[Congressional Record (Bound Edition), Volume 145 (1999), Part 19]
[Senate]
[Pages 26779-26801]
[From the U.S. Government Publishing Office, www.gpo.gov]



          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. WELLSTONE (for himself and Mr. Kerry):
  S. 1785. A bill to provide for local family information centers, and 
for other purposes; to the Committee on Health, Education, Labor, and 
Pensions.


               LOCAL FAMILY EDUCATION INFORMATION CENTERS

  Mr. WELLSTONE. Mr. President, I speak on behalf of myself and Senator 
Kerry from Massachusetts, today for myself and Senator Kerry of 
Massachusetts today to introduce legislation that will go a long way to 
help parents become more involved in their children's education. We all 
know that families are crucial to the improvement of our nation's 
schools. To ensure that schools and students meet challenging 
educational goals, families must be involved. Parents must insist that 
their children get the best education. They must understand, shape and 
support the reforms in their schools; and, they must work with schools 
to help all children meet their goals.
  We know that when families are fully engaged in the educational 
process, students have: higher grades and test scores; better 
attendance and more homework done; fewer placements in special 
education; more positive attitudes and behavior; higher graduation 
rates; and, greater enrollment in postsecondary education.
  For school reforms to help all children, we must move to ensure that 
all parents are involved in their children's education. For many 
parents, this is not an easy task. Parents, particularly those who have 
limited English proficiency, or those who have a troubled history with 
the school system, often need outside help to get the information, 
support, and training they need to help their children navigate the 
school system.
  Current provisions in Title I of the Elementary and Secondary 
Education Act provide for excellent and important ways for parents to 
get involved in their children's education. However, in some cases, 
parent involvement of the type envisioned by Title I remains a distant 
goal. Many Title I schools (though not all) have failed to fully bring 
parents into the development of parent involvement policies, school-
parent compacts, and into planning and improvement for the school as 
provided for in Title I. It is thus essential for families to have an 
independent source of information and support that they understand and 
trust so that they can participate in an informed and effective manner 
and help move the schools toward the goal of full parental 
participation.
  To achieve this critical end, this legislation would provide 
competitive grants to community based organizations to establish Local 
Family Information Centers. These centers, made up of community members 
as well as professionals from the Title I schools in the area, should 
have a track record of effective outreach and work with low income 
communities. They, in consultation with the school district, would 
develop a plan to provide parents with the full support that they need 
to be partners in their children's education. For example, they would 
help parents understand standards, assessments, and accountability 
systems; support activities that are likely to improve student 
achievement in Title I schools; understand and analyze data that 
schools, districts, and states must provide under reporting 
requirements of ESEA and other laws; understand and participate in the 
implementation of parent involvement requirements of ESEA, including; 
and, communicate effectively with school personnel.
  This legislation is essential because it would reach and assist 
parents most isolated from participation by poverty, race, limited 
English proficiency and other factors. It is essential because of what 
we know about how children learn--that children that are the farthest 
behind make the greatest gains when their parents are part of their 
school life.

[[Page 26780]]

  Many schools do a very good job of involving parents in education 
reform. This bill does nothing but ensure that parents have the option 
of an independent voice in districts where schools do not do such a 
good job. If we are to educate our children, we must also educate their 
parents. This legislation provides one necessary means to do so.
                                 ______
                                 
      By Mr. LAUTENBERG:
  S. 1786. A bill to amend the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act to establish a grant program for assisting 
small business and agricultural enterprises in meeting disaster-related 
expenses; to the Committee on Environment and Public Works.


        small business and agricultural enterprise grant program

 Mr. LAUTENBERG. Mr. President, I ask that a copy of the bill 
be printed in the Record.
  The bill follows:

                                S. 1786

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

     SECTION 1. SMALL BUSINESS AND AGRICULTURAL ENTERPRISE GRANT 
                   PROGRAM.

       Title IV of the Robert T. Stafford Disaster Relief and 
     Emergency Assistance Act (42 U.S.C. 5170a et seq.) is amended 
     by adding at the end the following:

     ``SEC. 425. SMALL BUSINESS AND AGRICULTURAL ENTERPRISE GRANT 
                   PROGRAM.

       ``(a) Definitions.--In this section:
       ``(1) Agricultural enterprise.--The term `agricultural 
     enterprise' includes--
       ``(A) a farm not larger than a family farm (within the 
     meaning of section 321(a) of the Consolidated Farm and Rural 
     Development Act (7 U.S.C. 1961(a))); and
       ``(B) an enterprise engaged in the business of production 
     of food or fiber, ranching or raising of livestock, 
     aquaculture, or any other farming or agricultural related 
     industry (within the meaning of section 3(a) of the Small 
     Business Act (15 U.S.C. 632(a))).
       ``(2) Small business.--The term `small business' has the 
     meaning given the term `small business concern' under section 
     3 of the Small Business Act (15 U.S.C. 632).
       ``(b) Grant Program.--The President may make grants to 
     assist small businesses and agricultural enterprises 
     adversely affected by a major disaster in meeting disaster-
     related expenses, including the costs of nonstructural 
     repairs and replacement of noninsured contents and inventory.
       ``(c) Conditions.--
       ``(1) No relocation assistance.--A small business or 
     agricultural enterprise receiving a grant under this 
     section--
       ``(A) shall not use the proceeds of the grant for 
     relocation; but
       ``(B) may use the proceeds of the grant for appropriate 
     purposes in a new location, at the discretion of the 
     President, for a safety, health, or mitigation purpose.
       ``(2) Duplicative assistance.--
       ``(A) In general.--A small business or agricultural 
     enterprise receiving assistance in the form of a grant under 
     this section shall be liable to the United States to the 
     extent that the assistance duplicates benefits provided to 
     the small business or agricultural enterprise for the same 
     purpose by another Federal agency.
       ``(B) Debt collection.--A Federal agency that provides any 
     duplicative assistance described in subparagraph (A) shall 
     collect an amount equal to the value of the duplicative 
     assistance from the recipient in accordance with chapter 37 
     of title 31, United States Code, in any case in which the 
     head of the agency considers such collection to be in the 
     best interest of the Federal Government.
       ``(C) Inapplicability of duplication of benefits 
     provision.--Section 312 shall not apply to assistance 
     provided under this section.
       ``(d) Funding Limitations.--
       ``(1) One major disaster only.--A small business or 
     agricultural enterprise shall be eligible for a grant under 
     this section in relation to not more than 1 major disaster.
       ``(2) Maximum amount of grant.--The maximum amount that a 
     small business or agricultural enterprise may receive under 
     this section shall be $20,000.
       ``(e) Time Period for Making Grants.--The President may 
     make a grant under this section only during the 90-day period 
     beginning on the date of declaration of a major disaster 
     under this title.
       ``(f) Regulations.--The President shall promulgate 
     regulations to carry out this section, including criteria, 
     standards, and procedures for the determination of 
     eligibility for grants and the administration of grants under 
     this section.
       ``(g) Applicability.--
       ``(1) Date of disaster.--This section shall apply to any 
     major disaster declared after September 1, 1999, and before 
     the date of enactment of this section.
       ``(2) Limitation on time period for making grants.--For the 
     purpose of subsection (e), with respect to a major disaster 
     described in paragraph (1), the 90-day period shall begin on 
     the date of enactment of this section.''.
                                 ______
                                 
      By Mr. BAUCUS (for himself, Mr. Campbell, and Mr. Daschile):
  S. 1787. A bill to amend the Federal Water Pollution Control Act to 
improve water quality on abandoned or inactive mined land; to the 
Committee on Environment and Public Works.


    good samaritan abandoned or inactive mine waste remediation act

  Mr. BAUCUS. Mr. President, I rise to introduce a bill, for myself, 
Senator Campbell, and Senator Daschle. This bill will address one of 
our nation's most overlooked environmental problems: the thousands of 
abandoned mines that pour pollution into rivers and streams throughout 
the west.
  Since 1972, when we enacted the Clean Water Act, our nation has made 
a lot of progress improving water quality. Generally speaking, our 
water is cleaner. The Potomac doesn't stink. The Cuyuhoga doesn't burst 
into flame. EPA estimates that about 1/3 more of our rivers are 
fishable and swimmable than 20 years ago.
  But we still face serious water pollution problems.
  One of the most serious, in the west, is pollution from abandoned 
mines.
  Let me provide some background.
  The settlement of the mountain west was driven, in large part, by 
mining. Take my home state of Montana. At the center of Helena is Last 
Chance Gulch, where gold was discovered in 1864. Butte was called the 
``Richest Hill on Earth, ``because of it's huge veins of copper. Our 
state's motto is ``Oro y Plata''--gold and silver. The ASARCO smelter 
in East Helena is one of the largest and most efficient in the world.
  Mining has long been critical to our development. It's created jobs. 
It's part of our culture. Of our community.
  But mining, like many other economic activities, can have severe 
environmental consequences. Especially the way it was conducted years 
ago, before the development of sophisticated environmental laws and 
regulations.
  I am reminded of the words of the Montana writer, A.B. Guthrie.

       Much of the exploitation, much of unthinking damage, was 
     done in . . . a spirit characteristic of pioneer America. 
     Growth was the way of life. It was the nature of things. . . 
     . The end was not yet. The end never would be. That's what we 
     thought. We know better now.

  One reason that we know better now is that we've seen the effect of 
the abandoned hardrock mines that dot the landscape of the mountain 
west. They once were active mines, in many cases, long ago. Now they're 
an abandoned collection of tailings, shafts, and adits.
  Even in generally arid areas, these mines release acid wastes. They 
leach mercury, arsenic, copper, and other heavy metals. They load 
sediments into nearby waters. They poison drinking water. They 
contaminate fish, making them unfit to eat. They threaten public health 
and destroy rivers and streams.
  According to the Western Governors Association:

       Abandoned and inactive mines are responsible for many of 
     the greatest threats and impairments to water quality 
     throughout the United States. Thousands of stream miles are 
     severely impacted by drainage and runoff from these mines, 
     often for which a responsible party is unidentifiable or not 
     economically viable. At least 400,000 abandoned or inactive 
     mine sites occur in the west.

  This map shows the scope of the problem.
  The small dots indicate individual sites. Light shading indicates 
that there are more than 100 sites. Orange, between 200 and 300. Red, 
more than 300 sites.
  As you can see, There are hundreds of sites in many western states--
Montana, Idaho, California, Utah. New Mexico, Arizona, Colorado, and 
South Dakota.
  And that's not all. Michigan. The Ohio Valley. The Appalachains. All 
across the country.
  In Montana, there are approximately 6,000 abandoned hardrock mines. 
State officials already have identified 245 that are within 100 feet of 
a stream. In many cases, these mines are known to be polluting 
downstream waters.
  Most of the sites are concentrated around Helena. But there are sites 
throughout western Montana, in 24 of

[[Page 26781]]

our 56 counties. All the way from Lincoln County, in Northwest Montana, 
to Park County, in South Central Montana.
  Let me show you an example.
  This is an abandoned hardrock mine site near Rimini, about 15 miles 
west of Helena. It's in the Ten Mile Creek watershed, which serves as 
the Helena drinking supply. As you can see, the water is actually 
orange.
  Clearly, abandoned hardrock mines pose a big problem.
  So why isn't somebody doing something about it?
  As is often the case, this simple question requires a pretty 
complicated answer.
  In the first place, it may be impossible to track down the person who 
created the problem. The original mine operator may long gone.
  In other cases, the ownership patterns are a complex mix of federal, 
state, and private land; and of surface, mineral, and water rights. It 
is not uncommon for dozens of parties to have had some connection to a 
mining site over the years. So it's difficult to establish legal 
responsibility for a private party to clean up the site.
  There's another alternative. A state, tribe, or local government 
agency may want to step in and clean the site up themselves. As the 
Western Governors Association has put it:

       The western states have found that there would be a high 
     degree of interest and willingness on the part of federal, 
     state and local agencies . . . to work together toward 
     solutions to the multi-faceted problems commonly found on 
     inactive mined lands.

  But there's a hitch. A few years ago, a federal court of appeals held 
that, under the Clean Water Act, one of these ``good samaritans'' is 
treated exactly the same as the operator of an working mine. That is, 
someone who has no responsibility for a site, but nevertheless wants to 
step in and make progress in cleaning up the site, must get a permit 
that complies with all of the effluent guidelines and other 
requirements of the Clean Water Act.
  Many states, tribes, and local government good samaritans simply 
can't afford to clean up a site to full Clean Water Act standards.
  So, facing the legal consequences if they fall short, potential good 
samaritans refrain from attempting to address water pollution problems 
at all.
  Let me tell you about the Alta mine, outside Corbin, Montana. That's 
about 15 miles South of Helena.
  The mine is an important part of Montana's heritage. Ore was 
discovered in there 1869.
  During the late 1800s, 450 miners were extracting more than 150 tons 
of ore each day, generating a total of $32 million worth of gold, 
silver, lead, and zinc. That's the equivalent of about $1 billion in 
today's dollars.
  The main portion of the mine closed in 1896. This century, mining and 
remining continued sporadically, under a variety of different 
operators. The mine was completely abandoned in the late 1950s.
  I visited the site a few weeks ago, with my friend Vick Anderson, who 
runs the Montana mine cleanup program.
  This is a photograph of the mine shaft. It cuts down to the old 
underground workings, 650 feet below. The shaft serves as a collection 
point for groundwater.
  In the picture, you can see the toxic, acid water that seeps from the 
shaft and eventually drains into Corbin Creek.
  Up until this point, Corbin Creek runs clear and clean. It's a high-
quality trout stream. But, after the runoff from the Alta mine, the 
water is contaminated with arsenic, antimony, cadmium, copper, iron, 
lead, mercury, and zinc.
  There's a distinct sulphuric odor. In some places, the water looks 
orange, like the picture I showed of the mine near Rimini.
  This contamination affects not only Corbin Creek, but also Spring 
Creek and Prickly Pear Creek. That's about 7 miles of contamination. In 
the town of Corbin itself, the pollution is so bad that the State of 
Montana was forced to close groundwater wells and contstruct a $300,000 
water supply project to serve 11 homes.
  Now let me tell you what you can't see in the picture of the Alta 
mine.
  All around the mine shaft, the State of Montana is conducting 
reclamation work. Removing structures. Closing adits. Removing or 
covering contaminated soil.
  The state would also like to do something about the water pollution.
  For example, they could divert runoff through a channel, and then 
construct wetlands to filter the arsenic, iron, lead, mercury, and 
other pollutants. This would clean the water up, significantly.
  The engineers say that it will work.
  But the lawyers say it won't.
  They say that, by diverting the water, the state would become liable 
under the Clean Water Act. It would have to get a permit. And the 
permit would require permanent treatment that is prohibitively 
expensive.
  Faced with that possibility, there is only one practical thing for 
the state to do. Nothing. Leave the water pollution alone.
  And that's exactly what is happening. As we speak, the toxic water 
continues to flow directly into Corbin Creek.
  This is not an isolated example. According to the Western Governors 
Association and others, the same thing is happening all across the 
west.
  As you can see, the current system creates a disincentive. It 
prevents well-intentioned state and local governments from stepping in 
and conducting voluntary cleanups.
  As a result, the cleanups don't occur and the pollution keeps 
flowing.
  That's the problem that our bill will fix.
  The title of this bill, the ``Good Samaritan Mine Remediation Waste 
bill'' says it all.
  The state, tribal, and local government agencies that we refer to as 
``good samaritans'' are not trying to make money. They're not trying to 
skirt the law. They're trying to do good--in this case, to improve 
water quality.
  The basic objective of this bill is to allow that. To allow states, 
tribes and local governments to be good samaritans.
  In a nutshell, the bill will allow state, local, and tribal 
governments to clean up an abandoned mines under a special permit, 
tailored to the conditions of the site.
  They apply for a good samaritan permit from EPA. The application must 
include a detailed plan describing the cleanup actions that will be 
taken to improve water quality.
  EPA reviews the plan and takes comments from the local community. EPA 
can approve the application if it determines that the plan will result 
in an improvement in water quality to the greatest extent practical, 
given the resources and cleanup technologies available to the Good 
Samaritan.
  Once a permit is approved, the good samaritan can proceed with the 
cleanup. EPA will monitor progress and conduct periodic reviews. When 
the cleanup is finished, the permit is terminated and the Good 
Samaritan is not held responsible for any future discharges from the 
site.
  That's the basic framework.
  Let me also mention several additional safeguards, that are described 
in detail in a summary that I ask be included in the Record after this 
statement.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  [See exhibit 1.]
  First, before applying for a permit, the good samaritan must conduct 
a search, to try to find parties who are responsible for the pollution 
problem at the mine site and have the resources to clean it up 
themselves. If so, those parties should be held to the ordinary 
standards of the Clean Water Act. And they will be.
  Second, a good samaritan permit can only be used for cleanup. It 
can't be used for remining. In fact, if the cleanup generates materials 
that can be sold commercially, the proceeds have to be used to help 
further clean up the river or stream. As a result, good samaritan 
permits cannot become a loophole for someone to get around the 
application of the Clean Water Act to active mining operations.

[[Page 26782]]

  This bill is not a remining bill, and will not become one.
  Third, a good samaritan permit is fully enforceable, by either EPA or 
a citizen suit. As I've explained, there are very good arguments for 
applying different standards to good samaritan cleanups.
  But, once those standards are written into a permit, they must be 
complied with to the same extent as the standards of an ordinary 
permit. The law is the law.
  Mr. President, this bill reflects years of hard work, by the Western 
Governors Association, environmentalists, industry representatives, and 
others.
  It's not perfect. It does not reflect a complete consensus. There are 
further issues to work through.
  But my hope is that we can proceed quickly, through a hearing and 
markup, so that, before long, this important bill can be enacted into 
law.
  If so, we soon will see success stories, all across the west. At 
places like the Alta Mine, we'll be taking sensible steps to make our 
rivers a lot cleaner and our lives a little bit better.
  Let me return to the words of A.B. Guthrie. He described the 
exploitation of natural resources in the past. Then he said that ``we 
know better now.''
  We do. We know better. And that knowledge gives us a responsibility. 
We must put our knowledge to constructive use. In this case, by 
cleaning up abandoned mine sites and other sources of pollution.
  If we solve the problem, our grandchildren won't have to.

                               Exhibit 1

                                Summary

       The legislation is designed to eliminate the disincentives 
     that currently exist in the Clean Water Act to the 
     restoration of water quality through Good Samaritan cleanups 
     of abandoned or inactive hardrock mines. To accomplish this, 
     the legislation allows the federal government, states, 
     tribes, and local governments that want to clean up an 
     abandoned or inactive mining site to apply for a ``mine waste 
     remediation'' permit instead of the typical Clean Water Act 
     permit. The key to the mine waste remediation permit is that 
     it allows Good Samaritans to improve water quality to the 
     best of their ability rather than necessarily to achieve full 
     compliance with water quality standards.
       An application for a permit must be submitted to the 
     Environmental Protection Agency and include a detailed plan 
     describing the cleanup actions that the Good Samaritan will 
     take to improve water quality. Applicants for a permit must 
     make a reasonable search for parties who are responsible for 
     the mine waste and therefore, are subject to full compliance 
     with the Clean Water Act. Based on a review of the plan and 
     obtaining public input, EPA can approve an application if no 
     companies responsible for the mine waste are found and if the 
     application ``demonstrates with reasonable certainty that the 
     implementation of the plan will result in an improvement in 
     water quality to the degree practicable, taking into 
     consideration the resources available to the remediating 
     party for the proposed remediation activity.'' EPA will 
     develop and issue regulations that detail the specific 
     contents of applications for mine waste remediation permits 
     and may, on a case-by-case basis, issue regulations that 
     impose ``more specific requirements that the Administrator 
     determines'' are appropriate for individual mine sites.
       Upon approval of a permit, the Good Samaritan proceeds with 
     the planned cleanup. EPA plays a continuing role in 
     monitoring the cleanup's progress, conducting periodic 
     reviews to assure permit compliance. As with an ordinary 
     Clean Water Act permit, both EPA and citizens can take legal 
     action if a Good Samaritan fails to comply with the terms of 
     a mine waste remediation permit. When the cleanup is 
     completed, the permit is terminated and the Good Samaritan is 
     not held responsible for any future discharges from the site.
       The legislation is based on a proposal by the Western 
     Governors Association (WGA), which worked extensively with 
     the environmental community, mining industry, and the 
     Administration in developing it. The staff of Senator Max 
     Baucus has also worked with these groups and WGA in crafting 
     the legislation. The Western Governors support this 
     legislation and urge that it be enacted in this Congress.

  Mr. BAUCUS. Mr. President, I ask unanimous consent that a letter of 
support from the Western Governors Association be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                               Western Governors' Association,

                                     Denver, CO, October 19, 1999.
     Hon. Max Baucus,
     Senator of Montana, Hart Senate Office Building, Washington, 
         DC.
       Dear Senator Baucus: The Western Governors commend you for 
     introducing the ``Good Samaritan Abandoned or Inactive Mine 
     Waste Remediation Act.'' As stated in WGA Resolution 98-004 
     (attached), the Western Governors believe that there is a 
     need to eliminate current disincentives in the Clean Water 
     Act for voluntary, cooperative efforts aimed at improving and 
     protecting water quality impacted by abandoned or inactive 
     mines. We believe your bill could effectively and fairly 
     eliminate such disincentives, and we therefore urge its 
     passage this Congress.
       Inactive or abandoned mines are responsible for threats and 
     impairments to water quality throughout the western United 
     States. Many also pose safety hazards from open adits and 
     shafts. These historic mines pre-date modern federal and 
     state environmental regulations which were enacted in the 
     1970s. Often a responsible party for these mines is not 
     identifiable or not economically viable enough to be 
     compelled to clean up the site. Many stream miles are 
     impacted by drainage and runoff from such mines, creating 
     significant adverse water quality impacts in several western 
     states.
       Recognizing the potential for economic, environmental and 
     social benefits to downstream users of impaired streams, 
     western states, municipalities, federal agencies, volunteer 
     citizen groups and private parties have come together across 
     the West to try to clean up some of these sites. However, due 
     to questions of liability; many of these Good Samaritan 
     efforts have been stymied.
       To date, EPA policy and some case law have viewed inactive 
     or abandoned mine drainage and runoff as problems that must 
     be addressed under Section 402 of the CWA--the National 
     Pollutant Discharge Elimination System (NPDES) permit 
     program. This, however, has become an overwhelming 
     disincentive for any voluntary cleanup efforts because of the 
     liability that can be inherited for any discharges from an 
     abandoned mine site remaining after cleanup, even though the 
     volunteering remediating party had no previous responsibility 
     or liability for the site, and has reduced the water quality 
     impacts from the site by completing a cleanup project.
       The ``Good Samaritan Abandoned or Inactive Mine Waste 
     Remediation Act'' would amend the Clean Water Act to protect 
     a remediating agency from becoming legally responsible for 
     any continuing discharges from the abandoned mine site after 
     completion of a cleanup project, provided that the 
     remediating agency--or ``Good Samaritan''--does not otherwise 
     have liability for that abandoned or inactive mine site and 
     implements a cleanup project approved by EPA. The Western 
     Governors support this bill, and urge that it be enacted this 
     Congress.
           Sincerely,
                                                     Marc Racicot,
                           Governor of Montana, WGA Lead Governor.
                                                       Bill Owens,
                          Governor of Colorado, WGA Lead Governor.
                                               Michael O. Leavitt,
     Governor of Utah.
                                  ____


         Policy Resolution 98-004, Cleaning Up Abandoned Mines

               [Adopted June 29, 1998, Girdwood, Alaska]


                             A. Background

       1. Inactive or abandoned mines are responsible for threats 
     and impairments to water quality throughout the western 
     United States. Many also pose safety hazards from open adits 
     and shafts. These historic mines pre-date modern federal and 
     state environmental regulations which were enacted in the 
     1970s. Often a responsible party for these mines is not 
     identifiable or not economically viable enough to be 
     compelled to clean up the site. Thousands of stream miles are 
     impacted by drainage and runoff from such mines, one of the 
     largest sources of adverse water quality impacts in several 
     western states.
       2. Mine drainage and runoff problems are extremely complex 
     and solutions are often highly site-specific. Although cost-
     effective management practices likely to reduce water quality 
     impacts from such sites can be formulated, the specific 
     improvement attainable through implementation of these 
     practices cannot be predicted in advance. Moreover, such 
     practices generally cannot eliminate all impacts and may not 
     result in the attainment of water quality standards.
       3. Cleanup of these abandoned mines and securing of open 
     adits and shafts has not been a high funding priority for 
     most state and federal agencies. Most of these sites are 
     located in remote and rugged terrain and the risks they pose 
     to human health and safety have been relatively small. That 
     is changing, however, as the West has gained in population 
     and increased tourism. Both of these factors are bringing 
     people into closer contact with abandoned mines and their 
     impacts.
       4. Cleanup of abandoned mines is hampered by two issues--
     lack of funding and concerns about liability. Both of these 
     issues are compounded by the land and mineral ownership 
     patterns in mining districts. It is not uncommon to have 
     private, federal, and state owned land side by side or 
     intermingled. Sometimes the minerals under the ground are not 
     owned by the same person or agency who owns the property. As 
     a result, it is not

[[Page 26783]]

     uncommon for there to be dozens of parties with partial 
     ownership or operational histories associated with a given 
     site.
       5. Recognizing the potential for economic, environmental 
     and social benefits to downstream users of impaired streams, 
     western states, municipalities, federal agencies, volunteer 
     citizen groups and private parties have come together across 
     the West to try to clean up some of these sites. However, due 
     to questions of liability, many of these Good Samaritan 
     efforts have been stymied.
       a. To date, EPA policy and some case law have viewed 
     inactive or abandoned mine drainage and runoff as problems 
     that must be addressed under the Clean Water Act's (CWA) 
     Section 402 National Pollutant Discharge Elimination System 
     (NPDES) permit program. This, however, has become an 
     overwhelming disincentive for any voluntary cleanup efforts 
     because of the liability that can be inherited for any 
     discharges from an abandoned mine site remaining after 
     cleanup, even though the volunteering remediating party had 
     no previous responsibility or liability for the site, and has 
     reduced the water quality impacts from the site by completing 
     a cleanup project.
       b. The western states have developed a package of 
     legislative language in the form of a proposed amendment to 
     the Clean Water Act. The effect of the proposed amendment 
     would be to eliminate the current disincentives in the Act 
     for Good Samaritan cleanups of abandoned mines. Over the 
     three years that the proposal was drafted, the states 
     received extensive input from EPA, environmental groups, and 
     the mining industry.
       6. Liability concerns also prevent mining companies from 
     going back into historic mining districts and remining old 
     abandoned mine sites or doing volunteer cleanup work. While 
     this could result in an improved environment, companies which 
     are interested are justifiably hesitant to incur liability 
     for cleaning up the entire abandoned mine site.


                     b. governors' policy statement

                             Good Samaritan

       1. The Western Governors believe that there is a need to 
     eliminate disincentives to voluntary, cooperative efforts 
     aimed at improving and protecting water quality impacted by 
     abandoned or inactive mines.
       2. The Western Governors believe the Clean Water Act should 
     be anended to protect a remediating agency from becoming 
     legally responsible under section 301(a) and section 402 of 
     the CWA for any continuing discharges from the abandoned mine 
     site after completion of a cleanup project, provided that 
     their mediating agency--or ``Good Samaritan''--does not 
     otherwise have liability for that abandoned or inactive mine 
     site and attempts to improve the conditions at the site.
       3. The Western Governors believe that Congress, as a 
     priority, should amend the Clean Water Act in a manner that 
     accomplishes the goals embodied in the WGA legislative 
     package on Good Samaritan cleanups.

                          Cleanup and Funding

       4. The governors support efforts to accelerate responsible 
     and effective abandoned mine waste cleanup including the 
     siting of joint waste repositories for cleanup wastes from 
     abandoned mines on private, federal, and state lands. 
     Liability concerns have hampered the siting of joint waste 
     repositories leading to the more expensive and less 
     environmentally responsible siting of multiple repositories. 
     The governors urge the Bureau of Land Management and the U.S. 
     Forest Service to develop policy encouraging the siting of 
     joint waste repositories whenever they make economic and 
     environmental sense.
       5. The governors encourage federal land management agencies 
     such as the Bureau of Land Management, Forest Service, and 
     Park Service, as well as support agencies like the U.S. 
     Environmental Protection Agency and the U.S. Geological 
     Survey to coordinate their abandoned mine efforts with state 
     efforts to avoid redundancy and unnecessary duplication. 
     Federal and State tax dollars should be focused on working 
     cooperatively to secure and clean up abandoned mine sites, 
     not working separately to conduct expensive and time 
     consuming inventories, research, and mapping efforts.
       6. Other responsible approaches to accelerate abandoned 
     mine cleanup should be investigated, including remining.
       7. Reliable sources of funds should be made available for 
     the cleanup of abandoned mines in the West.


                   c. governors' management directive

       1. WGA staff shall transmit a copy of this resolution and 
     the proposed WGA legislative package on Good Samaritan 
     cleanups to the President, the Secretary of the Interior, 
     Secretary of Agriculture, Administrator of the Environmental 
     Protection Agency, and Chairmen of the appropriate House and 
     Senate Committees.
       2. WGA staff shall work with the mining industry, 
     environmental interests, and federal agency representatives 
     to explore options to accelerate abandoned mine cleanup 
     through remining and report back to the Governors at the 1999 
     WGA Annual Meeting.
       3. WGA shall continue to work cooperatively with the 
     National Mining Association, federal agencies, and other 
     interested stakeholders to examine other mechanisms to 
     accelerate responsible cleanup and securing of abandoned 
     mines.
       Approval of a WGA resolution requires an affirmative vote 
     of two-thirds of the Board of the Directors present at the 
     meeting. Dissenting votes, if any, are indicated in the 
     resolution. The Board of Directors is comprised of the 
     governors of Alaska, American Samoa, Arizona, California, 
     Colorado, Guam, Hawaii, Idaho, Kansas, Montana, Nebraska, 
     Nevada, New Mexico, North Dakota, Northern Mariana Islands, 
     Oregon, South Dakota, Texas, Utah, Washington and Wyoming.
                                 ______
                                 
      By Mr. GORTON (for himself and Mr. Lieberman):
  S. 1789. A bill to provide a rotating schedule for regional selection 
of delegates to a national Presidential nominating convention, and for 
other purposes; to the Committee on Rules and Administration.


            the regional presidential selection act of 1999

  Mr. GORTON. Mr. President, the 2000 presidential election has already 
captured the interest of the national media, and once again the media 
struggles to make sense of one of this nation's most complex and 
confusing practices--the presidential nomination system. It is a tenet 
in this country, the greatest democracy in the world, that all citizens 
have an equal voice in choosing who will be the nominees for the final 
race for President of the United States. If there is one thing that has 
remained constant in the American system, it is democratic 
participation in our electoral process--a basic creed that has guided 
us toward wider participation and more direct election of our leaders. 
Ironically, however, every four years we are witnesses to the fact that 
the current system by which this country chooses its presidential 
nominees is not only arbitrary, but in many ways incompatible with the 
notion of equal participation in the nominating process.
  One of the most memorable political cartoons I have had the pleasure 
of reading was drawn during the 1996 election by the cartoonist for a 
local paper in my home state of Washington. This cartoon illustrates 
just how bizarre the current presidential primary process really is. 
The cartoon features Benjamin Franklin, Thomas Jefferson, and Alexander 
Hamilton brainstorming at the Constitutional Convention. Ben Franklin 
turns to his colleagues in jest and rattles off an idea for the 
presidential election system. He reads from his sheet of paper,

       The President shall be chosen from among those persons who 
     can hone complex ideas into simplistic sound bites, defame 
     the character of their opponents, hide their own blemishes 
     from an intrusive swarming press corps and--get this--win the 
     most votes from a tiny number of citizens in a remote corner 
     of New England!

To which Alexander Hamilton replies,

       Very droll Franklin, you're quite the comedian.

  Mr. President, I agree with the cartoonist that what our Founding 
Fathers would have regarded as a ridiculous way to choose a president 
is now reality. It is no joke--this IS how our Presidential nominating 
system works.
  For some time Members of Congress, party activists, the states, and 
academics have all advocated reform of the Presidential nominating 
system in this country. The flaws in our current system are obvious. 
The system is unstructured, confusing, and it gives small states that 
hold early primaries or caucuses a disproportionate amount of influence 
on the final outcome. The lack of uniformity and clear guidelines in 
the system creates a system whereby states compete for an early 
position in the nominating process in order to attract candidates and 
to have some kind of influence in the nominating process. Small to 
middle-sized states that select delegates later in the game risk being 
shut out of the process all together and face having a limited role in 
choosing the Presidential nominee. While the 2000 primary schedule has 
not yet been solidified, the first primary will be held at the earliest 
date in history, and an alarming number of states have moved or are 
considering moving their primary earlier in the year with the hope of 
influencing the nomination process.
  Clearly, the system does not allow for equal participation by all the 
states. It undermines the ideal of equal participation in the electoral 
process

[[Page 26784]]

by giving certain states, year after year, far more leverage than 
others. This unequal balance of power, if you will, compromises the 
integrity of the nominating process.
  At this time, while this country's Presidential nominating system 
again begins to receive national attention, I believe it is fundamental 
that the American people and this Congress begin discussing methods to 
improve the current system and introduce reforms to encourage wider 
participation and more direct nomination of Presidential candidates.
  I am introducing, today, a bill to provide for a rotating regional 
selection system for the nomination of candidates for Presidential 
elections. This bill will establish four regions comprised of 12-13 
states from the same geographic area in the country. All states in a 
region will hold primaries or caucuses on the same date either the 
first Tuesday in March, April, May, or June and no region will vote in 
the same month. The order in which each region votes will rotate with 
each presidential election cycle, allowing each region to have the 
opportunity to be the first, second, third, and last region in the 
country to vote.
  This bill introduces much needed uniformity and structure to a system 
that lacks real composition. It will eliminate the drive by the States 
to gain ``first-in-the-nation'' status and the ability for one or two 
small states to influence the entire nomination process. Under this 
plan each state will have equal opportunity to participate and 
influence the nomination process. This bill will also establish greater 
uniformity and structure by instituting much needed guidelines for 
states, delegate selection, and the role of Federal Election 
Commission.
  Obviously, since we are well into the presidential nomination process 
for the 2000 Presidential race this bill, if enacted, will apply to 
2004 and election years thereafter.
  In summary, Mr. President, I look forward to discussing this proposal 
with my colleagues in the coming weeks and months. I believe it is 
imperative that we do everything we can to improve the practice by 
which we nominate our country's leader.
  Mr. LIEBERMAN. Mr. President. I am happy to join Senator Gorton in 
introducing a bill that we hope will restore some common sense to the 
way the country chooses party nominees for president. As Senator Gorton 
already has explained well, anyone taking a objective look at the 
current primary and caucus system could reach only one conclusion: it 
makes very little sense.
  Our primary system was meant to serve a very important purpose: to 
determine the two--or perhaps three--individuals who will have the 
opportunity to compete for the most powerful office in our nation, and 
perhaps in the world. Given the importance of the process, it is 
critical that it be a fair one, one that tests the mettle and the ideas 
of all of the candidates, one that allows the voters to hear and weigh 
the views of those seeking their parties' nominations, and one that 
gives the primary electorate--the whole, national primary electorate--a 
chance to choose the person they think will best represent them and 
their views in the ultimate contest to determine who will become 
President of the United States.
  But that just isn't happening now. Instead of a system that tests a 
candidate's character and his ability to offer reasoned opinions over 
the long haul, we have an increasingly compressed schedule, one in 
which States whose primaries once were spread out over months now 
compete to see who can hold their contests the earliest, and candidates 
compete to see who can raise more money than everyone else before the 
first primary voters ever step foot into the election booth. That 
``money primary'' has already eliminated four of the Republican 
candidates for President.
  This is no way for the world's greatest democracy to choose its 
leader. As Senator Gorton already has explained, the bill we are 
proposing today offers an alternative system, one that can restore the 
primary season to what it should be: a contest of candidates discussing 
their ideas for America's future. By creating a series of regional 
primaries, we will make it more likely that all areas of the country 
have input into the nominee selection process, and that the candidates 
and their treasuries will not be stretched so thin by primaries all 
over the country on the same day. By spreading out the primaries over a 
four-month period, we have a chance to return to the days when the 
electorate had an opportunity to evaluate the candidates over time, and 
where voters--not just financial contributors--had decided who the 
parties' nominees will be.
  Anyone looking at the current system knows it has to change. I hope 
that we can make that happen before the 2004 campaign begins.
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself and Mrs. Boxer):
  S. 1790. A bill to provide for the issuance of a promotion, research, 
and information order applicable to certain handlers of Hass avocados; 
to the Committee on Agriculture, Nutrition, and Forestry.


    The Hass Avocado Promotion, Research and Information Act of 1999

  Mrs. FEINSTEIN. Mr. President, I rise today to introduce legislation 
that will create a national promotion, research and information program 
for Hass avocados. This industry-financed promotion program will help 
farmers without costing taxpayers any money.
  This legislation provides California's 6,000 Hass avocado growers 
with the ability to achieve together that which would not be possible 
alone--the establishment of a national program to enhance avocado 
marketing and consumption. Pooled industry resources create the 
potential for an impact much greater than what would be possible 
through a solely state-funded program.
  Like producers who have successful national promotion programs, 
including those for beef, cotton, dairy, eggs, pork and soybeans, 
producers of Hass avocados are seeking a new vehicle for expanding the 
consumer market for avocados. A nationwide promotion program would 
provide the avocado industry with the means to market avocados to a 
much wider consumer audience, and build demand at a time when the 
aggregate supply of avocados is rapidly increasing.
  California has a long history of state marketing programs for its 
many diverse agricultural commodities. In fact, the avocado industry 
has long benefitted from an innovative state grower-funded program 
administered by the California Avocado Commission.
  In recent years, however, increasing imports are supplying a larger 
share of the U.S. consumer market. In 1998, for example, import levels 
reached 100 million pounds, or nearly one-third the size of U.S. 
avocado production. If not offset by increased demand, this rapid 
escalation of supply will lead to market instability. Given this 
dynamic, it is only fair that the cost of a national promotion program 
be shared fairly among importers and domestic producers.
  The ``Hass Avocado Promotion, Research and Information Act of 1999'' 
is a self-help national checkoff program that will allow avocado 
growers to fund and operate a coordinated marketing effort to expand 
domestic and foreign markets. The avocado promotion program will be 
operated at no cost to the federal government and will be funded by 
U.S. Hass avocado growers and Hass avocado importers.
  The key elements of this avocado promotion legislation include: (1) 
an 11-member Hass Avocado Board comprised of both domestic producers 
and importers; (2) new programs for the advertising and promotion of 
avocados to develop new markets; (3) research on the sale, 
distribution, use, quality or nutritional value of avocados; (4) an up-
front referendum of qualified producers and importers during a 60-day 
period preceding the effective date of the Secretary of Agriculture's 
implementing order; and (5) an initial assessment rate on Hass avocados 
on 2.5 cent per pound.
  Hass avocados are an integral food source in the United States and 
are a valuable and healthy part of the human diet. Avocados are enjoyed 
by millions of persons every year for a

[[Page 26785]]

multitude of every day and special occasions. The maintenance and 
expansion of existing markets and the development of new markets and 
uses for Hass avocados is needed to preserve and strengthen the 
economic viability of the domestic Hass avocado industry for the 
benefit of producers and the benefit of other persons marketing, 
processing and consuming Hass avocados.
  Agricultural commodity promotion programs are a proven means of 
increasing market share for commodities. The Hass avocado growers in my 
state want to have a program that will help increase their market share 
of the consumer food dollar. California's Hass avocado growers have 
made extensive efforts over the last two years to unify the industry, 
which has resulted in the development of this highly supported national 
promotion program. The 1996-1997 value of domestic Hass avocado 
production was $259 million--a substantial market that could be even 
greater if properly promoted.
  This national avocado promotion program is an opportunity for 
Congress to help an agricultural industry create increased economic 
activity and job opportunities, with no expenditure of tax collars. I 
urge you to support this important legislation.
                                 ______
                                 
      By Mr. CAMPBELL (for himself and Mr. Lieberman):
  S. 1791. A bill to authorize the Librarian of Congress to purchase 
papers of Dr. Martin Luther King, Junior, from Dr. King's estate; to 
the Committee on Rules and Administration.


         the martin luther king, junior papers preservation act

  Mr. CAMPBELL. Mr. President, today I am introducing legislation that 
would authorize the Librarian of Congress to acquire Dr. Martin Luther 
King, Junior's personal papers from his estate. I am pleased to be 
joined in this important initiative by my friend and colleague from 
Connecticut, Senator Joe Lieberman. This bill is a companion to H.R. 
2963, which was introduced by our colleagues in the House of 
Representatives, Congressman James Clyburn and Congressman J.C. Watts.
  Dr. King, as a minister, civil rights leader, prolific writer and 
Nobel Prize winner, was deeply committed to nonviolence in the struggle 
for civil rights. He is quite possibly the most important and 
influential black leader in American history.
  When Dr. King was tragically assassinated on April 4, 1968, he was in 
his prime, after having emerged as a true national hero and a chief 
advocate of peacefully uniting a racially divided nation. He strove to 
build communities of hope and opportunity for all. He recognized that 
all Americans must be free if we are to live in a truly great nation.
  The acquisition of Dr. King's papers would permanently place them in 
the public domain. People from all over the United States, and the 
entire world, would have direct access to these important historic 
documents. Those people studying his life's work would have access to 
his messages of justice and peace, and also to reflect on the civil 
rights struggle. The Library of Congress would be the perfect place for 
these papers which already houses other great works of original 
American freedom fighters such as Frederick Douglass and Thurgood 
Marshall. It is altogether fitting that these documents be together 
under one roof.
  Dr. King was a person who wanted all people to get along regardless 
of their race, color or creed. His call to all of us, that we should 
judge by the content of one's character rather than by the color of 
one's skin, sums up the very core of how we can all peacefully live 
together as well as any other words ever spoken.
  The establishment of Martin Luther King, Jr. Day as a national 
holiday was the result of the work of many determined people who wanted 
to ensure that we and future generations duly honor and remember his 
legacy. In fact, our tradition of honoring Dr. King took another step 
forward when just yesterday the President signed into law S. 322, a 
bill I introduced earlier this year that authorizes the flying of the 
American flag on Martin Luther King Day, in addition to all of our 
nation's national holidays. The bill I introduce today builds on this 
work and will ensure that Dr. King's legacy is preserved for 
generations to come.
  I urge my colleagues to join me in supporting this important bill. I 
ask unanimous consent that the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1791

       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 Dr. Martin Luther King, 
     Junior Papers Preservation Act''.

     SEC. 2. PURCHASE OF MARTIN LUTHER KING PAPERS BY LIBRARIAN OF 
                   CONGRESS.

       (a) In General.--The Librarian of Congress is authorized to 
     acquire or purchase papers of Dr. Martin Luther King, Junior, 
     from Dr. King's estate.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Librarian of Congress such sums as 
     may be necessary to carry out this Act.
                                 ______
                                 
      By Mr. ROTH:
  S. 1792. An original bill to amend the Internal Revenue Code of 1986 
to extend expiring provisions, to fully allow the nonrefundable 
personal credits against regular tax liability, and for other purposes; 
from the Committee on Finance; placed on the calendar.


                    tax relief extension act of 1999

  Mr. ROTH. 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. 1792

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

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This Act may be cited as the ``Tax Relief 
     Extension Act of 1999''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; etc.

         TITLE I--EXTENSION OF EXPIRED AND EXPIRING PROVISIONS

Sec. 101. Extension of minimum tax relief for individuals.
Sec. 102. Extension of exclusion for employer-provided educational 
              assistance.
Sec. 103. Extension of research and experimentation credit and increase 
              in rates for alternative incremental research credit.
Sec. 104. Extension of exceptions under subpart F for active financing 
              income.
Sec. 105. Extension of suspension of net income limitation on 
              percentage depletion from marginal oil and gas wells.
Sec. 106. Extension of work opportunity tax credit and welfare-to-work 
              tax credit.
Sec. 107. Extension and modification of tax credit for electricity 
              produced from certain renewable resources.
Sec. 108. Expansion of brownfields environmental remediation.
Sec. 109. Temporary increase in amount of rum excise tax covered over 
              to Puerto Rico and Virgin Islands.
Sec. 110. Delay requirement that registered motor fuels terminals offer 
              dyed fuel as a condition of registration.
Sec. 111. Extension of production credit for fuel produced by certain 
              gasification facilities.

                  TITLE II--REVENUE OFFSET PROVISIONS

                     Subtitle A--General Provisions

Sec. 201. Modification of individual estimated tax safe harbor.
Sec. 202. Modification of foreign tax credit carryover rules.
Sec. 203. Clarification of tax treatment of income and losses on 
              derivatives.
Sec. 204. Inclusion of certain vaccines against streptococcus 
              pneumoniae to list of taxable vaccines.
Sec. 205. Expansion of reporting of cancellation of indebtedness 
              income.
Sec. 206. Imposition of limitation on prefunding of certain employee 
              benefits.
Sec. 207. Increase in elective withholding rate for nonperiodic 
              distributions from deferred compensation plans.

[[Page 26786]]

Sec. 208. Limitation on conversion of character of income from 
              constructive ownership transactions.
Sec. 209. Treatment of excess pension assets used for retiree health 
              benefits.
Sec. 210. Modification of installment method and repeal of installment 
              method for accrual method taxpayers.
Sec. 211. Limitation on use of nonaccrual experience method of 
              accounting.
Sec. 212. Denial of charitable contribution deduction for transfers 
              associated with split-dollar insurance arrangements.
Sec. 213. Prevention of duplication of loss through assumption of 
              liabilities giving rise to a deduction.
Sec. 214. Consistent treatment and basis allocation rules for transfers 
              of intangibles in certain nonrecognition transactions.
Sec. 215. Distributions by a partnership to a corporate partner of 
              stock in another corporation.
Sec. 216. Prohibited allocations of stock in S corporation ESOP.

    Subtitle B--Provisions Relating to Real Estate Investment Trusts

   Part I--Treatment of Income and Services Provided by Taxable REIT 
                              Subsidiaries

Sec. 221. Modifications to asset diversification test.
Sec. 222. Treatment of income and services provided by taxable REIT 
              subsidiaries.
Sec. 223. Taxable REIT subsidiary.
Sec. 224. Limitation on earnings stripping.
Sec. 225. 100 percent tax on improperly allocated amounts.
Sec. 226. Effective date.

                       Part II--Health Care REITs

Sec. 231. Health care REITs.

      Part III--Conformity With Regulated Investment Company Rules

Sec. 241. Conformity with regulated investment company rules.

 Part IV--Clarification of Exception From Impermissible Tenant Service 
                                 Income

Sec. 251. Clarification of exception for independent operators.

           Part V--Modification of Earnings and Profits Rules

Sec. 261. Modification of earnings and profits rules.

              Part VI--Modification of Estimated Tax Rules

Sec. 271. Modification of estimated tax rules for closely held real 
              estate investment trusts.

       Part VIII--Modification of Treatment of Closely-Held REITs

Sec. 281. Controlled entities ineligible for REIT status.

                      TITLE III--BUDGET PROVISION

Sec. 301. Exclusion from paygo scorecard.

         TITLE I--EXTENSION OF EXPIRED AND EXPIRING PROVISIONS

     SEC. 101. EXTENSION OF MINIMUM TAX RELIEF FOR INDIVIDUALS.

       (a) In General.--The second sentence of section 26(a) 
     (relating to limitations based on amount of tax) is amended 
     by striking ``1998'' and inserting ``calendar year 1998, 
     1999, or 2000''.
       (b) Child Credit.--Section 24(d)(2) (relating to reduction 
     of credit to taxpayer subject to alternative minimum tax) is 
     amended by striking ``December 31, 1998'' and inserting 
     ``December 31, 2000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. 102. EXTENSION OF EXCLUSION FOR EMPLOYER-PROVIDED 
                   EDUCATIONAL ASSISTANCE.

       (a) In General.--Section 127(d) (relating to termination) 
     is amended by striking ``May 31, 2000'' and inserting 
     ``December 31, 2000''.
       (b) Repeal of Limitation on Graduate Education.--
       (1) In general.--The last sentence of section 127(c)(1) 
     (defining educational assistance) is amended by striking ``, 
     and such term also does not include any payment for, or the 
     provision of any benefits with respect to, any graduate level 
     course of a kind normally taken by an individual pursuing a 
     program leading to a law, business, medical, or other 
     advanced academic or professional degree''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply with respect to expenses relating to courses 
     beginning after December 31, 1999.

     SEC. 103. EXTENSION OF RESEARCH AND EXPERIMENTATION CREDIT 
                   AND INCREASE IN RATES FOR ALTERNATIVE 
                   INCREMENTAL RESEARCH CREDIT.

       (a) Extension.--
       (1) In general.--Section 41(h) (relating to termination) is 
     amended--
       (A) by striking ``June 30, 1999'' and inserting ``December 
     31, 2000'',
       (B) by striking ``36-month'' and inserting ``54-month'', 
     and
       (C) by striking ``36 months'' and inserting ``54 months''.
       (2) Conforming amendment.--Section 45C(b)(1)(D) is amended 
     by striking ``June 30, 1999'' and inserting ``December 31, 
     2000''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to amounts paid or incurred after June 30, 1999.
       (b) Increase in Percentages Under Alternative Incremental 
     Credit.--
       (1) In general.--Subparagraph (A) of section 41(c)(4) is 
     amended--
       (A) by striking ``1.65 percent'' and inserting ``2.65 
     percent'',
       (B) by striking ``2.2 percent'' and inserting ``3.2 
     percent'', and
       (C) by striking ``2.75 percent'' and inserting ``3.75 
     percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after June 30, 1999.
       (c) Extension of Research Credit to Research in Puerto Rico 
     and the possessions of the United States.--
       (1) In general.--Section 41(d)(4)(F) (relating to foreign 
     research) is amended by inserting ``, the Commonwealth of 
     Puerto Rico, or any possession of the United States'' after 
     ``United States''.
       (2) Denial of double benefit.--Section 280C(c)(1) is 
     amended by inserting ``or credit'' after ``deduction'' each 
     place it appears.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to amounts paid or incurred after June 30, 1999.

     SEC. 104. EXTENSION OF EXCEPTIONS UNDER SUBPART F FOR ACTIVE 
                   FINANCING INCOME.

       (a) In General.--Sections 953(e)(10) and 954(h)(9) 
     (relating to application) are each amended--
       (1) by striking ``the first taxable year'' and inserting 
     ``taxable years'',
       (2) by striking ``January 1, 2000'' and inserting ``January 
     1, 2001'', and
       (3) by striking ``within which such'' and inserting 
     ``within which any such''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 105. EXTENSION OF SUSPENSION OF NET INCOME LIMITATION ON 
                   PERCENTAGE DEPLETION FROM MARGINAL OIL AND GAS 
                   WELLS.

       (a) In General.--Subparagraph (H) of section 613A(c)(6) 
     (relating to temporary suspension of taxable limit with 
     respect to marginal production) is amended by striking 
     ``January 1, 2000'' and inserting ``January 1, 2001''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 106. EXTENSION OF WORK OPPORTUNITY TAX CREDIT AND 
                   WELFARE-TO-WORK TAX CREDIT.

       (a) Temporary Extension.--Sections 51(c)(4)(B) and 51A(f ) 
     (relating to termination) are each amended by striking ``June 
     30, 1999'' and inserting ``December 31, 2000''.
       (b) Clarification of First Year of Employment.--Paragraph 
     (2) of section 51(i) is amended by striking ``during which he 
     was not a member of a targeted group''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after June 30, 1999.

     SEC. 107. EXTENSION AND MODIFICATION OF TAX CREDIT FOR 
                   ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE 
                   RESOURCES.

       (a) Extension and Modification of Placed-in-Service 
     Rules.--Paragraph (3) of section 45(c) is amended to read as 
     follows:
       ``(3) Qualified facility.--
       ``(A) Wind facility.--In the case of a facility using wind 
     to produce electricity, the term `qualified facility' means 
     any facility owned by the taxpayer which is originally placed 
     in service after December 31, 1993, and before January 1, 
     2001.
       ``(B) Closed-loop biomass facility.--In the case of a 
     facility using closed-loop biomass to produce electricity, 
     the term `qualified facility' means any facility owned by the 
     taxpayer which is--
       ``(i) originally placed in service after December 31, 1992, 
     and before January 1, 2001, or
       ``(ii) originally placed in service before December 31, 
     1992, and modified to use closed-loop biomass to co-fire with 
     coal after such date and before January 1, 2001.
       ``(C) Biomass facility.--In the case of a facility using 
     biomass (other than closed-loop biomass) to produce 
     electricity, the term `qualified facility' means any facility 
     owned by the taxpayer which is originally placed in service 
     before January 1, 2001.
       ``(D) Landfill gas or poultry waste facility.--
       ``(i) In general.--In the case of a facility using landfill 
     gas or poultry waste to produce electricity, the term 
     `qualified facility' means any facility of the taxpayer which 
     is originally placed in service after December 31, 1999, and 
     before January 1, 2001.
       ``(ii) Landfill gas.--In the case of a facility using 
     landfill gas, such term shall include equipment and housing 
     (not including wells and related systems required to collect 
     and transmit gas to the production facility) required to 
     generate electricity which are owned by the taxpayer and so 
     placed in service.
       ``(E) Special rule.--In the case of a qualified facility 
     described in subparagraph (B) or (C) using coal to co-fire 
     with biomass, the 10-year period referred to in subsection 
     (a) shall be treated as beginning no earlier than January 1, 
     2000.''
       (b) Expansion of Qualified Energy Resources.--
       (1) In general.--Section 45(c)(1) (defining qualified 
     energy resources) is amended by

[[Page 26787]]

     striking ``and'' at the end of subparagraph (A), by striking 
     the period at the end of subparagraph (B) and inserting a 
     comma, and by adding at the end the following new 
     subparagraphs:
       ``(C) biomass (other than closed-loop biomass),
       ``(D) landfill gas, and
       ``(E) poultry waste.''
       (2) Definitions.--Section 45(c), as amended by subsection 
     (a), is amended by redesignating paragraph (3) as paragraph 
     (6) and inserting after paragraph (2) the following new 
     paragraphs:
       ``(3) Biomass.--The term `biomass' means any solid, 
     nonhazardous, cellulosic waste material which is segregated 
     from other waste materials and which is derived from--
       ``(A) any of the following forest-related resources: mill 
     residues, precommercial thinnings, slash, and brush, but not 
     including old-growth timber,
       ``(B) urban sources, including waste pallets, crates, and 
     dunnage, manufacturing and construction wood wastes, and 
     landscape or right-of-way tree trimmings, but not including 
     unsegregated municipal solid waste (garbage) or paper that is 
     commonly recycled, or
       ``(C) agriculture sources, including orchard tree crops, 
     vineyard, grain, legumes, sugar, and other crop by-products 
     or residues.
       ``(4) Landfill gas.--The term `landfill gas' means gas from 
     the decomposition of any household solid waste, commercial 
     solid waste, and industrial solid waste disposed of in a 
     municipal solid waste landfill unit (as such terms are 
     defined in regulations promulgated under subtitle D of the 
     Solid Waste Disposal Act (42 U.S.C. 6941 et seq.)).
       ``(5) Poultry waste.--The term `poultry waste' means 
     poultry manure and litter, including wood shavings, straw, 
     rice hulls, and other bedding material for the disposition of 
     manure.''
       (c) Special Rules.--Section 45(d) (relating to definitions 
     and special rules) is amended by adding at the end the 
     following new paragraphs:
       ``(6) Credit eligibility in the case of government-owned 
     facilities using poultry waste.--In the case of a facility 
     using poultry waste to produce electricity and owned by a 
     governmental unit, the person eligible for the credit under 
     subsection (a) is the lessor or the operator of such 
     facility.
       ``(7) Proportional credit for facility using coal to co-
     fire with biomass.--In the case of a qualified facility 
     described in subparagraph (B) or (C) of subsection (c)(6) 
     using coal to co-fire with biomass, the amount of the credit 
     determined under subsection (a) for the taxable year shall be 
     reduced by the percentage coal comprises (on a Btu basis) of 
     the average fuel input of the facility for the taxable year.
       ``(8) Denial of double benefit.--No credit shall be allowed 
     under this section with respect to a facility for any taxable 
     year if the credit under section 29 is allowed in such year 
     or has been allowed in any preceding taxable year with 
     respect to any fuel produced from such facility.''
       (d) Conforming Amendment.--Section 29(d) (relating to other 
     definitions and special rules) is amended by adding at the 
     end the following new paragraph:
       ``(9) Denial of double benefit.--No credit shall be allowed 
     under this section with respect to any fuel produced from a 
     facility for any taxable year if the credit under section 45 
     is allowed in such year or has been allowed in any preceding 
     taxable year with respect to such facility.''
       (e) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 108. EXPANSION OF BROWNFIELDS ENVIRONMENTAL REMEDIATION.

       (a) In General.--Section 198(c) is amended to read as 
     follows:
       ``(c) Qualified Contaminated Site.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified contaminated site' 
     means any area--
       ``(A) which is held by the taxpayer for use in a trade or 
     business or for the production of income, or which is 
     property described in section 1221(1) in the hands of the 
     taxpayer, and
       ``(B) at or on which there has been a release (or threat of 
     release) or disposal of any hazardous substance.
       ``(2) National priorities listed sites not included.--Such 
     term shall not include any site which is on, or proposed for, 
     the national priorities list under section 105(a)(8)(B) of 
     the Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (as in effect on the date of the 
     enactment of this section).
       ``(3) Taxpayer must receive statement from state 
     environmental agency.--An area shall be treated as a 
     qualified contaminated site with respect to expenditures paid 
     or incurred during any taxable year only if the taxpayer 
     receives a statement from the appropriate environmental 
     agency of the State in which such area is located that such 
     area meets the requirement of paragraph (1)(B).
       ``(4) Appropriate state agency.--For purposes of paragraph 
     (3), the chief executive officer of each State may, in 
     consultation with the Administrator of the Environmental 
     Protection Agency, designate the appropriate State 
     environmental agency within 60 days of the date of the 
     enactment of this section. If the chief executive officer of 
     a State has not designated an appropriate State environmental 
     agency within such 60-day period, the appropriate 
     environmental agency for such State shall be designated by 
     the Administrator of the Environmental Protection Agency.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to expenditures paid or incurred after December 
     31, 1999.

     SEC. 109. TEMPORARY INCREASE IN AMOUNT OF RUM EXCISE TAX 
                   COVERED OVER TO PUERTO RICO AND VIRGIN ISLANDS.

       (a) In General.--Section 7652(f)(1) (relating to limitation 
     on cover over of tax on distilled spirits) is amended to read 
     as follows:
       ``(1) $10.50 ($13.50 in the case of distilled spirits 
     brought into the United States after June 30, 1999, and 
     before January 1, 2001), or''.
       (b) Effective Date.--
       (1) In general.--The amendment made by this section shall 
     take effect on July 1, 1999.
       (2) Special rule.--
       (A) In general.--For the period beginning after June 30, 
     1999, and before January 1, 2001, the treasury of Puerto Rico 
     shall make a Conservation Trust Fund transfer within 30 days 
     from the date of each cover over payment made during such 
     period to such treasury under section 7652(e) of the Internal 
     Revenue Code of 1986.
       (B) Conservation trust fund transfer.--
       (i) In general.--For purposes of this paragraph, the term 
     ``Conservation Trust Fund transfer'' means a transfer to the 
     Puerto Rico Conservation Trust Fund of an amount equal to 50 
     cents per proof gallon of the taxes imposed under section 
     5001 or section 7652 of such Code on distilled spirits that 
     are covered over to the treasury of Puerto Rico under section 
     7652(e) of such Code.
       (ii) Treatment of transfer.--Each Conservation Trust Fund 
     transfer shall be treated as principal for an endowment, the 
     income from which to be available for use by the Puerto Rico 
     Conservation Trust Fund for the purposes for which the Trust 
     Fund was established.
       (iii) Result of nontransfer.--

       (I) In general.--Upon notification by the Secretary of the 
     Interior that a Conservation Trust Fund transfer has not been 
     made by the treasury of Puerto Rico during the period 
     described in subparagraph (A), the Secretary of the Treasury 
     shall, except as provided in subclause (II), deduct and 
     withhold from the next cover over payment to be made to the 
     treasury of Puerto Rico under section 7652(e) of such Code an 
     amount equal to the appropriate Conservation Trust Fund 
     transfer and interest thereon at the underpayment rate 
     established under section 6621 of such Code as of the due 
     date of such transfer. The Secretary of the Treasury shall 
     transfer such amount deducted and withheld, and the interest 
     thereon, directly to the Puerto Rico Conservation Trust Fund.
       (II) Good cause exception.--If the Secretary of the 
     Interior finds, after consultation with the Governor of 
     Puerto Rico, that the failure by the treasury of Puerto Rico 
     to make a required transfer was for good cause, and notifies 
     the Secretary of the Treasury of the finding of such good 
     cause before the due date of the next cover over payment 
     following the notification of nontransfer, then the Secretary 
     of the Treasury shall not deduct the amount of such 
     nontransfer from any cover over payment.

       (C) Puerto rico conservation trust fund.--For purposes of 
     this paragraph, the term ``Puerto Rico Conservation Trust 
     Fund'' means the fund established pursuant to a Memorandum of 
     Understanding between the United States Department of the 
     Interior and the Commonwealth of Puerto Rico, dated December 
     24, 1968.

     SEC. 110. DELAY REQUIREMENT THAT REGISTERED MOTOR FUELS 
                   TERMINALS OFFER DYED FUEL AS A CONDITION OF 
                   REGISTRATION.

       Subsection (f)(2) of section 1032 of the Taxpayer Relief 
     Act of 1997, as amended by section 9008 of the Transportation 
     Equity Act for the 21st Century, is amended by striking 
     ``July 1, 2000'' and inserting ``January 1, 2001''.

     SEC. 111. EXTENSION OF PRODUCTION CREDIT FOR FUEL PRODUCED BY 
                   CERTAIN GASIFICATION FACILITIES.

       (a) In General.--Section 29(g)(1)(A) (relating to extension 
     for certain facilities) is amended by striking ``July 1, 
     1998'' and inserting ``July 1, 2000''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to fuels produced on and after July 1, 1998.
       (c) Special Rule.--
       (1) In general.--For purposes of the Internal Revenue Code 
     of 1986, the credit determined under section 29 of such Code 
     which is otherwise allowable under such Code by reason of the 
     amendment made by subsection (a) and which is attributable to 
     the suspension period shall not be taken into account prior 
     to October 1, 2004. On or after such date, such credit may be 
     taken into account through the filing of an amended return, 
     an application for expedited refund, an adjustment of 
     estimated taxes, or other means allowed by such Code. 
     Interest shall not be allowed under section 6511(a) of such 
     Code on any overpayment attributable to such credit

[[Page 26788]]

     for any period before the 45th day after the credit is taken 
     into account under the preceding sentence.
       (2) Suspension period.--For purposes of this subsection, 
     the suspension period is the period beginning on July 1, 
     1998, and ending on September 30, 2004.
       (3) Expedited refunds.--
       (A) In general.--If there is an overpayment of tax with 
     respect to a taxable year by reason of paragraph (1), the 
     taxpayer may file an application for a tentative refund of 
     such overpayment. Such application shall be in such manner 
     and form, and contain such information, as the Secretary may 
     prescribe.
       (B) Deadline for applications.--Subparagraph (A) shall 
     apply only to applications filed before October 1, 2005.
       (C) Allowance of adjustments.--Not later than 90 days after 
     the date on which an application is filed under this 
     paragraph, the Secretary shall--
       (i) review the application,
       (ii) determine the amount of the overpayment, and
       (iii) apply, credit, or refund such overpayment,

     in a manner similar to the manner provided in section 6411(b) 
     of such Code.
       (D) Consolidated returns.--The provisions of section 
     6411(c) of such Code shall apply to an adjustment under this 
     paragraph in such manner as the Secretary may provide.
       (4) Credit attributable to suspension period.--For purposes 
     of this subsection, in the case of a taxable year which 
     includes a portion of the suspension period, the amount of 
     credit determined under section 29 of such Code for such 
     taxable year which is attributable to such period is the 
     amount which bears the same ratio to the amount of credit 
     determined under such section 29 for such taxable year as the 
     number of months in the suspension period which are during 
     such taxable year bears to the number of months in such 
     taxable year.
       (5) Waiver of statute of limitations.--If, on October 1, 
     2004 (or at any time within the 1-year period beginning on 
     such date) credit or refund of any overpayment of tax 
     resulting from the provisions of this subsection is barred by 
     any law or rule of law, credit or refund of such overpayment 
     shall, nevertheless, be allowed or made if claim therefore is 
     filed before the date 1 year after October 1, 2004.
       (6) Secretary.--For purposes of this subsection, the term 
     ``Secretary'' means the Secretary of the Treasury (or such 
     Secretary's delegate).

                  TITLE II--REVENUE OFFSET PROVISIONS

                     Subtitle A--General Provisions

     SEC. 201. MODIFICATION OF INDIVIDUAL ESTIMATED TAX SAFE 
                   HARBOR.

         (a) In General.--The table contained in clause (i) of 
     section 6654(d)(1)(C) (relating to limitation on use of 
     preceding year's tax) is amended by striking all matter 
     beginning with the item relating to 1999 or 2000 and 
     inserting the following new items:

  ``1999.....................................................110.5 ....

  2000.........................................................106 ....

  2001.........................................................112 ....

  2002.........................................................110 ....

  2003.........................................................112 ....

  2004 or thereafter.........................................110''.....

         (b) Effective Date.--The amendment made by this section 
     shall apply with respect to any installment payment for 
     taxable years beginning after December 31, 1999.

     SEC. 202. MODIFICATION OF FOREIGN TAX CREDIT CARRYOVER RULES.

       (a) In General.--Section 904(c) (relating to limitation on 
     credit) is amended--
       (1) by striking ``in the second preceding taxable year,'', 
     and
       (2) by striking ``or fifth'' and inserting ``fifth, sixth, 
     or seventh''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to credits arising in taxable years beginning 
     after December 31, 1999.

     SEC. 203. CLARIFICATION OF TAX TREATMENT OF INCOME AND LOSS 
                   ON DERIVATIVES.

       (a) In General.--Section 1221 (defining capital assets) is 
     amended--
       (1) by striking ``For purposes'' and inserting the 
     following:
       ``(a) In General.--For purposes'',
       (2) by striking the period at the end of paragraph (5) and 
     inserting a semicolon, and
       (3) by adding at the end the following:
       ``(6) any commodities derivative financial instrument held 
     by a commodities derivatives dealer, unless--
       ``(A) it is established to the satisfaction of the 
     Secretary that such instrument has no connection to the 
     activities of such dealer as a dealer, and
       ``(B) such instrument is clearly identified in such 
     dealer's records as being described in subparagraph (A) 
     before the close of the day on which it was acquired, 
     originated, or entered into (or such other time as the 
     Secretary may by regulations prescribe);
       ``(7) any hedging transaction which is clearly identified 
     as such before the close of the day on which it was acquired, 
     originated, or entered into (or such other time as the 
     Secretary may by regulations prescribe); or
       ``(8) supplies of a type regularly used or consumed by the 
     taxpayer in the ordinary course of a trade or business of the 
     taxpayer.
       ``(b) Definitions and Special Rules.--
       ``(1) Commodities derivative financial instruments.--For 
     purposes of subsection (a)(6)--
       ``(A) Commodities derivatives dealer.--The term 
     `commodities derivatives dealer' means a person which 
     regularly offers to enter into, assume, offset, assign, or 
     terminate positions in commodities derivative financial 
     instruments with customers in the ordinary course of a trade 
     or business.
       ``(B) Commodities derivative financial instrument.--
       ``(i) In general.--The term `commodities derivative 
     financial instrument' means any contract or financial 
     instrument with respect to commodities (other than a share of 
     stock in a corporation, a beneficial interest in a 
     partnership or trust, a note, bond, debenture, or other 
     evidence of indebtedness, or a section 1256 contract (as 
     defined in section 1256(b)), the value or settlement price of 
     which is calculated by or determined by reference to a 
     specified index.
       ``(ii) Specified index.--The term `specified index' means 
     any one or more or any combination of--

       ``(I) a fixed rate, price, or amount, or
       ``(II) a variable rate, price, or amount,

     which is based on any current, objectively determinable 
     financial or economic information with respect to commodities 
     which is not within the control of any of the parties to the 
     contract or instrument and is not unique to any of the 
     parties' circumstances.
       ``(2) Hedging transaction.--
       ``(A) In general.--For purposes of this section, the term 
     `hedging transaction' means any transaction entered into by 
     the taxpayer in the normal course of the taxpayer's trade or 
     business primarily--
       ``(i) to manage risk of price changes or currency 
     fluctuations with respect to ordinary property which is held 
     or to be held by the taxpayer,
       ``(ii) to manage risk of interest rate or price changes or 
     currency fluctuations with respect to borrowings made or to 
     be made, or ordinary obligations incurred or to be incurred, 
     by the taxpayer, or
       ``(iii) to manage such other risks as the Secretary may 
     prescribe in regulations.
       ``(B) Treatment of nonidentification or improper 
     identification of hedging transactions.--Notwithstanding 
     subsection (a)(7), the Secretary shall prescribe regulations 
     to properly characterize any income, gain, expense, or loss 
     arising from a transaction--
       ``(i) which is a hedging transaction but which was not 
     identified as such in accordance with subsection (a)(7), or
       ``(ii) which was so identified but is not a hedging 
     transaction.
       ``(3) Regulations.--The Secretary shall prescribe such 
     regulations as are appropriate to carry out the purposes of 
     paragraph (6) and (7) of subsection (a) in the case of 
     transactions involving related parties.''.
       (b) Management of Risk.--
       (1) Section 475(c)(3) is amended by striking ``reduces'' 
     and inserting ``manages''.
       (2) Section 871(h)(4)(C)(iv) is amended by striking ``to 
     reduce'' and inserting ``to manage''.
       (3) Clauses (i) and (ii) of section 988(d)(2)(A) are each 
     amended by striking ``to reduce'' and inserting ``to 
     manage''.
       (4) Paragraph (2) of section 1256(e) is amended to read as 
     follows:
       ``(2) Definition of hedging transaction.--For purposes of 
     this subsection, the term `hedging transaction' means any 
     hedging transaction (as defined in section 1221(b)(2)(A)) if, 
     before the close of the day on which such transaction was 
     entered into (or such earlier time as the Secretary may 
     prescribe by regulations), the taxpayer clearly identifies 
     such transaction as being a hedging transaction.''.
       (c) Conforming Amendments.--
       (1) Each of the following sections are amended by striking 
     ``section 1221'' and inserting ``section 1221(a)'':
       (A) Section 170(e)(3)(A).
       (B) Section 170(e)(4)(B).
       (C) Section 367(a)(3)(B)(i).
       (D) Section 818(c)(3).
       (E) Section 865(i)(1).
       (F) Section 1092(a)(3)(B)(ii)(II).
       (G) Subparagraphs (C) and (D) of section 1231(b)(1).
       (H) Section 1234(a)(3)(A).
       (2) Each of the following sections are amended by striking 
     ``section 1221(1)'' and inserting ``section 1221(a)(1)'':
       (A) Section 198(c)(1)(A)(i).
       (B) Section 263A(b)(2)(A).
       (C) Clauses (i) and (iii) of section 267(f )(3)(B).
       (D) Section 341(d)(3).
       (E) Section 543(a)(1)(D)(i).
       (F) Section 751(d)(1).
       (G) Section 775(c).
       (H) Section 856(c)(2)(D).
       (I) Section 856(c)(3)(C).
       (J) Section 856(e)(1).
       (K) Section 856( j)(2)(B).
       (L) Section 857(b)(4)(B)(i).
       (M) Section 857(b)(6)(B)(iii).
       (N) Section 864(c)(4)(B)(iii).
       (O) Section 864(d)(3)(A).
       (P) Section 864(d)(6)(A).
       (Q) Section 954(c)(1)(B)(iii).
       (R) Section 995(b)(1)(C).
       (S) Section 1017(b)(3)(E)(i).

[[Page 26789]]

       (T) Section 1362(d)(3)(C)(ii).
       (U) Section 4662(c)(2)(C).
       (V) Section 7704(c)(3).
       (W) Section 7704(d)(1)(D).
       (X) Section 7704(d)(1)(G).
       (Y) Section 7704(d)(5).
       (3) Section 818(b)(2) is amended by striking ``section 
     1221(2)'' and inserting ``section 1221(a)(2)''.
       (4) Section 1397B(e)(2) is amended by striking ``section 
     1221(4)'' and inserting ``section 1221(a)(4)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to any instrument held, acquired, or entered 
     into, any transaction entered into, and supplies held or 
     acquired on or after the date of the enactment of this Act.

     SEC. 204. INCLUSION OF CERTAIN VACCINES AGAINST STREPTOCOCCUS 
                   PNEUMONIAE TO LIST OF TAXABLE VACCINES.

       (a) Inclusion of Vaccines.--
       (1) In general.--Section 4132(a)(1) (defining taxable 
     vaccine) is amended by adding at the end the following new 
     subparagraph:
       ``(L) Any conjugate vaccine against streptococcus 
     pneumoniae.''
       (2) Effective date.--
       (A) Sales.--The amendment made by this subsection shall 
     apply to vaccine sales beginning on the day after the date on 
     which the Centers for Disease Control makes a final 
     recommendation for routine administration to children of any 
     conjugate vaccine against streptococcus pneumoniae, but shall 
     not take effect if subsection (b) does not take effect.
       (B) Deliveries.--For purposes of subparagraph (A), in the 
     case of sales on or before the date described in such 
     subparagraph for which delivery is made after such date, the 
     delivery date shall be considered the sale date.
       (b) Vaccine Tax and Trust Fund Amendments.--
       (1) Sections 1503 and 1504 of the Vaccine Injury 
     Compensation Program Modification Act (and the amendments 
     made by such sections) are hereby repealed.
       (2) Subparagraph (A) of section 9510(c)(1) is amended by 
     striking ``August 5, 1997'' and inserting ``October 21, 
     1998''.
       (3) The amendments made by this subsection shall take 
     effect as if included in the provisions of the Omnibus 
     Consolidated and Emergency Supplemental Appropriations Act, 
     1999 to which they relate.
       (c) Report.--Not later than January 31, 2000, the 
     Comptroller General of the United States shall prepare and 
     submit a report to the Committee on Ways and Means of the 
     House of Representatives and the Committee on Finance of the 
     Senate on the operation of the Vaccine Injury Compensation 
     Trust Fund and on the adequacy of such Fund to meet future 
     claims made under the Vaccine Injury Compensation Program.

     SEC. 205. EXPANSION OF REPORTING OF CANCELLATION OF 
                   INDEBTEDNESS INCOME.

       (a) In General.--Paragraph (2) of section 6050P(c) 
     (relating to definitions and special rules) is amended by 
     striking ``and'' at the end of subparagraph (B), by striking 
     the period at the end of subparagraph (C) and inserting ``, 
     and'', and by inserting after subparagraph (C) the following 
     new subparagraph:
       ``(D) any organization a significant trade or business of 
     which is the lending of money.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to discharges of indebtedness after December 31, 
     1999.

     SEC. 206. IMPOSITION OF LIMITATION ON PREFUNDING OF CERTAIN 
                   EMPLOYEE BENEFITS.

       (a) Benefits to Which Exception Applies.--Section 
     419A(f)(6)(A) (relating to exception for 10 or more employer 
     plans) is amended to read as follows:
       ``(A) In general.--This subpart shall not apply to a 
     welfare benefit fund which is part of a 10 or more employer 
     plan if the only benefits provided through the fund are 1 or 
     more of the following:
       ``(i) Medical benefits.
       ``(ii) Disability benefits.
       ``(iii) Group term life insurance benefits which do not 
     provide directly or indirectly for any cash surrender value 
     or other money that can be paid, assigned, borrowed, or 
     pledged for collateral for a loan.

     The preceding sentence shall not apply to any plan which 
     maintains experience-rating arrangements with respect to 
     individual employers.''
       (b) Limitation on Use of Amounts for Other Purposes.--
     Section 4976(b) (defining disqualified benefit) is amended by 
     adding at the end the following new paragraph:
       ``(5) Special rule for 10 or more employer plans exempted 
     from prefunding limits.--For purposes of paragraph (1)(C), 
     if--
       ``(A) subpart D of part I of subchapter D of chapter 1 does 
     not apply by reason of section 419A(f)(6) to contributions to 
     provide 1 or more welfare benefits through a welfare benefit 
     fund under a 10 or more employer plan, and
       ``(B) any portion of the welfare benefit fund attributable 
     to such contributions is used for a purpose other than that 
     for which the contributions were made,

     then such portion shall be treated as reverting to the 
     benefit of the employers maintaining the fund.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions paid or accrued after June 9, 
     1999, in taxable years ending after such date.

     SEC. 207. INCREASE IN ELECTIVE WITHHOLDING RATE FOR 
                   NONPERIODIC DISTRIBUTIONS FROM DEFERRED 
                   COMPENSATION PLANS.

       (a) In General.--Section 3405(b)(1) (relating to 
     withholding) is amended by striking ``10 percent'' and 
     inserting ``15 percent''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to distributions after December 31, 2000.

     SEC. 208. LIMITATION ON CONVERSION OF CHARACTER OF INCOME 
                   FROM CONSTRUCTIVE OWNERSHIP TRANSACTIONS.

       (a) In General.--Part IV of subchapter P of chapter 1 
     (relating to special rules for determining capital gains and 
     losses) is amended by inserting after section 1259 the 
     following new section:

     ``SEC. 1260. GAINS FROM CONSTRUCTIVE OWNERSHIP TRANSACTIONS.

       ``(a) In General.--If the taxpayer has gain from a 
     constructive ownership transaction with respect to any 
     financial asset and such gain would (without regard to this 
     section) be treated as a long-term capital gain--
       ``(1) such gain shall be treated as ordinary income to the 
     extent that such gain exceeds the net underlying long-term 
     capital gain, and
       ``(2) to the extent such gain is treated as a long-term 
     capital gain after the application of paragraph (1), the 
     determination of the capital gain rate (or rates) applicable 
     to such gain under section 1(h) shall be determined on the 
     basis of the respective rate (or rates) that would have been 
     applicable to the net underlying long-term capital gain.
       ``(b) Interest Charge on Deferral of Gain Recognition.--
       ``(1) In general.--If any gain is treated as ordinary 
     income for any taxable year by reason of subsection (a)(1), 
     the tax imposed by this chapter for such taxable year shall 
     be increased by the amount of interest determined under 
     paragraph (2) with respect to each prior taxable year during 
     any portion of which the constructive ownership transaction 
     was open. Any amount payable under this paragraph shall be 
     taken into account in computing the amount of any deduction 
     allowable to the taxpayer for interest paid or accrued during 
     such taxable year.
       ``(2) Amount of interest.--The amount of interest 
     determined under this paragraph with respect to a prior 
     taxable year is the amount of interest which would have been 
     imposed under section 6601 on the underpayment of tax for 
     such year which would have resulted if the gain (which is 
     treated as ordinary income by reason of subsection (a)(1)) 
     had been included in gross income in the taxable years in 
     which it accrued (determined by treating the income as 
     accruing at a constant rate equal to the applicable Federal 
     rate as in effect on the day the transaction closed). The 
     period during which such interest shall accrue shall end on 
     the due date (without extensions) for the return of tax 
     imposed by this chapter for the taxable year in which such 
     transaction closed.
       ``(3) Applicable federal rate.--For purposes of paragraph 
     (2), the applicable Federal rate is the applicable Federal 
     rate determined under 1274(d) (compounded semiannually) which 
     would apply to a debt instrument with a term equal to the 
     period the transaction was open.
       ``(4) No credits against increase in tax.--Any increase in 
     tax under paragraph (1) shall not be treated as tax imposed 
     by this chapter for purposes of determining--
       ``(A) the amount of any credit allowable under this 
     chapter, or
       ``(B) the amount of the tax imposed by section 55.
       ``(c) Financial Asset.--For purposes of this section--
       ``(1) In general.--The term `financial asset' means--
       ``(A) any equity interest in any pass-thru entity, and
       ``(B) to the extent provided in regulations--
       ``(i) any debt instrument, and
       ``(ii) any stock in a corporation which is not a pass-thru 
     entity.
       ``(2) Pass-thru entity.--For purposes of paragraph (1), the 
     term `pass-thru entity' means--
       ``(A) a regulated investment company,
       ``(B) a real estate investment trust,
       ``(C) an S corporation,
       ``(D) a partnership,
       ``(E) a trust,
       ``(F) a common trust fund,
       ``(G) a passive foreign investment company (as defined in 
     section 1297 without regard to subsection (e) thereof),
       ``(H) a foreign personal holding company,
       ``(I) a foreign investment company (as defined in section 
     1246(b)), and
       ``(J) a REMIC.
       ``(d) Constructive Ownership Transaction.--For purposes of 
     this section--
       ``(1) In general.--The taxpayer shall be treated as having 
     entered into a constructive ownership transaction with 
     respect to any financial asset if the taxpayer--

[[Page 26790]]

       ``(A) holds a long position under a notional principal 
     contract with respect to the financial asset,
       ``(B) enters into a forward or futures contract to acquire 
     the financial asset,
       ``(C) is the holder of a call option, and is the grantor of 
     a put option, with respect to the financial asset and such 
     options have substantially equal strike prices and 
     substantially contemporaneous maturity dates, or
       ``(D) to the extent provided in regulations prescribed by 
     the Secretary, enters into one or more other transactions (or 
     acquires one or more positions) that have substantially the 
     same effect as a transaction described in any of the 
     preceding subparagraphs.
       ``(2) Exception for positions which are marked to market.--
     This section shall not apply to any constructive ownership 
     transaction if all of the positions which are part of such 
     transaction are marked to market under any provision of this 
     title or the regulations thereunder.
       ``(3) Long position under notional principal contract.--A 
     person shall be treated as holding a long position under a 
     notional principal contract with respect to any financial 
     asset if such person--
       ``(A) has the right to be paid (or receive credit for) all 
     or substantially all of the investment yield (including 
     appreciation) on such financial asset for a specified period, 
     and
       ``(B) is obligated to reimburse (or provide credit for) all 
     or substantially all of any decline in the value of such 
     financial asset.
       ``(4) Forward contract.--The term `forward contract' means 
     any contract to acquire in the future (or provide or receive 
     credit for the future value of) any financial asset.
       ``(e) Net Underlying Long-Term Capital Gain.--For purposes 
     of this section, in the case of any constructive ownership 
     transaction with respect to any financial asset, the term 
     `net underlying long-term capital gain' means the aggregate 
     net capital gain that the taxpayer would have had if--
       ``(1) the financial asset had been acquired for fair market 
     value on the date such transaction was opened and sold for 
     fair market value on the date such transaction was closed, 
     and
       ``(2) only gains and losses that would have resulted from 
     the deemed ownership under paragraph (1) were taken into 
     account.

     The amount of the net underlying long-term capital gain with 
     respect to any financial asset shall be treated as zero 
     unless the amount thereof is established by clear and 
     convincing evidence.
       ``(f ) Special Rule Where Taxpayer Takes Delivery.--Except 
     as provided in regulations prescribed by the Secretary, if a 
     constructive ownership transaction is closed by reason of 
     taking delivery, this section shall be applied as if the 
     taxpayer had sold all the contracts, options, or other 
     positions which are part of such transaction for fair market 
     value on the closing date. The amount of gain recognized 
     under the preceding sentence shall not exceed the amount of 
     gain treated as ordinary income under subsection (a). Proper 
     adjustments shall be made in the amount of any gain or loss 
     subsequently realized for gain recognized and treated as 
     ordinary income under this subsection.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section, including regulations--
       ``(1) to permit taxpayers to mark to market constructive 
     ownership transactions in lieu of applying this section, and
       ``(2) to exclude certain forward contracts which do not 
     convey substantially all of the economic return with respect 
     to a financial asset.''
       (b) Clerical Amendment.--The table of sections for part IV 
     of subchapter P of chapter 1 is amended by adding at the end 
     the following new item:

``Sec. 1260. Gains from constructive ownership transactions.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after July 11, 1999.

     SEC. 209. TREATMENT OF EXCESS PENSION ASSETS USED FOR RETIREE 
                   HEALTH BENEFITS.

       (a) Extension.--
       (1) In general.--Paragraph (5) of section 420(b) (relating 
     to expiration) is amended by striking ``in any taxable year 
     beginning after December 31, 2000'' and inserting ``made 
     after September 30, 2009''.
       (2) Conforming amendments.--
       (A) Section 101(e)(3) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1021(e)(3)) is amended by 
     striking ``January 1, 1995'' and inserting ``the date of the 
     enactment of the Tax Relief Extension Act of 1999''.
       (B) Section 403(c)(1) of such Act (29 U.S.C. 1103(c)(1)) is 
     amended by striking ``January 1, 1995'' and inserting ``the 
     date of the enactment of the Tax Relief Extension Act of 
     1999''.
       (C) Paragraph (13) of section 408(b) of such Act (29 U.S.C. 
     1108(b)(13)) is amended--
       (i) by striking ``in a taxable year beginning before 
     January 1, 2001'' and inserting ``made before October 1, 
     2009'', and
       (ii) by striking ``January 1, 1995'' and inserting ``the 
     date of the enactment of the Tax Relief Extension Act of 
     1999''.
       (b) Application of Minimum Cost Requirements.--
       (1) In general.--Paragraph (3) of section 420(c) is amended 
     to read as follows:
       ``(3) Minimum cost requirements.--
       ``(A) In general.--The requirements of this paragraph are 
     met if each group health plan or arrangement under which 
     applicable health benefits are provided provides that the 
     applicable employer cost for each taxable year during the 
     cost maintenance period shall not be less than the higher of 
     the applicable employer costs for each of the 2 taxable years 
     immediately preceding the taxable year of the qualified 
     transfer.
       ``(B) Applicable employer cost.--For purposes of this 
     paragraph, the term `applicable employer cost' means, with 
     respect to any taxable year, the amount determined by 
     dividing--
       ``(i) the qualified current retiree health liabilities of 
     the employer for such taxable year determined--

       ``(I) without regard to any reduction under subsection 
     (e)(1)(B), and
       ``(II) in the case of a taxable year in which there was no 
     qualified transfer, in the same manner as if there had been 
     such a transfer at the end of the taxable year, by

       ``(ii) the number of individuals to whom coverage for 
     applicable health benefits was provided during such taxable 
     year.
       ``(C) Election to compute cost separately.--An employer may 
     elect to have this paragraph applied separately with respect 
     to individuals eligible for benefits under title XVIII of the 
     Social Security Act at any time during the taxable year and 
     with respect to individuals not so eligible.
       ``(D) Cost maintenance period.--For purposes of this 
     paragraph, the term `cost maintenance period' means the 
     period of 5 taxable years beginning with the taxable year in 
     which the qualified transfer occurs. If a taxable year is in 
     two or more overlapping cost maintenance periods, this 
     paragraph shall be applied by taking into account the highest 
     applicable employer cost required to be provided under 
     subparagraph (A) for such taxable year.''.
       (2) Conforming amendments.--
       (A) Clause (iii) of section 420(b)(1)(C) is amended by 
     striking ``benefits'' and inserting ``cost''.
       (B) Subparagraph (D) of section 420(e)(1) is amended by 
     striking ``and shall not be subject to the minimum benefit 
     requirements of subsection (c)(3)'' and inserting ``or in 
     calculating applicable employer cost under subsection 
     (c)(3)(B)''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to qualified transfers occurring after the date of the 
     enactment of this Act.
       (2) Transition rule.--If the cost maintenance period for 
     any qualified transfer after the date of the enactment of 
     this Act includes any portion of a benefit maintenance period 
     for any qualified transfer on or before such date, the 
     amendments made by subsection (b) shall not apply to such 
     portion of the cost maintenance period (and such portion 
     shall be treated as a benefit maintenance period).

     SEC. 210. MODIFICATION OF INSTALLMENT METHOD AND REPEAL OF 
                   INSTALLMENT METHOD FOR ACCRUAL METHOD 
                   TAXPAYERS.

       (a) Repeal of Installment Method for Accrual Basis 
     Taxpayers.--
       (1) In general.--Subsection (a) of section 453 (relating to 
     installment method) is amended to read as follows:
       ``(a) Use of Installment Method.--
       ``(1) In general.--Except as otherwise provided in this 
     section, income from an installment sale shall be taken into 
     account for purposes of this title under the installment 
     method.
       ``(2) Accrual method taxpayer.--The installment method 
     shall not apply to income from an installment sale if such 
     income would be reported under an accrual method of 
     accounting without regard to this section. The preceding 
     sentence shall not apply to a disposition described in 
     subparagraph (A) or (B) of subsection (l)(2).''
       (2) Conforming amendments.--Sections 453(d)(1), 453(i)(1), 
     and 453(k) are each amended by striking ``(a)'' each place it 
     appears and inserting ``(a)(1)''.
       (b) Modification of Pledge Rules.--Paragraph (4) of section 
     453A(d) (relating to pledges, etc., of installment 
     obligations) is amended by adding at the end the following: 
     ``A payment shall be treated as directly secured by an 
     interest in an installment obligation to the extent an 
     arrangement allows the taxpayer to satisfy all or a portion 
     of the indebtedness with the installment obligation.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to sales or other dispositions occurring on or 
     after the date of the enactment of this Act.

     SEC. 211. LIMITATION ON USE OF NONACCRUAL EXPERIENCE METHOD 
                   OF ACCOUNTING.

       (a) In General.--Section 448(d)(5) (relating to special 
     rule for services) is amended--
       (1) by inserting ``in fields described in paragraph 
     (2)(A)'' after ``services by such person'', and
       (2) by inserting ``certain personal'' before ``services'' 
     in the heading.
       (b) Effective Date.--

[[Page 26791]]

       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after the date of the enactment 
     of this Act.
       (2) Change in method of accounting.--In the case of any 
     taxpayer required by the amendments made by this section to 
     change its method of accounting for its first taxable year 
     ending after the date of the enactment of this Act--
       (A) such change shall be treated as initiated by the 
     taxpayer,
       (B) such change shall be treated as made with the consent 
     of the Secretary of the Treasury, and
       (C) the net amount of the adjustments required to be taken 
     into account by the taxpayer under section 481 of the 
     Internal Revenue Code of 1986 shall be taken into account 
     over a period (not greater than 4 taxable years) beginning 
     with such first taxable year.

     SEC. 212. DENIAL OF CHARITABLE CONTRIBUTION DEDUCTION FOR 
                   TRANSFERS ASSOCIATED WITH SPLIT-DOLLAR 
                   INSURANCE ARRANGEMENTS.

       (a) In General.--Subsection (f ) of section 170 (relating 
     to disallowance of deduction in certain cases and special 
     rules) is amended by adding at the end the following new 
     paragraph:
       ``(10) Split-dollar life insurance, annuity, and endowment 
     contracts.--
       ``(A) In general.--Nothing in this section or in section 
     545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 shall 
     be construed to allow a deduction, and no deduction shall be 
     allowed, for any transfer to or for the use of an 
     organization described in subsection (c) if in connection 
     with such transfer--
       ``(i) the organization directly or indirectly pays, or has 
     previously paid, any premium on any personal benefit contract 
     with respect to the transferor, or
       ``(ii) there is an understanding or expectation that any 
     person will directly or indirectly pay any premium on any 
     personal benefit contract with respect to the transferor.
       ``(B) Personal benefit contract.--For purposes of 
     subparagraph (A), the term `personal benefit contract' means, 
     with respect to the transferor, any life insurance, annuity, 
     or endowment contract if any direct or indirect beneficiary 
     under such contract is the transferor, any member of the 
     transferor's family, or any other person (other than an 
     organization described in subsection (c)) designated by the 
     transferor.
       ``(C) Application to charitable remainder trusts.--In the 
     case of a transfer to a trust referred to in subparagraph 
     (E), references in subparagraphs (A) and (F) to an 
     organization described in subsection (c) shall be treated as 
     a reference to such trust.
       ``(D) Exception for certain annuity contracts.--If, in 
     connection with a transfer to or for the use of an 
     organization described in subsection (c), such organization 
     incurs an obligation to pay a charitable gift annuity (as 
     defined in section 501(m)) and such organization purchases 
     any annuity contract to fund such obligation, persons 
     receiving payments under the charitable gift annuity shall 
     not be treated for purposes of subparagraph (B) as indirect 
     beneficiaries under such contract if--
       ``(i) such organization possesses all of the incidents of 
     ownership under such contract,
       ``(ii) such organization is entitled to all the payments 
     under such contract, and
       ``(iii) the timing and amount of payments under such 
     contract are substantially the same as the timing and amount 
     of payments to each such person under such obligation (as 
     such obligation is in effect at the time of such transfer).
       ``(E) Exception for certain contracts held by charitable 
     remainder trusts.--A person shall not be treated for purposes 
     of subparagraph (B) as an indirect beneficiary under any life 
     insurance, annuity, or endowment contract held by a 
     charitable remainder annuity trust or a charitable remainder 
     unitrust (as defined in section 664(d)) solely by reason of 
     being entitled to any payment referred to in paragraph (1)(A) 
     or (2)(A) of section 664(d) if--
       ``(i) such trust possesses all of the incidents of 
     ownership under such contract, and
       ``(ii) such trust is entitled to all the payments under 
     such contract.
       ``(F) Excise tax on premiums paid.--
       ``(i) In general.--There is hereby imposed on any 
     organization described in subsection (c) an excise tax equal 
     to the premiums paid by such organization on any life 
     insurance, annuity, or endowment contract if the payment of 
     premiums on such contract is in connection with a transfer 
     for which a deduction is not allowable under subparagraph 
     (A), determined without regard to when such transfer is made.
       ``(ii) Payments by other persons.--For purposes of clause 
     (i), payments made by any other person pursuant to an 
     understanding or expectation referred to in subparagraph (A) 
     shall be treated as made by the organization.
       ``(iii) Reporting.--Any organization on which tax is 
     imposed by clause (i) with respect to any premium shall file 
     an annual return which includes--

       ``(I) the amount of such premiums paid during the year and 
     the name and TIN of each beneficiary under the contract to 
     which the premium relates, and
       ``(II) such other information as the Secretary may require.

     The penalties applicable to returns required under section 
     6033 shall apply to returns required under this clause. 
     Returns required under this clause shall be furnished at such 
     time and in such manner as the Secretary shall by forms or 
     regulations require.
       ``(iv) Certain rules to apply.--The tax imposed by this 
     subparagraph shall be treated as imposed by chapter 42 for 
     purposes of this title other than subchapter B of chapter 42.
       ``(G) Special rule where state requires specification of 
     charitable gift annuitant in contract.--In the case of an 
     obligation to pay a charitable gift annuity referred to in 
     subparagraph (D) which is entered into under the laws of a 
     State which requires, in order for the charitable gift 
     annuity to be exempt from insurance regulation by such State, 
     that each beneficiary under the charitable gift annuity be 
     named as a beneficiary under an annuity contract issued by an 
     insurance company authorized to transact business in such 
     State, the requirements of clauses (i) and (ii) of 
     subparagraph (D) shall be treated as met if--
       ``(i) such State law requirement was in effect on February 
     8, 1999,
       ``(ii) each such beneficiary under the charitable gift 
     annuity is a bona fide resident of such State at the time the 
     obligation to pay a charitable gift annuity is entered into, 
     and
       ``(iii) the only persons entitled to payments under such 
     contract are persons entitled to payments as beneficiaries 
     under such obligation on the date such obligation is entered 
     into.
       ``(H) Member of family.--For purposes of this paragraph, an 
     individual's family consists of the individual's 
     grandparents, the grandparents of such individual's spouse, 
     the lineal descendants of such grandparents, and any spouse 
     of such a lineal descendant.
       ``(I) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations to 
     prevent the avoidance of such purposes.''
       (b) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     section, the amendment made by this section shall apply to 
     transfers made after February 8, 1999.
       (2) Excise tax.--Except as provided in paragraph (3) of 
     this subsection, section 170(f )(10)(F) of the Internal 
     Revenue Code of 1986 (as added by this section) shall apply 
     to premiums paid after the date of the enactment of this Act.
       (3) Reporting.--Clause (iii) of such section 170(f )(10)(F) 
     shall apply to premiums paid after February 8, 1999 
     (determined as if the tax imposed by such section applies to 
     premiums paid after such date).

     SEC. 213. PREVENTION OF DUPLICATION OF LOSS THROUGH 
                   ASSUMPTION OF LIABILITIES GIVING RISE TO A 
                   DEDUCTION.

       (a) In General.--Section 358 (relating to basis to 
     distributees) is amended by adding at the end the following 
     new subsection:
       ``(h) Special Rules for Assumption of Liabilities To Which 
     Subsection (d) Does Not Apply.--
       ``(1) In general.--If, after application of the other 
     provisions of this section to an exchange or series of 
     exchanges, the basis of property to which subsection (a)(1) 
     applies exceeds the fair market value of such property, then 
     such basis shall be reduced (but not below such fair market 
     value) by the amount (determined as of the date of the 
     exchange) of any liability--
       ``(A) which is assumed in exchange for such property, and
       ``(B) with respect to which subsection (d)(1) does not 
     apply to the assumption.
       ``(2) Exception.--Paragraph (1) shall not apply to any 
     liability if the trade or business giving rise to the 
     liability is transferred to the person assuming the liability 
     as part of the exchange.
       ``(3) Liability.--For purposes of this subsection, the term 
     `liability' shall include any obligation to make payment, 
     without regard to whether the obligation is fixed or 
     contingent or otherwise taken into account for purposes of 
     this title.
       ``(4) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the provisions 
     of this subsection.''
       (b) Application of Comparable Rules to Partnerships.--The 
     Secretary of the Treasury or his delegate shall prescribe 
     rules which provide appropriate adjustments under subchapter 
     K of chapter 1 of the Internal Revenue Code of 1986 to 
     prevent the acceleration or duplication of losses through the 
     assumption of (or transfer of assets subject to) liabilities 
     described in section 358(h)(3) of such Code (as added by 
     subsection (a)) in transactions involving partnerships.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to assumptions of liability after October 18, 1999.
       (2) Rules.--The rules prescribed under subsection (b) shall 
     apply to assumptions of liability after October 18, 1999, or 
     such later date as may be prescribed in such rules.

[[Page 26792]]



     SEC. 214. CONSISTENT TREATMENT AND BASIS ALLOCATION RULES FOR 
                   TRANSFERS OF INTANGIBLES IN CERTAIN 
                   NONRECOGNITION TRANSACTIONS.

       (a) Transfers to Corporations.--Section 351 (relating to 
     transfer to corporation controlled by transferor) is amended 
     by redesignating subsection (h) as subsection (i) and by 
     inserting after subsection (g) the following new subsection:
       ``(h) Treatment of Transfers of Intangible Property.--
       ``(1) Transfers of less than all substantial rights.
       ``(A) In general.--A transfer of an interest in intangible 
     property (as defined in section 936(h)(3)(B)) shall be 
     treated under this section as a transfer of property even if 
     the transfer is of less than all of the substantial rights of 
     the transferor in the property.
       ``(B) Allocation of basis.--In the case of a transfer of 
     less than all of the substantial rights of the transferor in 
     the intangible property, the transferor's basis immediately 
     before the transfer shall be allocated among the rights 
     retained by the transferor and the rights transferred on the 
     basis of their respective fair market values.
       ``(2) Nonrecognition not to apply to intangible property 
     developed for transferee.--This section shall not apply to a 
     transfer of intangible property developed by the transferor 
     or any related person if such development was pursuant to an 
     arrangement with the transferee.''
       (b) Transfers to Partnerships.--Subsection (d) of section 
     721 is amended to read as follows:
       ``(d) Transfers of Intangible Property.--
       ``(1) In general.--Rules similar to the rules of section 
     351(h) shall apply for purposes of this section.
       ``(2) Transfers to foreign partnerships.--For regulatory 
     authority to treat intangibles transferred to a partnership 
     as sold, see section 367(d)(3).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers on or after the date of the 
     enactment of this Act.

     SEC. 215. DISTRIBUTIONS BY A PARTNERSHIP TO A CORPORATE 
                   PARTNER OF STOCK IN ANOTHER CORPORATION.

       (a) In General.--Section 732 (relating to basis of 
     distributed property other than money) is amended by adding 
     at the end the following new subsection:
       ``(f) Corresponding Adjustment to Basis of Assets of a 
     Distributed Corporation Controlled by a Corporate Partner.--
       ``(1) In general.--If--
       ``(A) a corporation (hereafter in this subsection referred 
     to as the `corporate partner') receives a distribution from a 
     partnership of stock in another corporation (hereafter in 
     this subsection referred to as the `distributed 
     corporation'),
       ``(B) the corporate partner has control of the distributed 
     corporation immediately after the distribution or at any time 
     thereafter, and
       ``(C) the partnership's adjusted basis in such stock 
     immediately before the distribution exceeded the corporate 
     partner's adjusted basis in such stock immediately after the 
     distribution,

     then an amount equal to such excess shall be applied to 
     reduce (in accordance with subsection (c)) the basis of 
     property held by the distributed corporation at such time 
     (or, if the corporate partner does not control the 
     distributed corporation at such time, at the time the 
     corporate partner first has such control).
       ``(2) Exception for certain distributions before control 
     acquired.--Paragraph (1) shall not apply to any distribution 
     of stock in the distributed corporation if--
       ``(A) the corporate partner does not have control of such 
     corporation immediately after such distribution, and
       ``(B) the corporate partner establishes to the satisfaction 
     of the Secretary that such distribution was not part of a 
     plan or arrangement to acquire control of the distributed 
     corporation.
       ``(3) Limitations on basis reduction.--
       ``(A) In general.--The amount of the reduction under 
     paragraph (1) shall not exceed the amount by which the sum of 
     the aggregate adjusted bases of the property and the amount 
     of money of the distributed corporation exceeds the corporate 
     partner's adjusted basis in the stock of the distributed 
     corporation.
       ``(B) Reduction not to exceed adjusted basis of property.--
     No reduction under paragraph (1) in the basis of any property 
     shall exceed the adjusted basis of such property (determined 
     without regard to such reduction).
       ``(4) Gain recognition where reduction limited.--If the 
     amount of any reduction under paragraph (1) (determined after 
     the application of paragraph (3)(A)) exceeds the aggregate 
     adjusted bases of the property of the distributed 
     corporation--
       ``(A) such excess shall be recognized by the corporate 
     partner as long-term capital gain, and
       ``(B) the corporate partner's adjusted basis in the stock 
     of the distributed corporation shall be increased by such 
     excess.
       ``(5) Control.--For purposes of this subsection, the term 
     `control' means ownership of stock meeting the requirements 
     of section 1504(a)(2).
       ``(6) Indirect distributions.--For purposes of paragraph 
     (1), if a corporation acquires (other than in a distribution 
     from a partnership) stock the basis of which is determined in 
     whole or in part by reference to subsection (a)(2) or (b), 
     the corporation shall be treated as receiving a distribution 
     of such stock from a partnership.
       ``(7) Special rule for stock in controlled corporation.--If 
     the property held by a distributed corporation is stock in a 
     corporation which the distributed corporation controls, this 
     subsection shall be applied to reduce the basis of the 
     property of such controlled corporation. This subsection 
     shall be reapplied to any property of any controlled 
     corporation which is stock in a corporation which it 
     controls.
       ``(8) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection, including regulations to avoid double 
     counting and to prevent the abuse of such purposes.''
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendment made by this section shall apply to distributions 
     made after July 14, 1999.
       (2) Partnerships in existence on July 14, 1999.--In the 
     case of a corporation which is a partner in a partnership as 
     of July 14, 1999, the amendment made by this section shall 
     apply to distributions made to such partner from such 
     partnership after the date of the enactment of this Act.

     SEC. 216. PROHIBITED ALLOCATIONS OF STOCK IN S CORPORATION 
                   ESOP.

       (a) In General.--Section 409 (relating to qualifications 
     for tax credit employee stock ownership plans) is amended by 
     redesignating subsection (p) as subsection (q) and by 
     inserting after subsection (o) the following new subsection:
       ``(p) Prohibited Allocations of Securities in an S 
     Corporation.--
       ``(1) In general.--An employee stock ownership plan holding 
     employer securities consisting of stock in an S corporation 
     shall provide that no portion of the assets of the plan 
     attributable to (or allocable in lieu of) such employer 
     securities may, during a nonallocation year, accrue (or be 
     allocated directly or indirectly under any plan of the 
     employer meeting the requirements of section 401(a)) for the 
     benefit of any disqualified person.
       ``(2) Failure to meet requirements.--
       ``(A) In general.--If a plan fails to meet the requirements 
     of paragraph (1), the plan shall be treated as having 
     distributed to any disqualified person the amount allocated 
     to the account of such person in violation of paragraph (1) 
     at the time of such allocation.
       ``(B) Cross reference.--

  ``For excise tax relating to violations of paragraph (1) and 
ownership of synthetic equity, see section 4979A.
       ``(3) Nonallocation year.--For purposes of this 
     subsection--
       ``(A) In general.--The term `nonallocation year' means any 
     plan year of an employee stock ownership plan if, at any time 
     during such plan year--
       ``(i) such plan holds employer securities consisting of 
     stock in an S corporation, and
       ``(ii) disqualified persons own at least 50 percent of the 
     number of shares of stock in the S corporation.
       ``(B) Attribution rules.--For purposes of subparagraph 
     (A)--
       ``(i) In general.--The rules of section 318(a) shall apply 
     for purposes of determining ownership, except that--

       ``(I) in applying paragraph (1) thereof, the members of an 
     individual's family shall include members of the family 
     described in paragraph (4)(D), and
       ``(II) paragraph (4) thereof shall not apply.

       ``(ii) Deemed-owned shares.--Notwithstanding the employee 
     trust exception in section 318(a)(2)(B)(i), individual shall 
     be treated as owning deemed-owned shares of the individual.

     Solely for purposes of applying paragraph (5), this 
     subparagraph shall be applied after the attribution rules of 
     paragraph (5) have been applied.
       ``(4) Disqualified person.--For purposes of this 
     subsection--
       ``(A) In general.--The term `disqualified person' means any 
     person if--
       ``(i) the aggregate number of deemed-owned shares of such 
     person and the members of such person's family is at least 20 
     percent of the number of deemed-owned shares of stock in the 
     S corporation, or
       ``(ii) in the case of a person not described in clause (i), 
     the number of deemed-owned shares of such person is at least 
     10 percent of the number of deemed-owned shares of stock in 
     such corporation.
       ``(B) Treatment of family members.--In the case of a 
     disqualified person described in subparagraph (A)(i), any 
     member of such person's family with deemed-owned shares shall 
     be treated as a disqualified person if not otherwise treated 
     as a disqualified person under subparagraph (A).
       ``(C) Deemed-owned shares.--
       ``(i) In general.--The term `deemed-owned shares' means, 
     with respect to any person--

       ``(I) the stock in the S corporation constituting employer 
     securities of an employee

[[Page 26793]]

     stock ownership plan which is allocated to such person under 
     the plan, and
       ``(II) such person's share of the stock in such corporation 
     which is held by such plan but which is not allocated under 
     the plan to participants.

       ``(ii) Person's share of unallocated stock.--For purposes 
     of clause (i)(II), a person's share of unallocated S 
     corporation stock held by such plan is the amount of the 
     unallocated stock which would be allocated to such person if 
     the unallocated stock were allocated to all participants in 
     the same proportions as the most recent stock allocation 
     under the plan.
       ``(D) Member of family.--For purposes of this paragraph, 
     the term `member of the family' means, with respect to any 
     individual--
       ``(i) the spouse of the individual,
       ``(ii) an ancestor or lineal descendant of the individual 
     or the individual's spouse,
       ``(iii) a brother or sister of the individual or the 
     individual's spouse and any lineal descendant of the brother 
     or sister, and
       ``(iv) the spouse of any individual described in clause 
     (ii) or (iii).

     A spouse of an individual who is legally separated from such 
     individual under a decree of divorce or separate maintenance 
     shall not be treated as such individual's spouse for purposes 
     of this subparagraph.
       ``(5) Treatment of synthetic equity.--For purposes of 
     paragraphs (3) and (4), in the case of a person who owns 
     synthetic equity in the S corporation, except to the extent 
     provided in regulations, the shares of stock in such 
     corporation on which such synthetic equity is based shall be 
     treated as outstanding stock in such corporation and deemed-
     owned shares of such person if such treatment of synthetic 
     equity of 1 or more such persons results in--
       ``(A) the treatment of any person as a disqualified person, 
     or
       ``(B) the treatment of any year as a nonallocation year.

     For purposes of this paragraph, synthetic equity shall be 
     treated as owned by a person in the same manner as stock is 
     treated as owned by a person under the rules of paragraphs 
     (2) and (3) of section 318(a). If, without regard to this 
     paragraph, a person is treated as a disqualified person or a 
     year is treated as a nonallocation year, this paragraph shall 
     not be construed to result in the person or year not being so 
     treated.
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Employee stock ownership plan.--The term `employee 
     stock ownership plan' has the meaning given such term by 
     section 4975(e)(7).
       ``(B) Employer securities.--The term `employer security' 
     has the meaning given such term by section 409(l).
       ``(C) Synthetic equity.--The term `synthetic equity' means 
     any stock option, warrant, restricted stock, deferred 
     issuance stock right, or similar interest or right that gives 
     the holder the right to acquire or receive stock of the S 
     corporation in the future. Except to the extent provided in 
     regulations, synthetic equity also includes a stock 
     appreciation right, phantom stock unit, or similar right to a 
     future cash payment based on the value of such stock or 
     appreciation in such value.
       ``(7) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection.''
       (b) Coordination With Section 4975(e)(7).--The last 
     sentence of section 4975(e)(7) (defining employee stock 
     ownership plan) is amended by inserting ``, section 409(p),'' 
     after ``409(n)''.
       (c) Excise Tax.--
       (1) Application of tax.--Subsection (a) of section 4979A 
     (relating to tax on certain prohibited allocations of 
     employer securities) is amended--
       (A) by striking ``or'' at the end of paragraph (1),
       (B) by striking the period at the end of paragraph (2) and 
     inserting a comma, and
       (C) by striking all that follows paragraph (2) and 
     inserting the following:
       ``(3) there is any allocation of employer securities which 
     violates the provisions of section 409(p), or a nonallocation 
     year described in subsection (c)(2)(C) with respect to an 
     employee stock ownership plan, or
       ``(4) any synthetic equity is owned by a disqualified 
     person in any nonallocation year,

     there is hereby imposed a tax on such allocation or ownership 
     equal to 50 percent of the amount involved.''
       (2) Liability.--Section 4979A(c) (defining liability for 
     tax) is amended to read as follows:
       ``(c) Liability for Tax.--The tax imposed by this section 
     shall be paid--
       ``(1) in the case of an allocation referred to in paragraph 
     (1) or (2) of subsection (a), by--
       ``(A) the employer sponsoring such plan, or
       ``(B) the eligible worker-owned cooperative,
     which made the written statement described in section 
     664(g)(1)(E) or in section 1042(b)(3)(B) (as the case may 
     be), and
       ``(2) in the case of an allocation or ownership referred to 
     in paragraph (3) or (4) of subsection (a), by the S 
     corporation the stock in which was so allocated or owned.''
       (3) Definitions.--Section 4979A(e) (relating to 
     definitions) is amended to read as follows:
       ``(e) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Definitions.--Except as provided in paragraph (2), 
     terms used in this section have the same respective meanings 
     as when used in sections 409 and 4978.
       ``(2) Special rules relating to tax imposed by reason of 
     paragraph (3) or (4) of subsection (a).--
       ``(A) Prohibited allocations.--The amount involved with 
     respect to any tax imposed by reason of subsection (a)(3) is 
     the amount allocated to the account of any person in 
     violation of section 409(p)(1).
       ``(B) Synthetic equity.--The amount involved with respect 
     to any tax imposed by reason of subsection (a)(4) is the 
     value of the shares on which the synthetic equity is based.
       ``(C) Special rule during first nonallocation year.--For 
     purposes of subparagraph (A), the amount involved for the 
     first nonallocation year of any employee stock ownership plan 
     shall be determined by taking into account the total value of 
     all the deemed-owned shares of all disqualified persons with 
     respect to such plan.
       ``(D) Statute of limitations.--The statutory period for the 
     assessment of any tax imposed by this section by reason of 
     paragraph (3) or (4) of subsection (a) shall not expire 
     before the date which is 3 years from the later of--
       ``(i) the allocation or ownership referred to in such 
     paragraph giving rise to such tax, or
       ``(ii) the date on which the Secretary is notified of such 
     allocation or ownership.''
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2000.
       (2) Exception for certain plans.--In the case of any--
       (A) employee stock ownership plan established after July 
     14, 1999, or
       (B) employee stock ownership plan established on or before 
     such date if employer securities held by the plan consist of 
     stock in a corporation with respect to which an election 
     under section 1362(a) of the Internal Revenue Code of 1986 is 
     not in effect on such date,

     the amendments made by this section shall apply to plan years 
     ending after July 14, 1999.

    Subtitle B--Provisions Relating to Real Estate Investment Trusts

   PART I--TREATMENT OF INCOME AND SERVICES PROVIDED BY TAXABLE REIT 
                              SUBSIDIARIES

     SEC. 221. MODIFICATIONS TO ASSET DIVERSIFICATION TEST.

       (a) In General.--Subparagraph (B) of section 856(c)(4) is 
     amended to read as follows:
       ``(B)(i) not more than 25 percent of the value of its total 
     assets is represented by securities (other than those 
     includible under subparagraph (A)),
       ``(ii) not more than 20 percent of the value of its total 
     assets is represented by securities of 1 or more taxable REIT 
     subsidiaries, and
       ``(iii) except with respect to a taxable REIT subsidiary 
     and securities includible under subparagraph (A)--
       ``(I) not more than 5 percent of the value of its total 
     assets is represented by securities of any one issuer,
       ``(II) the trust does not hold securities possessing more 
     than 10 percent of the total voting power of the outstanding 
     securities of any one issuer, and
       ``(III) the trust does not hold securities having a value 
     of more than 10 percent of the total value of the outstanding 
     securities of any one issuer.''.
       (b) Exception for Straight Debt Securities.--Subsection (c) 
     of section 856 is amended by adding at the end the following 
     new paragraph:
       ``(7) Straight debt safe harbor in applying paragraph 
     (4).--Securities of an issuer which are straight debt (as 
     defined in section 1361(c)(5) without regard to subparagraph 
     (B)(iii) thereof) shall not be taken into account in applying 
     paragraph (4)(B)(ii)(III) if--
       ``(A) the issuer is an individual, or
       ``(B) the only securities of such issuer which are held by 
     the trust or a taxable REIT subsidiary of the trust are 
     straight debt (as so defined), or
       ``(C) the issuer is a partnership and the trust holds at 
     least a 20 percent profits interest in the partnership.''.

     SEC. 222. TREATMENT OF INCOME AND SERVICES PROVIDED BY 
                   TAXABLE REIT SUBSIDIARIES.

       (a) Income From Taxable REIT Subsidiaries Not Treated as 
     Impermissible Tenant Service Income.--Clause (i) of section 
     856(d)(7)(C) (relating to exceptions to impermissible tenant 
     service income) is amended by inserting ``or through a 
     taxable REIT subsidiary of such trust'' after ``income''.
       (b) Certain Income From Taxable REIT Subsidiaries Not 
     Excluded From Rents From Real Property.--
       (1) In general.--Subsection (d) of section 856 (relating to 
     rents from real property defined) is amended by adding at the 
     end the following new paragraphs:
       ``(8) Special rule for taxable reit subsidiaries.--For 
     purposes of this subsection, amounts paid to a real estate 
     investment trust by a taxable REIT subsidiary of such

[[Page 26794]]

     trust shall not be excluded from rents from real property by 
     reason of paragraph (2)(B) if the requirements of either of 
     the following subparagraphs are met:
       ``(A) Limited rental exception.--The requirements of this 
     subparagraph are met with respect to any property if at least 
     90 percent of the leased space of the property is rented to 
     persons other than taxable REIT subsidiaries of such trust 
     and other than persons described in section 856(d)(2)(B). The 
     preceding sentence shall apply only to the extent that the 
     amounts paid to the trust as rents from real property (as 
     defined in paragraph (1) without regard to paragraph (2)(B)) 
     from such property are substantially comparable to such rents 
     made by the other tenants of the trust's property for 
     comparable space.
       ``(B) Exception for certain lodging facilities.--The 
     requirements of this subparagraph are met with respect to an 
     interest in real property which is a qualified lodging 
     facility leased by the trust to a taxable REIT subsidiary of 
     the trust if the property is operated on behalf of such 
     subsidiary by a person who is an eligible independent 
     contractor.
       ``(9) Eligible independent contractor.--For purposes of 
     paragraph (8)(B)--
       ``(A) In general.--The term `eligible independent 
     contractor' means, with respect to any qualified lodging 
     facility, any independent contractor if, at the time such 
     contractor enters into a management agreement or other 
     similar service contract with the taxable REIT subsidiary to 
     operate the facility, such contractor (or any related person) 
     is actively engaged in the trade or business of operating 
     qualified lodging facilities for any person who is not a 
     related person with respect to the real estate investment 
     trust or the taxable REIT subsidiary.
       ``(B) Special rules.--Solely for purposes of this paragraph 
     and paragraph (8)(B), a person shall not fail to be treated 
     as an independent contractor with respect to any qualified 
     lodging facility by reason of any of the following:
       ``(i) The taxable REIT subsidiary bears the expenses for 
     the operation of the facility pursuant to the management 
     agreement or other similar service contract.
       ``(ii) The taxable REIT subsidiary receives the revenues 
     from the operation of such facility, net of expenses for such 
     operation and fees payable to the operator pursuant to such 
     agreement or contract.
       ``(iii) The real estate investment trust receives income 
     from such person with respect to another property that is 
     attributable to a lease of such other property to such person 
     that was in effect as of the later of--

       ``(I) January 1, 1999, or
       ``(II) the earliest date that any taxable REIT subsidiary 
     of such trust entered into a management agreement or other 
     similar service contract with such person with respect to 
     such qualified lodging facility.

       ``(C) Renewals, etc., of existing leases.--For purposes of 
     subparagraph (B)(iii)--
       ``(i) a lease shall be treated as in effect on January 1, 
     1999, without regard to its renewal after such date, so long 
     as such renewal is pursuant to the terms of such lease as in 
     effect on whichever of the dates under subparagraph (B)(iii) 
     is the latest, and
       ``(ii) a lease of a property entered into after whichever 
     of the dates under subparagraph (B)(iii) is the latest shall 
     be treated as in effect on such date if--

       ``(I) on such date, a lease of such property from the trust 
     was in effect, and
       ``(II) under the terms of the new lease, such trust 
     receives a substantially similar or lesser benefit in 
     comparison to the lease referred to in subclause (I).

       ``(D) Qualified lodging facility.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `qualified lodging facility' 
     means any lodging facility unless wagering activities are 
     conducted at or in connection with such facility by any 
     person who is engaged in the business of accepting wagers and 
     who is legally authorized to engage in such business at or in 
     connection with such facility.
       ``(ii) Lodging facility.--The term `lodging facility' means 
     a hotel, motel, or other establishment more than one-half of 
     the dwelling units in which are used on a transient basis.
       ``(iii) Customary amenities and facilities.--The term 
     `lodging facility' includes customary amenities and 
     facilities operated as part of, or associated with, the 
     lodging facility so long as such amenities and facilities are 
     customary for other properties of a comparable size and class 
     owned by other owners unrelated to such real estate 
     investment trust.
       ``(E) Operate includes manage.--References in this 
     paragraph to operating a property shall be treated as 
     including a reference to managing the property.
       ``(F) Related person.--Persons shall be treated as related 
     to each other if such persons are treated as a single 
     employer under subsection (a) or (b) of section 52.''.
       (2) Conforming amendment.--Subparagraph (B) of section 
     856(d)(2) is amended by inserting ``except as provided in 
     paragraph (8),'' after ``(B)''.
       (3) Determining rents from real property.--
       (A)(i) Paragraph (1) of section 856(d) is amended by 
     striking ``adjusted bases'' each place it occurs and 
     inserting ``fair market values''.
       (ii) The amendment made by this subparagraph shall apply to 
     taxable years beginning after December 31, 2000.
       (B)(i) Clause (i) of section 856(d)(2)(B) is amended by 
     striking ``number'' and inserting ``value''.
       (ii) The amendment made by this subparagraph shall apply to 
     amounts received or accrued in taxable years beginning after 
     December 31, 2000, except for amounts paid pursuant to leases 
     in effect on July 12, 1999, or pursuant to a binding contract 
     in effect on such date and at all times thereafter.

     SEC. 223. TAXABLE REIT SUBSIDIARY.

       (a) In General.--Section 856 is amended by adding at the 
     end the following new subsection:
       ``(l) Taxable REIT Subsidiary.--For purposes of this part--
       ``(1) In general.--The term `taxable REIT subsidiary' 
     means, with respect to a real estate investment trust, a 
     corporation (other than a real estate investment trust) if--
       ``(A) such trust directly or indirectly owns stock in such 
     corporation, and
       ``(B) such trust and such corporation jointly elect that 
     such corporation shall be treated as a taxable REIT 
     subsidiary of such trust for purposes of this part.

     Such an election, once made, shall be irrevocable unless both 
     such trust and corporation consent to its revocation. Such 
     election, and any revocation thereof, may be made without the 
     consent of the Secretary.
       ``(2) 35 percent ownership in another taxable reit 
     subsidiary.--The term `taxable REIT subsidiary' includes, 
     with respect to any real estate investment trust, any 
     corporation (other than a real estate investment trust) with 
     respect to which a taxable REIT subsidiary of such trust owns 
     directly or indirectly--
       ``(A) securities possessing more than 35 percent of the 
     total voting power of the outstanding securities of such 
     corporation, or
       ``(B) securities having a value of more than 35 percent of 
     the total value of the outstanding securities of such 
     corporation.

     The preceding sentence shall not apply to a qualified REIT 
     subsidiary (as defined in subsection (i)(2)). The rule of 
     section 856(c)(7) shall apply for purposes of subparagraph 
     (B).
       ``(3) Exceptions.--The term `taxable REIT subsidiary' shall 
     not include--
       ``(A) any corporation which directly or indirectly operates 
     or manages a lodging facility or a health care facility, and
       ``(B) any corporation which directly or indirectly provides 
     to any other person (under a franchise, license, or 
     otherwise) rights to any brand name under which any lodging 
     facility or health care facility is operated.
     Subparagraph (B) shall not apply to rights provided to an 
     eligible independent contractor to operate or manage a 
     lodging facility if such rights are held by such corporation 
     as a franchisee, licensee, or in a similar capacity and such 
     lodging facility is either owned by such corporation or is 
     leased to such corporation from the real estate investment 
     trust.
       ``(4) Definitions.--For purposes of paragraph (3)--
       ``(A) Lodging facility.--The term `lodging facility' has 
     the meaning given to such term by paragraph (9)(D)(ii).
       ``(B) Health care facility.--The term `health care 
     facility' has the meaning given to such term by subsection 
     (e)(6)(D)(ii).''.
       (b) Conforming Amendment.--Paragraph (2) of section 856(i) 
     is amended by adding at the end the following new sentence: 
     ``Such term shall not include a taxable REIT subsidiary.''.

     SEC. 224. LIMITATION ON EARNINGS STRIPPING.

       Paragraph (3) of section 163( j) (relating to limitation on 
     deduction for interest on certain indebtedness) is amended by 
     striking ``and'' at the end of subparagraph (A), by striking 
     the period at the end of subparagraph (B) and inserting ``, 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(C) any interest paid or accrued (directly or indirectly) 
     by a taxable REIT subsidiary (as defined in section 856(l)) 
     of a real estate investment trust to such trust.''.

     SEC. 225. 100 PERCENT TAX ON IMPROPERLY ALLOCATED AMOUNTS.

       (a) In General.--Subsection (b) of section 857 (relating to 
     method of taxation of real estate investment trusts and 
     holders of shares or certificates of beneficial interest) is 
     amended by redesignating paragraphs (7) and (8) as paragraphs 
     (8) and (9), respectively, and by inserting after paragraph 
     (6) the following new paragraph:
       ``(7) Income from redetermined rents, redetermined 
     deductions, and excess interest.--
       ``(A) Imposition of tax.--There is hereby imposed for each 
     taxable year of the real estate investment trust a tax equal 
     to 100 percent of redetermined rents, redetermined 
     deductions, and excess interest.
       ``(B) Redetermined rents.--
       ``(i) In general.--The term `redetermined rents' means 
     rents from real property (as defined in subsection 856(d)) 
     the amount of which would (but for subparagraph (E)) be 
     reduced on distribution, apportionment, or allocation under 
     section 482 to clearly reflect income as a result of services 
     furnished or rendered by a taxable REIT subsidiary of the

[[Page 26795]]

     real estate investment trust to a tenant of such trust.
       ``(ii) Exception for certain services.--Clause (i) shall 
     not apply to amounts received directly or indirectly by a 
     real estate investment trust for services described in 
     paragraph (1)(B) or (7)(C)(i) of section 856(d).
       ``(iii) Exception for de minimis amounts.--Clause (i) shall 
     not apply to amounts described in section 856(d)(7)(A) with 
     respect to a property to the extent such amounts do not 
     exceed the one percent threshold described in section 
     856(d)(7)(B) with respect to such property.
       ``(iv) Exception for comparably priced services.--Clause 
     (i) shall not apply to any service rendered by a taxable REIT 
     subsidiary of a real estate investment trust to a tenant of 
     such trust if--

       ``(I) such subsidiary renders a significant amount of 
     similar services to persons other than such trust and tenants 
     of such trust who are unrelated (within the meaning of 
     section 856(d)(8)(F)) to such subsidiary, trust, and tenants, 
     but
       ``(II) only to the extent the charge for such service so 
     rendered is substantially comparable to the charge for the 
     similar services rendered to persons referred to in subclause 
     (I).

       ``(v) Exception for certain separately charged services.--
     Clause (i) shall not apply to any service rendered by a 
     taxable REIT subsidiary of a real estate investment trust to 
     a tenant of such trust if--

       ``(I) the rents paid to the trust by tenants (leasing at 
     least 25 percent of the net leasable space in the trust's 
     property) who are not receiving such service from such 
     subsidiary are substantially comparable to the rents paid by 
     tenants leasing comparable space who are receiving such 
     service from such subsidiary, and
       ``(II) the charge for such service from such subsidiary is 
     separately stated.

       ``(vi) Exception for certain services based on subsidiary's 
     income from the services.--Clause (i) shall not apply to any 
     service rendered by a taxable REIT subsidiary of a real 
     estate investment trust to a tenant of such trust if the 
     gross income of such subsidiary from such service is not less 
     than 150 percent of such subsidiary's direct cost in 
     furnishing or rendering the service.
       ``(vii) Exceptions granted by secretary.--The Secretary may 
     waive the tax otherwise imposed by subparagraph (A) if the 
     trust establishes to the satisfaction of the Secretary that 
     rents charged to tenants were established on an arms' length 
     basis even though a taxable REIT subsidiary of the trust 
     provided services to such tenants.
       ``(C) Redetermined deductions.--The term `redetermined 
     deductions' means deductions (other than redetermined rents) 
     of a taxable REIT subsidiary of a real estate investment 
     trust if the amount of such deductions would (but for 
     subparagraph (E)) be decreased on distribution, 
     apportionment, or allocation under section 482 to clearly 
     reflect income as between such subsidiary and such trust.
       ``(D) Excess interest.--The term `excess interest' means 
     any deductions for interest payments by a taxable REIT 
     subsidiary of a real estate investment trust to such trust to 
     the extent that the interest payments are in excess of a rate 
     that is commercially reasonable.
       ``(E) Coordination with section 482.--The imposition of tax 
     under subparagraph (A) shall be in lieu of any distribution, 
     apportionment, or allocation under section 482.
       ``(F) Regulatory authority.--The Secretary shall prescribe 
     such regulations as may be necessary or appropriate to carry 
     out the purposes of this paragraph. Until the Secretary 
     prescribes such regulations, real estate investment trusts 
     and their taxable REIT subsidiaries may base their 
     allocations on any reasonable method.''.
       (b) Amount Subject to Tax Not Required To Be Distributed.--
     Subparagraph (E) of section 857(b)(2) (relating to real 
     estate investment trust taxable income) is amended by 
     striking ``paragraph (5)'' and inserting ``paragraphs (5) and 
     (7)''.

     SEC. 226. EFFECTIVE DATE.

       (a) In General.--The amendments made by this part shall 
     apply to taxable years beginning after December 31, 2000.
       (b) Transitional Rules Related to Section 221.--
       (1) Existing arrangements.--
       (A) In general.--Except as otherwise provided in this 
     paragraph, the amendment made by section 221 shall not apply 
     to a real estate investment trust with respect to--
       (i) securities of a corporation held directly or indirectly 
     by such trust on July 12, 1999,
       (ii) securities of a corporation held by an entity on July 
     12, 1999, if such trust acquires control of such entity 
     pursuant to a written binding contract in effect on such date 
     and at all times thereafter before such acquisition,
       (iii) securities received by such trust (or a successor) in 
     exchange for, or with respect to, securities described in 
     clause (i) or (ii) in a transaction in which gain or loss is 
     not recognized, and
       (iv) securities acquired directly or indirectly by such 
     trust as part of a reorganization (as defined in section 
     368(a)(1) of the Internal Revenue Code of 1986) with respect 
     to such trust if such securities are described in clause (i), 
     (ii), or (iii) with respect to any other real estate 
     investment trust.
       (B) New trade or business or substantial new assets.--
     Subparagraph (A) shall cease to apply to securities of a 
     corporation as of the first day after July 12, 1999, on which 
     such corporation engages in a substantial new line of 
     business, or acquires any substantial asset, other than--
       (i) pursuant to a binding contract in effect on such date 
     and at all times thereafter before the acquisition of such 
     asset,
       (ii) in a transaction in which gain or loss is not 
     recognized by reason of section 1031 or 1033 of the Internal 
     Revenue Code of 1986, or
       (iii) in a reorganization (as so defined) with another 
     corporation the securities of which are described in 
     paragraph (1)(A) of this subsection.
       (C) Limitation on transition rules.--Subparagraph (A) shall 
     cease to apply to securities of a corporation held, acquired, 
     or received, directly or indirectly, by a real estate 
     investment trust as of the first day after July 12, 1999, on 
     which such trust acquires any additional securities of such 
     corporation other than--
       (i) pursuant to a binding contract in effect on July 12, 
     1999, and at all times thereafter, or
       (ii) in a reorganization (as so defined) with another 
     corporation the securities of which are described in 
     paragraph (1)(A) of this subsection.
       (2) Tax-free conversion.--If--
       (A) at the time of an election for a corporation to become 
     a taxable REIT subsidiary, the amendment made by section 221 
     does not apply to such corporation by reason of paragraph 
     (1), and
       (B) such election first takes effect before January 1, 
     2004,

     such election shall be treated as a reorganization qualifying 
     under section 368(a)(1)(A) of such Code.

                       PART II--HEALTH CARE REITS

     SEC. 231. HEALTH CARE REITS.

       (a) Special Foreclosure Rule for Health Care Properties.--
     Subsection (e) of section 856 (relating to special rules for 
     foreclosure property) is amended by adding at the end the 
     following new paragraph:
       ``(6) Special rule for qualified health care properties.--
     For purposes of this subsection--
       ``(A) Acquisition at expiration of lease.--The term 
     `foreclosure property' shall include any qualified health 
     care property acquired by a real estate investment trust as 
     the result of the termination of a lease of such property 
     (other than a termination by reason of a default, or the 
     imminence of a default, on the lease).
       ``(B) Grace period.--In the case of a qualified health care 
     property which is foreclosure property solely by reason of 
     subparagraph (A), in lieu of applying paragraphs (2) and 
     (3)--
       ``(i) the qualified health care property shall cease to be 
     foreclosure property as of the close of the second taxable 
     year after the taxable year in which such trust acquired such 
     property, and
       ``(ii) if the real estate investment trust establishes to 
     the satisfaction of the Secretary that an extension of the 
     grace period in clause (i) is necessary to the orderly 
     leasing or liquidation of the trust's interest in such 
     qualified health care property, the Secretary may grant one 
     or more extensions of the grace period for such qualified 
     health care property.

     Any such extension shall not extend the grace period beyond 
     the close of the 6th year after the taxable year in which 
     such trust acquired such qualified health care property.
       ``(C) Income from independent contractors.--For purposes of 
     applying paragraph (4)(C) with respect to qualified health 
     care property which is foreclosure property by reason of 
     subparagraph (A) or paragraph (1), income derived or received 
     by the trust from an independent contractor shall be 
     disregarded to the extent such income is attributable to--
       ``(i) any lease of property in effect on the date the real 
     estate investment trust acquired the qualified health care 
     property (without regard to its renewal after such date so 
     long as such renewal is pursuant to the terms of such lease 
     as in effect on such date), or
       ``(ii) any lease of property entered into after such date 
     if--

       ``(I) on such date, a lease of such property from the trust 
     was in effect, and
       ``(II) under the terms of the new lease, such trust 
     receives a substantially similar or lesser benefit in 
     comparison to the lease referred to in subclause (I).

       ``(D) Qualified health care property.--
       ``(i) In general.--The term `qualified health care 
     property' means any real property (including interests 
     therein), and any personal property incident to such real 
     property, which--

       ``(I) is a health care facility, or
       ``(II) is necessary or incidental to the use of a health 
     care facility.

       ``(ii) Health care facility.--For purposes of clause (i), 
     the term `health care facility' means a hospital, nursing 
     facility, assisted living facility, congregate care facility, 
     qualified continuing care facility (as defined

[[Page 26796]]

     in section 7872(g)(4)), or other licensed facility which 
     extends medical or nursing or ancillary services to patients 
     and which, immediately before the termination, expiration, 
     default, or breach of the lease of or mortgage secured by 
     such facility, was operated by a provider of such services 
     which was eligible for participation in the medicare program 
     under title XVIII of the Social Security Act with respect to 
     such facility.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

      PART III--CONFORMITY WITH REGULATED INVESTMENT COMPANY RULES

     SEC. 241. CONFORMITY WITH REGULATED INVESTMENT COMPANY RULES.

       (a) Distribution Requirement.--Clauses (i) and (ii) of 
     section 857(a)(1)(A) (relating to requirements applicable to 
     real estate investment trusts) are each amended by striking 
     ``95 percent (90 percent for taxable years beginning before 
     January 1, 1980)'' and inserting ``90 percent''.
       (b) Imposition of Tax.--Clause (i) of section 857(b)(5)(A) 
     (relating to imposition of tax in case of failure to meet 
     certain requirements) is amended by striking ``95 percent (90 
     percent in the case of taxable years beginning before January 
     1, 1980)'' and inserting ``90 percent''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

 PART IV--CLARIFICATION OF EXCEPTION FROM IMPERMISSIBLE TENANT SERVICE 
                                 INCOME

     SEC. 251. CLARIFICATION OF EXCEPTION FOR INDEPENDENT 
                   OPERATORS.

       (a) In General.--Paragraph (3) of section 856(d) (relating 
     to independent contractor defined) is amended by adding at 
     the end the following flush sentence:

     ``In the event that any class of stock of either the real 
     estate investment trust or such person is regularly traded on 
     an established securities market, only persons who own, 
     directly or indirectly, more than 5 percent of such class of 
     stock shall be taken into account as owning any of the stock 
     of such class for purposes of applying the 35 percent 
     limitation set forth in subparagraph (B) (but all of the 
     outstanding stock of such class shall be considered 
     outstanding in order to compute the denominator for purpose 
     of determining the applicable percentage of ownership).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

           PART V--MODIFICATION OF EARNINGS AND PROFITS RULES

     SEC. 261. MODIFICATION OF EARNINGS AND PROFITS RULES.

       (a) Rules for Determining Whether Regulated Investment 
     Company Has Earnings and Profits From Non-RIC Year.--
     Subsection (c) of section 852 is amended by adding at the end 
     the following new paragraph:
       ``(3) Distributions to meet requirements of subsection 
     (a)(2)(B).--Any distribution which is made in order to comply 
     with the requirements of subsection (a)(2)(B)--
       ``(A) shall be treated for purposes of this subsection and 
     subsection (a)(2)(B) as made from the earliest earnings and 
     profits accumulated in any taxable year to which the 
     provisions of this part did not apply rather than the most 
     recently accumulated earnings and profits, and
       ``(B) to the extent treated under subparagraph (A) as made 
     from accumulated earnings and profits, shall not be treated 
     as a distribution for purposes of subsection (b)(2)(D) and 
     section 855.''.
       (b) Clarification of Application of REIT Spillover Dividend 
     Rules to Distributions To Meet Qualification Requirement.--
     Subparagraph (B) of section 857(d)(3) is amended by inserting 
     before the period ``and section 858''.
       (c) Application of Deficiency Dividend Procedures.--
     Paragraph (1) of section 852(e) is amended by adding at the 
     end the following new sentence: ``If the determination under 
     subparagraph (A) is solely as a result of the failure to meet 
     the requirements of subsection (a)(2), the preceding sentence 
     shall also apply for purposes of applying subsection (a)(2) 
     to the non-RIC year.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.

              PART VI--MODIFICATION OF ESTIMATED TAX RULES

     SEC. 271. MODIFICATION OF ESTIMATED TAX RULES FOR CLOSELY 
                   HELD REAL ESTATE INVESTMENT TRUSTS.

       (a) In General.--Subsection (e) of section 6655 (relating 
     to estimated tax by corporations) is amended by adding at the 
     end the following new paragraph:
       ``(5) Treatment of certain reit dividends.--
       ``(A) In general.--Any dividend received from a closely 
     held real estate investment trust by any person which owns 
     (after application of subsections (d)(5) and (l)(3)(B) of 
     section 856) 10 percent or more (by vote or value) of the 
     stock or beneficial interests in the trust shall be taken 
     into account in computing annualized income installments 
     under paragraph (2) in a manner similar to the manner under 
     which partnership income inclusions are taken into account.
       ``(B) Closely held reit.--For purposes of subparagraph (A), 
     the term `closely held real estate investment trust' means a 
     real estate investment trust with respect to which 5 or fewer 
     persons own (after application of subsections (d)(5) and 
     (l)(3)(B) of section 856) 50 percent or more (by vote or 
     value) of the stock or beneficial interests in the trust.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to estimated tax payments due on or after 
     November 15, 1999.

       PART VII--MODIFICATION OF TREATMENT OF CLOSELY-HELD REITS

     SEC. 281. CONTROLLED ENTITIES INELIGIBLE FOR REIT STATUS.

       (a) In General.--Subsection (a) of section 856 (relating to 
     definition of real estate investment trust) is amended by 
     striking ``and'' at the end of paragraph (6), by 
     redesignating paragraph (7) as paragraph (8), and by 
     inserting after paragraph (6) the following new paragraph:
       ``(7) which is not a controlled entity (as defined in 
     subsection (l)); and''.
       (b) Controlled Entity.--Section 856 is amended by adding at 
     the end the following new subsection:
       ``(l) Controlled Entity.--
       ``(1) In general.--For purposes of subsection (a)(7), an 
     entity is a controlled entity if, at any time during the 
     taxable year, one person (other than a qualified entity)--
       ``(A) in the case of a corporation, owns stock--
       ``(i) possessing at least 50 percent of the total voting 
     power of the stock of such corporation, or
       ``(ii) having a value equal to at least 50 percent of the 
     total value of the stock of such corporation, or
       ``(B) in the case of a trust, owns beneficial interests in 
     the trust which would meet the requirements of subparagraph 
     (A) if such interests were stock.
       ``(2) Qualified entity.--For purposes of paragraph (1), the 
     term `qualified entity' means--
       ``(A) any real estate investment trust, and
       ``(B) any partnership in which one real estate investment 
     trust owns at least 50 percent of the capital and profits 
     interests in the partnership.
       ``(3) Attribution rules.--For purposes of this paragraphs 
     (1) and (2)--
       ``(A) In general.--Rules similar to the rules of 
     subsections (d)(5) and (h)(3) shall apply; except that 
     section 318(a)(3)(C) shall not be applied under such rules to 
     treat stock owned by a qualified entity as being owned by a 
     person which is not a qualified entity.
       ``(B) Stapled entities.--A group of entities which are 
     stapled entities (as defined in section 269B(c)(2)) shall be 
     treated as one person.
       ``(4) Exception for certain new reits.--
       ``(A) In general.--The term `controlled entity' shall not 
     include an incubator REIT.
       ``(B) Incubator reit.--A corporation shall be treated as an 
     incubator REIT for any taxable year during the eligibility 
     period if it meets all the following requirements for such 
     year:
       ``(i) The corporation elects to be treated as an incubator 
     REIT.
       ``(ii) The corporation has only voting common stock 
     outstanding.
       ``(iii) Not more than 50 percent of the corporation's real 
     estate assets consist of mortgages.
       ``(iv) From not later than the beginning of the last half 
     of the second taxable year, at least 10 percent of the 
     corporation's capital is provided by lenders or equity 
     investors who are unrelated to the corporation's largest 
     shareholder.
       ``(v) The corporation annually increases the value of its 
     real estate assets by at least 10 percent.
       ``(vi) The directors of the corporation adopt a resolution 
     setting forth an intent to engage in a going public 
     transaction.

     No election may be made with respect to any REIT if an 
     election under this subsection was in effect for any 
     predecessor of such REIT. The requirement of clause (ii) 
     shall not fail to be met merely because a going public 
     transaction is accomplished through a transaction described 
     in section 368(a)(1) with another corporation which had 
     another class of stock outstanding prior to the transaction.
       ``(C) Eligibility period.--
       ``(i) In general.--The eligibility period (for which an 
     incubator REIT election can be made) begins with the REIT's 
     second taxable year and ends at the close of the REIT's third 
     taxable year, except that the REIT may, subject to clauses 
     (ii), (iii), and (iv), elect to extend such period for an 
     additional 2 taxable years.
       ``(ii) Going public transaction.--A REIT may not elect to 
     extend the eligibility period under clause (i) unless it 
     enters into an agreement with the Secretary that if it does 
     not engage in a going public transaction by the end of the 
     extended eligibility period, it shall pay Federal income 
     taxes for the 2 years of the extended eligibility period as 
     if it had not made an incubator REIT election and had ceased 
     to qualify as a REIT for those 2 taxable years.
       ``(iii) Returns, interest, and notice.--

       ``(I) Returns.--In the event the corporation ceases to be 
     treated as a REIT by operation of clause (ii), the 
     corporation shall file

[[Page 26797]]

     any appropriate amended returns reflecting the change in 
     status within 3 months of the close of the extended 
     eligibility period.
       ``(II) Interest.--Interest shall be payable on any tax 
     imposed by reason of clause (ii) for any taxable year but, 
     unless there was a finding under subparagraph (D), no 
     substantial underpayment penalties shall be imposed.
       ``(III) Notice.--The corporation shall, at the same time it 
     files its returns under subclause (I), notify its 
     shareholders and any other persons whose tax position is, or 
     may reasonably be expected to be, affected by the change in 
     status so they also may file any appropriate amended returns 
     to conform their tax treatment consistent with the 
     corporation's loss of REIT status.
       ``(IV) Regulations.--The Secretary shall provide 
     appropriate regulations setting forth transferee liability 
     and other provisions to ensure collection of tax and the 
     proper administration of this provision.

       ``(iv) Clauses (ii) and (iii) shall not apply if the 
     corporation allows its incubator REIT status to lapse at the 
     end of the initial 2-year eligibility period without engaging 
     in a going public transaction if the corporation is not a 
     controlled entity as of the beginning of its fourth taxable 
     year. In such a case, the corporation's directors may still 
     be liable for the penalties described in subparagraph (D) 
     during the eligibility period.
       ``(D) Special penalties.--If the Secretary determines that 
     an incubator REIT election was filed for a principal purpose 
     other than as part of a reasonable plan to undertake a going 
     public transaction, an excise tax of $20,000 shall be imposed 
     on each of the corporation's directors for each taxable year 
     for which an election was in effect.
       ``(E) Going public transaction.--For purposes of this 
     paragraph, a going public transaction means--
       ``(i) a public offering of shares of the stock of the 
     incubator REIT;
       ``(ii) a transaction, or series of transactions, that 
     results in the stock of the incubator REIT being regularly 
     traded on an established securities market and that results 
     in at least 50 percent of such stock being held by 
     shareholders who are unrelated to persons who held such stock 
     before it began to be so regularly traded; or
       ``(iii) any transaction resulting in ownership of the REIT 
     by 200 or more persons (excluding the largest single 
     shareholder) who in the aggregate own at least 50 percent of 
     the stock of the REIT.

     For the purposes of this subparagraph, the rules of paragraph 
     (3) shall apply in determining the ownership of stock.
       ``(F) Definitions.--The term `established securities 
     market' shall have the meaning set forth in the regulations 
     under section 897.''
       (c) Conforming Amendment.--Paragraph (2) of section 856(h) 
     is amended by striking ``and (6)'' each place it appears and 
     inserting ``, (6), and (7)''.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after July 14, 1999.
       (2) Exception for existing controlled entities.--The 
     amendments made by this section shall not apply to any entity 
     which is a controlled entity (as defined in section 856(l) of 
     the Internal Revenue Code of 1986, as added by this section) 
     as of July 14, 1999, which is a real estate investment trust 
     for the taxable year which includes such date, and which has 
     significant business assets or activities as of such date. 
     For purposes of the preceding sentence, an entity shall be 
     treated as such a controlled entity on July 14, 1999, if it 
     becomes such an entity after such date in a transaction--
       (A) made pursuant to a written agreement which was binding 
     on such date and at all times thereafter, or
       (B) described on or before such date in a filing with the 
     Securities and Exchange Commission required solely by reason 
     of the transaction.

                      TITLE III--BUDGET PROVISION

     SEC. 301. EXCLUSION FROM PAYGO SCORECARD.

       Any net deficit increase or net surplus increase resulting 
     from the enactment of this Act shall not be counted for 
     purposes of section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 (2 U.S.C. 902).
                                 ______
                                 
      By Mr. DOMENICI:
  S. 1793. A bill to ensure that there will be adequate funding for the 
decommissioning of nuclear power facilities; to the Committee on 
Environment and Public Works.


                 NUCLEAR DECOMMISSIONING ASSURANCE ACT

 Mr. DOMENICI. Mr. President, in an era of deregulation, it is 
imperative that we focus on the public health and safety concerns that 
may surface in the rush to eliminate excess costs in energy production.
  One such concern involves the decommissioning and decontamination 
(D&D) of retired nuclear power plants. The nuclear industry confronts 
not only the difficulty of providing a competitive energy source in a 
changing regulatory environment, the funds accumulated to date to cover 
D&D costs are not sufficient to ensure proper cleanup unless measures 
are put into place that continue fee collection for the duration of 
each plant's service life.
  This bill establishes a framework to ensure adequate fee collection 
to cover nuclear decommissioning and decontamination costs in a 
changing regulatory environment.
  Today, nuclear generating units provide almost a quarter of the 
country's annual electricity generation. Over the next twenty years, a 
substantial number of these nuclear power plants reach the end of their 
40-year licenses. Some will apply for a license renewal, which should 
be a straightforward and expeditious process.
  All plants, at some point, however, will face retirement. Whenever 
retirement occurs, decommissioning follows--this requires safe 
dismantling and disposal of all irradiated components.
  Upon acquiring a license to operate a nuclear power plant, licensees 
also commit to decommission the plant upon closure. Utilities are 
required to set aside funds for decommissioning.
  In the past, State regulators generally allowed fee collection for 
decommissioning obligations through rates over the entire service lives 
of the nuclear power plants. This method spread the costs of 
decommissioning the plant to all the customers served by the plant over 
the entire course of the plant's service life.
  As the electricity market moves toward deregulation, the nuclear 
industry confronts a profound problem. First, fee collection was 
structured such that accrual of sufficient funds required the full life 
of the plant, and regulators often undercut the amount of fees 
collected in order to keep energy prices down.
  Second, under funding also results from escalating decommmissioning 
costs due to expanded regulatory requirements, lower than expected 
growth due to loss of load and customer exodus, rate settlements, and 
the lag in collecting funds due to ratemaking delays.
  Lastly, decommissioning cost recovery for most utilities, including 
nuclear, is ``back-end loaded.'' Meaning, cost recovery is designed to 
generate much larger contributions to the fund in latter years.
  In short, the funding of decommissioning has not kept pace with the 
aging of the units.
  For example, today, a nuclear plant licensee of a 15-year-old plant 
would have collected only approximately 5 percent of the funds 
necessary to meet decommissioning obligations. In addition, these 
nuclear plant licensees currently have no means of ensuring that they 
can continue to collect fees from consumers to ensure decommissioning 
obligations are met.
  The magnitude of the potential shortfall in cost recovery for 
decommissioning obligations is staggering. On an aggregate basis, 
utilities' decommissioning trust funds currently are funded at 
approximately 25 percent of the estimated costs--about $9 billion. 
Nuclear plants, however, are approximately 43 percent through their 
expected service lives. Total projected D&D costs will exceed $35 
billion, leaving a current shortfall of about $26 billion.
  The monumental size of this problem is underscored by the following 
comparison: FERC allowed recovery of $10 billion of total stranded 
costs during the restructuring of the natural gas industry. the nuclear 
industry's current dilemma is two and a half times greater.
  Two recent publications underscore the critical need to provide 
assurance that decommissioning funds can be collected and are adequate 
to cover costs. A study which I chaired by the Center for Strategic and 
International Studies (CSIS) entitled The Regulatory Process for 
Nuclear Power Reactors addressed this issue.
  The CSIS report stated, ``Restructuring of the electric utility 
industry could exacerbate the problem of adequate decommissioning 
funding and could threaten the ability of nuclear power plant owners to 
recover funds for

[[Page 26798]]

decommissioning and for nuclear waste disposal in electric rates.'' The 
June 1999 report Nuclear Power Plant Decommissioning Under Utility 
Restructuring by the National Conference of State Legislatures strongly 
urged a ``review of current decommissioning legislation, especially if 
considering or passing deregulation.
  The legislation I am introducing today creates a backstop to ensure 
that decommissioning fees can continue to be collected regardless of 
forthcoming changes in the regulatory environment. Because full, safe 
decommissioning is vital to public health and safety, this legislation 
is required to ensure that adequate funds for decommissioning are 
available to power plant licensees upon closure of their nuclear 
plants.
  Let me briefly describe the mechanism established in this bill to 
ensure that adequate funds are collected.
  First, nuclear power plant licensees are allowed to petition the NRC 
for determination of adequacy of their nuclear decommissioning trust 
funds. This petition process allows a full review of licensees' 
decommissioning costs and available funding. The petition process 
allows full public notice and comment.
  In other words, the NRC will determine each licensee's current and 
ongoing revenue requirement necessary to ensure adequate funds are 
accumulated in the trust fund at the appropriate time.
  Second, the Act amends the Federal Power Act to enable licensees to 
apply to the FERC, in the case of wholesale rates, or state 
commissions, for retail rates, for an order establishing rates or 
charges for collection of revenues necessary to meet NRC determined 
requirements.
  Depending on the consumer base served by the nuclear licensee, either 
the FERC or the state PUCs will be required to incorporate the NRC 
determined decommissioning cost and revenue requirements in their rate 
structure.
  This translates into a negligible fee added to consumers' monthly 
bills that will guarantee adequate cleanup upon closure of the nuclear 
plants that met their energy needs. This measure is simple, pragmatic, 
and safeguards our safety and health needs.
  We must act now to ensure adequate funding for the safe 
decommissioning of nuclear units. The awkward jurisdictional position 
of this issue--caught in a gap between federal agencies and state 
regulatory authorities--creates a situation in which inconsistent 
regimes interfere with federally mandated safety measures.
  This situation presents an unacceptable uncertainty and risk for the 
health and safety of the citizens and for the economy. As a matter of 
public policy, to protect public health and safety, as well as to 
preserve sound energy and economic policy, adequate funding of 
decommissioning obligations must be assured.
  This act addresses this concerns and creates a practical mechanism to 
ensure the decommissioning funds will be adequate to safe closure of 
nuclear plants in the future.
  Mr. President, I ask that the bill be printed in the Record.
  The bill follows:

                                S. 1793

       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 ``Nuclear Decommissioning 
     Assurance Act of 1999''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) full, safe decommissioning of nuclear power plants is a 
     compelling Federal interest, in that--
       (A) the public health and safety and the protection of the 
     environment can be guaranteed only if nuclear power plants 
     are adequately decommissioned at the end of their useful 
     lives; and
       (B) decommissioning obligations cannot be avoided, 
     abandoned, or mitigated, as a matter of public health and 
     safety;
       (2) electric utilities that own nuclear power plants must 
     be able to collect adequate revenues to ensure that the 
     utilities can satisfy the obligation to fully decommission 
     nuclear power plants in accordance with standards established 
     by the Nuclear Regulatory Commission;
       (3) the authority of the Nuclear Regulatory Commission to 
     ensure that utilities are able to collect adequate funds so 
     that they can satisfy the decommissioning obligation is 
     limited by the fact that the Commission does not directly 
     establish rates for electric services;
       (4) many nuclear decommissioning trust funds are not 
     adequate to meet decommissioning obligations, and the current 
     electric rates of collection are not adequate to ensure that 
     there will be adequate funds at the time of decommissioning.
       (5) potential restructuring of the electric utility 
     industry will exacerbate the problem, because competitive 
     pressure is expected to be placed on current rates, thereby 
     threatening the ability of utility entities to recover funds 
     for decommissioning in electric rates; and
       (6) there is a Federal interest in establishing a national 
     policy to ensure that electric utilities that own nuclear 
     power plants can recover funds sufficient to satisfy the 
     decommissioning obligation.
       (b) Purposes.--The purposes of this Act are--
       (1) to ensure that electric utilities that own commercial 
     nuclear electric generating plants will be able to satisfy 
     the obligation to decommission the plants, as established by 
     the Nuclear Regulatory Commission; and
       (2) to provide rate making bodies, including the Federal 
     Energy Regulatory Commission, with sufficient authority to 
     provide for recovery of funds for decommissioning.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Decommission.--The term ``decommission'' has the 
     meaning given the term in section 50.2 of title 10, Code of 
     Federal Regulations (or any successor regulation).
       (2) Decommissioning obligation.--The term ``decommissioning 
     obligation'' means the obligation to pay costs associated 
     with the measures necessary to ensure the continued 
     protection of the public from the dangers of any residual 
     radioactivity or other hazards present at a facility when a 
     nuclear unit is decommissioned.
       (3) Nuclear decommissioning trust fund.--The term ``nuclear 
     decommissioning trust fund'' has the meaning given the term 
     ``external sinking fund'' in section 50.75(e)(1)(ii) of title 
     10, Code of Federal Regulations (or any successor 
     regulation).
       (4) State Commission.--The term ``State commission'' has 
     the meaning given the term in section 3 of the Federal Power 
     Act (16 U.S.C. 796).

     SEC. 4. NUCLEAR DECOMMISSIONING ASSURANCE DETERMINATION BY 
                   THE NUCLEAR REGULATORY COMMISSION.

       (a) Petition.--
       (1) In general.--A licensee under part 50 of title 10, Code 
     of Federal Regulations may petition the Nuclear Regulatory 
     Commission for a determination of whether--
       (A) adequate amounts have been deposited or are being 
     deposited in the nuclear decommissioning trust fund of the 
     licensee; and
       (B) the future funding for any nuclear power plant owned in 
     whole or in part by the licensee is assured.
       (2) Contents.--A petition under paragraph (1) shall 
     disclose--
       (A) the licensee's current minimum amount established by 
     the Nuclear Regulatory Commission under section 50.75 of 
     title 10, Code of Federal Regulations for each facility for 
     which the licensee holds a license;
       (B) the currently effective rates to recover costs for 
     decommissioning obligations as established by the Commission 
     or State commissions, as appropriate;
       (C) the amount that has been deposited in the nuclear 
     decommissioning trust fund;
       (D) the planned rate and timing of collection of the costs 
     of the decommissioning obligation through the projected 
     useful life of the facility; and
       (E) any other information pertinent to the continuing 
     assurance of funding of the nuclear decommissioning trust 
     fund.
       (b) Determination.--Not later than 180 days of receipt of a 
     petition under paragraph (1), the Nuclear Regulatory 
     Commission shall issue a determination regarding whether the 
     nuclear decommissioning trust fund and the currently approved 
     level of rates to recover the costs of the decommissioning 
     obligation are adequate to ensure full and safe 
     decommissioning of the facility.
       (c) Considerations.--In making a determination under 
     subsection (b), the Nuclear Regulatory Commission shall 
     consider.--
       (1) the current level of funds in the nuclear 
     decommissioning trust fund;
       (2) the adequacy of the currently approved rates to recover 
     the costs of the decommissioning obligation;
       (3) the assurance of continuing recovery of such costs 
     through rates;
       (4) the timing of the recovery of such costs relative to 
     the projected useful life of the plant; and
       (5) any other information that the Nuclear Regulatory 
     Commission considers pertinent to a determination of the 
     necessary assurance of adequate funding.
       (d) Adequacy of Minimum Amounts.--Nothing in this Act 
     precludes the Nuclear Regulatory Commission from revising or 
     reconsidering the adequacy of the minimum amounts established 
     under section 50.75(c) of title 10, Code of Federal 
     Regulations.
       (e) Notice.--The Nuclear Regulatory Commission shall issue 
     notice of its finding to

[[Page 26799]]

     the licensee, the Federal Energy Regulatory Commission, and 
     any other party of record.

     SEC. 5. AMENDMENT OF THE FEDERAL POWER ACT.

       (a) Declaration.--Section 201 of the Federal Power Act is 
     amended by adding at the end the following:
       ``(h) Declaration Regarding Decommissioning.--The 
     decommissioning of nuclear power plants licensed by the 
     Commission is affected with a public interest, and the 
     Federal regulation of matters relating to decommissioning of 
     nuclear power plants, to the extent provided in this part, is 
     necessary in the pubic interest.''.
       (b) Nuclear Decommissioning Assurance.--Part II of the 
     Federal Power Act (16 U.S.C. 824 et seq.) is amended by 
     adding at the end the following:

     ``SEC. 215. NUCLEAR DECOMMISSIONING ASSURANCE.

       ``(a) Cost Recovery in Wholesale Rates.--
       ``(1) In general.--To the extent that the costs of a 
     decommissioning obligation are recovered in wholesale rates, 
     an electric utility that owns a nuclear power facility in 
     whole or in part may apply to the Commission for an order 
     approving rates and charges in connection with the wholesale 
     transmission or sale of electricity to ensure collection of 
     revenues necessary to ensure that there will be adequate 
     funding to satisfy the decommissioning obligation of the 
     electric utility in establishing rates and charges.
       ``(2) Nuclear decommissioning assurance determination.--In 
     a proceeding under this section, any nuclear decommissioning 
     assurance determination made in a proceeding under section 4 
     of the Nuclear Decommissioning Assurance Act of 1999 shall be 
     conclusive.
       ``(3) Denial of request.--If the Commission, by order or by 
     failure to act with 180 days of the filing of a petition, 
     denies in whole or in part an application under paragraph (1) 
     or otherwise fails to allow collection of costs in rates 
     necessary to ensure adequate funding under section 4 of the 
     Nuclear Decommissioning Assurance Act of 1999, the electric 
     utility may seek review of the action under section 313(b).
       ``(b) Cost Recovery in Retail Rates.--To the extent that 
     the costs of the decommissioning obligation are recovered in 
     retail rates, in a proceeding before a State commission 
     initiated by an electric utility that owns a nuclear power 
     plant in whole or in part for an order approving rates and 
     charges in connection with the distribution of electricity, 
     any nuclear decommissioning assurance determination made by 
     the Commission under section 4 of the Nuclear Decommissioning 
     Assurance Act of 1999 shall be given due consideration, so as 
     to ensure collection of revenues necessary to ensure adequate 
     funding of the nuclear-owning utility's nuclear 
     decommissioning obligations.
       ``(c) Rates, Terms, and Conditions.--
       ``(1) In General.--The Commission and the State commissions 
     shall establish rates, terms, and conditions in response to 
     an application under subsection (a) or (b) not later than 180 
     days after the date of submission of the application.
       ``(2) Failure to act.--For purposes of section 313(b), 
     failure of the Commission to comply with paragraph (1) shall 
     be considered a denial and shall be appealable as a final 
     agency action.
       ``(d) Denial of Request by State Commission.--
     Notwithstanding any other provision of law, if a State 
     commission, by order or by failure to act within 180 days of 
     the filing of a petition, denies in whole or in part the 
     request under subsection (b) or otherwise fails to allow 
     collection of costs in the rates necessary to ensure adequate 
     funding under section 4(b) of the Nuclear Decommissioning 
     Assurance Act of 1999, the electric utility may apply to the 
     United States district court for an order requiring the State 
     commission to establish rates, terms, and conditions 
     necessary to ensure adequate funding under section 4(b) of 
     the Nuclear Decommissioning Assurance Act of 1999.''.
                                 ______
                                 
      By Mr. THOMAS (for himself and Mr. Enzi):
  S. 1794. A bill to designate the Federal courthouse at 145 East 
Simpson Avenue in Jackson, Wyoming, as the ``Clifford P. Hansen Federal 
Courthouse''; to the Committee on Environment and Public Works.


                 Clifford P. Hansen Federal Courthouse

 Mr. THOMAS. Mr. President, I rise today to honor one of 
Wyoming's native sons, former Wyoming Governor and United States 
Senator Cliff Hansen. I am pleased that my colleague, Senator Enzi is 
joining me in sponsoring legislation to name the federal courthouse in 
Jackson, Wyoming, as the ``Clifford P. Hansen Federal Courthouse.''
  Wyoming has enjoyed a long history of outstanding leaders and strong 
individuals. These men and women have sought the best for our small 
towns with big expectations and in turn have exemplified what it really 
means to be a leader in their communities.
  Senator Cliff Hansen stands with the other Wyoming statesmen that 
have helped make our state so special and her citizens proud. Today I 
join my colleagues and Wyoming people to honor him by designating the 
Jackson, Wyoming, federal courthouse in his name.
  Cliff Hansen's career is well known and he has been a fixture of 
public service in Wyoming and the United States for more than 40 years. 
Beginning with the local school board, to Teton County Commissioner, 
the statehouse in Cheyenne as Wyoming's 26th Governor, and finally here 
as a distinguished member of the U.S. Senate.
  Senator Cliff Hansen was so well regarded, his leadership so clear, 
that President Reagan asked him to be Secretary of the Interior not 
once, but twice. With his experience and expertise gained from working 
on issues involving public lands and the environment there is no doubt 
he would have done an excellent job had he chosen to accept.
  His has been a remarkable career with a distinguished record.
  Cliff Hansen and his wife Martha recently celebrated their 65th 
wedding anniversary. What an incredible accomplishment--one of many for 
this singular Wyoming family that continues to play a significant role 
in the Jackson Hole community in which they live.
  With their children, grandchildren, and even great-grandchildren--the 
Hansen family is a colorful part of the fabric that makes Jackson and 
the surrounding areas unique. Cliff Hansen resides and enjoys life in 
Jackson, Wyoming under the immense shadow of the famed Grand Tetons. 
Like the Grand, he stands tall in that close community--dignified, 
multifaceted and solid in his grounding. Our goal as fellow public 
servants should be to aspire to climb to the same personal heights.
  Senator Hansen is a man who embodies a mix of justice and compassion. 
That's a combination we need always to strive for. He is a leader, 
quick to care, astutely understanding and finding the best solutions to 
fit the need. Gracing the Federal Courthouse in his hometown with his 
name--considering that great legacy--is an appropriate symbol for what 
he has always worked for and achieved.
  I join other Wyoming people who consider Governor, Senator, Cliff 
Hansen a worthy citizen. An honorable gentleman who continues to live 
up to the special significance I hope this act will bestow.
 Mr. ENZI. Mr. President, I rise today to pay tribute to one of 
Wyoming's greatest public servants of this century and to support 
legislation introduced today by my colleague, Senator Craig Thomas, to 
designate the federal courthouse in Jackson, Wyoming as the Clifford P. 
Hansen Federal Courthouse.
  When he was elected to the United States Senate in 1966, Clifford 
Peter Hansen had already distinguished himself as a dedicated advocate 
for the State of Wyoming. Born in Zenith, Teton (then Lincoln) County, 
Wyoming, on October 16, 1912, Cliff Hansen attended public schools in 
Jackson, Wyoming and graduated from the University of Wyoming in 1934. 
In that same year, Cliff married his sweetheart, Martha Elizabeth 
Close. For the past 65 years the couple has worked side by side to 
Wyoming's great benefit.
  As a successful cattle rancher and industry representative, Cliff has 
served as an officer of the Wyoming Stock Growers Association, the 
American National Cattlemen's Association, and the Livestock Research 
and Marketing Advisory Committee. He also served as both the Columbia 
Interstate Compact commissioner and the Snake River Compact 
commissioner.
  In 1943 Cliff began his first term as a public official where he 
served for eight years in the capacity of county commissioner for the 
people of Teton County. During those same years Cliff became a member 
of the Board of Trustees for the University of Wyoming where from 1955 
to 1962 he served as board president. Then, from 1963 to 1967 Cliff and 
Martha served as Governor and First Lady of the State of Wyoming.
  In 1966 Cliff was elected to the United States Senate where he served 
from

[[Page 26800]]

January 3, 1967 until December 31, 1978 when he resigned and was 
replaced by my immediate predecessor, Former Senator Alan K. Simpson. 
He passed legislation that still provides for and protects Wyoming. One 
of those, federal mineral royalty sharing, is a major source of revenue 
for the state.
  In April 1979 Cliff was awarded the William A. Steiger Award for 
public service in commemoration of his service to the people of Wyoming 
and the nation.
  This, however, was not the end of Cliff's dedication to public 
service. In 1996, the University of Wyoming celebrated the dedication 
of the Cliff and Martha Hansen agricultural teaching center that was 
made possible by the couple's generous donations to the school.
  One of the best testimonials about Cliff, however, can be found in 
the statement by one of his former employees. For the past three 
decades, the State of Wyoming has benefited by the fine service of 
Correspondence Coordinator Carroll Wood. Carroll was first hired by 
Cliff and has since worked for a total of three Wyoming senators 
including myself. On the subject of Cliff Hansen, Carroll writes: 
``Thank God for Cliff Hansen. He gave me the opportunity to work for 
him and I have survived three different senators from Wyoming. I am 
indeed in his debt for his confidence in me and I will never forget the 
love he has shown me and my family.''
  Mr. President, I too thank God for Cliff Hansen. He has dedicated his 
life to the people of Wyoming and is truly one of the giants of the 
State. Cliff and Martha Hansen are role models for my wife, Diana and 
I. Their continuing concern and consideration for other is unmatched. 
Naming this courthouse after Cliff would provide a small tribute to one 
who has done so much.
                                 ______
                                 
      By Mr. CRAPO:
  S. 1795. A bill to require that before issuing an order, the 
President shall cite the authority for the order, conduct a cost 
benefit analysis, provide for public comment, and for other purposes; 
to the Committee on Governmental Affairs.


                    executive orders limitation act

  Mr. CRAPO. Mr. President, I rise to introduce the Executive Orders 
Limitation Act of 1999.
  A growing number of Americans have expressed concern that President 
Clinton has sought to bypass the constitutional role of Congress by 
issuing Executive orders or proclamations that have the force of law 
and the practical impact of law. Indeed, the use of Executive orders 
has increased dramatically. For example, the first 24 Presidents issued 
1,262 Executive orders, whereas the last 17 Presidents have issued 
11,798 orders.
  The bill I introduce today seeks to strengthen article I of the 
Constitution which grants all legislative powers to the Congress. The 
bill seeks to strengthen our system of checks and balances by ensuring 
that all Executive orders are based on the President's expressed 
constitutional or statutory authority. The bill would require the 
President to cite the exact constitutional or statutory authority he is 
exercising when he issues an Executive order. It would require the 
publication of a cost-benefit analysis and a public comment period 
before an Executive order can take effect.
  The act would also provide for expedited judicial review of 
questionable Executive orders. The Congress has previously set limits 
on the President's ability to issue Executive orders when it required 
that all orders be printed in the Federal Register. My bill would not 
in any way limit the President's ability to issue an Executive order 
which he has the constitutional right to issue. The Executive Orders 
Limitation Act of 1999 seeks to preserve the constitutional separation 
of powers by safeguarding Congress' legislative power, while at the 
same time protecting the President's constitutional and statutory 
authorities.
  The question of how a law is enacted in America was one of the most 
important and significant debates in our constitutional convention. 
That is why we have a system of government established under our 
Constitution by which it is the Congress that makes the law that 
governs this Nation. The President then decides, as he has the right to 
do, whether to sign that law or not. We do not have a system where one 
man or even one branch of our Government has the ability to 
unilaterally create law. Yet that is what the practical effect of the 
use of Executive orders has become in today's timeframe in the way that 
President Clinton has begun using these Executive order powers.
  This legislation will bring appropriate controls to the issue. If the 
President has constitutional or statutorily delegated authority to 
issue Executive orders in a given area, those authorities and those 
rights are preserved. But in those areas where Congress or the 
Constitution have not given the President the authority to enact and 
act as though he were imposing new legal requirements, then that is 
prohibited.
  This legislation is critical. It should not be deemed a threat to 
anyone from any particular perspective on any issue. It should be 
deemed what it is, an effort to restore the balance of power and the 
system of government, in particular the system of making laws our 
constitutional founders intended when they created the Constitution of 
this country.
                                 ______
                                 

  By Mr. LAUTENBERG (for himself, Mr. Mack, Mr. Kyl, Mr. Graham, Mr. 
 Robb, Mr. Lott, Mr. Lieberman, Mr. Hatch, Mr. Conrad, Mr. Helms, Mr. 
 Torricelli, Mr. Specter, Mr. Moynihan, Mr. Hollings, Mr. Schumer, Mr. 
        Coverdell, Mr. Edwards, Mr. Cleland, and Mr. Santorum):

  S. 1796. A bill to modify the enforcement of certain anti-terrorism 
judgements, and for other purposes; to the Committee on the Judiciary.


                the justice for victims of terrorism act

  Mr. LAUTENBERG. Mr. President, I ask unanimous consent that the text 
of S. 1796 be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1796

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

     SECTION 1. ENFORCEMENT OF CERTAIN ANTI-TERRORISM JUDGMENTS.

       (a) Short Title.--This Act may be cited as the ``Justice 
     for Victims of Terrorism Act''.
       (b) Definition.--
       (1) In general.--Section 1603(b) of title 28, United States 
     Code, is amended--
       (A) in paragraph (3) by striking the period and inserting a 
     semicolon and ``and'';
       (B) by redesignating paragraphs (1), (2), and (3) as 
     subparagraphs (A), (B), and (C), respectively;
       (C) by striking ``(b)'' through ``entity--'' and inserting 
     the following:
       ``(b) An `agency or instrumentality of a foreign state' 
     means--
       ``(1) any entity--''; and
       (D) by adding at the end the following:
       ``(2) for purposes of sections 1605(a)(7) and 1610 (a)(7) 
     and (f), any entity as defined under subparagraphs (A) and 
     (B) of paragraph (1), and subparagraph (C) of paragraph (1) 
     shall not apply.''.
       (2) Technical and conforming amendment.--Section 1391(f)(3) 
     of title 28, United States Code, is amended by striking 
     ``1603(b)'' and inserting ``1603(b)(1)''.
       (c) Enforcement of Judgments.--Section 1610(f) of title 28, 
     United States Code, is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (A) by striking ``(including any agency 
     or instrumentality or such state)'' and inserting 
     ``(including any agency or instrumentality of such state)''; 
     and
       (B) by adding at the end the following:
       ``(C) Notwithstanding any other provision of law, moneys 
     due from or payable by the United States (including any 
     agency, subdivision or instrumentality thereof) to any state 
     against which a judgment is pending under section 1605(a)(7) 
     shall be subject to attachment and execution, in like manner 
     and to the same extent as if the United States were a private 
     person.''; and
       (2) by adding at the end the following:
       ``(3)(A) Subject to subparagraph (B), upon determining on 
     an asset-by-asset basis that a waiver is necessary in the 
     national security interest, the President may waive this 
     subsection in connection with (and prior to the enforcement 
     of) any judicial order directing attachment in aid of 
     execution or execution against the premises of a foreign 
     diplomatic mission to the United States, or any funds held by 
     or in the name of such foreign diplomatic mission determined 
     by the President

[[Page 26801]]

     to be necessary to satisfy actual operating expenses of such 
     foreign diplomatic mission.
       ``(B) A waiver under this paragraph shall not apply to--
       ``(i) if the premises of a foreign diplomatic mission has 
     been used for any nondiplomatic purpose (including use as 
     rental property), the proceeds of such use; or
       ``(ii) if any asset of a foreign diplomatic mission is sold 
     or otherwise transferred for value to a third party, the 
     proceeds of such sale or transfer.
       ``(4) For purposes of this subsection, all assets of any 
     agency or instrumentality of a foreign state shall be treated 
     as assets of that foreign state.''.
       (d) Technical and Conforming Amendment.--Section 117(d) of 
     the Treasury Department Appropriations Act, 1999 (Public Law 
     105-277; 112 Stat. 2681-492) is repealed.
       (e) Effective Date.--The amendments made by this section 
     shall apply to any claim for which a foreign state is not 
     immune under section 1605(a)(7) of title 28, United States 
     Code, arising before, on, or after the date of enactment of 
     this Act.
                                 ______
                                 
      By Mr. MURKOWSKI:
  S. 1797. A bill to amend the Alaska Native Claims Settlement Act, to 
provide for a land conveyance to the City of Craig, Alaska, and for 
other purposes; to the Committee on Energy and Natural Resources.


       alaska native claims settlement act amendments legislation

  Mr. MURKOWSKI. Mr. President, today I introduce a bill to solve a 
problem unique to Alaska. The city of Craig is located in the far 
southeastern part of Alaska on Price of Wales Island, the third largest 
island in the country. Craig is unlike any other small town or village 
in Alaska. It has no land base upon which to maintain its local 
services, and no ability to utilize many federal programs which are 
dependent upon a large Alaska Native population for eligibility.
  Nevertheless, the community has grown from a mostly Native population 
of 250 in 1971 to over 2,500 residents, most of whom are not Alaska 
Natives. Despite this, the town is surrounded by land selections from 
two different Alaska village corporations. In fact, 93 percent of the 
land within the Craig city limits is owned by these village 
corporations. Under federal law passed in 1987, none of the village 
land is subject to taxation so long as the land is not developed. The 
city of Craig has only 300 acres of land owned privately by individuals 
within its city limits to serve as it municipal tax base. It can annex 
no other land because the entire land base outside its municipal 
boundaries is owned by the federal government as part of the Tongass 
National Forest or other Alaska Native corporation.
  Craig's demands for municipal services increase every year as costs 
go up and population increases. According to the State of Alaska, Craig 
is the fastest growing first class city in the state. Since its large 
non-Native majority population make the town and its residents largely 
ineligible for federal programs which service virtually all other ANSCA 
villages, it has requested a small conveyance of 4,532 acres of federal 
land located not far from the town. That land entitlement would permit 
the city to develop a land base upon which it could support its 
increasing demand for municipal services.
  The land base which is included in this bill has been carefully 
chosen. It is less than 20 miles from the city and abuts the existing 
road system. It is the first available land from the city limits not 
owned by an Alaska native corporation. The land will complete a sound 
management system by providing municipal ownership of land adjacent to 
both existing private and state owned land. It will be a good use of 
this land which is nowhere near any environmentally sensitive lands 
such as wilderness areas. This part of Prince of Wales Island has 
roads, communities and other developed sites near it. There will be no 
land use conflicts created by this conveyance.
  Mr. President, my bill provides a direct grant of 4,532 acres to the 
city. While I looked at a land exchange, the city has no land to trade. 
The city received no municipal entitlement because the Forest Service 
never agreed to any land selection by the State of Alaska in this part 
of Prince of Wales Island. The only substantial land near Craig besides 
the actual 300 acres on which Craig sits is owned by the federal 
government in the national forest or by Alaska Native corporations.
  I intend to hold a hearing on this bill early in the next session, 
and begin the process to move the bill through the Senate to final 
passage in the Congress.

                          ____________________