[Congressional Record (Bound Edition), Volume 151 (2005), Part 4]
[Senate]
[Pages 4434-4441]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Ms. LANDRIEU (for herself, Mr. Johnson, Mr. Baucus, Mrs. 
        Lincoln, and Mr. Shelby):
  S. 603. A bill to amend the Consumer Credit Protection Act to assure 
meaningful disclosures of the terms of rental-purchase agreements, 
including disclosures of all costs to consumers under such agreements, 
to provide certain substantive rights to consumers under such 
agreements, and for other purposes; to the Committee on Banking, 
Housing, and Urban Affairs.
  Ms. LANDRIEU. 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. 603

       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 ``Consumer Rental-Purchase 
     Agreement Act of 2005''.

     SEC. 2. FINDINGS AND DECLARATION OF PURPOSES.

       (a) Findings.--Congress finds that--
       (1) the rental-purchase industry provides a service that 
     meets and satisfies the demands of many consumers;
       (2) each year, approximately 2,300,000 United States 
     households enter into rental- purchase transactions, and over 
     a 5-year period, approximately 4,900,000 United States 
     households will do so;
       (3) competition among the various firms engaged in the 
     extension of rental-purchase transactions would be 
     strengthened by informed use of rental-purchase transactions; 
     and
       (4) the informed use of rental-purchase transactions 
     results from an awareness of the cost thereof by consumers.
       (b) Purposes.--The purposes of this Act are to assure the 
     availability of rental-purchase transactions; and to assure 
     simple, meaningful, and consistent disclosure of rental-
     purchase terms so that consumers will be able to more readily 
     compare the available rental-purchase terms and avoid 
     uninformed use of rental-purchase transactions, and to 
     protect consumers against unfair rental-purchase practices.

     SEC. 3. CONSUMER CREDIT PROTECTION ACT.

       The Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) 
     is amended by adding at the end the following new title:

                ``TITLE X--RENTAL-PURCHASE TRANSACTIONS

``Sec. 1001. Short title; definitions
``Sec. 1002. Exempted transactions
``Sec. 1003. General disclosure requirements
``Sec. 1004. Rental-purchase disclosures
``Sec. 1005. Other agreement provisions
``Sec. 1006. Right to acquire ownership
``Sec. 1007. Prohibited provisions
``Sec. 1008. Statement of accounts
``Sec. 1009. Renegotiations and extensions
``Sec. 1010. Point-of-rental disclosures
``Sec. 1011. Rental-purchase advertising
``Sec. 1012. Civil liability
``Sec. 1013. Additional grounds for civil liability
``Sec. 1014. Liability of assignees
``Sec. 1015. Regulations
``Sec. 1016. Enforcement
``Sec. 1017. Criminal liability for willful and knowing violation
``Sec. 1018. Relation to other laws
``Sec. 1019. Effect on Government agencies
``Sec. 1020. Compliance date

     ``SEC. 1001. SHORT TITLE; DEFINITIONS.

       ``(a) Short Title.--This title may be cited as the `Rental-
     Purchase Protections Act'.
       ``(b) Definitions.--For purposes of this title, the 
     following definitions shall apply:
       ``(1) Advertisement.--The term `advertisement' means a 
     commercial message in any medium that promotes, directly or 
     indirectly, a rental-purchase agreement, but does not include 
     price tags, window signs, or other in-store merchandising 
     aids.
       ``(2) Agricultural purpose.--The term `agricultural 
     purpose' includes--
       ``(A) the production, harvest, exhibition, marketing, 
     transformation, processing, or manufacture of agricultural 
     products by a

[[Page 4435]]

     natural person who cultivates plants or propagates or 
     nurtures agricultural products; and
       ``(B) the acquisition of farmlands, real property with a 
     farm residence, or personal property and services used 
     primarily in farming.
       ``(3) Board.--The term `Board' means the Board of Governors 
     of the Federal Reserve System.
       ``(4) Cash price.--The term `cash price' means the price at 
     which a merchant, in the ordinary course of business, offers 
     to sell for cash the property that is the subject of the 
     rental-purchase transaction.
       ``(5) Consumer.--The term `consumer' means a natural person 
     who is offered or enters into a rental-purchase agreement.
       ``(6) Date of consummation.--The term `date of 
     consummation' means the date on which a consumer becomes 
     contractually obligated under a rental-purchase agreement.
       ``(7) Initial payment.--The term `initial payment' means 
     the amount to be paid before or at the time of consummation 
     of the agreement, or the time of delivery of the property 
     covered by the agreement if delivery occurs after 
     consummation, including--
       ``(A) the rental payment;
       ``(B) service, processing, or administrative charges;
       ``(C) any delivery fee;
       ``(D) refundable security deposit;
       ``(E) taxes;
       ``(F) mandatory fees or charges; and
       ``(G) any optional fees or charges agreed to by the 
     consumer.
       ``(8) Merchant.--The term `merchant' means a person who 
     provides the use of property through a rental-purchase 
     agreement in the ordinary course of business and to whom the 
     initial payment by the consumer under the agreement is 
     payable.
       ``(9) Payment schedule.--The term `payment schedule' means 
     the amount and timing of the periodic payments and the total 
     number of all periodic payments that the consumer will make 
     if the consumer acquires ownership of the property by making 
     all periodic payments.
       ``(10) Periodic payment.--The term `periodic payment' means 
     the total payment that a consumer will make for a specific 
     rental period after the initial payment, including the rental 
     payment, taxes, mandatory fees or charges, and any optional 
     fees or charges agreed to by the consumer.
       ``(11) Property.--The term `property' means property that 
     is not real property under the laws of the State in which the 
     property is located when it is made available under a rental-
     purchase agreement.
       ``(12) Rental payment.--The term `rental payment' means 
     rent required to be paid by a consumer for the possession and 
     use of property for a specific rental period, but does not 
     include taxes or any fees or charges.
       ``(13) Rental period.--The term `rental period' means a 
     week, month, or other specific period of time, during which 
     the consumer has a right to possess and use property that is 
     the subject of a rental-purchase agreement after paying the 
     rental payment and any applicable taxes for such period.
       ``(14) Rental-purchase agreement.--
       ``(A) In general.--The term `rental-purchase agreement' 
     means a contract in the form of a bailment or lease for the 
     use of property by a consumer for an initial period of 4 
     months or less, that is renewable with each payment by the 
     consumer, and that permits but does not obligate the consumer 
     to become the owner of the property.
       ``(B) Exclusions.--The term `rental-purchase agreement' 
     does not include--
       ``(i) a credit sale (as defined in section 103(g) of the 
     Truth in Lending Act);
       ``(ii) a consumer lease (as defined in section 181(1) of 
     the Truth in Lending Act); or
       ``(iii) a transaction giving rise to a debt incurred in 
     connection with the business of lending money or a thing of 
     value.
       ``(15) Rental-purchase cost.--
       ``(A) In general.--For purposes of sections 1010 and 1011, 
     the term `rental-purchase cost' means the sum of all rental 
     payments and mandatory fees or charges imposed by the 
     merchant as a condition of entering into a rental-purchase 
     agreement or acquiring ownership of property under a rental-
     purchase agreement, including--
       ``(i) any service, processing, or administrative charge;
       ``(ii) any fee for an investigation or credit report; and
       ``(iii) any charge for delivery required by the merchant.
       ``(B) Excluded items.--The following fees or charges shall 
     not be taken into account in determining the rental-purchase 
     cost with respect to a rental-purchase transaction:
       ``(i) Fees and charges prescribed by law, which actually 
     are or will be paid to public officials or government 
     entities, such as sales tax.
       ``(ii) Fees and charges for optional products and services 
     offered in connection with a rental-purchase agreement.
       ``(16) State.--The term `State' means any State of the 
     United States, the District of Columbia, any territory of the 
     United States, Puerto Rico, Guam, American Samoa, the Trust 
     Territory of the Pacific Islands, the Virgin Islands, and the 
     Northern Mariana Islands.
       ``(17) Total cost.--The term `total cost' means the sum of 
     the initial payment and all periodic payments in the payment 
     schedule to be paid by the consumer to acquire ownership of 
     the property that is the subject of the rental-purchase 
     agreement.

     ``SEC. 1002. EXEMPTED TRANSACTIONS.

       ``This title does not apply to rental-purchase agreements 
     primarily for business, commercial, or agricultural purposes, 
     or those made with agencies or instrumentalities of the 
     Federal Government or a State or political subdivision 
     thereof.

     ``SEC. 1003. GENERAL DISCLOSURE REQUIREMENTS.

       ``(a) Recipient of Disclosure.--A merchant shall disclose 
     to any person who will be a signatory to a rental-purchase 
     agreement the information required by sections 1004 and 1005.
       ``(b) Timing of Disclosure.--The disclosures required under 
     sections 1004 and 1005 shall be made before the consummation 
     of the rental-purchase agreement, and clearly and 
     conspicuously in writing as part of the rental-purchase 
     agreement to be signed by the consumer.
       ``(c) Clearly and Conspicuously.--As used in this section, 
     the term `clearly and conspicuously' means that information 
     required to be disclosed to the consumer shall be worded 
     plainly and simply, and appear in a type size, prominence, 
     and location as to be readily noticeable, readable, and 
     comprehensible to an ordinary consumer.

     ``SEC. 1004. RENTAL-PURCHASE DISCLOSURES.

       ``(a) In General.--For each rental-purchase agreement, the 
     merchant shall disclose to the consumer, to the extent 
     applicable--
       ``(1) the date of consummation of the rental-purchase 
     transaction and the identities of the merchant and the 
     consumer;
       ``(2) a brief description of the rental property, which 
     shall be sufficient to identify the property to the consumer, 
     including an identification or serial number, if applicable, 
     and a statement indicating whether the property is new or 
     used;
       ``(3) a description of any fee, charge, or penalty, in 
     addition to the periodic payment, that the consumer may be 
     required to pay under the agreement, which shall be 
     separately identified by type and amount;
       ``(4) a clear and conspicuous statement that the 
     transaction is a rental-purchase agreement and that the 
     consumer will not obtain ownership of the property until the 
     consumer has paid the total dollar amount necessary to 
     acquire ownership;
       ``(5) the amount of any initial payment, which includes the 
     first periodic payment, and the total amount of any fees, 
     taxes, or other charges, required to be paid by the consumer;
       ``(6) the amount of the cash price of the property that is 
     the subject of the rental-purchase agreement, and, if the 
     agreement involves the rental of 2 or more items as a set (as 
     may be defined by the Board in regulation) a statement of the 
     aggregate cash price of all items shall satisfy this 
     requirement;
       ``(7) the amount and timing of periodic payments, and the 
     total number of periodic payments necessary to acquire 
     ownership of the property under the rental-purchase 
     agreement;
       ``(8) the total cost, using that term, and a brief 
     description, such as `This is the amount that you will pay 
     the merchant if you make all periodic payments to acquire 
     ownership of the property.';
       ``(9) a statement of the right of the consumer to terminate 
     the agreement without paying any fee or charge not previously 
     due under the agreement by voluntarily surrendering or 
     returning the property in good repair upon expiration of any 
     lease term; and
       ``(10) substantially the following statement: `other 
     important terms: See your rental-purchase agreement for 
     additional important information on early termination 
     procedures, purchase option rights, responsibilities for 
     loss, damage, or destruction of the property, warranties, 
     maintenance responsibilities, and other charges or penalties 
     you may incur.'.
       ``(b) Form of Disclosure.--The disclosures required by 
     paragraphs (4) through (10) of subsection (a) shall--
       ``(1) be segregated from other information at the beginning 
     of the rental-purchase agreement;
       ``(2) contain only directly related information; and
       ``(3) be identified in boldface, upper-case letters as 
     follows: `IMPORTANT RENTAL-PURCHASE DISCLOSURES'.
       ``(c) Disclosure Requirements Relating to Insurance 
     Premiums and Liability Waivers.--
       ``(1) In general.--A merchant shall clearly and 
     conspicuously disclose in writing to the consumer before the 
     consummation of a rental-purchase agreement that the purchase 
     of leased property insurance or liability waiver coverage is 
     not required as a condition for entering into the rental-
     purchase agreement.
       ``(2) Affirmative written request after cost disclosure.--A 
     merchant may provide insurance or liability waiver coverage, 
     directly or indirectly, in connection with a rental-purchase 
     transaction only if--
       ``(A) the merchant clearly and conspicuously discloses to 
     the consumer the cost of each component of such coverage 
     before the consummation of the rental-purchase agreement; and

[[Page 4436]]

       ``(B) the consumer signs an affirmative written request for 
     such coverage after receiving the disclosures required under 
     paragraph (1) and subparagraph (A) of this paragraph.
       ``(d) Accuracy of Disclosure.--
       ``(1) In general.--The disclosures required to be made 
     under subsection (a) shall be accurate as of the date on 
     which the disclosures are made, based on the information 
     available to the merchant.
       ``(2) Information subsequently rendered inaccurate.--If 
     information required to be disclosed under subsection (a) is 
     subsequently rendered inaccurate as a result of any agreement 
     between the merchant and the consumer subsequent to the 
     delivery of the required disclosures, the resulting 
     inaccuracy shall not constitute a violation of this title.

     ``SEC. 1005. OTHER AGREEMENT PROVISIONS.

       ``(a) In General.--Each rental-purchase agreement shall--
       ``(1) provide a statement specifying whether the merchant 
     or the consumer is responsible for loss, theft, damage, or 
     destruction of the property;
       ``(2) provide a statement specifying whether the merchant 
     or the consumer is responsible for maintaining or servicing 
     the property, together with a brief description of the 
     responsibility;
       ``(3) provide that the consumer may terminate the agreement 
     without paying any charges not previously due under the 
     agreement by voluntarily surrendering or returning the 
     property that is the subject of the agreement upon expiration 
     of any rental period;
       ``(4) contain a provision for reinstatement of the 
     agreement, which at a minimum--
       ``(A) permits a consumer who fails to make a timely rental 
     payment to reinstate the agreement, without losing any rights 
     or options which exist under the agreement, by the payment of 
     all past due rental payments and any other charges then due 
     under the agreement and a payment for the next rental period 
     within 7 business days after failing to make a timely rental 
     payment if the consumer pays monthly, or within 3 business 
     days after failing to make a timely rental payment if the 
     consumer pays more frequently than monthly;
       ``(B) if the consumer returns or voluntarily surrenders the 
     property covered by the agreement, other than through 
     judicial process, during the applicable reinstatement period 
     set forth in subparagraph (A), permits the consumer to 
     reinstate the agreement during a period of at least 60 days 
     after the date of the return or surrender of the property by 
     the payment of all amounts previously due under the 
     agreement, any applicable fees, and a payment for the next 
     rental period;
       ``(C) if the consumer has paid 50 percent or more of the 
     total cost necessary to acquire ownership and returns or 
     voluntarily surrenders the property, other than through 
     judicial process, during the applicable reinstatement period 
     set forth in subparagraph (A), permits the consumer to 
     reinstate the agreement during a period of at least 120 days 
     after the date of the return of the property by the payment 
     of all amounts previously due under the agreement, any 
     applicable fees, and a payment for the next rental period; 
     and
       ``(D) permits the consumer, upon reinstatement of the 
     agreement, to receive the same property, if available, that 
     was the subject of the rental-purchase agreement, or if the 
     same property is not available, a substitute item of 
     comparable quality and condition, except that the Board may, 
     by regulation or order, exempt any independent small business 
     (as defined by regulation of the Board) from the requirement 
     of providing the same or comparable product during the 
     extended reinstatement period provided in subparagraph (C), 
     if the Board determines, taking into account such standards 
     as the Board determines appropriate, that the reinstatement 
     right provided in subparagraph (C) would provide excessive 
     hardship for the independent small business;
       ``(5) provide a statement specifying the terms under which 
     the consumer shall acquire ownership of the property that is 
     the subject of the rental-purchase agreement either by 
     payment of the total cost to acquire ownership, as provided 
     in section 1006, or by exercise of any early purchase option 
     provided in the rental-purchase agreement;
       ``(6) provide a statement disclosing that if any part of a 
     manufacturer's express warranty covers the property at the 
     time the consumer acquires ownership of the property, the 
     warranty will be transferred to the consumer if allowed by 
     the terms of the warranty; and
       ``(7) provide, to the extent applicable, a description of 
     any grace period for making any periodic payment, the amount 
     of any security deposit, if any, to be paid by the consumer 
     upon initiation of the rental-purchase agreement, and the 
     terms for refund of such security deposit to the consumer 
     upon return, surrender or purchase of the property.
       ``(b) Repossession During Reinstatement Period.--Subsection 
     (a)(4) shall not be construed so as to prevent a merchant 
     from attempting to repossess property during the 
     reinstatement period pursuant to subsection (a)(4)(A), but 
     such a repossession does not affect the right of the consumer 
     to reinstatement under subsection (a)(4).

     ``SEC. 1006. RIGHT TO ACQUIRE OWNERSHIP.

       ``(a) In General.--The consumer shall acquire ownership of 
     the property that is the subject of the rental-purchase 
     agreement, and the rental-purchase agreement shall terminate, 
     upon compliance by the consumer with the requirements of 
     subsection (b) or any early payment option provided in the 
     rental purchase agreement, and upon payment of any past due 
     payments and fees, as permitted by regulation of the Board.
       ``(b) Payment of Total Cost.--The consumer shall acquire 
     ownership of the rental property upon payment of the total 
     cost of the rental-purchase agreement, as defined in section 
     1001(17), and as disclosed to the consumer in the rental-
     purchase agreement pursuant to section 1004(a).
       ``(c) Additional Fees Prohibited.--A merchant shall not 
     require the consumer to pay, as a condition for acquiring 
     ownership of the property that is the subject of the rental-
     purchase agreement, any fee or charge in addition to, or in 
     excess of, the regular periodic payments required by 
     subsection (b), or any early purchase option amount provided 
     in the rental-purchase agreement, as applicable. A 
     requirement that the consumer pay an unpaid late charge or 
     other fee or charge which the merchant has previously billed 
     to the consumer shall not constitute an additional fee or 
     charge for purposes of this subsection.
       ``(d) Transfer of Ownership Rights.--Upon payment by the 
     consumer of all payments necessary to acquire ownership under 
     subsection (b) or any early purchase option amount provided 
     in the rental-purchase agreement, as applicable, the merchant 
     shall--
       ``(1) deliver, or mail to the last known address of the 
     consumer, such documents or other instruments which the Board 
     has determined, by regulation, are necessary to acknowledge 
     full ownership by the consumer of the property acquired 
     pursuant to the rental-purchase agreement; and
       ``(2) transfer to the consumer the unexpired portion of any 
     warranties provided by the manufacturer, distributor, or 
     seller of the property, which shall apply as if the consumer 
     were the original purchaser of the property, except where 
     such transfer is prohibited by the terms of the warranty.

     ``SEC. 1007. PROHIBITED PROVISIONS.

       ``A rental-purchase agreement may not contain--
       ``(1) a confession of judgment;
       ``(2) a negotiable instrument;
       ``(3) a security interest or any other claim of a property 
     interest in any goods, except those goods, the use of which 
     is provided by the merchant pursuant to the agreement;
       ``(4) a wage assignment;
       ``(5) a provision requiring the waiver of any legal claim 
     or remedy created by this title or other provision of Federal 
     or State law;
       ``(6) a provision requiring the consumer, in the event that 
     the property subject to the rental-purchase agreement is 
     lost, stolen, damaged, or destroyed, to pay an amount in 
     excess of the least of--
       ``(A) the fair market value of the property, as determined 
     by regulation of the Board;
       ``(B) any early purchase option amount provided in the 
     rental-purchase agreement; or
       ``(C) the actual cost of repair, as appropriate;
       ``(7) a provision authorizing the merchant, or a person 
     acting on behalf of the merchant, to enter the dwelling of 
     the consumer or other premises without obtaining the consent 
     of the consumer, or to commit any breach of the peace in 
     connection with the repossession of the rental property or 
     the collection of any obligation or alleged obligation of the 
     consumer arising out of the rental-purchase agreement;
       ``(8) a provision requiring the purchase of insurance or 
     liability damage waiver to cover the property that is the 
     subject of the rental-purchase agreement, except as permitted 
     by regulation of the Board; or
       ``(9) a provision requiring the consumer to pay more than 1 
     late fee or charge for an unpaid or delinquent periodic 
     payment, regardless of the period in which the payment 
     remains unpaid or delinquent, or to pay a late fee or charge 
     for any periodic payment because a previously assessed late 
     fee has not been paid in full.

     ``SEC. 1008. STATEMENT OF ACCOUNTS.

       ``Upon request of a consumer, a merchant shall provide a 
     statement of the account of the consumer. If a consumer 
     requests a statement for an individual account more than 4 
     times in any 12-month period, the merchant may charge a 
     reasonable fee for the additional statements requested in 
     excess of 4 times during that 12-month period.

     ``SEC. 1009. RENEGOTIATIONS AND EXTENSIONS.

       ``(a) Renegotiations.--For purposes of this section, a 
     `renegotiation' occurs when a rental-purchase agreement is 
     satisfied and replaced by a new agreement undertaken by the 
     same consumer. A renegotiation requires new disclosures under 
     this title, except as provided in subsection (c).
       ``(b) Extensions.--For purposes of this section, an 
     `extension' is an agreement by the consumer and the merchant 
     to continue an existing rental-purchase agreement beyond the 
     original end of the payment schedule,

[[Page 4437]]

     but does not include a continuation that is the result of a 
     renegotiation.
       ``(c) Exceptions.--New disclosures under this title are not 
     required for the following, even if they meet the definition 
     of a renegotiation or an extension under this section:
       ``(1) A reduction in payments.
       ``(2) A deferment of 1 or more payments.
       ``(3) The extension of a rental-purchase agreement.
       ``(4) The substitution of property with property that has a 
     substantially equivalent or greater economic value, provided 
     that the rental-purchase cost does not increase.
       ``(5) The deletion of property in a multiple-item 
     agreement.
       ``(6) A change in the rental period, provided that the 
     rental-purchase cost does not increase.
       ``(7) An agreement resulting from a court proceeding.
       ``(8) Any other event described in regulations prescribed 
     by the Board.

     ``SEC. 1010. POINT-OF-RENTAL DISCLOSURES.

       ``(a) In General.--For any item of property or set of items 
     displayed or offered for rental-purchase, the merchant shall 
     display on or next to the item or set of items a card, tag, 
     or label that clearly and conspicuously discloses--
       ``(1) a brief description of the property;
       ``(2) whether the property is new or used;
       ``(3) the cash price of the property;
       ``(4) the amount of each rental payment;
       ``(5) the total number of rental payments necessary to 
     acquire ownership of the property; and
       ``(6) the rental-purchase cost.
       ``(b) Form of Disclosure.--
       ``(1) In general.--A merchant may make the disclosures 
     required by subsection (a) in the form of a list or catalog 
     which is readily available to the consumer at the point of 
     rental if the merchandise is not displayed in the showroom of 
     the merchant, or if displaying a card, tag, or label would be 
     impractical due to the size of the merchandise.
       ``(2) Clearly and conspicuously.--As used in this section, 
     the term `clearly and conspicuously' means that information 
     required to be disclosed to the consumer shall appear in a 
     type size, prominence, and location as to be noticeable, 
     readable, and comprehensible to an ordinary consumer.

     ``SEC. 1011. RENTAL-PURCHASE ADVERTISING.

       ``(a) In General.--If an advertisement for a rental-
     purchase transaction refers to or states the amount of any 
     payment for any specific item or set of items, the merchant 
     making the advertisement shall also clearly and conspicuously 
     state in the advertisement for the item or set of items 
     advertised--
       ``(1) that the transaction advertised is a rental-purchase 
     agreement;
       ``(2) the amount, timing, and total number of rental 
     payments necessary to acquire ownership under the rental-
     purchase agreement;
       ``(3) the amount of the rental-purchase cost;
       ``(4) that to acquire ownership of the property, the 
     consumer must pay the rental-purchase cost plus applicable 
     taxes; and
       ``(5) whether the stated payment amount and advertised 
     rental-purchase cost is for new or used property.
       ``(b) Prohibition.--An advertisement for a rental-purchase 
     agreement shall not state or imply that a specific item or 
     set of items is available at specific amounts or terms, 
     unless the merchant usually and customarily offers, or will 
     offer, the item or set of items at the stated amounts or 
     terms.
       ``(c) Clearly and Conspicuously.--
       ``(1) In general.--For purposes of this section, the term 
     `clearly and conspicuously' means that required disclosures 
     shall be presented in a type, size, shade, contrast, 
     prominence, location, and manner, as applicable to different 
     media for advertising, so as to be readily noticeable and 
     comprehensible to the ordinary consumer.
       ``(2) Regulatory guidance.--The Board shall prescribe 
     regulations on principles and factors to meet the clear and 
     conspicuous standard, as appropriate to print, video, audio, 
     and computerized advertising, reflecting the principles and 
     factors typically applied in each medium by the Federal Trade 
     Commission.
       ``(3) Limitation.--Nothing contrary to, inconsistent with, 
     or in mitigation of, the disclosures required by this section 
     shall be used in any advertisement in any medium, and no 
     audio, video, or print technique shall be used that is likely 
     to obscure or detract significantly from the communication of 
     the required disclosures.

     ``SEC. 1012. CIVIL LIABILITY.

       ``(a) In General.--Except as otherwise provided in section 
     1013, any merchant who fails to comply with any requirement 
     of this title with respect to any consumer is liable to such 
     consumer as provided for leases in section 130. For purposes 
     of this section, the term `creditor' as used in section 130 
     shall include a `merchant', as defined in section 1001.
       ``(b) Jurisdiction of Courts; Limitation on Actions.--
       ``(1) In general.--Notwithstanding section 130(e), any 
     action under this section may be brought in any United States 
     district court, or in any other court of competent 
     jurisdiction, before the end of the 1-year period beginning 
     on the date on which the last payment was made by the 
     consumer under the rental-purchase agreement.
       ``(2) Recoupment or set-off.--This subsection shall not bar 
     a consumer from asserting a violation of this title in an 
     action to collect an obligation arising from a rental-
     purchase agreement, which was brought after the end of the 1-
     year period described in paragraph (1) as a matter of defense 
     by recoupment or set-off in such action, except as otherwise 
     provided by State law.

     ``SEC. 1013. ADDITIONAL GROUNDS FOR CIVIL LIABILITY.

       ``(a) Individual Cases With Actual Damages.--Any merchant 
     who fails to comply with any requirement imposed under 
     section 1010 or 1011 with respect to any consumer who suffers 
     actual damage from the violation shall be liable to such 
     consumer as provided in section 130.
       ``(b) Pattern or Practice of Violations.--If a merchant 
     engages in a pattern or practice of violating any requirement 
     imposed under section 1010 or 1011, the Federal Trade 
     Commission or an appropriate State attorney general, in 
     accordance with section 1016, may initiate an action to 
     enforce sanctions against the merchant, including--
       ``(1) an order to cease and desist from such practices; and
       ``(2) a civil money penalty of such amount as the court may 
     impose, based on such factors as the court may determine to 
     be appropriate.

     ``SEC. 1014. LIABILITY OF ASSIGNEES.

       ``(a) Assignees Included.--For purposes of section 1013 and 
     this section, the term `merchant' includes an assignee of a 
     merchant.
       ``(b) Liabilities of Assignees.--
       ``(1) Apparent violation.--An action under section 1012 or 
     1013 for a violation of this title may be brought against an 
     assignee only if the violation is apparent on the face of the 
     rental-purchase agreement to which it relates.
       ``(2) Apparent violation defined.--For purposes of this 
     subsection, a violation that is apparent on the face of a 
     rental-purchase agreement includes, but is not limited to, a 
     disclosure that can be determined to be incomplete or 
     inaccurate from the face of the agreement.
       ``(3) Involuntary assignment.--An assignee has no liability 
     under this section in a case in which the assignment is 
     involuntary.
       ``(4) Rule of construction.--No provision of this section 
     shall be construed as limiting or altering the liability 
     under section 1012 or 1013 of a merchant assigning a rental-
     purchase agreement.
       ``(c) Proof of Disclosure.--In an action by or against an 
     assignee, the consumer's written acknowledgment of receipt of 
     a disclosure, made as part of the rental-purchase agreement, 
     shall be conclusive proof that the disclosure was made, if 
     the assignee had no knowledge that the disclosure had not 
     been made when the assignee acquired the rental-purchase 
     agreement to which it relates.

     ``SEC. 1015. REGULATIONS.

       ``(a) In General.--The Board shall prescribe regulations, 
     as necessary to carry out this title, to prevent its 
     circumvention, and to facilitate compliance with its 
     requirements.
       ``(b) Model Disclosure Forms.--
       ``(1) Board authority.--The Board may publish model 
     disclosure forms and clauses for common rental-purchase 
     agreements to facilitate compliance with the disclosure 
     requirements of this title and to aid the consumer in 
     understanding the transaction by utilizing readily 
     understandable language to simplify the technical nature of 
     the disclosures.
       ``(2) Content.--In devising forms described in paragraph 
     (1), the Board shall consider the use by merchants of data 
     processing or similar automated equipment.
       ``(3) Use not mandatory.--Nothing in this title may be 
     construed to require a merchant to use any model form or 
     clause published by the Board under this section.
       ``(4) Determination of compliance.--A merchant shall be 
     deemed to be in compliance with the requirement to provide 
     disclosure under section 1003(a) if the merchant--
       ``(A) uses any appropriate model form or clause published 
     by the Board under this section; or
       ``(B) uses any such model form or clause, and changes it by 
     deleting any information which is not required by this title 
     or rearranging the format, if in making such deletion or 
     rearranging the format, the merchant does not affect the 
     substance, clarity, or meaningful sequence of the disclosure.
       ``(c) Effective Date of Regulations.--
       ``(1) In general.--Any regulation prescribed by the Board, 
     or any amendment or interpretation thereof, shall not be 
     effective before the October 1 that follows the date of 
     publication of the regulation in final form by at least 6 
     months.
       ``(2) Authority to modify.--The Board may, at its 
     discretion--
       ``(A) lengthen the period of time described in paragraph 
     (1) to permit merchants to adjust to accommodate new 
     requirements; or
       ``(B) shorten that period of time, if the Board makes a 
     specific finding that such action is necessary to comply with 
     the findings of a court or to prevent unfair or deceptive 
     practices.
       ``(3) Voluntary compliance.--Notwithstanding paragraph (1) 
     or (2), a merchant

[[Page 4438]]

     may comply with any newly prescribed disclosure requirement 
     prior to its effective date.

     ``SEC. 1016. ENFORCEMENT.

       ``(a) Federal Enforcement.--Compliance with this title 
     shall be enforced under the Federal Trade Commission Act (15 
     U.S.C. 41 et seq.), and a violation of any requirement 
     imposed under this title shall be deemed a violation of a 
     requirement imposed under that Act. All of the functions and 
     powers of the Federal Trade Commission under the Federal 
     Trade Commission Act are available to the Commission to 
     enforce compliance by any person with the requirements of 
     this title, irrespective of whether that person is engaged in 
     commerce or meets any other jurisdictional test under the 
     Federal Trade Commission Act.
       ``(b) State Enforcement.--
       ``(1) In general.--An action to enforce the requirements 
     imposed by this title may also be brought by the appropriate 
     State attorney general in any appropriate United States 
     district court, or any other court of competent jurisdiction.
       ``(2) Prior written notice.--
       ``(A) In general.--The State attorney general shall provide 
     prior written notice of any civil action described in 
     paragraph (1) to the Federal Trade Commission, and shall 
     provide the Commission with a copy of the complaint.
       ``(B) Emergency action.--If prior notice required by this 
     paragraph is not feasible, the State attorney general shall 
     provide notice to the Commission immediately upon instituting 
     the action.
       ``(3) FTC intervention.--The Commission may--
       ``(A) intervene in an action described in paragraph (1);
       ``(B) upon intervening--
       ``(i) remove the action to the appropriate United States 
     district court, if it was not originally brought there; and
       ``(ii) be heard on all matters arising in the action; and
       ``(C) file a petition for appeal.

     ``SEC. 1017. CRIMINAL LIABILITY FOR WILLFUL AND KNOWING 
                   VIOLATION.

       ``Whoever willfully and knowingly gives false or inaccurate 
     information, or fails to provide information which that 
     person is required to disclose under the provisions of this 
     title or any regulation issued under this title shall be 
     subject to the penalty provisions as provided in section 112.

     ``SEC. 1018. RELATION TO OTHER LAWS.

       ``(a) Relation to State Law.--
       ``(1) No effect on consistent state laws.--Except as 
     otherwise provided in subsection (b), this title does not 
     annul, alter, or affect in any manner the meaning, scope, or 
     applicability of the laws of any State relating to rental-
     purchase agreements, except to the extent that those laws are 
     inconsistent with any provision of this title, and then only 
     to the extent of the inconsistency.
       ``(2) Determination of inconsistency.--Upon its own motion 
     or upon the request of an interested party, which is 
     submitted in accordance with procedures prescribed by 
     regulation of the Board, the Board shall determine whether 
     any such inconsistency exists. If the Board determines that a 
     term or provision of a State law is inconsistent with a 
     provision of this title, merchants located in that State 
     shall not be required to comply with that term or provision, 
     and shall incur no liability under the law of that State for 
     failure to follow such term or provision, notwithstanding 
     that such determination is subsequently amended, rescinded, 
     or determined by judicial or other authority to be invalid 
     for any reason.
       ``(3) Greater protection under state law.--Except as 
     provided in subsection (b), for purposes of this section, a 
     term or provision of a State law is not inconsistent with the 
     provisions of this title if the term or provision affords 
     greater protection and benefit to the consumer than the 
     protection and benefit provided under this title, as 
     determined by the Board, on its own motion or upon the 
     petition of any interested party.
       ``(b) State Laws Relating to Characterization of 
     Transaction.--Notwithstanding subsection (a), this title 
     shall supersede any State law, to the extent that such law--
       ``(1) regulates a rental-purchase agreement as a security 
     interest, credit sale, retail installment sale, conditional 
     sale, or any other form of consumer credit, or that imputes 
     to a rental-purchase agreement the creation of a debt or 
     extension of credit; or
       ``(2) requires the disclosure of a percentage rate 
     calculation, including a time-price differential, an annual 
     percentage rate, or an effective annual percentage rate.
       ``(c) Relation to Federal Trade Commission Act.--No 
     provision of this title shall be construed as limiting, 
     superseding, or otherwise affecting the applicability of the 
     Federal Trade Commission Act to any merchant or rental-
     purchase transaction.

     ``SEC. 1019. EFFECT ON GOVERNMENT AGENCIES.

       ``No civil liability or criminal penalty under this title 
     may be imposed on the United States or any of its departments 
     or agencies, any State or political subdivision thereof, or 
     any agency of a State or political subdivision thereof.

     ``SEC. 1020. COMPLIANCE DATE.

       ``Compliance with this title shall not be required until 6 
     months after the date of enactment of this title. In any 
     case, a merchant may comply with this title at any time after 
     such date of enactment.''.
                                 ______
                                 
      By Mr. CRAIG (for himself, Mr. Bingaman, Ms. Collins, Mr. Burr, 
        Mr. Durbin, and Ms. Snowe):
  S. 604. A bill to amend title XVIII of the Social Security Act to 
authorize expansion of medicare coverage of medical nutrition therapy 
services; to the Committee on Finance.
  Mr. CRAIG. Mr. President, in this day of runaway medical costs, I 
would like to take a moment to highlight one cost-effective component 
of healthcare; Medical Nutrition Therapy (MNT). MNT can be used to 
promote health and functionality and affects the quality of life for 
many Americans. MNT is also an effective disease management component 
that lessens chronic disease risk, slows disease progression and 
reduces symptoms. Currently, Medicare beneficiaries can have access to 
MNT, but only for the care of diabetes and kidney disease.
  The legislation that I have introduced, along with Mr. Bingaman and 
other colleagues, would give the Centers for Medicare & Medicaid 
Services the authority, using the National Coverage Determination (NCD) 
process, to expand the MNT benefit beyond diabetes and renal diseases. 
Currently, Congress must pass legislation for beneficiaries to receive 
MNT for each and every condition or disease for which MNT proves itself 
to be cost effective. Choosing to rely on the NCD process would allow 
CMS to make decisions based upon the science, and establish the extent 
to which Medicare will cover specific services, procedures or 
technologies on a national basis. This is what the NCD is designed to 
do.
  CMS reported to Congress last year that there are other conditions, 
such as hypertension and dyslipidemia, HIV/AIDS and cancer, where 
evidence supports the cost-effectiveness of MNT as part of the care 
plan. It is time to make the MNT benefit more preventive in nature, and 
combat diabetes, hypertension, and dyslipidemia in the early stages of 
the diseases. It makes good sense for CMS, which routinely reviews the 
science behind recommendations, to direct this benefit appropriately 
without having to get Congressional approval for each and every 
disease.
  It is important to note that this new language does not mandate any 
expansion; it only gives CMS the authority in include coverage of MNT 
based on scientific evidence that the proposed coverage is reasonable, 
necessary and cost effective. I encourage your support for this 
legislation.
                                 ______
                                 
      By Mr. THUNE (for himself, Mr. Inhofe, Mr. Voinovich, and Mr. 
        Bond):
  S. 606. A bill to amend the Clean Air Act to eliminate methyl 
tertiary butyl ether from the United States fuel supply, to increase 
production and use of renewable fuel, and to increase the Nation's 
energy independence, and for other purposes; to the Committee on 
Environment and Public Works.
  Mr. THUNE. Mr. President, last weekend I joined four of my colleagues 
to travel to Alaska, to see first-hand the Arctic National Wildlife 
Refuge. It's not a welcoming place--it's cold and icy; vast and empty . 
. . even the Caribou didn't notice our presence. But beneath the icy 
tundra is one of the largest oil fields in the world--an oil field so 
vast it could power the State of South Dakota for centuries.
  This week the Senate is moving forward on legislation to explore 
ANWR. This is just one piece of finally passing a national energy 
policy and reducing our dependence on foreign sources of oil.
  We cannot act fast enough: This week gas prices hit record highs. And 
with oil hovering around $55 per barrel and threatening to move even 
higher, it's critical that the Senate act to reduce America's 
dependence on foreign sources oil.
  ANWR is one piece of the solution. But equally important--and even 
more important to my State of South Dakota--is investing in renewable 
fuels like ethanol.
  It is time for the United States Senate to pass the Renewable Fuels 
Standard.

[[Page 4439]]

  The Renewable Fuels Standard has languished for too long. Despite 
strong bipartisan support and private-sector agreements, past 
Congresses have failed to pass a national energy policy that includes a 
Renewable Fuels Standard. Now, we have another opportunity.
  This legislation has a special importance to my State. South Dakota 
is a heavily agricultural State and the Nation's fifth largest producer 
of ethanol. The market for ethanol has breathed new life into the small 
towns and small farms that dot the prairies of South Dakota. When 
driving through the rural counties of South Dakota, it's not unusual to 
observe the silos and storage tanks of an ethanol plant silhouetted 
against the prairie horizon. In many ways, the ethanol industry and its 
physical manifestations have become a part of the rural American 
identity.
  Make no mistake about it: South Dakota's farmers are relying on the 
passage of the Renewable Fuels Standard to provide a surge in corn 
prices and a guaranteed market for their product.
  This legislation is an improvement upon what passed out of the United 
States Senate last Congress. It increases the ethanol gallon 
requirement to 6 billion gallons, an increase of 1 billion gallons.
  As we have a tremendous opportunity and responsibility to move this 
country forward. This legislation is vital to the ethanol industry, and 
will strengthen our economy, and our energy security. After so many 
failed attempts to pass this important legislation, I hope this Senate 
will finally finish the job and pass a Renewable Fuel Standard.
                                 ______
                                 
      By Mr. HARKIN:
  S. 607. A bill to amend the Employee Retirement Income Security Act 
of 1974 and the Internal Revenue Code of 1986 with respect to early 
retirement benefits, and for other purposes; to the Committee on 
Health, Education, Labor, and Pensions.
  Mr. HARKIN. Mr. President, I rise to introduce a bill that will 
prevent workers from losing a large chunk of their pension when they 
work for a company that sells their division.
  This legislation is prompted by articles written by Mary Williams 
Walsh in the New York Times outlining the story of how a group of 
workers in Olean, NY lost $25 million in promised benefits when their 
division was acquired and then spun off.
  Current law says that if a company wants to amend their pension plan, 
they have to give workers the share of their early retirement subsidy 
that they have already earned. However, a company doesn't have to do 
that if your division is bought and sold--even if the workers are in 
the same building, sitting at the same desk, and doing the same job the 
whole time. That's just ridiculous.
  In this case, Halliburton purchased a division of Dresser Industries, 
and seventeen months later spun off the Olean, NY division, netting 
$215 million. They treated those employees as if they had resigned and 
gone to work for Ingersoll-Rand. While employees who were 55 years old 
were kept whole, anyone younger lost up to half the value of their 
pension overnight, without being informed. They realized what had 
happened in June 2002 when they got notices in the mail telling them 
that they had 90 days to either collect a much smaller benefit than 
they had anticipated, or lose their right to a lump sum payment 
forever. Some recent retirees were even told that they got paid too 
much, and had to give back pension money they already received.
  Meanwhile, the CEO during that period, now Vice President Dick 
Cheney, got a special pension deal from the board totaling an estimated 
$10 million in benefits, even though he hadn't worked there long enough 
to qualify for a pension under the usual rules.
  This is a completely unconscionable way to cheat hard working people 
out of their promised pension benefits.
  My bill would simply require that companies must follow the same 
rules about applying credits toward pension under mergers and 
acquisitions that they do under any other kind of pension plan 
amendment.
                                 ______
                                 
      By Mr. HARKIN:
  S. 608. A bill to create an independent office in the Department of 
Labor to advocate on behalf of pension participants, and for other 
purposes; to the Committee on Health, Education, Labor, and Pensions.
  Mr. HARKIN. Mr. President, I rise to reintroduce a bill originally 
introduced in the 106th Congress that seeks to create an Office of 
Pension Participant Advocacy at the Department of Labor.
  When I first introduced this bill, it was just a good idea. Now, it 
has become an absolute necessity. Since 2000, unimaginable pension loss 
horror stories have cropped up in the wake of major corporate 
bankruptcies like Enron and WorldCom. People have lost their guaranteed 
pensions to mergers and acquisitions and to misinformation and to just 
plain irresponsibility.
  On March 3, the New York Times reported that companies are still 
desperately seeking ways to scrape funds out of their pensions--despite 
market downfalls and despite the dire situation at the Pension Benefit 
Guarantee Corporation. And who ultimately ends up paying the price when 
the company ends up bailing on its obligation? Pension plan 
participants pay.
  Many of these people have absolutely nowhere to turn. People who have 
a genuine legal claim to their pension, but have been unfairly denied 
it, can end up spending countless hours calling phone number after 
phone number and getting the run around, and maybe receiving technical 
assistance years later.
  Individual pension plans are complex, as are the laws that govern 
them. Currently, multiple Federal agencies share jurisdiction over 
pension law. Time and time again, the needs of pension participants are 
ignored, and pensioners don't get help in navigating the government's 
pension bureaucracy.
  This office would accelerate good public policy. Several years ago, I 
heard from an employee of a large technology manufacturer that gave 
early retirees the choice between taking either an annuity of $1,470 
per month, or an annuity of $200 per month plus $107,300 as a lump sum, 
both payable at age 55. While the lump sum package may appear more 
lucrative at first glance, the annuity option for a given employee had 
a value of approximately $228,000--more than 80 percent greater than 
the lump sum option touted by the employer.
  I also heard from a 53 year old man with 26 years of service. He 
shared with me the complicated summary of his pension options he 
received from his employer. The first line offers a $423,000 lump sum, 
which looks like it is based on the value of the $3,140 per month 
annuity he would normally receive. However, the true actuarial value of 
the annuity option turns out to be closer to $511,000. Stated another 
way, the $423,000 lump sum offer is equivalent to a monthly benefit of 
$2,590, almost $500 a month less than the annuity option would provide. 
People lost half the value of their pensions to this kind of 
misinformation, many of whom never found out how they had been hurt.
  Hearing stories like that prompted me to write to the Treasury 
requesting that they close this loophole and require that employees get 
an apples-to-apples comparison of their benefits, and Treasury did. 
However, how many fewer people would have been given misleading 
information about their pensions if there were someone within the 
government specifically charged with seeking out problems like these?
  In the years that I have been working to fight age discriminatory 
practices sometimes used when converting from traditional defined 
benefit plans to cash balance pensions, I heard from a number of people 
who lost huge amounts of money in their pensions to ``wear away,'' 
again, often not realizing what had happened to them until their nest 
egg was gone.
  For example, take Larry Cutrone. He was one of thousands of people 
who figured out how much they lost in their cash balance conversion. He 
said that before AT&T converted his pension, it was valued at $350,000. 
After the conversion, in July 1997, the value dropped to $138,000. The 
calculation period for

[[Page 4440]]

his pension was frozen at 1994-1996 salaries, so no value to his 
retirement account was added for any years he worked after the 
conversion.
  He said:

       In September 2001, I was ``downsized'' out of AT&T and 
     decided to take my pension. I discovered that it translated 
     into an annual income of just $23,444 instead of the $47,303 
     income under the old plan.
       When these plans were changed over, workers were not 
     informed that this could happen. They woke up one day and 
     found out: they have less than 50 percent of what they 
     thought they were going to get in their retirement.

  Good public policy on pensions should never, ever have allowed that. 
People need someone on their side, because large corporations have 
plenty of people on their side.
  This office would not only provide technical assistance to 
participants, but would serve as a voice to advocate for participants' 
rights in general within the Administration. Corporations who cheat 
employees out of their pensions should not be able to wait for a 
retiree to notice that they've been taken. There should be someone in 
the Federal government actively pursuing companies who use their 
employees' pension plans as their own private piggy bank.
  The Office of Pension Participant Advocacy created in this bill 
would: actively seek out information and suggestions on pension 
policies and on Federal agencies which affect pension participants.
  Evaluate the efforts of Federal agencies, businesses and industry to 
assist pension participants.
  Identify significant problems faced by employees and retirees.
  Make annual recommendations documenting significant pension problems 
and recommending legislative and regulatory solutions.
  And examine existing pension plans and determine the extent to which 
current law serves pensioners in those plans.
  We need one central place where pension participants can turn to when 
problems arise. We need one place in government whose sole obligation 
is to look out for the general pension interests of employees and 
retirees concerning their pensions. We need an office that will be an 
advocate for pension participants. For that reason, I urge my 
colleagues to join me in supporting this critical legislation.
                                 ______
                                 
      By Mr. TALENT (for himself, Mrs. Lincoln, Mr. Thune, Mr. Johnson, 
        Mr. Coleman, Mr. Salazar, Mr. Harkin, Mr. Hagel, and Mr. Bond):
  S. 610. A bill to amend the Internal Revenue Code of 1986 to provide 
for a small agri-biodiesel producer credit and to improve the small 
ethanol producer credit; to the Committee on Finance.
  Mr. TALENT. 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. 610

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

     SECTION 1. SMALL AGRI-BIODIESEL PRODUCER CREDIT.

       (a) In General.--Subsection (a) of section 40A of the 
     Internal Revenue Code of 1986 (relating to biodiesel used as 
     a fuel) is amended to read as follows:
       ``(a) General Rule.--For purposes of section 38, the 
     biodiesel fuels credit determined under this section for the 
     taxable year is an amount equal to the sum of--
       ``(1) the biodiesel mixture credit, plus
       ``(2) the biodiesel credit, plus
       ``(3) in the case of an eligible small agri-biodiesel 
     producer, the small agri-biodiesel producer credit.''.
       (b) Small Agri-biodiesel Producer Credit Defined.--Section 
     40A(b) of the Internal Revenue Code of 1986 (relating to 
     definition of biodiesel mixture credit and biodiesel credit) 
     is amended by adding at the end the following new paragraph:
       ``(5) Small agri-biodiesel producer credit.--
       ``(A) In general.--The small agri-biodiesel producer credit 
     of any eligible small agri-biodiesel producer for any taxable 
     year is 10 cents for each gallon of qualified agri-biodiesel 
     production of such producer.
       ``(B) Qualified agri-biodiesel production.--For purposes of 
     this paragraph, the term `qualified agri-biodiesel 
     production' means any agri-biodiesel which is produced by an 
     eligible small agri-biodiesel producer, and which during the 
     taxable year--
       ``(i) is sold by such producer to another person--

       ``(I) for use by such other person in the production of a 
     qualified biodiesel mixture in such other person's trade or 
     business (other than casual off-farm production),
       ``(II) for use by such other person as a fuel in a trade or 
     business, or
       ``(III) who sells such agri-biodiesel at retail to another 
     person and places such agri-biodiesel in the fuel tank of 
     such other person, or

       ``(ii) is used or sold by such producer for any purpose 
     described in clause (i).
       ``(C) Limitation.--The qualified agri-biodiesel production 
     of any producer for any taxable year shall not exceed 
     15,000,000 gallons.''.
       (c) Definitions and Special Rules.--Section 40A of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     subsection (e) as subsection (f) and by inserting after 
     subsection (d) the following new subsection:
       ``(e) Definitions and Special Rules for Small Agri-
     biodiesel Producer Credit.--For purposes of this section--
       ``(1) Eligible small agri-biodiesel producer.--The term 
     `eligible small agri-biodiesel producer' means a person who, 
     at all times during the taxable year, has a productive 
     capacity for agri-biodiesel not in excess of 60,000,000 
     gallons.
       ``(2) Aggregation rule.--For purposes of the 15,000,000 
     gallon limitation under subsection (b)(5)(C) and the 
     60,000,000 gallon limitation under paragraph (1), all members 
     of the same controlled group of corporations (within the 
     meaning of section 267(f)) and all persons under common 
     control (within the meaning of section 52(b) but determined 
     by treating an interest of more than 50 percent as a 
     controlling interest) shall be treated as 1 person.
       ``(3) Partnership, s corporation, and other pass-thru 
     entities.--In the case of a partnership, trust, S 
     corporation, or other pass-thru entity, the limitations 
     contained in subsection (b)(5)(C) and paragraph (1) shall be 
     applied at the entity level and at the partner or similar 
     level.
       ``(4) Allocation.--For purposes of this subsection, in the 
     case of a facility in which more than 1 person has an 
     interest, productive capacity shall be allocated among such 
     persons in such manner as the Secretary may prescribe.
       ``(5) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary--
       ``(A) to prevent the credit provided for in subsection 
     (a)(3) from directly or indirectly benefiting any person with 
     a direct or indirect productive capacity of more than 
     60,000,000 gallons of agri-biodiesel during the taxable year, 
     or
       ``(B) to prevent any person from directly or indirectly 
     benefiting with respect to more than 15,000,000 gallons 
     during the taxable year.
       ``(6) Allocation of small agri-biodiesel credit to patrons 
     of cooperative.--
       ``(A) Election to allocate.--
       ``(i) In general.--In the case of a cooperative 
     organization described in section 1381(a), any portion of the 
     credit determined under subsection (a)(3) for the taxable 
     year may, at the election of the organization, be apportioned 
     pro rata among patrons of the organization on the basis of 
     the quantity or value of business done with or for such 
     patrons for the taxable year.
       ``(ii) Form and effect of election.--An election under 
     clause (i) for any taxable year shall be made on a timely 
     filed return for such year. Such election, once made, shall 
     be irrevocable for such taxable year.
       ``(B) Treatment of organizations and patrons.--
       ``(i) Organizations.--The amount of the credit not 
     apportioned to patrons pursuant to subparagraph (A) shall be 
     included in the amount determined under subsection (a)(3) for 
     the taxable year of the organization.
       ``(ii) Patrons.--The amount of the credit apportioned to 
     patrons pursuant to subparagraph (A) shall be included in the 
     amount determined under such subsection for the first taxable 
     year of each patron ending on or after the last day of the 
     payment period (as defined in section 1382(d)) for the 
     taxable year of the organization or, if earlier, for the 
     taxable year of each patron ending on or after the date on 
     which the patron receives notice from the cooperative of the 
     apportionment.
       ``(iii) Special rules for decrease in credits for taxable 
     year.--If the amount of the credit of the organization 
     determined under such subsection for a taxable year is less 
     than the amount of such credit shown on the return of the 
     organization for such year, an amount equal to the excess 
     of--

       ``(I) such reduction, over
       ``(II) the amount not apportioned to such patrons under 
     subparagraph (A) for the taxable year,

     shall be treated as an increase in tax imposed by this 
     chapter on the organization. Such increase shall not be 
     treated as tax imposed by this chapter for purposes of 
     determining the amount of any credit under this chapter or 
     for purposes of section 55.''.

[[Page 4441]]

       (d) Small Agri-biodiesel Credit Not a Passive Activity 
     Credit.--Clause (i) of section 469(d)(2)(A) of the Internal 
     Revenue Code of 1986, as amended by section 2, is amended by 
     striking ``section 40(a)(3)'' and inserting ``sections 
     40(a)(3) and 40A(a)(3)''.
       (e) Small Agri-biodiesel Producer Credit Not Added Back to 
     Income Under Section 87.--Section 87 of the Internal Revenue 
     Code of 1986, as amended by section 2, is amended by striking 
     ``and'' at the end of paragraph (2) and by striking paragraph 
     (3) and inserting the following new paragraphs:
       ``(3) the biodiesel mixture credit determined with respect 
     to the taxpayer for the taxable year under section 40A(a)(1), 
     and
       ``(4) the biodiesel credit determined with respect to the 
     taxpayer for the taxable year under section 40A(a)(2).''.
       (f) Conforming Amendments.--
       (1) Paragraph (4) of section 40A(b) of the Internal Revenue 
     Code of 1986 is amended by striking ``this section'' and 
     inserting ``paragraph (1) or (2) of subsection (a)''.
       (2) The heading of subsection (b) of section 40A of such 
     Code is amended by striking ``and Biodiesel Credit'' and 
     inserting ``, Biodiesel Credit, and Small Agri-biodiesel 
     Producer Credit''.
       (3) Paragraph (3) of section 40A(d) of such Code is amended 
     by redesignating subparagraph (C) as subparagraph (D) and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Producer credit.--If--
       ``(i) any credit was determined under subsection (a)(3), 
     and
       ``(ii) any person does not use such fuel for a purpose 
     described in subsection (b)(5)(B),

     then there is hereby imposed on such person a tax equal to 10 
     cents a gallon for each gallon of such agri-biodiesel.''.
       (g) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 2. IMPROVEMENTS TO SMALL ETHANOL PRODUCER CREDIT.

       (a) Definition of Small Ethanol Producer.--Section 40(g) of 
     the Internal Revenue Code of 1986 (relating to definitions 
     and special rules for eligible small ethanol producer credit) 
     is amended by striking ``30,000,000'' each place it appears 
     and inserting ``60,000,000''.
       (b) Small Ethanol Producer Credit Not a Passive Activity 
     Credit.--Clause (i) of section 469(d)(2)(A) of the Internal 
     Revenue Code of 1986 is amended by striking ``subpart D'' and 
     inserting ``subpart D, other than section 40(a)(3),''.
       (c) Small Ethanol Producer Credit Not Added Back to Income 
     Under Section 87.--Section 87 of the Internal Revenue Code of 
     1986 (relating to income inclusion of alcohol and biodiesel 
     fuels credits) is amended by redesignating paragraph (2) as 
     paragraph (3) and by striking paragraph (1) and inserting the 
     following:
       ``(1) the amount of the alcohol mixture credit determined 
     with respect to the taxpayer for the taxable year under 
     section 40(a)(1),
       ``(2) the alcohol credit determined with respect to the 
     taxpayer for the taxable year under section 40(a)(2), and''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

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