Small Business Administration, General Services 
Administration, Securities and Exchange Commission, National 
Aeronautics and Space Administration, the Office of the Inspector 
General at the Department of Housing and Urban Development, the 
National Science Foundation, the Merit Systems Protections Board, the 
Office of the Inspector General at the Office of Public Health and 
Science, and the Substance Abuse and Mental Health Services 
Administration at Department of Health and Human Services.
  Regrettably, other departments such as Treasury, Justice, Defense, 
Commerce, Transportation, Veterans Affairs, and agencies such as the 
Equal Employment Opportunity Commission, and the Office of Personnel 
Management have not seen fit to do so.
  The professional associations of these officials (the Senior 
Executives Association, the Professional Managers Association, the FBI 
Agents Association, the Federal Criminal Investigators Association, the 
Federal Law Enforcement Officers Association, the National Association 
of Assistance U.S. Attorneys, and the National Treasury Employees 
Union) have endorsed the concept for legislation to require federal 
agencies to reimburse half the cost of premiums for professional 
liability insurance.
  The intent of this measure is simply to ``level the playing field'' 
so that supervisors and managers are treated equally by various federal 
agencies and have access to protections similar to those which are 
already provided for rank and file federal employees.
  I request your support for these federal officials and for this 
legislation.
  Mr. President, I ask unanimous consent that the text 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. 1298

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

     SECTION 1. PROFESSIONAL LIABILITY INSURANCE.

       (a) Short Title.--This Act may be cited as the ``Federal 
     Employees Equity Act of 1999''.
       (b) In General.--Section 636(a) of the Treasury, Postal 
     Service, and General Government Appropriations Act, 1997 
     (Public Law 104-208; 110 Stat. 3009-363; 5 U.S.C. prec. 5941 
     note) is amended in the first sentence by striking ``may'' 
     and inserting ``shall''.
       (c) Law Enforcement Officers.--Section 636(c)(2) of the 
     Treasury, Postal Service, and General Government 
     Appropriations Act, 1997 (Public Law 104-208; 110 Stat. 3009-
     364; 5 U.S.C. prec. 5941 note) is amended to read as follows:
       ``(2) the term `law enforcement officer' means an employee, 
     the duties of whose position are primarily the investigation, 
     apprehension, prosecution, or detention of individuals 
     suspected or convicted of offenses against the criminal laws 
     of the United States, including--
       ``(A) any law enforcement officer under section 8331(20) or 
     8401(17) of title 5, United States Code;
       ``(B) any special agent under section 206 of the Omnibus 
     Diplomatic Security and Antiterrorism Act of 1986 (22 U.S.C. 
     4823);
       ``(C) any customs officer as defined under section 5(e)(1) 
     of the Act of February 13, 1911 (19 U.S.C. 267);
       ``(D) any revenue officer or revenue agent of the Internal 
     Revenue Service; or
       ``(E) any Assistant United States Attorney appointed under 
     section 542 of title 28, United States Code.''.
       (d) Effective Date.--The amendments made by this Act shall 
     take effect on the later of--
       (1) October 1, 1999; or
       (2) the date of enactment of this Act.
                                 ______
                                 
      By Mr. ROCKEFELLER (for himself, Mr. Nickles, Mr. Robb, Mr. 
        Hatch, and Mr. Mack).
  S. 1299. A bill to amend the Internal Revenue Code of 1986 to provide 
corporate alternative minimum tax reform; to the Committee on Finance.


               ALTERNATIVE MINIMUM TAX REFORM ACT OF 1999

  Mr. ROCKEFELLER. Mr. President, I rise today to introduce the 
``Alternative Minimum Tax Reform Act of 1999'' with a bipartisan group 
of my colleagues on the Senate Finance Committee, Senators Nickles, 
Robb, Hatch and Mack. This bill is designed to improve the way the 
corporate alternative minimum tax works for capital intensive and 
commodity based companies. It is relatively modest in scope and I hope 
it will be part of any discussion we have about how we might deliver 
appropriate tax relief. Even though this bill does not change the 
fundamentals of the corporate AMT, it would eliminate some of the 
unfairness of current law by allowing companies with long term AMT 
credits to recover those credits faster. I think this bill should be 
part of the Finance Committee's discussions about constructive ways to 
provide corporate tax relief.

[[Page 14571]]

  The alternative minimum tax imposes a significant long term tax 
burden on capital intensive industries --it is not a minimum tax, but 
is, in fact, a maximum tax which requires companies to calculate their 
taxes two different ways and pay the higher of the two calculations. It 
hits our manufacturing sector hard because these businesses are most 
likely to have to make large investments in plants and equipment. 
Manufacturing businesses that make commodity products often have slim 
profit margins and must contend with fierce international competition. 
The coal and steel industry are perfect examples of these types of 
industries. Other businesses with tight profit margins such as start up 
companies are also negatively affected by AMT.
  Today, a taxpayer's AMT may be reduced by foreign tax credits and net 
operating losses, but they are limited to 90% of the alternative 
minimum tax. Under present law, if a taxpayer pays alternative minimum 
tax in any year, the amount of that payment is treated as an 
alternative minimum credit for future years. This was intended to 
ensure that companies did not wind up paying more under the AMT than 
was owed under the regular income tax. However, under current law, AMT 
credits may be used to reduce regular tax but not alternative minimum 
tax. No carryback of credits is permitted.
  The provisions of the ``Alternative Minimum Tax Reform Act of 1999'' 
would allow a corporation with AMT credits that are unused after three 
or more years to reduce its tentative minimum tax by a maximum of 50% 
using those credits. The portion which would be allowed would the 
lesser of the aggregate amount of the taxpayer's AMT credits that are 
at least three years old; or 50% of the taxpayer's alternative minimum 
tax. The taxpayer would use its oldest AMT credits first under both 
current law that allows a company to use its AMT credits, and under the 
provisions of this bill. The bill would enhance a company's ability to 
use AMT credits to reduce its regular tax. Finally, the bill would 
allow a taxpayer with AMT net operating losses in the current and two 
previous years to carry back AMT net operating losses up to 10 years to 
offset AMT paid in previous years. First-in, and first- out ordering 
would apply. This provision would help companies in the toughest 
financial shape.
  The ``Alternative Minimum Tax Reform Act of 1999'' is designed to 
help prevent companies from being trapped permanently into AMT status. 
Recovering more AMT credits sooner will help ease the position of many 
companies who are now stuck with excess and unusable AMT credits. Too 
many companies have paid AMT for years and see no possibility of using 
their AMT credits without this reform. Moreover, a great many U.S. 
companies have had to deal with sharply decreasing commodity prices due 
to the collapse of markets in Asia and around the world over the last 
few years. Without some assistance it will be very hard for American 
companies to continue to modernize and remain competitive. Their 
position of accumulating excess AMT credits hurts their cash flow and 
their bottomline profitability.
  The Alternative Minimum Tax Reform Act of 1999 is something 
reasonable we can do to help companies that are the backbone of our 
manufacturing base. I look forward to discussing this issue with my 
colleagues and to a score of how much this proposal would cost from the 
Joint Tax Committee to inform our discussions.
  Mr. President, I ask unanimous consent that the text 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. 1299

       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 may be cited as the ``Alternative Minimum Tax 
     Reform Act of 1999.''.

     SEC. 2. LONG-TERM UNUSED CREDITS ALLOWED AGAINST MINIMUM TAX.

       (a) In General.--Subsection (c) of section 53 of the 
     Internal Revenue Code of 1986 (relating to limitation) is 
     amended by adding at the end the following:
       ``(2) Special rule for corporations with long-term unused 
     credits.--
       ``(A) In general.--If a corporation to which section 56(g) 
     applies has a long-term unused minimum tax credit for a 
     taxable year, the credit allowable under subsection (a) for 
     the taxable year shall not exceed the greater of--
       ``(i) the limitation determined under paragraph (1) for the 
     taxable year, or
       ``(ii) the least of the following for the taxable year:

       ``(I) The sum of the tax imposed by section 55 and the 
     regular tax reduced by the sum of the credits allowed under 
     subparts A, B, D, E, and F of this part.
       ``(II) The long-term unused minimum tax credit.
       ``(III) The sum of--

       ``(aa) the excess (if any) of the amount under paragraph 
     (1)(A) over the amount under paragraph (1)(B), plus
       ``(bb) 50 percent of the tentative minimum tax (determined 
     under section 55(b)(1)(B)).
       ``(B) Long-term unused minimum tax credit.--For purposes of 
     this paragraph--
       ``(i) In general.--The long-term unused minimum tax credit 
     for any taxable year is the portion of the minimum tax credit 
     determined under subsection (b) attributable to the adjusted 
     net minimum tax for taxable years beginning after 1986 and 
     ending before the 3rd taxable year immediately preceding the 
     taxable year for which the determination is being made.
       ``(ii) First-in, first-out ordering rule.--For purposes of 
     clause (i), credits shall be treated as allowed under 
     subsection (a) on a first-in, first-out basis.''.
       (b) Conforming Amendments.--Section 53(c) of such Code is 
     amended--
       (1) by striking ``The'' and inserting the following:
       ``(1) In general.--The''; and
       (2) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively.

     SEC. 3. 10-YEAR CARRYBACK OF CERTAIN NET OPERATING LOSSES.

       Section 56(d) of the Internal Revenue Code of 1986 
     (relating to definition of alternative tax net operating loss 
     deduction) is amended by adding at the end the following:
       ``(3) Special rule.--In the case of a corporation to which 
     section 56(g) applies which has a net operating loss under 
     this part for 3 or more consecutive taxable years which 
     includes a taxable year beginning after the date of enactment 
     of this paragraph, the loss for each such year shall be a net 
     operating loss carryback for purposes of this part to each of 
     the 10 years preceding the taxable year of such loss.''.

     SEC. 4. EFFECTIVE DATE.

       The amendments made by this Act shall apply to taxable 
     years beginning after December 31, 1998.

  Mr. NICKLES. Mr. President, today I join my colleague from West 
Virginia, Senator Rockefeller, to introduce legislation to reform the 
alternative minimum tax, or AMT.
  Congress created the AMT in 1986 to prevent businesses from using tax 
loopholes, such as the investment tax credit or safe harbor leasing, to 
pay little or no tax. The use of these tax preferences sometimes 
resulted in companies reporting healthy ``book'' income to their 
shareholders but little taxable income to the government.
  Therefore, to create a perception of fairness, Congress created the 
AMT. The AMT requires taxpayers to calculate their taxes once under 
regular tax rules, and again under AMT rules which deny accelerated 
depreciation, net operating losses, foreign tax credits, and other 
deductions and credits. The taxpayer then pays the higher amount, and 
the difference between their AMT tax and their regular tax is 
``credited' to offset future regular tax liability if it eventually 
falls below their AMT tax liability.
  Unfortunately, the AMT has had a negative, unanticipated impact on 
many U.S. businesses. As it is currently structured, the AMT is a 
complicated, parallel tax code which places a particularly heavy burden 
on capital intensive companies. Corporations must now plan for and 
comply with two tax codes instead of one. Further, the AMT's 
elimination of important cost-recovery tax incentives increases the 
cost of investment and makes U.S. businesses uncompetitive with foreign 
companies.
  Mr. President, I am proud to say that several AMT reforms I began 
pushing in 1995 were eventually enacted in 1997. The Taxpayer Relief 
Act of 1997 exempted small corporations from the AMT, and conformed the 
depreciation cost-recovery periods for AMT and the regular corporate 
tax. The depreciation provisions in particular will relieve much of the 
AMT's negative impact on capital-intensive businesses.
  However, even with these changes, some businesses continue to be 
chronic

[[Page 14572]]

AMT taxpayers, a situation that was not contemplated when the AMT was 
created. These companies continue to pay AMT year after year, 
accumulating millions in unused AMT credits. These credits are a tax on 
future, unearned revenues which may never materialize, and because of 
the time-value of money their value to the taxpayer decreases every 
year.
  The legislation Senator Rockefeller and I are introducing today helps 
AMT taxpayers recover their AMT credits in a more reasonable time frame 
than under current law. Our bill would allow businesses with AMT 
credits which are three years old or older to offset up to 50 percent 
of their current-year tentative minimum tax. This provision will help 
chronic AMT taxpayers dig their way out of the AMT and allow them to 
recoup at least a portion of these ``accelerated tax payments'' in a 
reasonable time-frame.
  Mr. President, our legislation does not repeal the AMT, and it will 
not allow taxpayers to ``zero out'' their tax liability. This bill 
specifically addresses the problems faced by companies that are buried 
in AMT credits they might otherwise never be able to utilize. I 
encourage the Senate Finance Committee to consider our bill when 
drafting this year's tax reconciliation legislation.
                                 ______
                                 
      By Mr. HARKIN:
  S. 1300. A bill to amend the Internal Revenue Code of 1986 and the 
Employee Retirement Income Security Act of 1974 to prevent the wearing 
away of an employee's accrued benefit under a defined plan by the 
adoption of a plan amendment reducing future accruals under the plan; 
to the Committee on Finance.


              older workers pension protection act of 1999

  Mr. HARKIN. Mr. President, older workers across America have been 
paying into pension plans throughout their working years, anticipating 
the secure retirement which is their due. And now, as more Americans 
than ever before in history approach retirement, we are seeing a 
disturbing trend by employers to cut their pension benefits.
  Many companies are changing to so-called ``cash balance'' plans which 
often saves them millions of dollars in pension costs each year by 
taking a substantial cut out of employee pensions. This practice allows 
employers to unfairly profit at the expense of retirees.
  Employees generally receive three types of benefits for working: 
direct wages, health benefits and pensions. Two of those are long-term 
benefits which usually grow in value as workers become older. Pensions 
are paid entirely after a worker leaves. Reducing an employee's pension 
years after it is earned should be no more legal than denying a worker 
wages after work has been done.
  In fact, our laws do prohibit employers from directly reducing an 
employee's pension accrued benefit. Unfortunately, however, these 
protections are being sidestepped and workers' pensions are being 
indirectly reduced through the creation of cash balance pension plans.
  Under traditional defined benefit plans, a worker's pension is based 
on their length of employment and their average pay during their last 
years of service. Their pension is based on a preset formula using 
those key factors rather than the amount in their pension account. 
Under the typical cash balance plan, a worker's pension is based on the 
sum placed in the employee's account. That sum is based on their wages 
or salary year to year.
  When a worker shifts from a traditional to a cash balance plan, the 
employer calculates the value of the benefits they have accrued under 
the old plan. The result for many older workers who have accrued 
significant sums in their pension that are higher than it would have 
been under the new cash balance plan. In that case, under many of these 
cash balance plans the employer simply stops contributing to the value 
of their pension till the value reaches the level provided for under 
the new plan. And this can go on for significant periods--five years 
and sometimes more. Pension experts call this ``wear away'' others call 
it a ``plateau.''
  This is not right. It is not fair. In fact, I believe it is a type of 
age discrimination. After all, a new employee, usually younger, would 
effectively be receiving greater pay for the same work: money put into 
their pension plan. And, there are some who believe this practice 
violates the spirit and perhaps the letter of existing law in that 
regard.
  What does this mean to real people?
  Two Chase Manhattan banking executives hired an actuary to calculate 
their future pensions after Chase Manhattan's predecessor, Chemical 
Bank, converted to a cash balance plan. The actuary estimated their 
future pensions had fallen 45 percent. John Healy, one of the 
executives, says ``I would have had to work about ten more years before 
I broke even.''
  Ispat Inland, Inc, an East Chicago steel company, converted to a cash 
balance plan January 1. Paul Schroeder, a 44-year-old engineer who has 
worked for Ispat for 19 years, calculated it could take him as long as 
13 years to acquire additional benefits.
  Why are companies changing to these cash balance plans? They have 
lots of stated reasons: ease of administration, certainty in how much 
is needed to pay for the pension plan and that the plan is beneficial 
to those workers who move from company to company (with similar pension 
plans). But, the big reason is the companies save millions of dollars. 
They save it because the pensions provided for with almost all cash 
balance plans are, on average far less generous, and they immediately 
reduce their need to pay anything into a pension plan at all for a 
while, sometimes for years, because of this wear away or plateau 
feature.
  At one conference of consulting actuaries, Joseph M. Edmonds told 
companies:

     . . . it is easy to install a cash balance plan in place of a 
     traditional defined benefit plan and cover up cutbacks in 
     future benefit accruals. For example, you might change from a 
     final average pay formula to a career average pay formula. 
     The employee is very excited about this because he now has an 
     annual account balance instead of an obscure future monthly 
     benefit. The employee does not realize the implications of 
     the loss of future benefits in the final pay plan. Another 
     example of a reduction in future accruals could be in the 
     elimination of early retirement subsidies.

  Because traditional pension plans become significantly more valuable 
in the last years before retirement, the switch to cash balance plans 
also can reduce older workers' incentive to stay until they reach their 
normal retirement age.
  I support Senator Moynihan's legislation that requires that 
individuals receive clear individualized notice of what a conversion to 
a cash balance plan would do to their specific pension. There is no 
question that shining the light on this dark practice can reduce the 
chance that it will occur. I certainly agree with his view that those 
notices should not be generalized where obfuscation is easier and 
employees will pay less attention to the result.
  I also believe that more must be done. For that reason, I am 
introducing the Older Workers Pension Protection Act of 1999 which 
prohibits the practice of ``wear away.'' It provides that a company 
cannot discriminate against longtime workers by not putting aside money 
into their pension account without any consideration for the long term 
payments made to the employee's pension for earlier work performed. 
Under my bill, there would be no wear away, no plateau in which a 
worker would be receiving no increases in pension benefits while 
working when other employees received benefits. The new payments would 
have to at least equal the payments made under the revised pension plan 
without any regard to how much a worker had accrued in pension benefits 
under the old plan.
  Some suggest that if such a requirement were put in place, companies 
could and would opt out of providing any pension at all. I do not 
believe that would happen. Companies with defined benefit plans do not 
have them because they are required to do so. They do it because of 
negotiated contracts or because the company has decided that it is an 
important part of the benefits for employees to acquire and maintain a

[[Page 14573]]

productive workforce. Many suggest that the simple disclosure alone 
might prevent a reduction in payment benefits.
  Much is made about the gains of younger workers when companies switch 
to cash benefit plans. There is greater portability. But, none of the 
experts I've consulted believes that is a dominant motivation of the 
companies for proposing these changes in pension law. And, the changes 
I am proposing would not reduce the benefits for younger workers.
  I urge my colleagues to take a fresh look at the spirit of the 
current law that prevents a reduction in accrued pension benefits. I 
believe it is only fair to extend that law with its current spirit by 
simply requiring that any company which changes to a cash balance or 
similar pension plan treats all workers fairly and not penalize older 
employees whose hard work has earned them benefits under the earlier 
pension plan.
  Mr. President, Ellen Schultz at the Wall Street Journal has done an 
excellent series of articles on this issue. I ask unanimous consent 
that a copy of those articles appear in the Record at this point. I am 
also including the text of a piece of this same subject done by NPR. If 
my colleagues have not seen these articles I commend them to their 
attention. I believe that once you've read them, you'll agree with me 
that we must take action to protect the pensions of older workers.

              [From the Wall Street Journal, Dec. 4, 1998]

      Employers Win Big With a Pension Shift; Employees Often Lose

             (By Ellen E. Schultz and Elizabeth MacDonald)

       Largely out of sight, an ingenious change in the way big 
     companies structure their pension plans is saving them 
     millions of dollars, with barely a peep of resistance. Unless 
     they happen to have a Jim Bruggeman on their staff.
       Sifting through his bills and junk mail one day last year, 
     Mr. Bruggeman found the sort of notice most people look at 
     but don't spend a lot of time on: His company was making some 
     pension-plan changes.
       The company, Central & South West Corp., was replacing its 
     traditional plan with a new variety it said was easier to 
     understand and better for today's more-mobile work force. A 
     brochure sent to workers stressed that ``the changes being 
     made are good for both you and the company.''
       Alone among Central & South West's 7,000 employees, Mr. 
     Bruggeman, a 49-year-old engineer in the Dallas utility's 
     Tulsa, Okla., office, set out to discover exactly how the new 
     system, known as a cash-balance plan, worked. During a year-
     long quest to master the assumptions, formulas and 
     calculations behind it, Mr. Bruggeman found himself at odds 
     with his superiors, and labeled a troublemaker. In the end, 
     though, he figured out something about the new pension system 
     that few other employees have noticed: For many of them, it 
     is far from a good deal.
       But it clearly was, as the brochure noted, good for the 
     company. A peek at a CSW regulatory filing in March 1998, 
     after the new plan took effect, shows that the company saved 
     $20 million in pension costs last year alone. Other 
     government filings revealed that whereas the year before, CSW 
     had to set aside $30 million to fund its pension obligations, 
     after it made the mid-1997 switch it didn't have to pay a 
     dime to fund the pension plan.


                             pension light

       The switch to cash-balance pension plans--details later--is 
     the biggest development in the pension world in years, so big 
     that some consultants call it revolutionary. Certainly, many 
     call it lucrative; one says such a pension plan ought to be 
     thought of as a profit center. Not since companies dipped 
     into pension funds in the 1980s to finance leveraged buyouts, 
     have corporate treasurers been so abuzz over a pension 
     technique.
       But its little-noticed dark side--one that many companies 
     don't make very clear to employees, to say the least--is that 
     a lot of older workers will find their pensions cut, in some 
     cases deeply.
       So far, only the most financially sophisticated employees 
     have figured this out, because the formulas are so complex. 
     Even the Labor Department and the Internal Revenue Service 
     have trouble with them. So thousands of employees, while 
     acutely aware of how the stock market affects their 
     retirement next eggs, are oblivious to the effect of this 
     change. (See related article on page C1.)
       One might get the impression, from the rise of 401(k) 
     retirement plans funded jointly by employer and employee, 
     that pensions are a dead species. In fact, nearly all large 
     employers still have pension plans, because pulling the plug 
     would be too costly; the company would have to pay out all 
     accrued benefits at once. Meanwhile, companies face growing 
     obligations as the millions of baby boomers move into their 
     peak pension-earning years.
       Now, however, employers have discovered a substitute for 
     terminating the pension plan; a restructuring that often 
     makes it unnecessary ever to feed the plan again.


                         pitfalls for employers

       But this financially appealing move has its risks. The IRS 
     has never given its blessing to some of the maneuvers 
     involved. If employers don't win a lobbying battle currently 
     being waged for exemptions from certain pension rules, some 
     of these plans could be in for a costly fix.
       In addition, the way employers are handling the transition 
     could result in employee-relations backlashes as more and 
     more older workers eventually figure out they are paying the 
     price for the transformation of traditional pension plans.
       In those traditional plans, most of the benefits build up 
     in an employee's later years. Typical formulas multiply years 
     of service by the average salary in the final years, when pay 
     usually is highest. As a result, as much as half of a 
     person's pension is earned in the last five years on the job.
       With the new plans, everyone gets the same steady annual 
     credit toward an eventual pension, adding to his or her 
     pension-account ``cash balance.'' Employers contribute a 
     percentage of an employee's pay, typically 4%. The balance 
     earns an interest credit, usually around 5%. And it is 
     portable when the employee leaves.
       For the young, 4% of pay each year is more than what they 
     were accruing under the old plan. But for those nearing 
     retirement, the amount is far less. So an older employee who 
     is switched in to a cash-balance system can find his or her 
     eventual pension reduced by 20% or 50% or, in rare cases, 
     even more.
       This is one way companies save money with the switch. The 
     other is a bit more complicated. Companies can also benefit 
     from the way they invest the assets in the cash-balance 
     accounts.
       If the employer promised to credit 5% interest to 
     employees' account balances, it can keep whatever it earned 
     above that amount. The company can use these earnings to 
     finance other benefits, to pay for a work-force reduction, 
     or--crucially--to cover future years' contributions. This is 
     why the switch makes pension plans self-funding for many 
     companies.
       Although employers can do this with regular pensions, the 
     savings are grater and easier to measure in cash-balance 
     plans. The savings often transform an underfunded pension 
     plan into one that is fully funded. ``Cash-balance plans have 
     a positive effect on a company's profitability,'' says Joseph 
     Davi, a benefits consultant at Towers Perrin in Stamford, 
     Conn. They ``could be considered a profit center.''


                          motive for the move

       Employers, however, are almost universally reticent about 
     how they benefit. ``Cost savings were not the reason the 
     company switched to a cash-balance plan,'' says Paul Douty, 
     the compensation director at Mr. Bruggeman's employer, CSW. 
     Sure, the move resulted in substantial cost savings, he says, 
     but the company's goal was to become more competitive and 
     adapt to changing times. Besides, he notes, the $20 million 
     in pension-plan savings last year were partly offset by a $3 
     million rise in costs in the 401(k); the company let 
     employees contribute more and increased its matching 
     contributions.
       There is another reason some employers like cash-balances 
     plans: By redistributing pension assets from older to younger 
     workers, they turn pension rights--which many young employees 
     ignore since their pension is so far in the future--into 
     appealing benefits today. At the same time, older workers 
     lose a financial incentive to stay on the job, since their 
     later years no longer can balloon the pension.
       Some pension professionals think companies should be more 
     candid. ``If what you want to do is get rid of older workers, 
     don't mask it as an improvement to the pension plan,'' says 
     Michael Pikelny, an employee-benefits specialist at Hartmarx 
     Corp., an apparel maker in Chicago that decided not to 
     install a cash-balance plan.


                           under a microscope

       Most employees aren't equipped to question what employers 
     tell them. But Mr. Bruggeman was. He had a background in 
     finance, his hobby was actuarial science, he had taken 
     graduate-level courses in statistics and probability, and he 
     knew CSW's old pension plan inside and out. So when the 
     company announce it was converting to a cash-balance plan 
     last year, he began asking it for the documents and 
     assumptions he needed to compare the old pension to the new 
     one.
       With each new bit of data, he gained another insight. 
     First, he figured out that future pension accruals had been 
     reduced by at least 30% for most employees. CSW got rid of 
     early-retirement and other subsidies and reduced the rates at 
     which employees would accrue pensions in the future.
       Employees wouldn't necessarily conclude this from the 
     brochures the human resources department handed out. Like 
     most employers that switch to cash-balances plans, CSW 
     assured employees that the overall level of retirement 
     benefits would remain unchanged. But a close reading of the 
     brochure

[[Page 14574]]

     revealed that this result depended on employees' putting more 
     into their 401(k) plans, gradually making up for the 
     reduction in pensions.
       At a question-and-answer session on the new plan before it 
     was adopted, Mr. Bruggeman spoke up and told co-workers how 
     their pensions were being reduced. The next day, he says, his 
     supervisors in Tulsa came to his office and told him that CSW 
     management in Dallas was concerned that his remarks would 
     ``cause a class-action suit'' or ``uprising,'' and said he 
     shouldn't talk to any other employees. He says the 
     supervisor, Peter Kissman, informed him that if he continued 
     to challenge the new pension plan, CSW officials would think 
     he wasn't a team player, and his job could be in jeopardy.
       Asked about this, Mr. Kissman says: ``In my department I 
     would not tolerate employee harassment. I believe the company 
     feels the same way. Past that, I really can't speak to this 
     issue. It's being investigated by the company.''


                            a few sweeteners

       Employers, aware that switching to cash-balance plans can 
     slam older workers, often offer features to soften the blow. 
     They may agree to contribute somewhat more than the standard 
     4% of pay for older employees, or they may provide a 
     ``grandfather clause.'' CSW offered both options, saying 
     employees 50 or older with 10 years of service could stay in 
     the old plan if they wished. Mr. Bruggeman, a 25-year 
     veteran, was just shy of 49. He calculated that people in his 
     situation would see their pensions fall 50% under the new 
     plan, depending on when they retired.
       Mr. Bruggeman told company officials that the plan wasn't 
     fair to some long-term employees. Subsequently, he says, in 
     his November 1997 performance evaluation, his supervisor's 
     only criticism was that he ``spends too much time thinking 
     about the pension plan.'' A CSW official says the company 
     can't discuss personnel matters.
       What bothered Mr. Bruggeman even more was his discovery of 
     one of the least-known features of cash-balance plans: Once 
     enrolled in them, some employees don't earn any more toward 
     their pension for several years.
       The reasons are convoluted, but in a nutshell: Most 
     employees believe that opening balance in their new pension 
     account equals the credits they've earned so far under the 
     old plan. But in fact, the balance often is lower.
       When employers convert to a cash-balance plan, they 
     calculate a present-day, lump-sum value for the benefit each 
     employee has already earned. In Mr. Bruggeman's case, this 
     was $352,000--something he discovered only after obtaining 
     information from the company and making the calculations 
     himself. Yet Mr. Bruggeman's opening account in the cash-
     balance plan was just $296,000, because the company figured 
     it using different actuarial and other assumptions.
       This is generally legal, despite a federal law that bars 
     companies from cutting already-earned pensions. If Mr. 
     Bruggeman quit, he would get the full $352,000, so the law 
     isn't violated. But if he stays, it will take several years 
     of pay credits and interest before his balance gets back up 
     to $352,000.


                              ``Wearaway''

       Mr. Douty says this happened to fewer than 2% of workers at 
     CSW. But at some companies that switch to cash-balance plans, 
     far more are affected. At AT&T Corp., which adopted a cash-
     balance plan this year, many older workers will have to work 
     three to eight years before their balance catches up and they 
     start building up their pension pot again. ``Wearaway,'' this 
     is called. Only if an employee knows what figures to ask for 
     can he or she make a precise comparison of old and new 
     benefits.
       Indeed, the difficulty of making comparisons has sometimes 
     been portrayed as an advantage of switching to cash-balance 
     plans. A partner at the consulting firm that invented the 
     plans in the 1980s told a client in a 1989 letter: ``One 
     feature which might come in handy is that it is difficult for 
     employees to compare prior pension benefit formulas to the 
     account balance approach.''
       Asked to comment, the author of that line, Robert S. Byrne 
     of Kwasha Lipton (now a unit of PricewaterhouseCoopers), 
     says, ``Dwelling on old vs. new benefits is probably not 
     something that's a good way to go forward.''
       At one company, employees did know how to make comparisons. 
     When Deloitte & Touche started putting a cash-balance plan in 
     place last year, some older actuaries rebelled. The firm 
     eventually allowed all who had already been on the staff when 
     the cash-balance plan was adopted to stick with the old 
     benefit if they wished.


                           Struggle at Chase

       At Chase Manhattan Corp., two executives in the private-
     banking division hired an actuary and calculated that their 
     future pensions had fallen 45% as a result of a conversion to 
     a cash-balance plan by Chase predecessor Chemical Bank. ``I 
     would have had to work about 10 more years before I broke 
     even and got a payout equal to my old pension,'' says one of 
     the executives, John Healy, now 61.
       He and colleague Nathan Davi say that after seven years of 
     their complaints, Chase agreed to give each a pension lump 
     sum of about $487,000, which was roughly $72,000 more than 
     what they would have received under the new cash-balance 
     plan. Although a Chase official initially said the bank had 
     ``never given any settlement to any employee over the bank's 
     pension plans,'' when told about correspondence about the 
     Healy-Davi case, Chase said that a review had determined that 
     about 1,000 employees could be eligible for additional 
     benefits. ``We amended the plan so that it would cover all 
     similarly situated employees,'' a spokesman said.
       How many quiet arrangements have been reached is unknown. 
     But employees are currently pressing class-action suits 
     against Georgia-Pacific Corp. and Cummins Engine Co.'s Onan 
     Corp. subsidiary, alleging that cash-balance plans illegally 
     reduce pensions. (Both defendants are fighting the suits.) 
     Judges have recently dismissed similar suits against Bell 
     Atlantic Corp. and BankBoston N.A.


                           Concern at the IRS

       Not aware of any of this ferment, Mr. Bruggeman in August 
     1998 filed his multiple-spreadsheet analysis of the CSW cash-
     balance plan with the IRS and the Labor Department, asking 
     them for a review. Soon after, he says, a manager in CSW's 
     benefits department called him in and ``wanted to know what 
     it would take for me to drop all this.'' The answer wasn't to 
     be ``grandfathered'' and exempted from the new plan. ``I told 
     him all I want is for the company to . . . be fair to 
     employees,'' he says, ``It's the principle of the thing.''
       The manager couldn't be reached for comment, but a CSW 
     official says the company takes complaints ``very seriously 
     and they're thoroughly investigated. In every part of this 
     type of investigation an employee is interviewed by a company 
     representative, and in every initial interview the employee 
     is asked for suggestions on what might be a preferred 
     solution.''
       Even without Mr. Bruggeman's input, the IRS has a lot of 
     cash-balance data on its plate. The agency is swamped with 
     paper-work from hundreds of new plans seeking its approval, 
     and applications are piling up. The delay is due in part to 
     concern at the IRS that such plans may violate various 
     pension laws, according to a person familiar with the 
     situation. Meanwhile, the consulting firms that create the 
     plans for companies are lobbying for exemptions from certain 
     pension rules.
       They say they aren't worried. That's because ``companies 
     who now have these plans are sufficiently powerful, 
     sufficiently big and have enough clout that they could get 
     Congress to bend the law . . . to protect their plans,'' says 
     Judith Mazo, a Washington-based senior vice president for 
     consulting firm Segal Co. Regulators, meanwhile, are playing 
     catch-up. Bottom line, Ms. Mazo says: ``The plans are too big 
     to fail.''
                                  ____


                [From ``Morning Edition,'' Feb. 1, 1999]

       Pros and Cons of Cash Balance Plans for Retirement Savings

       Bob Edwards, host. This is NPR's ``Morning Edition.'' I'm 
     Bob Edwards.
       A new type of pension program is becoming popular with the 
     nation's top employers. The program is called the cash 
     balance plan. It's an innovative and complicated type of 
     retirement account suitable for today's modern work force, 
     especially many young mobile employees. And that's the 
     problem. Critics warn cash balance plans benefit the young at 
     the expense of older, longtime workers. NPR's Elaine Korry 
     reports.
       Elaine Korry reporting. The traditional pension plan so 
     widespread a generation ago essentially promised long-term 
     employees a secure monthly income when they reached 
     retirement age. Eric Lofgren (ph), head of the benefits 
     consulting group (ph) at Watson Wyatt (ph), says that type of 
     pension made sense when people worked at the same job for 
     decades. But, he says, great changes in the workplace have 
     made those plans obsolete.
       Mr. Eric Lofgren (Benefits Consulting Group, Watson Wyatt). 
     The traditional plan does a very good job for about one 
     person out of 20. But for the rest of us who have changed 
     jobs a couple times in our career, the traditional plan 
     really doesn't deliver, because it rewards long career with 
     one employer and that just isn't the situation for most 
     people.
       Korry. The response of many large employers--so far about 
     300 of them--has been to quietly switch to a new plan that 
     turns the traditional pension on its head. Lofgren, who helps 
     companies formulate these new cash balance plans, says they 
     spread the wealth around so more employees prosper, perhaps 
     19 out of 20. But that's not the only reason companies are 
     lining up to make the switch. Edgar Pouk (ph), a New York 
     pension law attorney, says that the real winners in these 
     plan conversions are the employers.
       Mr. Edgar Pouk (Pension Law Attorney). They stand to gain 
     by the change, and so they're trying to sell it, and they 
     sell it by emphasizing the advantages of the conversion for 
     younger workers, but not explaining the drawbacks, and 
     serious drawbacks, for older workers.
       Korry. In fact, says Pouk, switching to a cash balance plan 
     can cost older employees

[[Page 14575]]

     tens of thousands of dollars, a loss they may never figure 
     out. This stuff is so technical, many pension experts don't 
     understand it, let alone the average employee. In simple 
     terms, here's what happens: Pension regulations permit 
     companies to use two different interest rates when 
     calculating the value of the old pension vs. the opening 
     balance of the new one. Employers usually choose the formula 
     that favors them, even though it leaves older workers worse 
     off. A pension balance of, say, $100,000 under the old plan 
     might be worth only $70,000 when converted to a cash balance 
     plan. Right there, the older worker is down 30 grand.
       It gets worse. For some accounting purposes, the employer 
     can treat the $70,000 as if it were 100 grand. Then the 
     employer can freeze the account until the employee works the 
     five to 10 years it can take to make up the difference. Edgar 
     Pouk says the contributions the company doesn't have to make 
     during that time add up quickly.
       Mr. Pouk. You're talking about tens of thousands of dollars 
     for each worker. You multiply that by thousands of workers 
     and the employer saves millions of dollars.
       Korry. Often older workers don't know what happened. Some 
     employers, however, are careful to point out the differences. 
     Then older workers have a choice. They can recoup their 
     losses, but only by quitting, in which case they would 
     receive a lump-sum payment equal to their old balance. So 
     cash balance plans may be an inducement for older workers to 
     leave. Olivia Mitchell (ph), head of the Pension Research 
     Council at the Wharton School, says recent changes in labor 
     and law have given older workers many more job protections 
     than before, so employers are resorting to creative ways to 
     ease their older worker force out.
       Ms. Olivia Mitchell (Pension Research Council, Wharton 
     School). They may be downsizing, they may be looking for a 
     different type of employee, perhaps with different skills, 
     and so they're taking the cash balance plan as one of many 
     human resource policies to essentially restructure the work 
     force. So it's seen as a tool toward that end.
       Korry. Companies that convert to cash balance plans can 
     level the playing field so that all employees benefit. Some 
     companies will guarantee their older workers a higher rate of 
     return or allow them to keep the old plan until they retire. 
     But those are voluntary measures that eat up the cost 
     savings. For now, regulators have not caught up with the 
     growing momentum toward the new plans. But according to 
     attorney Edgar Pouk, employers who don't protect their older 
     workers are running the risk of landing in court.
       Mr. Pouk. When you have a number of years where the older 
     worker receives no additional benefits that a plan is illegal 
     per se, because federal law prohibits zero accruals for any 
     year of participation.
       Korry. So far, the Internal Revenue Service has not given 
     its blessing to cash balance plans. Employers have mounted an 
     intense lobbying effort to win a safe harbor within pension 
     law. On the other side, employees at a few large companies 
     have lawsuits pending against the conversions, and some 
     congressional leaders have expressed concern. Staffers on the 
     Senate Finance Committee are considering legislation that 
     would at least require employers to spell out what a pension 
     conversion would mean for older workers. Elaine Korry, NPR 
     News, San Francisco.
                                 ______
                                 
      By Mr. STEVENS (for himself, Mr. Lott, Mr. Hollings, and Mr. 
        Dorgan):
  S. 1301. A bill to provide reasonable and non-discriminatory access 
to buildings owned or used by the Federal government for the provision 
of competitive telecommunications services by telecommunications 
carriers; to the Committee on Commerce, Science, and Transportation.


              competitive access to federal buildings act

  Mr. STEVENS. Mr. President, today I introduce, along with Senators 
Lott, Hollings, and Dorgan, a bill to ensure that the Federal 
Government stands behind its pledge to foster true competition in the 
provision of local telecommunications services.
  While competition in the local telecommunications sector is growing, 
new entrants using terrestrial fixed wireless or satellite services 
lack of the significant advantages of incumbent local exchange carriers 
when it comes to gaining access to many buildings. This is particularly 
true when it comes to access to rooftops and to the internal risers and 
conduits linking the rooftop to the basement, where the access point to 
the internal phone wiring is usually located.
  In some instances these wireless local carriers are welcomed by 
building owners and landlords with open arms; however, more often than 
not they meet resistance, are rejected, or just plain ignored. I 
believe the Federal Government should do more to ensure a level playing 
field for these new entrants to compete on.
  Our bill is designed to spur competition and to hopefully save 
taxpayer dollars. We focus in this legislation only upon buildings 
owned by the Federal Government or where the Federal Government is a 
lessee.
  The inspiration of this bill comes from States which have moved to 
encourage access by competitors. Connecticut and Texas have both 
enacted measures to promote nondiscriminatory access by 
telecommunications carriers to rooftops, risers, conduits, utility 
spaces, and points of entry and demarcation in order to promote the 
competitive provision of telecommunications and information services.
  This bill takes a similar approach to that enacted by the States, and 
requires that nondiscriminatory access be provided to all 
telecommunications carriers seeking to provide service to federally-
owned buildings and buildings in which Federal agencies are tenants. 
The National Telecommunications and Information Administration of the 
Department of Commerce, the NTIA, which is the Agency that coordinates 
telecommunications policy for Federal agencies, is tasked with 
implementing this requirement.
  Building owners can easily meet the requirements of this bill. They 
can either certify that they are already bound to provide 
nondiscriminatory access under State law or they can commit in writing 
that they will provide such access as a matter of contract.
  This bill does not mandate that every building must use the services 
of these new competitors. What it does say is that the Federal 
Government should lead by example.
  This bill does not mandate a takings. Owners and operators can charge 
a nondiscriminatory fee for the rooftop and conduit space these 
technologies use to provide local service--which I am encouraged to say 
is quite small.
  Owners and operators may impose reasonable requirements to protect 
the safety of the tenants and the condition of the property.
  Any damage caused as a result of installing these services will be 
borne by the telecommunications carrier.
  The carriers must pay for the entire cost of installing, operating, 
maintaining, and removing any facilities they provide.
  The bill will not adversely impact the ability of Federal agencies to 
obtain office space. Federal agency heads may waive the requirements of 
this bill if enforcement of the bill would result in the agency being 
unable to obtain suitable space in a geographic area.
  The President may also waive the nondiscriminatory access provisions 
for any building if they are determined to be contrary to the interests 
of national security.
  I look forward to working with NTIA, the General Services 
Administration, and private building owners who have a leasing 
relationship with the Federal Government to carry out the purpose of 
this bill.
  My goal is to ensure that the Federal Government sets a good example. 
I hope it will become the standard in the private sector. Businesses 
should demand that building owners provide every opportunity for 
competitive choice in telecommunications providers.
  Access to Federal buildings or a building that is housing Federal 
workers should be encouraged. This bill is a further step in 
implementing the promise of the Telecommunications Act which Congress 
enacted.
  It will help ensure that telecommunications providers can compete 
fairly on the basis of the cost and quality of the services provided.
  I ask unanimous consent that the text of the bill be printed in the 
Record.

                                S. 1301

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Competitive Access to 
     Federal Buildings Act''.

     SEC. 2. FINDINGS

       The Congress finds that--
       (1) non-discriminatory access to, and use of, the rooftops, 
     risers, telephone cabinets, conduits, points of entry or 
     demarcation for internal wiring, and all utility spaces in or

[[Page 14576]]

     on federal buildings and commercial property is essential to 
     the competitive provision of telecommunications services and 
     information services;
       (2) incumbent telecommunications carriers often enjoy 
     access to such buildings and property through historic rights 
     of way that were developed before the advent of new means of 
     providing such services, in particular the provision of such 
     services using terrestrial fixed wireless or satellite 
     services that enter a building through equipment located on 
     rooftops;
       (3) the National Telecommunications and Information 
     Administration is the Federal agency tasked with developing 
     policies for the efficient and competitive use of emerging 
     technologies that combine spectrum use with the convergence 
     of communications and computer technologies for the 
     utilization of telecommunications services and information 
     services by federal agencies;
       (4) that several States, for example Connecticut and Texas, 
     have already enacted measures to promote non-discriminatory 
     access by telecommunications carriers to rooftops, risers, 
     conduits, utility spaces, and points of entry and demarcation 
     in order to promote the competitive provision of 
     telecommunications services and information services; and
       (5) that the Federal government should encourage States to 
     develop similar policies by establishing as federal policy 
     requirements to promote non-discriminatory access to Federal 
     buildings and commercial property used by agencies of the 
     Federal government so that taxpayers receive the benefits and 
     cost savings from the competitive provision of 
     telecommunications services and information services by 
     telecommunications carriers.

     SEC. 3. ACCESS TO BUILDINGS FOR COMPETITIVE 
                   TELECOMMUNICATIONS SERVICES

       The National Telecommunications and Information 
     Administration Organization Act (Title I of Public Law 102-
     538; 47 U.S.C. 901 et seq.) is amended--
       (1) in section 103(b)(2) (47 U.S.C. 902(b)(2)) by adding at 
     the end the following new subparagraph:
       ``(U) The authority to implement policies for buildings and 
     other structures owned or used by agencies of the Federal 
     government in order to provide for non-discriminatory access 
     to such buildings and structures for the provision of 
     telecommunications services or information services by 
     telecommunications carriers, and to advise the Commission on 
     the development of policies for non-discriminatory access by 
     such carriers to commercial property in general for the 
     provision of such services.''; and
       (2) in section 105 (47 U.S.C. 904) by adding at the end the 
     following new subsection:
       ``(f) Prohibition on Discriminatory Access.--
       ``(1) In general.--No Federal agency shall enter into a 
     contract with the owner or operator of any commercial 
     property for the rental or lease of all or some portion of 
     such property unless the owner or operator permits non-
     discriminatory access to, and use of, the rooftops, risers, 
     telephone cabinets, conduits, points of entry or demarcation 
     for internal wiring, easements, rights of way, and all 
     utility spaces in or on such commercial property, for the 
     provision of telecommunications services or information 
     services by any telecommunications carrier that has obtained, 
     where required, a Federal or state certificate of public 
     convenience and necessity for the provision of such services, 
     and which seeks to provide or provides such services to 
     tenants (including, but not limited to, the Federal agency 
     for which such rental or lease is made) of such property. 
     Such owner or operator may--
       ``(A) charge a reasonable and nondiscriminatory fee (which 
     shall be based on the commercial rental value of the space 
     actually used by the telecommunications carrier) for such 
     access and use;
       ``(B) impose reasonable and non-discriminatory requirements 
     necessary to protect the safety and condition of the 
     property, and the safety and convenience of tenants and other 
     persons (including hours when entry and work may be conducted 
     on the property);
       ``(C) require the telecommunications carrier to indemnify 
     the owner or operator for damage caused by the installation, 
     maintenance, or removal of any facilities of such carrier; 
     and
       ``(D) require the telecommunications carrier to bear the 
     entire cost of installing, operating, maintaining, and 
     removing any facilities of such carrier.
       ``(2) State law or contractual obligation required.--No 
     Federal agency shall enter into a contract with the owner or 
     operator of any commercial property for the rental or lease 
     of all or some portion of such property unless the owner or 
     operator submits to such agency a notarized statement that 
     such owner or operator is obligated under State law, or is 
     obligated or will undertake an obligation through a 
     contractual commitment with each telecommunication carrier 
     providing or seeking to provide service, to resolve any 
     disputes between such telecommunication carriers and such 
     owner or operator that may arise regarding access to the 
     commercial property or the provision of competitive 
     telecommunications services or information services to 
     tenants of such property. To meet the requirements of this 
     paragraph such State process or contractual commitment must--
       ``(A) provide an effective means for resolution of disputes 
     within 30 days (unless otherwise required by State law or 
     agreed by the parties involved), either through arbitration 
     or order of a State agency or through binding arbitration;
       ``(B) permit the telecommunications carrier to initiate 
     service or continue service while any dispute is pending;
       ``(C) provide that any fee charged for access to, or use 
     of, building space (including conduits, risers, and utility 
     closets), easements or rights of way, or rooftops to provide 
     telecommunications service or information service be 
     reasonable and applied in a non-discriminatory manner to all 
     providers of such service, including the incumbent local 
     exchange carrier; and
       ``(D) provide that requirements with respect to the 
     condition of the property are limited to those necessary to 
     ensure that the value of the property is not diminished by 
     the installation, maintenance, or removal of the facilities 
     of the telecommunications carrier, and do not require the 
     telecommunications carrier to improve the condition of the 
     property in order to obtain access or use.
       ``(3) Effective date.--Paragraphs (1) and (2) shall take 
     effect six months after the date of enactment of this 
     subsection for all lease or rental agreements entered into or 
     renewed by any Federal agency after such date.
       ``(4) Waiver permitted.--The requirements of paragraphs (1) 
     or (2) may be waived on a case by case basis--
       ``(A) by the head of the agency seeking space in a 
     commercial property upon a determination, which shall be made 
     in writing and be available to the public upon request, that 
     such requirements would result in the affected agency being 
     unable, in that particular case, to obtain any space suitable 
     for the needs of that agency in that general geographic area; 
     or
       ``(B) by the President upon a finding that waiver of such 
     requirements is necessary to obtain space for the affected 
     agency in that particular case, and that enforcement of such 
     requirements in that particular case would be contrary to the 
     interests of national security.

     Any determination under subparagraph (A) may be appealed by 
     any affected telecommunications carrier to the Assistant 
     Secretary, who shall review the agency determination and 
     issue a decision upholding or revoking the agency 
     determination within 30 days of an appeal being filed. The 
     burden shall be on the agency head to demonstrate through the 
     written determination that all reasonable efforts had been 
     made to find suitable alternative space for the agency's 
     needs before the waiver determination was made. The Assistant 
     Secretary shall revoke any agency determination made without 
     all reasonable efforts being made. The decision of the 
     Assistant Secretary shall be binding on the agency whose 
     waiver determination was appealed.
       ``(5) Limitations.--
       ``(A) Nothing in this subsection shall waive or modify any 
     requirements or restrictions imposed by any Federal, state, 
     or local agency with authority under other law to impose such 
     restrictions or requirements on the provision of 
     telecommunications services or the facilities used to provide 
     such services.
       ``(B) Refusal by an owner to provide access to a 
     telecommunications carrier seeking to provide 
     telecommunications services or information services to a 
     commercial property due to a demonstrated lack of available 
     space at a commercial property on a rooftop or in a riser, 
     telephone cabinet, conduit, point of entry or demarcation for 
     internal wiring, or utility space due to existing occupation 
     of such space by two or more telecommunications carriers 
     providing service to that commercial property shall not be a 
     violation of paragraphs (1)(B) or (2)(D) if the owner has 
     made reasonable efforts to permit access by such 
     telecommunications carrier to any space that is available.
       ``(6) Definitions.--For the purposes of this subsection the 
     term--
       ``(A) `Federal agency' shall mean any executive agency or 
     any establishment in the legislative or judicial branch of 
     the Government;
       ``(B) `commercial property' shall include any buildings or 
     other structures offered, in whole or in part, for rent or 
     lease to any Federal agency;
       ``(C) `incumbent local exchange carrier' shall have the 
     same meaning given such term in section 251(h) of the 
     Communications Act of 1934 (47 U.S.C. 251(h)); and
       ``(D) `information service,' `telecommunications carrier,' 
     and `telecommunications service' shall have the same meaning 
     given such terms, respectively, in section 3 of the 
     Communications Act of 1934 (47 U.S.C. 153).''.

     SEC. 4. APPLICATION TO PUBLIC BUILDINGS.

       Within six months after the date of enactment of this Act 
     the Secretary of Commerce, acting through the Assistant 
     Secretary of Commerce for Telecommunications and Information, 
     shall promulgate final rules, after notice and opportunity 
     for public comment, to apply the requirements of section 
     105(f) of the National Telecommunications and Information 
     Administration Organization Act, as

[[Page 14577]]

     added by this Act, to all buildings and other structures 
     owned or operated by any Federal agency. In promulgating such 
     rules the Assistant Secretary may, at the direction of the 
     President, exempt any buildings or structures owned or 
     operated by a Federal agency if the application of such 
     requirements would be contrary to the interests of national 
     security. The Assistant Secretary shall coordinate the 
     promulgation of the rules required by this section with the 
     Administrator of the General Services Administration and the 
     heads of any establishments in the legislative and judicial 
     branches of government which are responsible for buildings 
     and other structures owned or operated by such 
     establishments. Such rules may include any requirements for 
     identification, background checks, or other matters necessary 
     to ensure access by telecommunications carriers under this 
     section does not compromise the safety and security of agency 
     operations in government owned or operated buildings or 
     structures. For the purposes of this section, the term 
     ``Federal agency'' shall have the same meaning given such 
     term in section 105(f)(6) of the National Telecommunications 
     and Information Administration Organization Act, as added by 
     this Act.
                                 ______
                                 
      By Mr. MURKOWSKI (for himself, Mr. Breaux, Mr. Gorton, Mr. 
        Cochran, Mr. Hutchinson, Ms. Collins, Mrs. Lincoln, Mr. Shelby, 
        Ms. Snowe, Mrs. Murray, Mr. Sessions, Mr. Smith of Oregon, Mrs. 
        Hutchison, Mr. Grams, and Ms. Landrieu):
  S. 1303. A bill to amend the Internal Revenue Code of 1986 to modify 
certain provisions relating to the treatment of forestry activities; to 
the Committee on Finance.


                   THE REFORESTATION TAX ACT OF 1999

  Mr. MURKOWSKI. Mr. President, on June 17, I introduced bipartisan 
legislation (1240) providing capital gains for the forest products 
industry and lifting the existing cap on the reforestation tax credit 
and amortization provisions of the tax Code.
  Unfortunately, because of a clerical error, the section of the bill 
that lifted the cap on the tax credit and the amortization provisions 
of the Code was inadvertently omitted from the bill. Today I am 
reintroducing the bill as it was originally intended to be drafted.
  I ask unanimous consent that the text 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. 1303

       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 may be cited as the ``Reforestation Tax Act of 
     1999''.

     SEC. 2. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.

       (a) In General.--Part I of subchapter P of chapter 1 of the 
     Internal Revenue Code of 1986 (relating to treatment of 
     capital gains) is amended by adding at the end the following 
     new section:

     ``SEC. 1203. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.

       ``(a) In General.--At the election of any taxpayer who has 
     qualified timber gain for any taxable year, there shall be 
     allowed as a deduction from gross income an amount equal to 
     the qualified percentage of such gain.
       ``(b) Qualified Timber Gain.--For purposes of this section, 
     the term `qualified timber gain' means gain from the 
     disposition of timber which the taxpayer has owned for more 
     than 1 year.
       ``(c) Qualified Percentage.--For purposes of this section, 
     the term `qualified percentage' means the percentage (not 
     exceeding 50 percent) determined by multiplying--
       ``(1) 3 percent, by
       ``(2) the number of years in the holding period of the 
     taxpayer with respect to the timber.
       ``(d) Estates and Trusts.--In the case of an estate or 
     trust, the deduction under subsection (a) shall be computed 
     by excluding the portion of (if any) the gains for the 
     taxable year from sales or exchanges of capital assets which, 
     under sections 652 and 662 (relating to inclusions of amounts 
     in gross income of beneficiaries of trusts), is includible by 
     the income beneficiaries as gain derived from the sale or 
     exchange of capital assets.''
       (b) Coordination With Maximum Rates of Tax on Net Capital 
     Gains.--
       (1) Section 1(h) of such Code (relating to maximum capital 
     gains rate) is amended by adding at the end the following new 
     paragraph:
       ``(14) Qualified timber gain.--For purposes of this 
     section, net capital gain shall be determined without regard 
     to qualified timber gain (as defined in section 1203) with 
     respect to which an election is in effect under section 
     1203.''
       (2) Subsection (a) of section 1201 of such Code (relating 
     to the alternative tax for corporations) is amended by 
     inserting at the end the following new sentence:

     ``For purposes of this section, net capital gain shall be 
     determined without regard to qualified timber gain (as 
     defined in section 1203) with respect to which an election is 
     in effect under section 1203.''
       (c) Allowance of Deduction in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 of such Code (relating 
     to definition of adjusted gross income) is amended by 
     inserting after paragraph (17) the following new paragraph:
       ``(18) Partial inflation adjustment for timber.--The 
     deduction allowed by section 1203.''
       (d) Technical Amendments.--
       (1) Subparagraph (B) of section 172(d)(2) of such Code is 
     amended to read as follows:
       ``(B) the exclusion under section 1202 and the deduction 
     under section 1203 shall not be allowed.''
       (2) The last sentence of section 453A(c)(3) of such Code is 
     amended by striking ``(whichever is appropriate)'' and 
     inserting ``or the deduction under section 1203 (whichever is 
     appropriate)''.
       (3) Section 641(c)(2)(C) of such Code is amended by 
     inserting after clause (iii) the following new clause:
       ``(iv) The deduction under section 1203.''
       (4) The first sentence of section 642(c)(4) of such Code is 
     amended to read as follows: ``To the extent that the amount 
     otherwise allowable as a deduction under this subsection 
     consists of gain described in section 1202(a) or qualified 
     timber gain (as defined in section 1203(b)), proper 
     adjustment shall be made for any exclusion allowable under 
     section 1202, and any deduction allowable under section 1203, 
     to the estate or trust.''
       (5) The last sentence of section 643(a)(3) of such Code is 
     amended to read as follows: ``The exclusion under section 
     1202 and the deduction under section 1203 shall not be taken 
     into account.''
       (6) The last sentence of section 643(a)(6)(C) of such Code 
     is amended by inserting ``(i)'' before ``there shall'' and by 
     inserting before the period ``, and (ii) the deduction under 
     section 1203 (relating to partial inflation adjustment for 
     timber) shall not be taken into account''.
       (7) Paragraph (4) of section 691(c) of such Code is amended 
     by inserting ``1203,'' after ``1202,''.
       (8) The second sentence of paragraph (2) of section 871(a) 
     of such Code is amended by striking ``section 1202'' and 
     inserting ``sections 1202 and 1203''.
       (e) Clerical Amendment.--The table of sections for part I 
     of subchapter P of chapter 1 of such Code is amended by 
     adding at the end the following new item:

``Sec. 1203. Partial inflation adjustment for timber.''

       (f) Effective Date.--The amendments made by this section 
     shall apply to sales or exchanges after December 31, 1998.

     SEC. 3. AMORTIZATION OF REFORESTATION EXPENDITURES AND 
                   REFORESTATION TAX CREDIT.

       (a) Decrease in Amortization Period.--
       (1) In general.--Section 194(a) of the Internal Revenue 
     Code of 1986 is amended by striking ``84 months'' and 
     inserting ``60 months''.
       (2) Conforming amendment.--Section 194(a) of such Code is 
     amended by striking ``84-month period'' and inserting ``60-
     month period''.
       (b) Removal of Cap on Amortizable Basis.--
       (1) Section 194 of the Internal Revenue Code of 1986 is 
     amended by striking subsection (b) and by redesignating 
     subsections (c) and (d) as subsections (b) and (c), 
     respectively.
       (2) Subsection (b) of section 194 of such Code (as 
     redesignated by paragraph (1)) is amended by striking 
     paragraph (4).
       (3) Paragraph (1) of section 48(b) of such Code is amended 
     by striking ``(after the application of section 194(b)(1))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to additions to capital account made after 
     December 31, 1998.

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