[Congressional Record (Bound Edition), Volume 161 (2015), Part 8]
[Senate]
[Pages 10488-10491]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. WYDEN:
  S. 1687. A bill to amend the Internal Revenue Code of 1986 to 
restrict the insurance business exception to passive foreign investment 
company rules; to the Committee on Finance.
  Mr. WYDEN. Mr. President, I rise today to introduce the Offshore 
Reinsurance Tax Fairness Act. This bill closes a tax loophole that is 
being used by some U.S.-based hedge funds that set up insurance 
companies in places like Bermuda and the Cayman Islands where they 
aren't taxed and where their earnings are sheltered from U.S. taxes. 
Offshore businesses that reinsure risks and that invest in U.S. hedge 
funds create the potential for tax avoidance of hundreds of millions of 
dollars.
  Under these arrangements, a hedge fund or hedge fund investors make a 
capital investment in an offshore reinsurance company. The offshore 
reinsurance company then reinvests that capital, as well as premiums it 
receives, in the hedge fund. The owners of the reinsurer take the 
position that they are not taxed on corporate earnings until either 
those earnings are distributed, or the investors sell the corporation's 
stock at a gain reflecting those earnings.
  However, the hedge fund ``reinsurers'' are taking advantage of an 
exception to the passive foreign investment company--or PFIC--rules of 
U.S. tax law. The PFIC rules are designed to prevent U.S. taxpayers 
from delaying U.S. tax on investment income by holding investments 
through offshore corporations. However, the PFIC rules provide an 
exception for income derived from the active conduct of an insurance 
business. The exception applies to income derived from the active 
conduct of an insurance business by a corporation which is 
predominantly engaged in an insurance business and which would be 
subject to tax under Subchapter L if it were a domestic corporation.
  Current law does not prescribe how much insurance or reinsurance 
business the company must do to be considered predominantly engaged in 
an insurance business. Our investigative efforts show that some 
companies that are not legitimate insurance companies are taking 
advantage of this favorable tax treatment.
  About a year ago I asked the Treasury Department and IRS to issue 
guidance to shut down this abuse. And in April, Treasury and IRS issued 
regulations that take a first step at addressing this issue. However, 
while the guidance offers clarity in this area, a legislative fix is 
required to fully close this loophole.
  Therefore, today I am introducing the Offshore Reinsurance Tax 
Fairness Act to shut down this abuse once and for all. My bill would 
provide a bright-line test for determining whether a company is truly 
an insurance company for purposes of the exception to the PFIC rules.
  Under the new rule, to be considered an insurance company, the 
company's insurance liabilities must exceed 25 percent of its assets. 
If the company fails to qualify because it has 25 percent or less--but 
not less than 10 percent--in insurance liability assets, the company 
may still be predominantly engaged in the insurance business based on 
facts and circumstances. A company with less than 10 percent of 
insurance liability assets will not be considered an insurance company 
and, therefore, would be ineligible for the PFIC exception and subject 
to current taxation.
  The Offshore Reinsurance Tax Fairness Act will disqualify most of the 
hedge fund reinsurance companies that are taking advantage of the 
current law loophole, making them ineligible for the PFIC exception and 
stopping this abuse. I look forward to working with my colleagues to 
enact this important reform.
  Mr. President, I ask unanimous consent that the text of the bill and 
a technical explanation be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1687

       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 ``Offshore Reinsurance Tax 
     Fairness Act''.

     SEC. 2. RESTRICTION ON INSURANCE BUSINESS EXCEPTION TO 
                   PASSIVE FOREIGN INVESTMENT COMPANY RULES.

       (a) In General.--Section 1297(b)(2)(B) of the Internal 
     Revenue Code of 1986 is amended to read as follows:
       ``(B) derived in the active conduct of an insurance 
     business by a qualifying insurance corporation (as defined in 
     subsection (f)),''.
       (b) Qualifying Insurance Corporation Defined.--Section 1297 
     of the Internal Revenue Code of 1986 is amended by adding at 
     the end the following new subsection:
       ``(f) Qualifying Insurance Corporation.--For purposes of 
     subsection (b)(2)(B)--
       ``(1) In general.--The term `qualifying insurance 
     corporation' means, with respect to any taxable year, a 
     foreign corporation--
       ``(A) which would be subject to tax under subchapter L if 
     such corporation were a domestic corporation, and
       ``(B) the applicable insurance liabilities of which 
     constitute more than 25 percent of its total assets, 
     determined on the basis of such liabilities and assets as 
     reported on the corporation's applicable financial statement 
     for the last year ending with or within the taxable year.
       ``(2) Alternative facts and circumstances test for certain 
     corporations.--If a corporation fails to qualify as a 
     qualified insurance corporation under paragraph (1) solely 
     because the percentage determined under paragraph (1)(B) is 
     25 percent or less, a United States person that owns stock in 
     such corporation may elect to treat such stock as stock of a 
     qualifying insurance corporation if--
       ``(A) the percentage so determined for the corporation is 
     at least 10 percent, and
       ``(B) under regulations provided by the Secretary, based on 
     the applicable facts and circumstances--
       ``(i) the corporation is predominantly engaged in an 
     insurance business, and
       ``(ii) such failure is due solely to temporary 
     circumstances involving such insurance business.
       ``(3) Applicable insurance liabilities.--For purposes of 
     this subsection--
       ``(A) In general.--The term `applicable insurance 
     liabilities' means, with respect to any life or property and 
     casualty insurance business--
       ``(i) loss and loss adjustment expenses, and
       ``(ii) reserves (other than deficiency, contingency, or 
     unearned premium reserves) for life and health insurance 
     risks and life and health insurance claims with respect to 
     contracts providing coverage for mortality or morbidity 
     risks.
       ``(B) Limitations on amount of liabilities.--Any amount 
     determined under clause (i) or (ii) of subparagraph (A) shall 
     not exceed the lesser of such amount--
       ``(i) as reported to the applicable insurance regulatory 
     body in the applicable financial statement described in 
     paragraph (4)(A) (or, if less, the amount required by 
     applicable law or regulation), or
       ``(ii) as determined under regulations prescribed by the 
     Secretary.
       ``(4) Other definitions and rules.--For purposes of this 
     subsection--
       ``(A) Applicable financial statement.--The term `applicable 
     financial statement' means a statement for financial 
     reporting purposes which--
       ``(i) is made on the basis of generally accepted accounting 
     principles,
       ``(ii) is made on the basis of international financial 
     reporting standards, but only if there is no statement that 
     meets the requirement of clause (i), or

[[Page 10489]]

       ``(iii) except as otherwise provided by the Secretary in 
     regulations, is the annual statement which is required to be 
     filed with the applicable insurance regulatory body, but only 
     if there is no statement which meets the requirements of 
     clause (i) or (ii).
       ``(B) Applicable insurance regulatory body.--The term 
     `applicable insurance regulatory body' means, with respect to 
     any insurance business, the entity established by law to 
     license, authorize, or regulate such business and to which 
     the statement described in subparagraph (A) is provided.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2015.

  Technical Explanation of the Offshore Reinsurance Tax Fairness Act 
              Introduced by Senator Wyden on June 25, 2015


                              Present Law

     Passive foreign investment companies
       A U.S. person who is a shareholder of a passive foreign 
     investment company (``PFIC'') is subject to U.S. tax in 
     respect to that person's share of the PFIC's income under one 
     of three alternative anti-deferral regimes. A PFIC generally 
     is defined as any foreign corporation if 75 percent or more 
     of its gross income for the taxable year consists of passive 
     income, or 50 percent or more of its assets consists of 
     assets that produce, or are held for the production of, 
     passive income. Alternative sets of income inclusion rules 
     apply to U.S. persons that are shareholders in a PFIC, 
     regardless of their percentage ownership in the company. One 
     set of rules applies to passive foreign investment companies 
     that are ``qualified electing funds,'' under which electing 
     U.S. shareholders currently include in gross income their 
     respective shares of the company's earnings, with a separate 
     election to defer payment of tax, subject to an interest 
     charge, on income not currently received. A second set of 
     rules applies to passive foreign investment companies that 
     are not qualified electing funds, under which U.S. 
     shareholders pay tax on certain income or gain realized 
     through the company, plus an interest charge that is 
     attributable to the value of deferral. A third set of rules 
     applies to PFIC stock that is marketable, under which 
     electing U.S. shareholders currently take into account as 
     income (or loss) the difference between the fair market value 
     of the stock as of the close of the taxable year and their 
     adjusted basis in such stock (subject to certain 
     limitations), often referred to as ``marking to market.''
     Passive income
       Passive income means any income which is of a kind that 
     would be foreign personal holding company income, including 
     dividends, interest, royalties, rents, and certain gains on 
     the sale or exchange of property, commodities, or foreign 
     currency.
       However, among other exceptions, passive income does not 
     include any income derived in the active conduct of an 
     insurance business by a corporation that is predominantly 
     engaged in an insurance business and that would be subject to 
     tax under subchapter L if it were a domestic corporation.
       In Notice 2003-34, the Internal Revenue Service identified 
     issues in applying the insurance exception under the PFIC 
     rules. One issue involves whether risks assumed under 
     contracts issued by a foreign company organized as an insurer 
     are truly insurance risks, and whether the risks are limited 
     under the terms of the contracts. In the Notice, the Service 
     also analyzed the status of the company as an insurance 
     company. The Service looked to Treasury Regulations issued in 
     1960 and last amended in 1972, as well as to the statutory 
     definition of an insurance company and to the case law. The 
     question to resolve in determining a company's status as an 
     insurance company is whether ``the character of all of the 
     business actually done by [the company] . . . indicate[s] 
     whether [the company] uses its capital and efforts primarily 
     in investing rather than primarily in the insurance 
     business.'' The Notice concluded that ``[t]he Service will 
     scrutinize these arrangements and will apply the PFIC rules 
     where it determines that [a company] is not an insurance 
     company for federal tax purposes.''
       Proposed regulations on the insurance exception under the 
     PFIC rules published on April 24, 2015, provide that ``the 
     term insurance business means the business of issuing 
     insurance and annuity contracts and the reinsuring of risks 
     underwritten by insurance companies, together with those 
     investment activities and administrative services that are 
     required to support or are substantially related to insurance 
     and annuity contracts issued or reinsured by the foreign 
     corporation.'' The proposed regulations provide that an 
     investment activity is an activity producing foreign personal 
     holding company income, and that is ``required to support or 
     [is] substantially related to insurance and annuity contracts 
     issued or reinsured by the foreign corporation to the extent 
     that income from the activities is earned from assets held by 
     the foreign corporation to meet obligations under the 
     contracts.''
       The preamble to the proposed regulations specifically 
     requests comments on the proposed regulations ``with regard 
     to how to determine the portion of a foreign insurance 
     company's assets that are held to meet obligations under 
     insurance contracts issued or reinsured by the company,'' for 
     example, if the assets ``do not exceed a specified percentage 
     of the corporation's total insurance liabilities for the 
     year.''


                           Reasons for Change

       The establishment of offshore businesses that reinsure 
     risks and that invest in U.S. hedge funds has been 
     characterized as creating the potential for tax avoidance. In 
     these arrangements, a hedge fund or hedge fund investors make 
     a capital investment in an offshore reinsurance company. The 
     offshore reinsurance company then reinvests that capital (as 
     well as premiums it receives) as reserves in the hedge fund. 
     Because the capital may be held largely or completely in one 
     investment (the hedge fund), an insurance regulator may 
     require a higher level of reserves to compensate for the lack 
     of diversification. This can magnify the effect of holding a 
     high level of reserves relative to a low level of insurance 
     liabilities.
       The owners of the offshore reinsurance company take the 
     position that the reinsurance company is not a PFIC, and that 
     investors in it are not taxed on its earnings until those 
     earnings are distributed or the investors sell the 
     reinsurance company stock at a gain reflecting those 
     earnings. U.S. PFIC rules designed to prevent tax deferral 
     through offshore corporations provide an exception for income 
     derived in the active conduct of an insurance business. What 
     it takes to qualify under this exception as an insurance 
     business, including how much insurance or reinsurance 
     business the company must do to qualify under the exception, 
     may not be completely clear.
       The hedge fund reinsurance arrangement is said to provide 
     indefinite deferral of U.S. taxation of the hedge fund's 
     investment earnings, such as interest and dividends. At the 
     time the taxpayer chooses to liquidate the investment, 
     ordinary investment earnings are said to be converted to 
     capital gains, which are subject to a lower rate of tax. The 
     use of offshore reinsurance companies allows large-scale 
     investments that are said to be consistent with capital and 
     reserve requirements applicable to the insurance and 
     reinsurance business.
       Media attention to hedge fund reinsurance has described the 
     practice as dating from an arrangement set up in 1999. In 
     recent years, the practice has grown, giving rise to a 
     serious income mismeasurement problem. The ``Offshore 
     Reinsurance Tax Fairness Act'' seeks to prevent this income 
     mismeasurement by modifying the definition of an insurance 
     company for purposes of the PFIC rules. The ``Offshore 
     Reinsurance Tax Fairness Act'' provides that objective 
     measures of a firm's real insurance risks compared to its 
     assets are used to determine whether a firm is an insurance 
     company, or is a disguise cloaking untaxed offshore income.


                        Explanation of Provision

     Applicable insurance liabilities as a percentage of total 
         assets
       Under the provision, passive income for purposes of the 
     PFIC rules does not include income derived in the active 
     conduct of an insurance business by a corporation (1) that 
     would be subject to tax under subchapter L if it were a 
     domestic corporation; and (2) the applicable insurance 
     liabilities of which constitute more than 25 percent of its 
     total assets as reported on the company's applicable 
     financial statement for the last year ending with or within 
     the taxable year.
       For the purpose of the provision's exception from passive 
     income, applicable insurance liabilities means, with respect 
     to any property and casualty or life insurance business (1) 
     loss and loss adjustment expenses, (2) reserves (other than 
     deficiency, contingency, or unearned premium reserves) for 
     life and health insurance risks and life and health insurance 
     claims with respect to contracts providing coverage for 
     mortality or morbidity risks. This includes loss reserves for 
     property and casualty, life, and health insurance contracts 
     and annuity contracts. Unearned premium reserves with respect 
     to any type of risk are not treated as applicable insurance 
     liabilities for purposes of the provision. For purposes of 
     the provision, the amount of any applicable insurance 
     liability may not exceed the lesser of such amount (1) as 
     reported to the applicable insurance regulatory body in the 
     applicable financial statement (or, if less, the amount 
     required by applicable law or regulation), or (2) as 
     determined under regulations prescribed by the Secretary.
       An applicable financial statement is a statement for 
     financial reporting purposes that (1) is made on the basis of 
     generally accepted accounting principles, (2) is made on the 
     basis of international financial reporting standards, but 
     only if there is no statement made on the basis of generally 
     accepted accounting principles, or (3) except as otherwise 
     provided by the Secretary in regulations, is the annual 
     statement required to be filed with the applicable insurance 
     regulatory body, but only if there is no statement made on 
     either of the foregoing bases. Unless otherwise provided in 
     regulations, it is intended that generally accepted 
     accounting principles means U.S. GAAP.
       The applicable insurance regulatory body means, with 
     respect to any insurance business, the entity established by 
     law to license, authorize, or regulate such insurance

[[Page 10490]]

     business and to which the applicable financial statement is 
     provided. For example, in the United States, the applicable 
     insurance regulatory body is the State insurance regulator to 
     which the corporation provides its annual statement.
     Election to apply alternative test in certain circumstances
       If a corporation fails to qualify solely because its 
     applicable insurance liabilities constitute 25 percent or 
     less of its total assets, a United States person who owns 
     stock of the corporation may elect in such manner as the 
     Secretary prescribes to treat the stock as stock of a 
     qualifying insurance corporation if (1) the corporation's 
     applicable insurance liabilities constitute at least 10 
     percent of its total assets, and (2) based on the applicable 
     facts and circumstances, the corporation is predominantly 
     engaged in an insurance business, and its failure to qualify 
     under the 25 percent threshold is due solely to temporary 
     circumstances involving such insurance business.
       Whether the corporation's applicable insurance liabilities 
     constitute at least 10 percent of its total assets is 
     determined in the same manner as whether the corporation's 
     applicable insurance liabilities constitute more than 25 
     percent of its total assets.
       In determining whether the corporation is predominantly 
     engaged in an insurance business, relevant facts and 
     circumstances under this election include: the number of 
     insurance contracts issued or taken on through reinsurance by 
     the firm; the amount of insurance liabilities (determined as 
     above) with respect to such contracts; the total assets of 
     the firm (determined as above); information with respect to 
     claims payment patterns for the current and prior years; the 
     nature of risks underwritten and the data available on 
     likelihood of the risk occurring (extremely low-risk but 
     extremely high cost risks are less indicative of being 
     engaged in an insurance business); the firm's loss exposure 
     as calculated for a regulator such as the SEC or for a rating 
     agency, or if those are not calculated, for internal pricing 
     purposes; the percentage of gross receipts constituting 
     premiums for the current and prior years; whether the firm 
     makes substantial expenditures during the taxable year with 
     respect to marketing or soliciting new insurance or 
     reinsurance business; and such other facts or circumstances 
     as the Secretary may prescribe.
       Facts and circumstances that tend to show the firm may not 
     be predominantly engaged in an insurance business include a 
     small number of insured risks with low likelihood but large 
     potential costs; workers focused to a greater degree on 
     investment activities than underwriting activities; and low 
     loss exposure. The fact that a firm has been holding itself 
     out as an insurer for a long period is not determinative 
     either way.
       Temporary circumstances include the fact that the company 
     is in runoff, that is, it is not taking on new insurance 
     business (and consequently has little or no premium income), 
     and is using its remaining assets to pay off claims with 
     respect to pre-existing insurance risks on its books. 
     Temporary circumstances may also include specific 
     requirements with respect to capital and surplus relating to 
     insurance liabilities imposed by a rating agency as a 
     condition of obtaining a rating necessary to write new 
     insurance business for the current year.
       Temporary circumstances do not refer to starting up an 
     insurance business; the present-law PFIC rules include a 
     special start-up year rule under which a foreign corporation 
     that would be a PFIC under the income or assets test will not 
     be considered a PFIC in the first year in which it has gross 
     income if, among other requirements, the corporation is not a 
     PFIC in either of the two following years. This start-up year 
     exception to status as a PFIC applies broadly to all foreign 
     corporations including those in the insurance business.


                             Effective Date

       The provision applies to taxable years beginning after 
     December 31, 2015.
                                 ______
                                 
      By Mr. GRASSLEY (for himself and Ms. Heitkamp):
  S. 1697. A bill to provide an exception from certain group health 
plan requirements to allow small businesses to use pre-tax dollars to 
assist employees in the purchase of policies in the individual health 
insurance market, and for other purposes; to the Committee on Finance.
  Mr. GRASSLEY. Mr. President, over the past year and half or more, 
many small business owners have discovered they could be subject to 
punitive penalties simply for helping their employees purchase health 
insurance. This is the result of a little understood provision in the 
Affordable Care Act, ACA.
  Farmers, ranchers, and small business owners frequently do not have 
the resources to offer a traditional group health plan to their 
employees. However, many still want to help their employees obtain 
health coverage. They have frequently done this by reimbursing their 
employees on a pre-tax basis for the cost of health insurance the 
employee purchases on the individual market.
  However, as a result of so-called market reforms in the ACA, small 
business owners who want to help their employees purchase insurance on 
the individual market could be subject to a $100 a day per employee 
penalty.
  This fails to meet the common sense test. These businesses have no 
obligation under the ACA to offer any form of insurance. However, they 
would like to do what they can to help their employees obtain coverage. 
This is a practice that should be commended, not penalized.
  I have had a number of farmers, small business owners, and 
accountants reach out to me over the past year explaining how this 
penalty has the potential to be devastating. Just as examples, I want 
to read excerpts from a couple emails I have received from Iowans.
  The first is from a constituent who is a dentist in Sioux City, IA:

       Help! . . . I am a small business owner--7 employees. I 
     have been helping to subsidize my employee's health insurance 
     for 20 years. I just found out that the Market Reforms of the 
     ACA have made that illegal. . . . Now all of my employees 
     will have to pay taxes on the money I gave them for Health 
     Insurance. They all live paycheck to paycheck and won't be 
     able to come up with the taxes on this money. They also most 
     likely won't qualify for the exchanges and any government 
     subsidy. They are caught in the middle. I can't subsidize 
     their Health Insurance because I risk a $100/day/employee 
     penalty . . . Please hurry and do something to help the 
     millions of middle class small business employees who are 
     caught between a rock and a hard place.

  This next one is from an accountant in Zwingle, IA:

       I recently completed two classes for CPE credit for my CPA 
     license. These classes covered the Affordable Care Act and 
     the presenters were adamant that we contact our senators and 
     representatives on behalf of small businesses. I do have a 
     client that this affects that could potentially be put out of 
     business.
       Businesses that have section 105 plans or that provide 
     additional salary to employees for the employees to purchase 
     health insurance privately or through the government 
     marketplace can be fined $100 per day per employee. That is 
     $36,500 per employee per year!
       I'm trying to help my client to figure out how to stop the 
     payments to the employees and not be destroyed by the 
     potential fines. This could be absolutely devastating.

  No doubt, there are countless other small business owners who have 
similarly been caught off guard. In fact, due to widespread confusion, 
the IRS granted penalty relief earlier this year. However, this penalty 
relief runs out at the end of this month. Legislation is necessary to 
eliminate this unfair and potentially devastating penalty once and for 
all.
  Toward this end, I have been working with Senator Heitkamp, along 
with Representatives Charles Boustany and Mike Thompson in the House, 
on bipartisan, bicameral legislation. Today, we are pleased to 
introduce this legislation.
  This common sense legislation will permit small businesses to 
continue offering a benefit to their employees that many have provided 
for years--namely reimbursing their employees for the cost of health 
insurance purchased on the individual market.
  According to the National Federation of Independent Business, around 
18 percent of small businesses last year reimbursed employees or 
provided other financial support to workers who bought individual 
insurance plans. Many others responded that they would be interested in 
such an option. Our legislation ensures this option is, and continues 
to be, available by eliminating the potential for devastating 
penalties.
  This legislation should be a no brainer for anyone who supports small 
business. I hope that my colleagues on both sides of the aisle will 
join in this effort.
                                 ______
                                 
      By Mr. TILLIS (for himself, Mr. Carper, Mr. Burr, Mr. Kaine, and 
        Mr. Warner):
  S. 1698. A bill to exclude payments from State eugenics compensation 
programs from consideration in determining eligibility for, or the 
amount of, Federal public benefits; read the first time.

[[Page 10491]]


  Mr. TILLIS. Mr. President, I am introducing the Treatment of Certain 
Payments in Eugenics Compensation Act, which would exclude payments 
from State eugenics compensation programs from consideration in 
determining eligibility for, or the amount of, Federal public benefits. 
My colleagues, Senator Richard Burr, Senator Tom Carper, Senator Tim 
Kaine, and Senator Mark Warner have agreed to cosponsor the bill. In 
addition, Congressman Patrick McHenry will introduce a companion bill 
in the House of Representatives.
  A dark chapter in American history, eugenics and compulsory 
sterilization laws were implemented in the first decades of the 20th 
century by more than 30 States, leading to the forced sterilization of 
more than 60,000 disabled citizens. Only California and Virginia 
sterilized more citizens than North Carolina under these laws, though 
North Carolina was considered as having the most aggressive State-run 
program.
  In 2013, North Carolina became the first State in the country to 
enact legislation to compensate living victims of these forced-
sterilization laws. Most of the victims of the State-run eugenics 
program were poor and disadvantaged individuals and many remain so to 
this day. Therefore, concerns have been raised in both States that the 
compensation provided to the victims could unintentionally render them 
ineligible under Federal law to continue receiving Federal benefits 
that are subject to income thresholds. The bill introduced today would 
specifically exclude all payments from any State eugenics compensation 
program from being used in determining eligibility for, or the amount 
of, any public benefits from the Federal government.
  The implementation of State-run eugenics and sterilization programs 
represent a dark and shameful chapter in our Nation's history. While 
North Carolina and Virginia have recently created State compensation 
programs to help victims recover from horrible wrongs that have been 
perpetrated against them in the past, Federal laws can unintentionally 
punish victims who receive eugenics compensation by preventing them 
from receiving Federal benefits. This bipartisan legislation will 
ensure that will not happen.
  I wish to offer a special, much deserved thank you to my friend and 
former colleague, North Carolina State representative Larry Womble, who 
has provided extraordinary leadership in the decades-long fight for 
justice for the living victims of North Carolina's eugenics program.
                                 ______
                                 
      By Mr. WYDEN (for himself and Mr. Merkley):
  S. 1699. A bill to designate certain land administered by the Bureau 
of Land Management and the Forest Service in the State of Oregon as 
wilderness and national recreation areas and to make additional wild 
and scenic river designations in the State of Oregon, and for other 
purposes; to the Committee on Energy and Natural Resources.
  Mr. WYDEN. Mr. President, today I am introducing the Oregon Wildlands 
Act to designate hundreds of miles of Oregon Rivers as Wild and Scenic, 
to protect thousands of acres of beautiful Oregon lands as National 
Recreation Areas, and to expand Wilderness for some of Oregon's most 
treasured areas.
  Oregon is a unique State and Oregonians take pride in the many 
natural treasures throughout our diverse landscape. From the Oregon 
Coast to the high desert of Eastern Oregon, our State boasts some of 
the most beautiful scenery, varied ecosystems, and unmatched outdoor 
recreation opportunities in the nation. Protecting these lands and 
rivers ensures that they will be treasured for generations to come. 
Oregon's rivers and landscapes are also home to threatened and 
endangered species, old-growth trees, and delicate ecosystems that 
deserve the highest protections.
  Enjoying the outdoors is in Oregonians' DNA--across the State, 
opportunities to get outside and enjoy Oregon's treasures bring in 
visitors from all over the world and make residents proud to call 
Oregon home. Protecting the lands and waters that support recreation is 
also an investment in our rural economies. In Oregon alone, the tourism 
industry employed more than 100,000 Oregonians during 2014 and 
generated $10.3 billion for the State's economy. Nationwide, outdoor 
recreation supports a $646 billion industry. Ensuring that visitors 
have pristine rivers to fish and float on, wilderness areas to hike in, 
and recreation areas to explore is a guaranteed way to make certain 
that visitors will return year after year.
  All told, the bill designates approximately 118,000 acres of 
Recreation Areas, approximately 250 miles of Wild and Scenic Rivers, 
and over 86,600 acres of Wilderness. Each area offers significant 
opportunities for recreation and ecosystem protections.
  The protections in this bill highlight some of Oregon's most 
environmentally significant areas, such as Devil's Staircase near the 
Oregon Coast. Devil's Staircase is the epitome of Wilderness in 
Oregon--it is rugged, pristine, and remote, with hikers following elk 
and deer trails to navigate the rugged terrain. My bill would protect 
approximately 30,540 acres as wilderness and 14.6 miles of Wasson Creek 
and Franklin Creek, which run through the Devil's Staircase area as 
Wild and Scenic Rivers. Devil's Staircase is home to the most 
remarkable old-growth forest on Oregon's Coast Range, where giant 
Douglas-fir, cedar, and hemlock support threatened and endangered 
species habitat, such as marbled murrelets and Northern Spotted Owls.
  My proposal would expand the Wild Rogue Wilderness by approximately 
56,100 acres and include an additional 125 miles to the incomparable 
Wild and Scenic Rogue River. The Rogue is world-renowned as a premier 
recreation destination for rafting and fishing, with its free flowing 
waters starting at Oregon's Crater Lake National Park and emptying into 
the Pacific Ocean. Along the way, the Rogue River flows through a 
diverse landscape and its cold waters are the perfect habitat for 
salmon--the river is home to runs of Coho, spring and fall Chinook, and 
winter and summer Steelhead. By protecting the Rogue River and its 
tributaries we are protecting the fish and wildlife that depend on 
clean, healthy water. Additionally, the Wilderness expansion would 
protect the habitat for bald eagles, osprey, spotted owls, bear, elk, 
and cougars.
  In addition, my proposal designates approximately 35.2 miles of the 
Elk River and 21.3 miles of the Molalla River as a new recreational, 
scenic, and wild rivers, and withdraws 19 miles of the Chetco River, 
one of the most endangered rivers in the country, from mineral 
development. By protecting hundreds of miles of Wild and Scenic Rivers, 
as well as the lands that surround those rivers, my proposal ensures 
that important wildlife habitat can thrive, that Oregon's treasured 
recreation destinations remain scenic and pristine, and that Oregonians 
continue to have clean sources of drinking water.
  I am pleased to be joined on this bill by my colleague from Oregon 
Senator Jeff Merkley who has worked closely with me over the years to 
protect Oregon's natural treasures.

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